Searching among English media the association between Taiwan and U.S. Under Secretary of State Keith Krach, who is in charge of the economic growth, energy resources and environment of the country, I found, apart from the visit he has recently paid to Taiwan, only news about Taiwanese Semiconductor Manufacturing Company’s announcement in May 2020 of going to invest in Arizona, U.S., to build a foundry for mass production of 5-nanometer chips,

For the office led by Krach, the investment project from Taiwan not only is conducive to spurring the U.S. economy, but also enhances its national security, because the U.S. can count on reliable chips from Taiwan that will drive its development of artificial intelligence, 5G network and F-35 air fighters in the future , instead of being dependent on supplies from companies like Huawei that might jeopardize the country’s national security.

Since Trump assumed office, Krach’s current post of Under Secretary of State had been unfilled for two years until June 2016 that the successful high-tech entrepreneur from Silicon Valley was designated. Not long ago, the U.S. just started to impose sanctions on Huawei, opening the door to a war over high-tech industries. Since he came into office, Krach has been mediating between different countries and Silicon Valley to stop information and communication facilities from being encroached on by malicious dictatorships that also steal data as well as sabotaging national security and infringing on human rights. The boycott is mainly targeted at red supply chains that might endanger national security. For this reason, Krach has even mentioned “Huawei is an extension of the Chinese Communist Party”.

From the perspective of international relations, the objective of economic safety is to make a country’s national security and economic safety immune to negative impact from policy change of other countries. For the time being, China is menacing U.S. economic safety in at least two aspects. Firstly, China was the largest trade partner of the U.S. between 2015 and 2018 when the U.S. corporations were dependent on essential spare parts supplied by the former, while Americans benefited from bargain buys from China. Nonetheless, once China restricts export of important merchandise to the U.S. for its falling out with the latter, it will imperil the U.S. enterprises and society. Concerned about the reality, the U.S. has reduced China to its third largest trade partner, even lower in the near future, since the outbreak of the trade war in 2019.

U.S. trade policy is mainly dominated by the Office of the U.S. Trade Representative, not U.S. Department of State. In view of this, it was unlikely that Krach would follow up during his visit Taiwan lifting restrictions of pork containing Ractopamine imported from the U.S.. Moreover, he is not entitled to represent the U.S. government to discuss with Taiwan the affairs about enhancing Taiwan-U.S. trade.

Secondly, from the perspective of Trump’s administration, Chinese high-tech industries having frequent dealings with the U.S. businesses are eroding U.S. national security, with Huawei as the main focus. What Krach’s office in U.S. Department of State sees is Huawei, which has been thriving on U.S. software and hardware technologies and manufacturing facilities while being subsidized by the Ministry of State Security of the PRC, will be an accomplice in stealing information about U.S. national security and possibly paralyzing the U.S. information and communication system if it gets into America on a large scale. As such, Krach’s mission is to batter down those high-tech industries posing threats to U.S. national security, get rid of the plight, in which the U.S. is over-dependent on China, by diversifying supply chains, as well as attaching more weight to countries in the free world with the international supply chains.

From Krach’s perspective, attending the memorial service of the late Taiwanese president Lee Teng-hui was not the main objective of his visit. Instead, he was highly likely commissioned to talk Taiwan into joining the plan of restructuring global supply chains, which is congruent with the Forum on Supply Chain Restructuring: Improving Resilience Amongst Like-Minded Partners held in early September by the American Institute in Taiwan, in which Taiwan, the U.S., European countries and Japan took part, and also echoes the Taiwan-U.S. Economic and Commercial Dialogue expected to be activated by Krach during his visit. Content of discussion in these occasions might be related to the possibility of like-minded pro-U.S. countries to sniff out trade partners that can restructure together existing supply chains into reliable ones for essential global industries, in order to prevent key and strategic supplies from being over-concentrated in a handful of unfriendly countries among which China is the main target.

With a glimpse of the guests invited by President Cai Ing-wen to the evening banquet, it is not difficult to understand those high echelon personnel were representative of the Taiwan government and civil corporations to negotiate with the U.S. over possible cooperation for international economic safety.

For now, various countries react differently to the U.S. upon the issue of economic safety. Though there are some countries resistant to Huawei, a lot are still querying the U.S. is taking the anti-China measures to extremes, and coveting their economic benefits from China.

For Taiwanese people, Taiwanese entrepreneurs in China and Taiwan’s high-tech industries are also caught between a rock and a hard place. What’s more, Taiwan is still highly dependent on the trade with and investment in China, hence not being able to shrug off the latter overnight.

Even though Taiwan-U.S. relations are making progress at light speed, it is still unclear whether the government and civil enterprises are willing to play ball with the U.S. to boycott China’s high-tech industries. With the improvement of Taiwan-U.S. relations, both will ask for what they need, which is perfectly justified. In the eye of the U.S., Taiwan, US’s like-minded partner, needs its promise of protection most. To this end, the Taiwan government has to be on the receiving end of pressure exerted by the U.S. that it has to come up with effective economic and industry policies to nose Taiwanese enterprises into matching up with the U.S.'s strategy of constructing clean global supply chains.

Taiwan’s high-tech industries are bound to be pressed by the U.S. and Taiwan government to reconsider their business relations with red supply chains, which is also political pressure from the U.S. that the Taiwan society has to look out upon.

(Ian Chen Tsung-yen, Assistant Professor, Institute of Political Science, National Sun Yat-sen University)

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