EDITORIAL: Taiwan-Japan deal is win-win

Taiwan and Japan could sign a broad trade agreement by the end of this year, potentially opening the door for other countries, including Canada and the Philippines, to reach similar deals with Taiwan, Nikkei Asia’s Taipei-based correspondent Thompson Chau (周浩霖) reported on Monday. Modeled on Taiwan’s 2023 trade agreement with the UK, the proposed deal would cover five areas of cooperation: economic resilience and innovation, industry cooperation on disaster risk education, digital trade, trade facilitation and sustainability.

Minister of Foreign Affairs Lin Chia-lung (林佳龍) welcomed the possibility, saying that Taiwan and Japan have close trade and investment ties, particularly in semiconductors and supply-chain security. The two sides have signed about 100 agreements and held several meetings over the past year to enhance economic ties, the Ministry of Foreign Affairs said.

The potential agreement comes amid broader efforts by countries to diversify trade and strengthen economic partnerships. Canada and the EU last month concluded negotiations on a new digital trade agreement and announced plans to deepen cooperation on critical minerals, energy, defense and technology. The US has also signed trade and critical minerals agreements with several Southeast Asian countries, including Malaysia and Thailand, to secure alternative supplies of minerals used in electronics, electric vehicles and military equipment. Those efforts come as China tightens controls on rare earth exports, using its dominant position in the global supply chain as a source of economic and political leverage.

However, for Taiwan and Japan, the need to diversify trade goes beyond economic considerations. Closer cooperation also reflects growing concerns about China’s military activities and the risk of trade disruptions should tensions in the region escalate. Taipei and Tokyo have a strong interest in protecting their technology industries and critical supply chains from potential interruptions.

Japan has become increasingly aware of the risks of economic dependence on China. It experienced this pressure firsthand after relations with Beijing deteriorated following Japanese Prime Minister Sanae Takaichi’s remarks in November last year that a Chinese attack on Taiwan could pose an existential threat to Japan and potentially justify a military response. Beijing responded with restrictions on Japanese seafood imports, as well as on exports of rare earths and other critical minerals, and calls for Chinese citizens to avoid traveling to Japan. It has also stepped up military and coast guard activity around disputed waters near Japan.

Taiwan has faced similar economic and political pressure from Beijing for years. China regularly uses trade restrictions, military exercises and diplomatic pressure to discourage what it calls “Taiwanese independence” and influence political developments in the nation. With Taiwan’s Nov. 28 nine-in-one local elections approaching, concerns about Chinese interference are again growing. Taipei has accused Beijing of using disinformation campaigns and economic pressure to influence public opinion. Enhancing trade ties with Japan and other partners would help Taiwan reduce its vulnerability to such pressure and better protect its economy should tensions across the Taiwan Strait escalate.

The proposed cooperation on drones is being presented primarily as a disaster-response initiative, but its military applications are impossible to ignore. US Indo-Pacific Commander Admiral Samuel Paparo has advocated a strategy he calls a “hellscape,” envisioning thousands of aerial, surface and underwater drones deployed across the Taiwan Strait to overwhelm and delay a potential Chinese invasion. Taiwan and Japan could make significant advances in drone technology through joint research and development, producing systems that serve civilian and defense purposes.

Artificial intelligence (AI) and semiconductors are equally important to modern military capabilities. Taipei and Tokyo understand the strategic value of these technologies and have much to gain from closer cooperation. Joint development in semiconductors, AI and related industries could boost their technological and defense capabilities while creating new business opportunities and jobs in both countries.

Cooperation between Taiwan and Japan has long made economic and strategic sense, but it is becoming increasingly important as China expands its military presence and influence across the First Island Chain. Closer collaboration between Taiwan, Japan and the US on security and technology, combined with partnerships with Southeast Asian countries on manufacturing and critical minerals, could help build more resilient supply chains. Such cooperation would make it harder for Beijing to use trade dependence for economic coercion and other forms of pressure.