The US and the island of Taiwan reached a trade deal on Thursday (US time) that cuts tariffs on many of the island's exports but requires Taiwan-based chipmakers and tech firms to invest hundreds of billions of US dollar to increase production in the US. Some politicians on the island and news outlets criticized Democratic Progressive Party (DPP) authorities' self-claimed "good" deal, warning that moving the key chipmaking industrial chain to the US may hollow out the island.
Chinese mainland experts warned heavy blow on the island's economy in the upcoming 5-10 years by losing the advantage chipmaking industry, noting that the complementarity between the island and the Chinese mainland in the chip industry will unleash great development potential.
As part of the agreement, Taiwan semiconductor and technology enterprises will make new, direct investments totaling at least $250 billion to build and expand advanced semiconductor, energy, and artificial intelligence production and innovation capacity in the US, according to a statement on the US Department of Commerce website.
The island of Taiwan is required provide credit guarantees of at least $250 billion to facilitate additional investment by Taiwan enterprises, supporting the establishment and expansion of the full semiconductor supply chain and ecosystem in the US.
In exchange, the US will limit "reciprocal" tariffs on Taiwan to 15 percent, down from 20 percent, and commit to zero reciprocal tariffs on generic pharmaceuticals, their ingredients, aircraft components and some natural resources, according to the statement.
While the DPP authorities claimed that the trade deal "a good result," some politicians and media outlets on the island criticized the DPP of accelerating chip manufacturing to the US and hollowing out the island's advantage industry.
On Friday morning, the Kuomintang (KMT) held a press conference, pointing out problems with the trade deal, Taiwan-based China Times reported.
At the conference, KMT Culture and Communications Committee Chairman Wu Tsung-hsien said the deal is not simply a matter of tariff reduction but rather connects with "expanding investment in the US," in which way, the deal uses tariffs to reshape the geographical configuration of semiconductor production.
This will lead to long-term structural changes on the island: lack of high-level jobs, research and development institutions and talent will drain, which along with declining birth rate, make the island's future worrisome, Wu said.
"The Lai Ching-te administration will naturally claim 'success' of the trade deal with the US. The 'Taiwan model' may indeed please the US, but seeing 40 percent of Taiwan's semiconductor supply chain - built up over 40 years - shift to the US, the Lai administration may be satisfied, but can the people of Taiwan be satisfied?" udn.com wrote in a commentary on Friday.
Some Taiwan regional netizens on the local forum PTT also expressed dissatisfaction. A netizen posted "It's pathetic that the island claims to strengthen national security while moving the chipmaking industry overseas," another netizen posted "The US wants TSMC and thus of course gives a little treat in exchange," and another posted "Congratulations to the US, they've made a killing!"
"The DPP should be responsible for the island's loss," Wang Jianmin, a research fellow at the Institute of Taiwan Studies under the Chinese Academy of Social Sciences, told the Global Times on Friday.
Out of the political purpose to align itself with the US, the DPP authorities has agreed to transfer its most competitive chip industry to the US, making huge concessions that all the people on the island have to bear, Wang said, warning that this will deal a great blow on the island's economy in the upcoming five to 10 years.
Lü Xiang, a research fellow at the Chinese Academy of Social Sciences, told the Global Times on Friday that the US always put its own interests first and has no intension to protect the island of Taiwan's interests.
"If the island loses advantage in chipmaking, its economy will be risky," Lü said. He said the island has advantage in chipmaking and the Chinese mainland's tech firms are accelerating core technological breakthroughs, and such complementarity will unleash great development potential.
A Chinese mainland spokesperson on Wednesday criticized the DPP authorities for showing no resistance when confronted with overt bullying and exploitation by external forces, but instead moving to accommodate those forces.
Zhu Fenglian, a spokesperson for the State Council Taiwan Affairs Office, commented in response to a question about a report that Taiwan and the United States are nearing a trade agreement to reduce Taiwan's tariff rate to 15 percent, while committing TSMC to building at least five more facilities in the US.
The so-called agreement amounts to economic exploitation of Taiwan by the US through high tariffs, aimed at siphoning off the island's industrial strength. It reveals not only the self-interested nature of the United States, but also Washington's underlying intention of viewing Taiwan as a strategic pawn, Zhu said.
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