The relationship between the Unites States and Taiwan has slowly been rebuilding since full diplomatic relations ended in 1979. Relations established since then were unofficial until the introduction of the Taiwan Relations Act which essentially governs US-Taiwan Relations. The parameters of this act call for the establishment of representative offices in the US as were maintained prior to the first day of 1979.
Today the US is the largest foreign investor in Taiwan with $6.3 billion invested in various industries. Taiwan is the seventh largest US export market, sixth largest supplier, and eight largest overall trading partner. The American Institute in Taiwan reports that the country is the seventh largest overseas market for US exports of farm products. In addition, the US is Taiwan's largest trading partner and largest foreign market. Two-way trade in 1995 totaled $47 billion. The financial sectors' relations with the US are continually monitored and managed by two private organizations: The American Institute in Taiwan and the Taipei Economic and Cultural Representative Office.
A stronger relationship between the US and Taiwan is evident in the electronics sector. Taiwan's network of small family companies have become major suppliers of low-cost electronic products to major US firms including: Compaq, Apple, and Hewlett-Packard. In early 1996, Acer Group and Mitac International reported they received billions of dollars in orders from IBM and other information companies. US firms have become increasingly dependent on Taiwan-made notebook PC's, for instance. Taiwan suppliers of telecommunications equipment have based their competitive advantage over the US by continually developing smaller and less expensive products. Despite the strength of its exporting function of electronics to the US, Taiwan manufacturers have faced several obstacles in establishing brands and marketing them there. With the exception of the Acer Group, most Taiwan companies face size constraints and cannot afford the costly distribution networks in the US. Their refusal to allow US firms to take over the marketing function contributes to the slow development of strong brand names.
Several other industries in Taiwan are establishing ties with western markets, as evidenced by a number of partnerships with US firms. International Technologies of the US signed a joint-venture agreement with Taiwan's Chi Mei Group to upgrade the island's environmental protection know-how. The US-based Monitor Aerospace contracted with Taiwan's Jui Li Enterprise to purchase parts for Boeing aircrafts. Ta Ching Hwa Enterprise also formed a joint venture with a US company, Monsanto, to manufacture "nylon 66," a sophisticated nylon fiber. As Taiwan makes strides in economic, financial, and commercial developments, it will continue to contribute to the relationship it shares with United States.
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