International Trade

The Taiwan Relations Act: 40 Years of Mutual Benefit – Now More Relevant Than Ever

Forty years have passed since the signing of the Taiwan Relations Act (TRA) on April 10, 1979. Adopted with bipartisan support, TRA enabled the United States to maintain its close economic and strategic ties with Taiwan while establishing diplomatic relations with the People’s Republic of China (PRC). It has been affirmed by seven US presidents weathering four decades of shifting political landscapes and priorities. Taiwan has been a key but less well-known ally in advancing critical security and commercial objectives in the fastest-growing region of the globe – the Asia-Pacific. Taiwan is a natural geopolitical partner sharing our core values of liberty, democracy and free markets even as its neighbor China eschews them within its own borders and seeks to undermine them across the Strait. Today the TRA is more important than ever as American strategic interests and liberal democratic ideals are challenged by authoritarian states such as China and North Korea.  The fortieth anniversary of this far-reaching and pivotal piece of legislation is an important milestone worthy of commemoration.

Taiwan’s situation is informed by a complicated recent history, and the TRA has provided the tools to navigate relations for four decades. In 1949 the Chinese civil war concluded with the Soviet-backed Communist faction declaring victory over the US-backed Nationalist faction. The Nationalists retreated to the island of Taiwan just off the coast of mainland China, declaring itself the Republic of China (ROC) while the mainland became the People’s Republic of China (PRC). The US initially recognized the ROC as the legitimate Chinese state while the two factions continued to be at odds with one another. In 1979, the Carter Administration formally recognized the PRC but subsequently introduced the TRA to maintain a relationship with Taiwan. Today Taiwan remains in a state of limbo being officially recognized as a nation by just a handful of countries not including the United States yet totally independent from the authoritarian rule of Beijing.

Taiwan, enabled by the TRA, has been a critical actor for the maintenance of democracy, freedom and commerce in East Asia. To this day China threatens to invade and annex the island of Taiwan which would result in subjugating its free people to a brutal authoritarian regime. The TRA has been the primary deterrent against Chinese aggression preserving Taiwan’s independence.  This has preserved free and open trade routes in the region and prevented harassment by the Chinese navy.

The US-Taiwan relationship features a strong economic component as well. Although Taiwan is only a small island of 20 million people, it is America’s 11th largest goods trading partner with two-way trade totaling $76 billion — $94.5 billion when services are included. The TRA is the cornerstone of this successful, mutually beneficial commercial relationship.

Taiwan has grown into a significant regional and global role model. During its short history, it has had political and democratic missteps – some quite dark – but has emerged as a vibrant democracy with dynamic markets and strong civil liberties. According to Freedom House, the island is now amongst the freest countries in the world, even more so than the United States. This is in stark contrast to its neighbor China where the Chinese Communist Party continues to censor thought, persecute religious minorities, stifle economic freedom and prop up regimes such as North Korea. Although China has offered to allow Taiwan to operate under the “One Country Two Systems” model if it were to reunify, its treatment of Hong Kong shows Chinese promises of sovereignty are often hollow. Ronald Reagan commented in 1980 that the TRA is a result of  “the timely action of the Congress, reflecting the strong support of the American people for Taiwan.” It was clear then and it is even clearer now that our relationship with Taiwan is one based on shared political and free-market values and a common vision.

After 40 years of cooperation and friendship with Taiwan the TRA has proven itself to be a bipartisan success story. It has provided invaluable guidance in navigating thorny relations between China and Taiwan and is a critical component in our security and strategic interest in the Indo-Pacific Region and facilitating commerce while restraining authoritarian regimes. Taiwan, because of the TRA, has been a loyal ally that has reformed its political system in the mold of freedom. The island’s political orientation has more in common with the philosophies of Reagan and Jefferson than with Mao Zedong and Kim Jong-un. The Taiwan Relations Act was wise policy forty years ago and remains so today.


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