By David Lawder
WASHINGTON (Reuters) -The&nbsp;U.S.&nbsp;and&nbsp;Taiwan&nbsp;reached agreement on the&nbsp;first&nbsp;part&nbsp;of their "21st Century"&nbsp;trade&nbsp;initiative, covering customs and border procedures, regulatory practices, and small business, the&nbsp;U.S.&nbsp;Trade&nbsp;Representative's office said on Thursday.
After the initial agreement of the&nbsp;U.S.-Taiwan&nbsp;Initiative on 21st Century&nbsp;Trade&nbsp;is signed, negotiations will commence on other, more complicated&nbsp;trade&nbsp;areas including agriculture, digital&nbsp;trade, labor and environmental standards, state-owned enterprises, and non-market policies and practices, USTR said.
U.S.&nbsp;Trade&nbsp;Representative Katherine Tai said in a statement that the&nbsp;deal&nbsp;strengthens&nbsp;U.S.-Taiwan&nbsp;relations and demonstrates they can work together to advance&nbsp;trade&nbsp;priorities for their populations.
"We look forward to continuing these negotiations and finalizing a robust and high-standard&nbsp;trade&nbsp;agreement that tackles 21st Century economic challenges," Tai said.
Taiwan's Office of&nbsp;Trade&nbsp;Negotiations in a statement called the agreement "historically significant" and said&nbsp;Taiwan&nbsp;aimed to finalize negotiations on all remaining issues&nbsp;by the end of the year.
The&nbsp;pact&nbsp;is not expected to alter goods tariffs, but proponents say it will strengthen economic bonds between the&nbsp;U.S.&nbsp;and&nbsp;Taiwan, open the Chinese-claimed island to more&nbsp;U.S.&nbsp;exports, and increase&nbsp;Taiwan's ability to resist economic coercion from China. Democratically governed&nbsp;Taiwan&nbsp;strongly rejects China's sovereignty claims.
China has reacted furiously to&nbsp;Taiwan&nbsp;President Tsai Ing-wen's recent engagements with high-ranking&nbsp;U.S.&nbsp;politicians, including an April meeting with&nbsp;U.S.&nbsp;House of Representatives Speaker Kevin McCarthy. Announcement of the&nbsp;trade&nbsp;pact&nbsp;comes just ahead of planned meetings between China's commerce minister, Wang Wenta, and USTR Tai and&nbsp;U.S.&nbsp;Commerce Secretary Gina Raimondo.
The bilateral talks commenced last August, after the Biden administration excluded&nbsp;Taiwan&nbsp;from its larger pan-Asian&nbsp;trade&nbsp;initiative, the Indo-Pacific Economic Framework.
USTR said the text on customs and&nbsp;trade&nbsp;facilitation will reduce red tape for&nbsp;U.S.&nbsp;firms to export products to&nbsp;Taiwan, allowing for electronic filing of customs forms and online payment of duties and fees, cutting waiting times for vessels.
The texts on good regulatory practices and services regulation seek to streamline operating licenses for firms seeking to operate across borders and promote fair competition opportunities, USTR said.
The&nbsp;trade&nbsp;agency added that anti-corruption texts are based on those in the&nbsp;U.S.-Mexico-Canada Agreement on&nbsp;trade&nbsp;and address money laundering, denial of entry for foreign public officials. The small- and medium-sized enterprises text aims to facilitate cross border investment and finance in the sector, USTR said.
(Reporting by David Lawder; additional reporting by Yimou Lee in Taipei; Editing by Richard Chang, David Gregorio and Leslie Adler)

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U.S., Taiwan reach deal on first part of '21st Century' trade pact