(Bloomberg) -- Taiwan’s de facto ambassador to the US said the lack of a double taxation treaty is “unfair” and discouraging investment from Taiwanese semiconductor firms, while adding she hopes recent trade talks lead to a deeper deal between the two governments. 

Hsiao Bi-khim criticized the lack of a deal between Taipei and Washington to prevent double taxation, saying Taiwanese firms, including world-beating chipmakers such as Taiwan Semiconductor Manufacturing Co., find it “very problematic” and an “obstacle in expanding their further investments” in the US. 

“Taiwan is the only top 10 trading partner of the United States that does not have a tax agreement that prevents double taxation,” Taiwan’s representative in Washington said at a breakfast event hosted by the Christian Science Monitor news organization on Tuesday. 

“As a result, Taiwanese companies, including many of them in the semiconductor industry that are investing here in the United States, are paying a lot more taxes than other foreign investors here in the United States. And this is unfair,” she said.

Her comments come as the US seeks to dramatically boost domestic production of advanced semiconductors used in everything from cars to defense equipment, including with the Chips and Science Act that was passed last year to incentivize investments.

Hsiao also praised a recent successful round of talks under the US-Taiwan Initiative on 21st Century Trade, and said she hoped the two sides could go further, including deals with additional trading partners. 

“Taiwan hopes that this agreement will lay the groundwork for a more comprehensive agreement in the future, demonstrating our commitment to high standards in trade and opening the door to agreements with other like-minded trading partners,” Hsiao said.

Noting the deal doesn’t include the “important aspect” of customs duties and tariffs, Hsiao said she believed the two sides would have to move to a second phase of negotiations, adding that “we will continue to see this in an organic and growing way.” 

Hsiao also criticized Taiwan’s exclusion from the Biden administration’s regional trade initiative, the Indo-Pacific Economic Framework, saying that Taiwan “certainly qualifies” from an economic standpoint and as a fully-fledged democracy.

“It was very disappointing that we were not included and we will continue to advocate on this matter and we will continue to seek opportunities to not only have a strong bilateral partnership, but also expand to have a presence in the region and beyond,” she said.

Security Concerns 

Hsiao — who represents Taiwan at a time when there’s growing US concern about China’s increased assertiveness toward the region Beijing claims as its own — said the island is taking lessons from Russia’s invasion of Ukraine, including the success of Stingers and Javelin missile systems, as well as the widespread use of drones.

“So our first and foremost priority is to take lessons that will help to fortify our continuing existence as a free and open democracy, free of coercion,” she said. “Our best hope is that Beijing also takes the lesson that aggression will not succeed, that there will be tremendous international pushback.”

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