Taiwan President Calls for Strengthened Trade Partnerships and Regional De-Risking Amid Global Supply Chain Realignment

At the eighth Ketagalan Forum: Indo-Pacific Security Dialogue, held on August 21, Taiwan President Lai Ching-te emphasized the strategic need for regional de-risking and the fortification of supply chain resilience through robust free trade agreements with allied nations. The forum, organized by Taiwan's Ministry of Foreign Affairs (MOFA) and the Prospect Foundation, underscored the global trend of decoupling from China, focusing on mitigating risks in semiconductor and manufacturing supply chains by deepening ties with ideologically aligned partners.

Strengthening Global Partnerships

In his opening address, President Lai highlighted Taiwan's ongoing efforts to reduce economic dependence on China while expanding global partnerships through various trade agreements. Citing data from the Mainland Affairs Council, Lai noted a significant decline in Taiwan's outbound investment in China, which dropped from 83.8% in 2010 to 11.4% in 2023. Additionally, Taiwanese exports to China fell to 31.2% in the first half of this year, the lowest percentage in 22 years.

Former Slovakian Prime Minister Eduard Heger, also a keynote speaker, drew parallels between Taiwan's current situation and Slovakia's past dependency on Russian energy, warning of the dangers posed by economic dependencies. He emphasized the importance of diversifying trade partners to mitigate such risks.

President Lai further detailed Taiwan's trade diversification efforts with Western allies, highlighting initiatives like the Taiwan-US Initiative on 21st-Century Trade, the Foreign Investment Promotion and Protection Arrangement with Canada, and an enhanced trade partnership with the United Kingdom. He also pointed to the success of the Tsai Ing-wen administration's Southbound Policy, which saw Taiwan's exports to 18 Southbound nations reach US$50.2 billion in the first half of 2024.

Reaffirming Taiwan's commitment to peace and stability in the Taiwan Strait, Lai outlined a four-pillar action plan, which includes strengthening defense capabilities, ensuring economic security, bolstering partnerships with democratic nations, and exercising stable, principled leadership across the Taiwan Strait.

Semiconductor Industry as a Diplomatic Asset

On the topic of semiconductors, President Lai reiterated his administration's commitment to collaborating with like-minded partners on what he termed "democracy chips," aiming to build sustainable supply chains that contribute to global prosperity. Former Japanese Prime Minister Yoshihiko Noda echoed Lai's sentiments, emphasizing the significance of the semiconductor industry in Taiwan-Japan relations and citing TSMC's Kumamoto fab as a key example of their economic collaboration.

Noda also expressed strong support for Taiwan's application to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and reaffirmed his opposition to any unilateral changes to the status quo in the Taiwan Strait.

Former U.S. Ambassador to the United Nations Nikki Haley, making her first visit to Taiwan, urged the United States to formalize a free trade agreement with Taiwan to diminish China's economic leverage. Haley called for swift action from the West to support Taiwan, warning against waiting until a conflict with China arises. She also praised Taiwan for its role in sparking a technological revolution, noting that even China is now attempting to catch up.

Other notable speakers at the forum included former NATO Assistant Secretary-General Giedrimas Jeglinskas, Estonian MP Kalle Laanet, and Taiwan's Deputy Minister of Foreign Affairs Chung-Kwang Tien. Their insights collectively highlighted the emerging diplomatic trend of aligning with like-minded nations in response to the regionalization of supply chains in an era of de-globalization.