Testimony:
Office of the United States Trade Representative (USTR)

Comments on Two Section 301 Investigations on Excess Capacity and Forced Labor

(Arlington, Virginia, April 13, 2025)

Written Testimonies. See attachments for full text.

Introduction

The Office of the United States Trade Representative (USTR) has initiated two separate investigations of Taiwan under Section 301 of the Trade Act of 1974. The first investigation, docket USTR-2026-0067, focuses on 16 economies, including Taiwan, that appear to exhibit structural excess capacity and production in various manufacturing sectors, through large or persistent trade surpluses or underutilized or unused capacity. The second investigation, docket USTR-2026-0133, is examining 60 economies, including Taiwan, for failure to impose and effectively enforce the prohibition on importing goods produced with forced labor.

The US-Taiwan Business Council (USTBC) thanks USTR for this opportunity to comment on the these two Section 301 investigations. It is our understanding that USTR seeks to better understand if Taiwan exhibits structural excess capacity in its manufacturing sectors, leading to overproduction, large or persistent trade surpluses, or underutilized and unused capacity. Moreover, USTR is attempting to identify countries who have failed to impose and effectively enforce prohibitions on importing goods produced with forced labor

USTBC is a member-based organization that has worked since 1976 to foster bilateral trade and business relations with Taiwan and to support U.S. companies on the island. We offer these comments on behalf of the organization and of our member companies doing business in both the United States and Taiwan.

Selected Comments

Please see the attachments for the full text.

Docket USTR-2026-0067 – Excess Capacity

Taiwan is a like-minded democracy, a top tier trading partner, and an essential strategic ally for the United States. Through industrial development and substantial domestic and foreign company investments over the last 50+ years, Taiwan has also come to play a crucial role in the global technology supply chain – particularly for leading-edge semiconductors.

U.S. companies frequently depend on Taiwan’s manufacturing capabilities, particularly in semiconductors and electronics. Over many years of trusted partnerships, companies on both sides of the equation have developed specializations. American firms have concentrated on innovation, software development, and product design, whereas Taiwan companies have focused more on the capital-intensive processes of fabrication and assembly. Additionally, Taiwan serves as a crucial partner for U.S. and foreign companies who send critical components to Taiwan for processing and for ultimate re-export to the United States.

This supply chain dynamic – where demand from the U.S. for components manufactured or processed in Taiwan remains robust and enduring – has led to a significant trade surplus for Taiwan with the United States. The Taiwan trade surplus has also grown over the last few years, reflecting the increased U.S. demand for Taiwan’s high-value advanced technology products due to U.S. growth in Artificial Intelligence (AI), building of data centers, and related industries.

While Taiwan has a large, persistent, and growing trade surplus with the United States, this is not due to structural overcapacity but because of the highly complementary nature of our economies. Taiwan does not maintain underutilized and unused capacity, nor does it overproduce. Instead, production is based on consumer demand and driven by market forces.

2026.04.13 – US-Taiwan Business Council – Comment on USTR-2026-0067 (Excess Capacity)

Docket USTR-2026-0133 – Forced Labor

Taiwan has faced some labor challenges that include inadequate oversight of supply chains – particularly within fisheries and certain manufacturing industries such as textiles – as well as labor regulations that render many migrant workers reliant on brokers and employers. A significant challenge lies in tracing labor conditions throughout subcontracting chains, particularly in instances where production is linked to Taiwan, but where recruitment fees, document retention, and wage withholding occur outside of Taiwan.

Due to increased global scrutiny of labor abuse, pressures from its trading partners including the U.S., evolving labor rights standards promoted by the United Nations and the European Union, and domestic pressures, Taiwan has recently taken additional steps to counteract some of those structural problems. The Taiwan government has said that it wants to align with U.S. and global standards regarding ethical supply chains. The U.S.-Taiwan Agreement on Reciprocal Trade (ART) was signed on February 12, 2026. As part of the agreement, Taiwan is committed to adopting and implementing forced labor import prohibitions and to working with the U.S. on this issue.

We note that this investigation features some countries that have already enacted regulations regarding supply chain due diligence and that have already taken measures to prevent importing goods produced through forced labor. It also includes several trading partners, like Taiwan, who are committed to doing just that under recently signed Agreements on Reciprocal Trade (ARTs).

We encourage USTR and the U.S. government to work with Taiwan to implement the relevant provisions under the ART, and to communicate with Taiwan to address any additional issues under existing trade dialogues such as the Trade & Investment Framework Agreement (TIFA). The United States should give Taiwan the time necessary to follow through on its existing commitments to adjust its labor market structures, before determining that they have failed to impose and effectively enforce forced labor prohibitions.

2026.04.13 – US-Taiwan Business Council – Comment on USTR-2026-0133 (Forced Labor)