Talks with Taiwan show EU urgency on semiconductors: scholars

Taipei, June 3 (CNA) The holding of ministerial-level talks between the European Union and Taiwan under a new trade and investment framework reflected the EU's urgency in gaining more stable access to the global semiconductor supply chain, according to local economists.

The talks between Taiwan's economic affairs minister, Wang Mei-hua (王美花), and Sabine Weyand, director-general for trade at the EU, on Thursday were the first held under the new EU-Taiwan Trade and Investment Dialogue.

After the talks, the Bureau of Foreign Trade (BOFT) said in a statement that the dialogue was aimed at creating a platform to further promote bilateral trade and cooperation, most notably in the semiconductor sector.

Yen Huai-shing (顏慧欣), deputy executive director of the Taiwan WTO & RTA Center at the Chung-Hua Institution for Economic Research, told CNA the talks came at a time when the EU has felt vulnerable because it has little control over semiconductor manufacturing and design.

Russia's invasion of Ukraine and interruptions in logistics amid the COVID-19 pandemic that sent ripples through the global semiconductor industry have only increased the EU's urgency on supply chain resilience, Yen said.

"The ongoing geopolitical crisis has made the EU sense the importance of stable semiconductor supplies," Yen said. "Even weapons need chips to power themselves, so a shortage in semiconductor supplies has become an issue of national security."

She said the EU has immediate, medium-term, and long-term goals, with its priority right now to be able to secure a stable supply of chips.

In the medium term, it hopes to build an information-sharing mechanism with Taiwan similar to the one between Taiwan and the United States in which the EU would provide information on shortages of key materials and orders placed with Taiwan throughout the supply chain.

In the long run, Yen said, the EU hopes Taiwan's semiconductor companies will invest in Europe.

It was not clear how receptive Taiwan would be to those goals, but in the BOFT statement, Wang was cited as saying that Taiwan was willing to continue its role as a reliable partner in the global semiconductor industry and maintain its efforts to enhance the resilience of the semiconductor supply chain.

Darson Chiu (邱達生), an economist at the Taiwan Institute of Economic Research, said he expected the EU to use cooperation on semiconductors as a first step in solidifying economic ties with Taiwan before moving on to old economy sectors, such as the textile, machinery and petrochemical sectors, to lower its trade deficit with Taiwan.

The EU is also expected to work more closely in clean energy development with Taiwan, Chiu said.

At the same time, Taiwan expects that with the EU being a close ally of the United States, trade tensions between Washington and Beijing could help Taiwan gain a higher share of EU markets, Chiu said.

According to the BOFT, the EU is Taiwan's fifth largest trade partner, with bilateral trade reaching US$68.7 billion in 2021, an increase of 32.45 percent over 2020.

In terms of investment, the EU is Taiwan's largest source of foreign capital. Taiwan's investment in the EU has also grown significantly, totaling US$5.42 billion since 2016, which accounts for 66.8 percent of Taiwan's all-time investment in the EU.