BY JULIA BERGSTRÖM
U.S. Speaker of the House of Representatives Nancy Pelosi visited Taiwan on August 2-3, to which China responded by launching military exercises around the island. The Speaker’s trip included meetings with President Tsai Ing-wen, Taiwan Semiconductor Manufacturing Co. (TSMC) Chairperson Mark Liu, and high-profile human rights activists. Pelosi said her visit was a sign of the United States’ “unwavering commitment to supporting Taiwan’s vibrant democracy.” 
Following Pelosi’s departure, China launched a series of military exercises encircling Taiwan. The drills initially lasted from August 4 to 7 and involved live-fire drills, air sorties, naval deployments, and ballistic missile launches. Taiwan responded by putting its military on alert and deploying ships, planes, and other assets to monitor Chinese aircrafts, ships, and drones that were “simulating attacks on the island of Taiwan and our ships at sea” and crossing the Taiwan Strait’s median line, the Ministry of National Defense said. 
Pelosi is the most prominent American official to visit Taiwan since 1997. Her trip was followed by visits by several other foreign delegations, including a cross-party Japanese delegation, as well as U.S. Senator Marsha Blackburn and Indiana Governor Eric Holcomb.   
The U.S. and Taiwan on August 17 announced they had reached a consensus on the negotiating mandate for the U.S.-Taiwan Initiative on 21st Century Trade. The first round of negotiations is expected to take place early this fall. 
The United States and Taiwan, through the American Institute in Taiwan (AIT) and Taipei Economic and Cultural Representative Office in the United States (TECRO), established an agenda for negotiations on trade facilitation, good regulatory practices, strong anti-corruption standards, enhancing trade between small and medium enterprises, deepening agriculture trade, removing discriminatory barriers to trade, digital trade, labor and environmental standards, and ways to address distorted state-owned enterprises and non-market policies and practices. 
President Joe Biden announced the initiative following Taiwan’s exclusion from the Indo-Pacific Economic Framework, a U.S.-led multilateral partnership involving 12 other countries, which has been positioned as a counterbalance to China’s regional ambitions. 
U.S. President Joe Biden on August 25 signed an executive order that would kickstart the implementation process of the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act. The law was implemented to boost U.S. domestic chip-making and scientific research. A 16-member implementation steering council composed of cabinet secretaries and top White House officials will be created under the executive order. The order will also detail Biden’s six priorities for the implementation process in the months ahead. 
Biden authorized the order after signing the CHIPS and Science Act on August 9. The law provides US$52 billion in semiconductor manufacturing subsidies to incentivize companies to build, expand, or modernize domestic semiconductor facilities on American soil. It also includes a 25% tax credit to encourage investments in semiconductor manufacturing. The law marked a significant, bipartisan U.S. effort to inject tens of billions of dollars into manufacturing, research and development, and science – areas where the U.S. has lagged behind some international competitors in terms of public spending in recent years. 
In conjunction with the new law, Taiwan’s Ministry of Economic Affairs (MOEA) released a statement saying that the Act is unlikely to challenge Taiwan’s role as a dominant global chips supplier. “After 50 years of efforts in developing its semiconductor industry through investment and talent cultivation, Taiwan has been on the top of the industry in terms of production efficiency, establishment of a comprehensive supply chain, and innovations,” MOEA said. “Taiwan’s status as a critical player in the global semiconductor sector will not be affected.” 
Editor’s note: Since publication, the CECC has announced that Taiwan will allow visa-free entry for travelers from the U.S., Canada, Europe, Australia, New Zealand, and Taiwan’s 14 diplomatic allies starting September 12. The weekly cap of 50,000 travelers will remain in place, as well as the requirement for all arrivals to follow the “3+4” protocol of three days of quarantine and four days of “self-initiated epidemic prevention.”
The Central Epidemic Command Center (CECC) declared it intends to accelerate plans to fully reopen Taiwan’s borders following the subsiding of the next COVID-19 wave. The earliest time the Center would consider easing border restrictions would be in late September, CECC said. President Tsai Ing-wen announced at the Taipei Tourism Exposition on August 19 that she had instructed the Executive Yuan to establish a timeline and draft measures for reopening borders for tourism, to which a Cabinet official responded that the situation would be reassessed in September. CECC head and Deputy Minister of Health and Welfare Victor Wang stated that policy changes would be gradual, beginning with easing quarantine rules. 
On August 25, CECC Advisory Committee on Immunization Practices (ACIP) convener Lee Ping-ing said that Taiwan’s border restrictions are based on “political considerations.” In response, CECC’s Wang said the border reopening decision is based on expert assessments and practical considerations. 
While the U.S., Canada, the EU, Australia and nearby Thailand, Vietnam, Philippines, Singapore, South Korea, and Hong Kong have opened borders for tourists, and Japan has begun accepting tour groups, Taiwan retains one of the world’s strictest pandemic-related border restrictions. International travelers have been banned from entering Taiwan since March 19, 2020. 
Police in August arrested more than 20 people on different occasions on suspicion of human trafficking. The suspects are said to have colluded with foreign crime organizations to bait Taiwanese citizens to Cambodia by promising high-paying jobs. Victims reported having been subjected to beatings, shocks, and other physical abuse by human traffickers at hotels and resorts in Sihanoukville. Accusations of sexual abuse and organ harvesting have also been made in connection with the arrests. 
Separately, the Criminal Investigation Bureau (CIB) announced that it had detained six people in connection with an investigation into a human trafficking ring allegedly connected to the Bamboo Union, Taiwan’s largest criminal triad.Evidence suggests that between June and August the group lured 82 Taiwanese to Cambodia, where they were held captive to make calls for telecommunications scams. In total, 67 people were detained in July and August in connection with sweeps targeting 20 different human trafficking groups. 
Out of 420 Taiwanese likely being held against their will in Cambodia, at least 46 have returned to Taiwan. National Police Agency Director Huang Ming-chao said the agency had launched efforts to rescue the remaining victims. Taiwanese law-enforcement agencies have contacted their foreign counterparts for assistance in saving victims of human trafficking. 
The Control Yuan on August 16 censured the Ministry of Education (MOE) and the Taipei Department of Education for lax oversight of cram schools when it was discovered that some institutions operated unlicensed after-school programs and kindergartens. 
Kindergartens, after-school clubs, and cram schools have different requirements regarding floor space and teacher-student ratios. The conditions for cram schools are less strict than for the other two, which is why most institutions are registered as cram schools, said Control Yuan member Wang Yu-ling. Despite this, many cram schools also act as after-school clubs and kindergartens, which must adhere to stricter standards for child protection. 

Published monthly by the American Chamber of Commerce in Taiwan, Taiwan Business TOPICS is a source of balanced, reliable, and insightful news and analysis on issues of concern to Taiwan’s business community.

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