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Dealing with Taiwan

SWP Research Paper 2022/RP 09, 09.09.2022, 91 Pages

doi:10.18449/2022RP09

Research Areas
  • The de facto politically independent Taiwan is coming under increas­ing pressure from the People’s Republic of China (PRC) and its claim to reunification. In addition to militarily threatening gestures, Beijing is employing economic and political means as well as cyberattacks and disinformation campaigns. This threatens the stability and status quo in the Taiwan Strait.

  • Taiwan is of immense importance to East Asia’s geopolitical dynamics: geo-strategically as part of the first island chain that restricts the PRC’s access to the Pacific, and economically-technologically as a leading manufacturer of semiconductors. In the global systemic conflict between liberal-democratic and authoritarian political systems, Taiwan holds a prominent position as a consolidated, pluralistic democracy and political counter-model to the authoritarian system of the PRC.

  • It is in the interest of Germany and Europe that peace and stability in the Taiwan Strait are preserved, to make better use of Taiwan’s economic and technological potential and to extend value-based support for its free and democratic society.

  • Germany is committed to a one-China policy, which rules out any diplo­matic recognition of Taiwan. Nevertheless, there is scope to expand and intensify relations below this threshold and thus counter China’s policy of intimidating and isolating Taiwan.

  • The Taiwan policies of the United States, Japan, Singapore, South Korea, Australia, India as well as European partner countries show that there is room for pursuing closer relations with Taiwan while at the same time adhering to a one-China policy. Thus, options for action exist in foreign and security policy, trade and economic policy, as well as cultural policy.

Table of contents

1 Introduction: Taiwan’s Predicament

Hanns Günther Hilpert, Alexandra Sakaki and Gudrun Wacker

1.1 Changing parameters

1.2 Chinese calculus and the risk of military conflict

1.3 China’s attrition tactics

1.4 Taiwan’s resilience

1.5 The international community and the Taiwan question

2 Taiwan’s Foreign Policy: Walking a Constant Tightrope

Gudrun Wacker

2.1 Historical context

2.2 Taiwan’s foreign policy: institutions and actors

2.3 International representation and diplomatic recognition

2.4 Foreign policy: principles and priorities

2.5 Conclusion

3 Trade and Technology Partner Taiwan

Hanns Günther Hilpert

3.1 Taiwan in the global economy

3.2 New challenges for Taiwan’s economic policy

3.3 Strategic positioning in the semiconductor industry

3.4 Taiwan’s defensive foreign economic policy

3.4.1 Multilateral level

3.4.2 Unilateral level

3.4.3 Cross-Strait

3.4.4 Bilateral and regional level

3.5 Conclusion

4 U.S. Taiwan Policy: A Balancing Act under Difficult Conditions

Marco Overhaus

4.1 Political and social relations between the U.S. and Taiwan

4.2 Security and defence relations

4.3 U.S. economic interests vis-à-vis Taiwan

4.4 Social and scientific exchange

4.5 Conclusion

5 Japan-Taiwan Relations: More than Meets the Eye

Alexandra Sakaki

5.1 Reassessing Taiwan’s significance

5.2 Political relations

5.2.1 Quasi-diplomatic channels

5.2.2 Functional and Think Tank Dialogues

5.2.3 Parliamentary and Party Dialogue

5.3 Security policy relations

5.4 Economic relations

5.5 Culture and civil society

5.6 Conclusion

6 Much Diplomacy without Diplomatic Relations: Singapore’s Foreign Policy and Taiwan

Felix Heiduk

6.1 Introduction

6.2 Political relations

6.2.1 Dealing with pressure from Beijing

6.3 Security policy

6.4 Economy

6.5 Cultural and civil society relations

6.6 Conclusion

7 In the Shadow of the “1992 System” – Relations between South Korea and Taiwan

Eric J. Ballbach

7.1 Introduction

7.2 Political relations

7.2.1 Breakdown of diplomatic relations and separation of politics and business

7.2.2 Informal cooperation

7.3 Security policy relations

7.4 Economic relations

7.4.1 Trade and investment

7.4.2 Current status and challenges of economic cooperation

7.4.3 Development of further fields of cooperation

7.5 Educational and Cultural Relations and People-to-People Exchange

7.6 Conclusion

8 Australia and Taiwan: Finding Alignments amidst Great Power Competition

Mark Harrison

8.1 Australia, the Republic of China (ROC) and Japan

8.2 Australia’s One-China Policy

8.3 Australia’s turn to Asia

8.4 Economic relations

8.5 Relations in security and defence policy

8.6 Political relations in the context of national interests in the region

8.7 Cultural and civil society relations

8.8 Growing alignment

9 In China’s Shadow: Indo-Taiwan Relations

Christian Wagner

9.1 Political relations

9.2 Security policy

9.3 Economy

9.4 Cultural and civil society relations

9.5 Outlook

10 European-Taiwanese Relations (Selected Member States of the EU, and the U.K.)

Volker Stanzel

10.1 Background

10.2 Europe and Taiwan: the big picture

10.3 The European Union as Taiwan’s partner

10.3.1 Politics

10.3.2 Economy

10.3.3 Culture and science

10.4 Germany as Taiwan’s partner

10.4.1 Politics

10.4.2 Economy

10.4.3 Culture and science

10.5 France as Taiwan’s partner

10.5.1 Politics

10.5.2 Economy

10.5.3 Culture and science

10.6 Great Britain as Taiwan’s partner

10.6.1 Politics

10.6.2 Economy

10.6.3 Culture and science

10.7 Outlook

11 Conclusions and Recommendations

Hanns Günther Hilpert, Alexandra Sakaki and Gudrun Wacker

11.1 Commonalities

11.2 Differences

11.3 Distinctive features

11.4 German and European interests

11.5 Concrete proposals

11.5.1 Foreign and security policy

11.5.2 Trade and economic policy

11.5.3 Science and cultural policy

12 Addendum: The Ukraine War and Taiwan

13 Appendix

14 Abbreviations

15 The Authors

Introduction: Taiwan’s Predicament

Hanns Günther Hilpert, Alexandra Sakaki and Gudrun Wacker

Taiwan is a de facto independent country, but few states formally recognise it as such. Indeed, as of December 2021, only 14 states, all of which are relatively small, still did so. Taiwan has made a transition from authoritarian rule to a consolidated democracy over the past three decades. Since 2016, when the Democratic Progressive Party (DPP) won Taiwan’s presidential and parliamentary elections again, tensions have grown between the People’s Republic of China (PRC) and the Republic of China (ROC) on Taiwan. Beijing claims that the island is an “inseparable part” of Chinese territory. The Chinese leadership reacted to the 2016 election results by increasing political, economic and military pressure – even though Taiwan’s President Tsai Ing-wen had announced that she would strive for stability in the Taiwan Strait.

China’s military threats against Taiwan are causing international concern and alarm. Since March 2019, Beijing has dispatched Chinese Air Force aircraft to fly through Taiwan’s Air Defence Identification Zone (ADIZ) southwest of the island (see Map 1, p. 6). In 2021, the Taiwanese Ministry of Defence recorded around 950 such flights, a marked increase on the 380 cases in 2020.1 To date, no Chinese aircraft have penetrated Taiwan’s national airspace, which begins 12 nautical miles off its coast. Nevertheless, these flights are perceived as a provocation in Taiwan. The ADIZ is unilaterally declared by Taiwan in which air­craft are supposed to identify themselves to Taiwanese authorities. Similar zones have also been desig­nated by Taiwan’s neighbouring countries, including China.

Of concern to Taiwan is that since March 2020, Chinese aircraft have been flying into the ADIZ at night, sometimes making a sharp left turn towards the direction of Taiwan, which could indicate a pos­sible new attack vector in the event of a military conflict.2 Besides the air force, the Chinese Navy has also increased its presence around Taiwan. Moreover, the Taiwanese defence ministry has been irritated by China’s military erecting replicas of Taiwanese build­ings on several of its training grounds.3

Taiwan not only criticises Beijing’s military show of force, but also accuses the Chinese leadership of insti­gating cyberattacks against government agencies and other actors, as well as deliberately spreading misinformation to influence public opinion.4 More­over, China has also flexed its muscles in the eco­nomic sphere in recent years, for example by curbing the flow of Chinese tourists to Taiwan and imposing an import ban on Taiwanese pineapples.

The tensions in the Taiwan Strait have particularly alarmed the United States. Although Washington does not have a formal alliance with Taipei, the Tai­wan Relations Act of 1979 insists that the future of Taiwan be decided by peaceful means. In March 2021, the outgoing US Commander for the Indo-Pacific, Admiral Philip Davidson, warned that China might try to take Taiwan by force within the next six years. For his successor Admiral John Aquilino, too, a con­flict with China is “much closer to us than most think.”5 Taiwan’s President Tsai expressed a some­what more cautious assessment in January 2020, stating that the possibility of war simply could not be ruled out.6

Changing parameters

Map 1

Three particular developments have made stability in the Taiwan Strait seem much more precarious today than two decades ago. Firstly, the PRC under Xi Jin­ping’s leadership has gained considerable political, economic, technological and military power. Because the balance of power has shifted in China’s favour, the U.S. no longer enjoys the unchallenged status of being the superior military power in the region.7 With medium-range and anti-ship missiles, for exam­ple, China has significantly expanded its capabilities to deny access to the region or to restrict freedom of operation in it (anti-access/area denial or A2/AD). According to American media reports, Pentagon simu­lations of a Taiwan conflict also show that the U.S. now cannot be sure of its superiority.8

Secondly, the population of Taiwan is increasingly emphasising its own identity as distinct from main­land China. According to a regularly conducted sur­vey in Taiwan, the proportion of people who identify themselves as Taiwanese has trended upward, while fewer and fewer respondents claim both Taiwanese and Chinese identity.9 In a US survey in late 2019, 66% of respondents described themselves as Taiwanese, compared to 28% who considered themselves to be both Chinese and Taiwanese.10 In the same poll, an overwhelming majority (83%) of young people aged between 18 and 29 stated that they felt exclusively Taiwanese. Thus, the proportion of those favouring more political or other forms of dissociation from the PRC is increasing, a trend from which Beijing could conclude that the prospects for peaceful unification with Taiwan are dwindling.

Thirdly, the relationship between the U.S. and China can increasingly be characterised as a great power conflict in which both sides, driven by mutual mistrust, compete for power and status. Taiwan is of great importance in this geopolitical struggle for supremacy. It is strategically located as part of the first island chain (see Map 2, p. 8). Taiwan also plays a key role in the technology rivalry between the U.S. and China, as it is the world leader in semiconductor manufacturing. For the two great powers, Taiwan is also an object of the systemic conflict between liberal democracy and authoritarianism. Against this back­ground, Taiwan’s democratic system is undoubtedly a thorn in Beijing’s side, as it offers a counter-model to its own system. The U.S. and China therefore in­creasingly see Taiwan as a crucial building block in their competition for dominance and in their systemic competition.

Chinese calculus and the risk of military conflict

The growing presence of Chinese aircraft and ships in areas around Taiwan increases the risk of unintended incidents that could escalate militarily. However, as­sess­ments differ as to whether China might deliberately choose military action to bring Taiwan under its control. Officially, China favours peaceful unification, but does not rule out the use of military means in prin­ciple.11 A speech by President Xi Jinping in 2019 has been seen as an indication of the willingness to act militarily. Xi defined unification with Taiwan as a “core interest,” the realisation of which should not be passed on from generation to generation.12 At the same time, however, he repeatedly referred to China’s desire for peaceful unification. Some observers believe that in this speech, the 69-year-old Xi declared his will to realise unification under his leadership as a political legacy – because his successor will belong to a younger generation. A possible window for this would be Xi’s very likely third term in office from 2022 to 2027.

However, in recent speeches, Xi has not reiterated the need to avoid passing on the Taiwan issue to future generations. In his speech on the 100th anni­versary of the founding of the Communist Party in July 2021, for example, he described reunification as the Party’s “historic mission and unshakeable com­mit­ment” and again expressed the desire for a peace­ful process.13 He thus indicated that the Party’s legiti­macy also depends on whether it can resolve the Taiwan issue. When this could be expected to occur, however, cannot be deduced from Xi’s statements.

Moreover, there are a number of reasons why China may decide against using military means to force unification.14 For one, Xi has formulated an ambitious domestic agenda for his country for the next few years. A military confrontation would jeop­ardise these plans because China would not only have to reckon with punitive economic measures being imposed on it by the West, but also with a possible military intervention by the U.S. and its unforesee­able consequences. As long as Beijing hopes to achieve unification peacefully (“winning without fighting”), it is unlikely that the Chinese leadership will decide to annex Taiwan. However, a military conflict cannot be categorically ruled out, because Beijing could also conclude that success is guaranteed and that the price for such action would be acceptable. Further develop­ments in the Russia’s war against Ukraine could also influence China’s considerations. However, it is too early to predict what lessons China’s leadership and military will draw from the Russian invasion.

China’s attrition tactics

Map 2

For the time being, the PRC is trying to put pressure on Taiwan’s government and population and to wear them down through so-called grey zone activities. These include disinformation campaigns, cyber­attacks, military sabre-rattling and “exercises” in the immediate vicinity, as well as efforts to isolate Taiwan internationally. This is Beijing’s way of saying that it would not accept any formal independence of Tai­wan. Moreover, Beijing’s attrition tactics are also designed to make the island’s population realise that, given the balance of power, unification is inevitable and that resistance is therefore futile.

The frequent flights by Chinese aircraft through Taiwan’s ADIZ are a great burden on the Taiwanese military, as the latter must be on constant alert to respond to intercept. Through disinformation and other domestic political measures, China is trying to divide Taiwanese society as well as weaken their general confidence and trust in their government. Such activities, through which China influences the will and mind-set of the population, together amount to what Taiwan calls “cognitive warfare.”15 However, the Chinese leadership also provides economic and financial incentives for entrepreneurs, executives, engineers and students from Taiwan in order to bind them to the Chinese mainland. In this way, China wants to attract supporters from the Taiwanese econo­my16 and increase dependencies. At the same time, this approach also has the effect of undermining Taiwan’s industrial base by luring away talent.

Taiwan’s resilience

However, China’s threats and attempts at intimida­tion in recent years have rather tended to strengthen Taiwan’s resolve to defend its own democratic rights and freedoms. Taiwan’s resilience and stamina is rooted in the country’s non-negotiable democratic identity, which is based on liberal norms and values. Its democratic transition since the late 1980s has proved sustainable. From Taiwan’s perspective, there­fore, the successful status quo cannot be changed simply by decree.

Taiwan’s foreign relations are an essential part of the national effort to secure the island’s de facto in­dependence. Taipei’s political, economic and social ties with foreign actors enable the island to visibly demonstrate its independence and gain more inter­national recognition. Moreover, Taiwan seeks to pro­mote a positive reputation abroad by voluntarily complying with international treaties and norms, even though it cannot itself be a signatory state. Tai­wan’s economic performance, its capacity for tech­nological innovation and its embeddedness in the international division of labour are also fundamental to the preservation of its independence. Crucially, Taiwan’s companies occupy hubs and nodes in global supply chains, while its skills and manufacturing capacities have become indispensable to the global semiconductor industry.

The international community and the Taiwan question

In order to support Taiwan in its existence as a demo­cratic state and to reduce the risk of military action being taken by Beijing, it is important from an exter­nal perspective to strengthen relations with Taipei in all areas – economy, politics, society, science and culture. And even if a one-China policy is adhered to in principle, there is still room for manoeuvre. Doing so requires not only ingenuity and creativity, but also the political will to endure Beijing’s reactions – mainly consisting of economic pressure and punitive measures.

The vast majority of members of the international community, in establishing diplomatic relations with the PRC, have committed themselves in one form or another to a one-China policy. This rules out any diplomatic and formal recognition of Taiwan. How­ever, almost all of these countries maintain informal relations with the island and have quasi-embassies there. Moreover, a growing number of Western coun­tries, as well as Japan, Australia and New Zealand, are increasingly vocal in their support for maintaining peace and stability in the Taiwan Strait and reject any attempt to change the status quo unilaterally against the will of the other side.

The authors of this study systematically analyse and compare how countries that Germany and Europe consider important partners have shaped their relations with Taiwan over the years. They look at the U.S., Japan, Singapore, South Korea, Australia, India and Europe, with a focus on the EU as well as France, Germany and the United Kingdom.

The comparative country analyses are intended to reveal what leeway other countries utilise to strength­en relations with Taiwan, thus contributing to stability in the Taiwan Strait and counteracting China’s grow­ing superiority.

Taiwan’s Foreign Policy: Walking a Constant Tightrope

Gudrun Wacker

The politics of Taiwan (officially the Republic of China, in short: ROC) are determined primarily by three factors. The first factor is the People’s Republic of China (PRC). Although Taiwan is, de facto, a coun­try with its own foreign policy and armed forces, its foreign relations are significantly influenced by the PRC. The latter claims to be the only legitimate gov­ernment of China in its entirety and regards Taiwan as an inseparable part of it. Pertinently, the declared goal of the Chinese leadership in this regard is “reunification” with Taiwan. The second factor is Tai­wan’s domestic politics. Put simply, both the polarisa­tion of the two dominant political parties and the disputed identity of the island play a role here. While the Kuomintang (KMT), known as the “mainland party,” stands more for the island having a Chinese identity, the Democratic Progressive Party (DPP), known as the “independence party,” proclaims a spe­cifically Taiwanese identity. The third factor is the United States and its role as Taiwan’s main security guarantor. Washington is neither interested in an escalation of the conflict between the two sides nor in excessive rapprochement between them.1

Historical context

The Republic of China (ROC) was a founding member of the United Nations (UN) in 1945 and also had a permanent seat on the UN Security Council. After the ruling nationalist KMT was defeated by the com­mu­nists in the civil war on the Chinese mainland in 1949, the government withdrew its remaining troops to the island of Taiwan and from there represented the ROC’s claims to the entire Chinese territory.2 It also continued to represent China in the UN and the Security Council. The island itself had been annexed by the Chinese Empire in 1683 as part of the coastal province of Fujian. When Japan won the 1894–95 war against China, Taiwan became a Japanese colony under the Treaty of Shimonoseki in 1895 and re­mained so until 1945. After the end of World War II in the Pacific, Taiwan was returned along with some smaller offshore islands such as Jinmen (Kinmen) and Matsu (both occupied by Japan) as well as Penghu to the ROC, which was ruled by the KMT at the time (see Map 1, p. 6). After retreating to the island in 1949, the KMT took sole rule and established a mili­tary dictatorship. Martial law was in force until 1987.

With the visits of U.S. Secretary of State Henry Kissinger in 1971 and U.S. President Richard Nixon in 1972 to the PRC, and the eventual establishment of diplomatic relations (which did not actually material­ise until 1979) between Beijing and Washington ini­tiated by these visits, the diplomatic status of the ROC in the international community changed permanently. In 1971, the PRC became a member of the UN in ac­cord­ance with UN General Assembly Resolution 2758 and, as China’s sole representative, it also took over the ROC’s seat on the Security Council.3 The ROC/Tai­wan was also excluded from all UN sub-organisations. At that time, many Western countries came to recog­nise the PRC diplomatically and followed – in differ­ent variants – a one-China policy, as the United States had also acknowledged in the 1972 Shanghai Communiqué. According to this, the Chinese on both sides of the Taiwan Strait took the position that there was only one China, and that Taiwan was part of it.4

In some regional organisations, Taiwan had to accept another name instead of “ROC” in order to con­tinue to be represented. When the Asian Devel­opment Bank (ADB) was founded in 1966, the ROC initially represented all of China, and was able to remain a member of the bank under the name “Tai­pei, China” after the PRC joined in 1986. In 1991, Taiwan became a member of the Asia-Pacific Eco­nomic Cooperation (APEC) under the name “Chinese Taipei.”5 APEC had been founded two years prior, and Taiwan acceded at the same time as the PRC and Hong Kong (the latter then still a British colony).6 However, the ROC/Taiwan never gained access to any of the other official regional formats such as the ASEAN Regional Forum (ARF, founded in 1994). At best, the island is represented in associated informal (Track 2) forums.

Although the ROC was also a founding member of the International Monetary Fund (IMF) in 1945 under the name “China,” it lost its seat to the PRC in 1980.7 The same happened with respect to the ROC’s mem­ber­ship in the World Bank. The only exception has been the World Trade Organisation (WTO), which the island joined shortly after the PRC on 1 January 2002, as the “Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei).”8

Taiwan’s foreign policy: institutions and actors

In organisational terms, the foreign policy of the ROC/Taiwan largely corresponds to that of other states with a presidential system. The president sets the gen­eral direction and priorities, while foreign representa­tion is the responsibility of the Ministry of Foreign Affairs. This also applies to the quasi-representations maintained by the country in 60 of the world’s states (including most EU member states) that do not have official relations with Taiwan.9 These unofficial em­bassies operate under the name of either “Economic and Cultural Office” or “Taipei Representative Office.” Specialised ministries of the ROC, such as for the econo­my, culture or other sectors, also play a foreign policy role.

Two dedicated institutions were created to plan and coordinate relations between the two sides of the Taiwan Strait. In Taiwan, there is the Mainland Affairs Council (MAC)10 while its counterpart in the PRC is the Taiwan Affairs Office (TAO), both of which have the status of ministries.

Two institutions were created specifically to coordinate relations between Beijing and Taipei.

In Taiwan, the Inter-Agency Mainland Affairs Com­mittee was first created in 1988, when the PRC first allowed Taiwanese to visit their relatives on the main­land. The Committee was finally formalised as an independent government institution (the MAC) in 1991. It is responsible not only for the PRC, but also for Hong Kong and Macao, as well as Inner Mongolia and Tibet. According to its constitution, the ROC also continues to formally lay claim to all of China in the tradition of pre-war China. While there were direct meetings held between the heads of the MAC and the TAO during the second term of then Taiwanese President Ma Ying-jeou (2012–2016), the official line remains that the PRC and Taiwan do not negotiate with each other. Therefore, direct contacts and nego­tiations between the two sides are usually the respon­sibility of representatives of two other unofficial organisations established for this purpose. On the Taiwanese side, this is the Straits Exchange Foundation (SEF) and on the mainland it is the Association for Relations Across the Taiwan Straits (ARATS).

It is not actually the task of the ROC’s foreign ministry to conduct and oversee relations with the mainland. Nevertheless, it keeps a close eye on Beijing’s attempts to limit Taiwan’s international presence. Since 2009, the ministry has published an ongoing list of cases in which it sees Taiwan’s sover­eignty as being violated by other states or international organisations and associations – mostly as a result of pressure from the PRC.11

Development cooperation is also part of the remit of the ROC’s Ministry of Foreign Affairs. In 2009, it published its first white paper on Taiwan’s development aid,12 and reports on international cooperation and development are now released by the ministry at irregular intervals.13 Development projects are mainly implemented by the International Cooperation and Development Fund (TaiwanICDF or the ICDF),14 on behalf of the Ministry of Foreign Affairs, and they extend not only to Taiwan’s diplomatic partners, all of which are developing countries (with the one excep­tion of the Holy See), but also to other countries. The focus here is on topics in the fields of the envi­ron­ment, agriculture, health, education, as well as information and communication technology. The ICDF also cooperates with international organisations and non-governmental organisations (NGOs).

Because Taiwan is diplomatically recognised by only a few states and has been excluded from almost all international organisations, NGOs play an impor­tant complementary role in the country’s foreign policy and many of them are financially supported by the ROC government. They often represent Taiwan’s only opportunity to participate in international events, such as the Conference of Parties (COP) of the UN Frame­work Convention on Climate Change (UNFCCC). As early as 2000, the Ministry of Foreign Affairs set up a separate commission for these activities, which has been operating as the Department for NGO Inter­national Affairs since 2012.15

International representation and diplomatic recognition

The number of states maintaining diplomatic rela­tions with the ROC has shrunk dramatically over the decades. From 2000 to 2008, the elected president of Taiwan was a member of the DPP, which advocates for Taiwan’s independence according to the party’s statute. During these years, the PRC actively tried to motivate Taiwan’s diplomatic allies to switch their official recognition in favour of Beijing. In this period of “chequebook diplomacy,” both sides used devel­opment aid as an instrument to gain or maintain diplo­matic recognition. The PRC also engaged more sys­tematically in blocking Taiwan’s access to inter­national organisations, and it accused President Chen Shui-bian of unilaterally and incrementally changing Taiwan’s status by dissolving the National Unification Council, introducing new passports, renaming public buildings and taking other steps towards “Taiwanisation.”16 Between 1993 and 2006, the ROC tried every year to improve its status at the UN, either directly or through its remaining diplomatic partners, but the issue never even made it onto the agenda. In 2007, still under Chen Shui-bian’s presidency, his government requested the country to be admitted as a full member of the UN under the name “Taiwan.” The UN Secretary-General at the time, Ban Ki-moon, categori­cally rejected this attempt.17 On the day of the fol­low­ing year’s presidential election, the Taiwanese people were also to decide by referendum on Taiwan’s rep­resentation in the UN. The two rival parties, the DPP and the KMT, each formulated their own questions and put them to a vote. However, both referendums failed to reach the necessary quorum.

When the KMT won both the parliamentary and presidential elections in 2008, a period of rapproche­ment between the adversaries on both sides of the Taiwan Strait began. The new Taiwanese president Ma Ying-jeou called for a “diplomatic truce” in 2010, and although Beijing never officially responded to this proposal, Taiwan did not lose any of its remaining 23 diplomatic allies for the next eight years.18 Taiwan also refrained from making direct attempts to be recog­nised by the UN and instead focused on demand­ing “meaningful participation” in specialised UN agen­cies. This approach was at least partially success­ful. Starting in 2009, the PRC allowed Taipei to par­ticipate as an observer in the World Health Assembly (WHA) for several years. Since 2013, Taiwanese repre­sentatives have also been allowed by Beijing to parti­cipate in the International Civil Aviation Organization (ICAO) Assembly, which comes together every three years. However, a separate invitation had to be issued for each of these events.19 Other international organisations in which Taiwan still seeks at least observer status but has so far been unsuccessful include Interpol and the UNFCCC.

Since 2016, Beijing’s attitude towards Taipei has hardened and the island is losing allies.

However, since Tsai Ing-wen’s victory in the presidential election and the DPP’s return to power in 2016, the PRC has toughened its approach to Taiwan considerably. Despite strong international support for Taiwan’s functional participation in international organisations that do not require statehood, Beijing has again been consistently blocking any move in this direction.20 Since 2017, Taipei has not been invited to the WHA or the ICAO. Even the outbreak of the COVID-19 pandemic did not change Beijing’s uncom­promising stance. Taiwan was denied access to the WHO or the WHA, as Beijing feared that any con­cession on international cooperation could be inter­preted as recognition of Taiwan’s statehood.

Taiwan’s diplomatic allies have diminished in number since Tsai Ing-wen took office. In July 2021, Taiwan had official relations with only 15 states, mostly in Central America and the South Pacific.21 In Europe, its only remaining ally in this regard is the Holy See, which is therefore of particular importance.

Maintaining diplomatic relations with at least some states is not only important for Taiwan’s self-esteem and dignity. These relations also provide oppor­tunities for participation, albeit limited, in international affairs, as well as for state visits and travel by senior politicians who are barred from visiting other states.22 Such official trips have also typically been used for stopovers (to “refuel”) and unofficial meetings, especially in the U.S.23 Moreover, in the past Taiwan stood a better chance of being invited to international meetings if they were hosted in one of the states with which it had diplomatic relations.

Foreign policy: principles and priorities

Since the beginning of its democratisation process in the 1980s, Taiwan has gone through various phases in its foreign policy, each of which has been strongly influenced by whoever held the presidency at the given time. Lee Teng-hui (KMT), the first democratically-elected president of the ROC,24 pursued a flexible foreign policy with the primary aim of improving the ROC’s international standing, even if this required making some concessions in terms of its name. His successor Chen Shui-bian (DPP, 2000–2008) pursued a zero-sum diplomacy – also as a reaction to Beijing’s mistrust and refusal to talk –, which not only his political opponents at home, but also Western observ­ers dubbed “scorched earth diplomacy.” Thus, this also put considerable strain on Taiwan’s relations with the United States, as Washington saw Chen’s policy as unnecessarily provoking the PRC.

The KMT’s Ma Ying-jeou (president from 2008 to 2016) then returned to the pragmatic and flexible stance that had prevailed during Lee’s reign, referred to as “viable diplomacy.”25 The emphasis of this was on consolidating the remaining diplomatic relations based on a “diplomatic truce,” improving relations with other states (especially with the United States and Japan), enabling Taiwan’s functional participation in international organisations (including through NGOs), revitalising Taiwan’s economy using bilateral and regional free trade agreements (FTAs) such as the Regional Comprehensive Economic Partnership (RCEP) and the Trans-Pacific Partnership (TPP) and, finally, deploying cultural diplomacy as an expression of Taiwanese soft power.26 After the turbulent period under Chen Shui-bian, this pragmatic approach was able to bring back to normal and stabilise relations with the United States in particular. As far as inter­national leeway was concerned, the results were mixed, as explained above: the few successes achieved re­mained dependent on the goodwill of the PRC, because Beijing did not want to set any precedents that would have endured beyond another change of government in Taipei.

President Tsai Ing-wen, who has been in office since 2016, continued the direction and principles of the previous government, but set her own priorities. In contrast to Ma Ying-jeou’s government, the suc­ceed­ing DPP government could not count on an accom­modating attitude from Beijing, although Tsai expressed commitment to stability in the Taiwan Strait. She at least managed to convince Washington that there would be no surprises to fear from her, as had been the case under Chen Shui-bian.27

A central feature of foreign policy under Tsai, which also played a role under Ma, is that Taiwan consciously and voluntarily adheres to internationally agreed stand­ards and complies with international treaties, even if it has no prospect of formally signing these agreements. Taiwan acts as if it were a member of the main international organisations and tries to contrib­ute to achieving or implementing their goals.28 In this way, Taiwan presents itself as a responsible actor in the international community and as an ex­emplary democracy. This approach applies to the observance of human rights, the fight against climate change and the achievement of the UN’s Sustainable Development Goals (SDGs).29 In terms of development co­opera­tion, Taiwan follows OECD standards.30 Under the Tsai government, Taiwan has consciously used its “warm power” to counter the diplomatic instruments of the PRC. Meanwhile, Beijing’s arsenal has come to be called “sharp power” by some Western analysts because the Chinese leadership exerts economic pres­sure, uses systematic disinformation and aggressive “wolf-warrior” diplomacy, among other methods.31

Taiwan’s “as if” behaviour plays out in an interesting manner in the disputes in the East and South China Seas. Taiwan’s maritime claims are historically congruent with those of the PRC32 and it has upheld them, including under Tsai Ing-wen’s presidency. How­ever, Taiwan’s government refers to principles of the UN Convention on the Law of the Sea and advo­cates guaranteeing freedom of navigation and over­flight rights.33 Taiwan was also prepared to participate in the negotiations in The Hague on the South China Sea, but was denied the opportunity to do so. For this reason alone, Taiwan rejected the Permanent Court of Arbitration’s ruling.34

Under Tsai’s government, Taiwan re-launched a cam­paign in 2017 to upgrade its status at the UN35 based on three demands: improved access of Taiwan­ese people to the UN system; an end to discrimination against Taiwanese citizens when entering UN build­ings36; and, finally, the inclusion of Taiwan in meet­ings, mechanisms and activities in the SDG context. In substance, this campaign represents nothing new, and it is no surprise that so far it has been as fruitless as similar previous attempts.

With its “New Southbound Policy,” Taiwan wants to reduce its dependence on the PRC.

One initiative that Taiwan revived under a new name after Tsai Ing-wen took office in 2016 is the “New Southbound Policy” (NSP) – such a “Go South” policy had also existed under Presidents Lee and Chen.37 The NSP is designed to intensify relations with the countries of South and Southeast Asia, as well as with Australia and New Zealand, and thus reduce the one-sided economic dependence on the PRC. Originally, the focus was on the 10 ASEAN states and India. With the expansion of its geographical scope, Taiwan is establishing an explicit link between the NSP and the Indo-Pacific concepts of the United States, Japan and other states, and subscribes to the strategy of a “free and open Indo-Pacific.”38 The NSP comprises the following four dimensions: economic and trade collaboration; talent exchange; resource sharing; and regional connectivity. During Ma’s presi­dency, the focus had been on rapprochement with the PRC – 23 bilateral agreements had been nego­tiated during the two terms of Ma’s KMT govern­ment. Taiwan’s economic integration with the main­land had increased during that period, and so had its dependence on the PRC. The NSP, on the other hand, focuses on diversification.

Conclusion

The official and informal room for manoeuvre in Taiwan’s foreign policy remains massively restricted by the PRC: even during the phase of rapprochement between the two sides during Ma Ying-jeou’s two terms in office, Beijing was careful not to set a prec­edent from which Taiwan’s right to permanent par­tici­pation in international organisations – even if only as an observer – could later be derived. Admis­sion to international organisations or regional FTAs such as the RCEP or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will be next to impossible for Taiwan to push through against Beijing’s resistance. This has not been changed by the fact that support from other countries has become louder and more coherent, as expressed in the Summit Communiqué of the G7 countries in 2021. Beijing has expanded and sharpened the tools with which it exerts pressure not only on Taiwan itself, but also on international organisations, other states and companies.

In order not to lose the domestic support of its own electorate, any government in Taiwan, whether led by the KMT or the DPP, must strike a balance between rap­prochement with mainland China on the one hand and the defence of Taiwan’s sovereignty and dignity on the other. Taiwan’s foreign policy must, if pos­sible, avoid steps that could be perceived by the PRC or the United States as unilaterally challenging the status quo, which is in any case constantly changing. Finally, Taipei must be careful not to allow itself to be instrumentalised by third parties, for example in the disputes in the South China Sea.

Below the threshold of formal diplomatic relations, Taiwan is trying to systematically and wisely use any available room for manoeuvre. However, the country remains dependent on the extent to which its respec­tive partners are prepared to allow and support this. Cru­cially, Taiwan has a lot to offer including eco­nomic strengths, such as in the production of semi­conductors, internationally compliant behaviour, normative, cultural and social soft power, as well as ample experience in dealing with China’s foreign policy instruments, especially cyberattacks, disinfor­ma­tion, military threats, and both economic pres­sures and incentives. All of this makes Taiwan an attractive partner even for those who are not diplo­matically connected to it.

Trade and Technology Partner Taiwan

Hanns Günther Hilpert

For Taiwan, whose national existence is politically contested by its overpowering neighbour China, state survival depends on its own economic and technologi­cal strength at least as much as on its diplomacy and foreign policy. Economically and technologically, Taiwan is under constant pressure to be a leader, to keep its dependence on China as low as possible and to remain attractive to third parties. From an external perspective, the question arises as to how Taiwan deals with this pressure situation and how and where meaningful economic and technological cooperation is possible.

Taiwan in the global economy

Despite its relatively small population (23.6 million) and the country’s diplomatic fringe position, Tai­wan’s global economic weight should not be under­estimated. With a gross domestic product (GDP) of US$668.5 billion, Taiwan ranked 21st among the world’s economies in 2020 and was the sixth largest in Asia after China, Japan, India, Korea and Indo­nesia. With a per capita income of US$28,306 (2020), Taiwan is the fourth wealthiest country in Asia, after Singapore, Japan and Korea.1

Even by Asian standards, Taiwan’s economy is extremely stable macroeconomically. As in the Asian crisis (1997/98) and the global financial market crisis (2008/09), Taiwan proved to be extraordinarily crisis-resistant in the 2020 pandemic crisis. Although Tai­wan was geographically not far from the source of infection, China, it was able to avoid major outbreaks of infection for a long time2 and also benefited from the rising global demand for electronic components and office and consumer electronics. Taiwan showed an estimated real GDP growth of 3.1% in 2020. This was the first time since China’s Tiananmen crisis year of 1989 that its economic output grew faster than that of the People’s Republic. Meanwhile, the un­employment rate remained at 3.9% in 2020, with inflation unchanged at 0%. The public budget deficit and public debt rose to 4.7% and 35.6%, respectively. At the same time, with a current account surplus of 9.6% of GDP, foreign exchange reserves increased to a record US$541 billion, making Taiwan the world’s sixth-largest foreign exchange reserve holder after China, Japan, Switzerland, Russia and India.3

An exceptionally high share of Taiwan’s value added, namely 36%, is accounted for by the manufacturing sector.4 As an industrial manufacturing loca­tion, Taiwan is very broadly positioned in terms of industrial sectors and has a medium-sized economic structure. A few large companies such as Foxconn, Pegatron, Taiwan Semiconductor Manufacturing Com­pany (TSMC), MediaTec and Formosa Petrochemical stand in contrast to numerous small and medium-sized enterprises, which give the Taiwanese economy its recognised high dynamism and flexibility. While the industrial focus is on electronics, information and communications, Taiwan also has considerable capac­ity in traditional industrial sectors. These include machinery and vehicle manufacturing, chemicals, plas­tics, steel, pharmaceuticals, textiles, apparel and food processing.

Figure 1

Taiwan’s particular competitive strengths lie in con­tract manufacturing for multinational industrial groups. Taiwanese companies are attractive as con­tractors not only because of their cost advantages, not least due to the fact that production is often relocated to the mainland and abroad, but also because of their ability to adapt manufacturing processes quickly and flexibly to customer wishes, market requirements and technological change. Taiwan’s industrial breadth, cooperative economic environment and international networking are an advantage here.

Through production and supply chains, Taiwan is deeply embedded in the regional division of labour of “Factory Asia”. In relation to domestic value added, the share of exports and imports in 2020 amounted to 94.4% in value terms, and the share of foreign direct investment (stocks) to 52%.5 Even though this entails political dependencies and vulnerabilities for Taiwan, China is by far the most important trading partner (exports 24.6%, imports 20.3%) and investment loca­tion (55%) for the country (see Figures 1 and 2). This may seem paradoxical in view of the political an­tago­nisms, but it is not surprising given the economic complementarity and geographical-cultural proximity of the two economies. The relocation of labour- and resource-intensive manufacturing processes to main­land China has been a bottom-up entrepreneurial process throughout. The immediate cost savings and, above all, the prospect of enormous profits in the course of expanding mainland production proved to be irresistible investment incentives.

Although direct shipping and air connections were still prohibited until 2008 and the government in Taipei constantly tried to steer Taiwanese foreign investment to Southeast Asia with subsidies, Taiwan’s businesses invested primarily on the mainland. At the end of 2020, Taiwan’s mainland investment amounted to US$192.4 billion, representing 55% of its total foreign investment. However, Taiwan’s current in­vest­ment in China has been declining since 2015, both in absolute terms and relatively when compared to its other outward investments.6 A similar trend can be seen in Taiwan’s foreign trade. To be sure, the country’s trade with China has continued to grow in absolute terms over the past decade. But China’s share in Taiwan’s exports has stagnated below 30% since 2010 and in imports at around 20% of the total value since 2015.

The flip side of the economic inter­connectedness with the mainland is the island’s greater political dependence on the People’s Republic.

Figure 2

The downside of the profitable economic inte­gration with the mainland is the island’s increased political dependence on the People’s Republic and greater vulnerability to it. Although a diversification trend started around 2015, the volume of Taiwan’s foreign trade with the U.S. (export 11.7%, import 12.7%), Japan (export 6.6%, import 16%), the Asso­ciation of Southeast Asian Nations (ASEAN) (export 17.6%, import 12.6%) and the European Union (EU) (export 12.7%, import 10.8%) still remains significantly lower than cross-strait trade (see Figures 1 and 2).

As an investor in Taiwan’s economy, the People’s Republic of China (PRC) continues to play a minor role due to Taiwanese restrictions. Among foreign investors, the EU (25.7%), the U.S. (13.1%) and Japan (12.4%) dominate (see Figure 2).

New challenges for Taiwan’s economic policy

The state has always played a leading role in Taiwan’s development into an advanced industrial country. Thus, in the post-war years, the state and state-owned enterprises initially dominated production and for­eign trade. But as early as the 1960s, the direction shifted to a market-based, outward-oriented industrial policy with a focus on rule-based sectoral innovation and investment promotion. Its most important instru­ments were and are the broad promotion of domestic STEM faculties and courses of study, the establishment of state research projects in prospective indus­trial sectors, the establishment and operation of well-functioning industrial and technology parks, and the active recruitment of direct investment and Chinese-born engineers from abroad. Sometimes the state itself acted as an entrepreneur, for example when the medium-sized domestic industry did not engage itself due to a lack of capital or insufficient willingness to conduct research and to take risks7 For example, in microelectronics and aircraft construction, economically successful companies have emerged from the spin-off of former state research institutions.8

Despite all the development successes in industry and the economy, Taiwan faces structural problems and challenges. According to President Tsai Ing-wen, Taiwan’s development is limited by the five shortages of land, water, energy, labour and talent. After the turn of the millennium, not only did the wage-inten­sive textile, garment and metal processing companies turn their backs on Taiwan, but also many high value-added businesses. For example, around 80% of Taiwanese companies’ production in the field of information and communication technologies (ICT) now takes place on the Chinese mainland.9 In the Pearl River Delta and the Greater Shanghai Area, research and production ecosystems have emerged that are equal, if not superior, to those in Taiwan. In addition to cost advantages, direct presence in the Chinese market and massive industrial policy sup­port from various Chinese bodies, the innovative and dynamic industrial environment now also speaks in favour of the mainland.

Taiwan’s economy has managed to maintain its unusually high industrial share of domestic value added through cost adjustments, productivity im­prove­ments and operational flexibility. However, only rudimentary efforts have been made to develop new industries.10 The hesitant industrial structural change also has problematic macroeconomic consequences. In the first two decades of the 21st century, wages stagnated and gross fixed capital formation was sub­dued. As a result, overall economic growth remained weak, unlike in South Korea, for example. Meanwhile, the gap in the distribution of income and wealth widened.

Strategic positioning in the semiconductor industry

One area in which Taiwan is excelling in global com­petition is microelectronics. Taiwan holds a key posi­tion in the production of semiconductors, the basic material and technological driver of the digital age. In 2020, Taiwanese companies accounted for 20.1% of global sales in chip design, 77.3% in chip manu­facturing, and 57.7% in chip packaging and testing. Taiwan­ese companies are among the global market leaders, including MediaTec in chip design, TSMC and United Microelectronics Corporation (UMC) in chip manufacturing, Globalwafers in wafer manu­facturing (the silicon substrate used in chip production) and Advanced Semiconductor Engineering (ASE) in chip packaging and testing.11 Electronic components are by far the country’s most important export product (see Figure 3) and China, the ASEAN coun­tries, Japan and Korea are their biggest buyers.

The success of Taiwan’s semiconductor industry is based on a number of factors. They include the gen­erally good local conditions for industrial production in the country, the long-lasting brain drain of Chi­nese-born engineers trained in the U.S. from Silicon Valley, the demand pull of Taiwanese and Chinese semiconductor consuming industries, as well as long-term planning and intensive industrial policy sup­port.12

TSMC’s industry dominance is impressive. As a contract manufacturer for semiconductor companies without their own manufacturing facilities (”fabless”), the company introduced specialisation in chip manu­facturing as an entrepreneurial innovation at the end of the 1980s. In the meantime, this business model of contract manufacturing (“foundry”) has largely pre­vailed over integrated semiconductor production. In 2020, TSMC held 55% of the global market in chip contract manufacturing and became the 11th largest company in the world by market capitalisation. TSMC is also an innovation leader, as it was the first to start commercial semiconductor production with a struc­ture width of 5 nanometres.13 The company currently intends to expand its technological lead. To this end, it plans to invest a massive US$100 billion by 2024 to build up semiconductor production with structure widths of 3 and 2 nanometres. Together with the Mas­sachusetts Institute of Technology (MIT), 1-nanometre technology is to be developed.14

The Taiwanese corporation TSMC is almost unrivalled in the global semiconductor industry.

Figure 3

By virtue of its market power and technology lead­ership in the field of high-performance processors, TSMC’s position in the global semiconductor industry is unique. In effect, it faces only limited competition in the newer product generations. The immense invest­ment required for research, development and production set-up is an effective barrier to market entry. As a first mover and temporary monopolist in the early product life cycles of semiconductors, TSMC can impose high sales prices and skim off lucrative pioneer rents. The indispensability of the latest gen­eration of semiconductors in applications such as artificial intelligence, high-speed computing, cloud servers, 5G communication systems, autonomous driv­ing or military drones gives TSMC’s corporate policy a geopolitical dimension, so to speak. The quasi-monopoly existence of technologically leading semiconductor production facilities in Taiwan is not only of strategic importance for global industrial value chains, but also for foreign and security policy. An act of war by China directed against Taiwan would endanger the supply of the mainland with this par­ticu­larly critical input. Metaphorically speaking, Tai­wan has a “silicon shield”.15

From a Taiwanese perspective, it is favourable that TSMC’s commercial interest and Taiwan’s foreign policy interest are currently quite congruent in the effort to defend the island’s central position as a globally leading location for semiconductor production and thus to underline Taiwan’s strategic value as part of the United States’ technological sphere of influence. It is crucial that TSMC maintains its com­petitive advantage with its own pilot production of the latest chip generations in Taiwan. Once manu­facturing facilities are established in foreign markets such as the U.S., Japan and possibly Europe, TSMC could even expand its world-leading market position.

Although TSMC has to perform a certain balancing act between Beijing and Washington, the company is clearly positioning itself on the United States’ side. Certainly, TSMC is pursuing commercial interests in the People’s Republic, by far the most important sales market for semiconductors of all: more than 50% of the world’s annual semiconductor production is con­sumed for industrial processing in China.16 TSMC has announced plans to expand and modernise its older-generation manufacturing facility in Nanjing. More important for TSMC, however, remains its connection to the U.S. The company generates two-thirds of its sales with U.S. companies, is highly dependent on industrial supplies from the U.S. (as well as Japan, Korea and Europe), and works closely with U.S. research institutions in research and development. It was therefore inevitable for TSMC to comply with the export control measures imposed by the Trump administration in May 2020 and to stop supplying semiconductors to the Chinese telecommunications company Huawei, at the time the company’s second most important customer after Apple. TSMC also pledged to invest US$12 billion to build a 5-nano­metre production facility in Arizona. However, since production costs in the U.S. are about 20% higher than in Taiwan, TSMC was able to negotiate compensatory subsidies with the United States.17

TSMC’s problems and concerns with China are simi­lar to those of the U.S. The company has to repeatedly defend itself against Chinese patent in­fringe­ments and industrial espionage and is exposed to the constant poaching of its engineers. Meanwhile, China’s industrial policy aims to develop a globally leading semiconductor industry across the entire value chain and to cover the domestic market from domestic production in the medium term. To this end, Chinese companies receive exorbitant subsidies for research, development and production.18 In con­trast, Taiwan’s government is trying to prevent the migration of industrial competencies to China by imposing investment restrictions and, more recently, recruitment bans.19 From a Taiwanese perspective, it must seem helpful that in December 2020 the U.S. government also imposed export control measures on the Chinese company Semiconductor Manufacturing International Corporation (SMIC), TSMC’s most im­portant Chinese competitor.20 Without importing the plant, equipment and materials required for tech­no­logically advanced semiconductor production, SMIC will only be able to manufacture the less lucrative older-generation semiconductors for the time being.21 In this respect, Taiwan’s semiconductor industry benefits from the United States’ confrontational trade policy towards China.

Taiwan’s defensive foreign economic policy

Taiwan’s deep integration into the international division of labour, the prominent role of Taiwanese companies in regional value chains, and the island’s openness to imports and direct investments clearly illustrate how necessary and important a foreign economic and trade policy that is suitable for the island is. In view of Taiwan’s sovereignty, which is contested by Beijing, the trade policy orientation is inevitably defensive. The focus is not on expanding export opportunities and thus increasing income, employment and growth. Rather, in the course of the globally increasing number of trade policy agree­ments, the aim is to avoid or at least limit discrimination, because the liberalisations agreed in bilateral and regional free trade agreements (FTA) do not apply to third countries. Countries like Taiwan, which are not party to the agreements, are excluded from the benefits and are not allowed to participate in the further development of trade rules. Taiwan’s com­panies and the production and supply chains they manage must, however, remain able to connect when new standards are set elsewhere, such as for customs clearance, rules of origin, investment and sustain­ability. Goods and services “Made in Taiwan” must maintain their price competitiveness if they are not sub­ject to tariff liberalisation agreed elsewhere.

In this sense, the general policy requirement for Taiwan’s foreign economic policy to work towards diversification of its own sales and investment mar­kets is also to be understood as defensive. There is great concern that Taiwan’s resistance to China’s annexation efforts could be broken if its economic dependence on the mainland and thus its political vulnerability vis-à-vis the People’s Republic become overwhelming.

Beyond the economic motives, Taiwan’s trade policy inevitably also has a political component. Every trade policy agreement with a third country, and every membership of Taiwan in multilateral organisations symbolises the country’s state sovereignty and thus has a foreign policy value in itself. Nevertheless, the institutional responsibility for trade policy lies with the Ministry of Economic Affairs.

Against the backdrop of these extreme conditions, Taiwan’s trade policy pursues ambitious goals at the multilateral, unilateral and bilateral levels.

Multilateral level

Under the name Customs Territory of Taiwan, Penghu, Kinmen and Matsu, Taiwan joined the World Trade Organization (WTO) on 1 January 2002, exactly one month later than the PRC. Since then, it has been an independent WTO member with all associated rights and obligations. Most importantly, Taiwan enjoys reciprocal, i.e. mutually beneficial, most-favoured-nation (MFN) market access in the WTO world and in return is bound by the commitments made in import liberalisation and tariff setting. As a WTO member, Taiwan actively participated in the Doha World Trade Round, which later failed, and has acceded to several plurilateral WTO agreements, most notably the Agree­ment on Government Procurement (2009) and the Information Technology Agreement (1996/2015).22 Taiwan also does not shy away from using the WTO dispute settlement mechanism when it feels it has been unfairly disadvantaged by import protection. In fact, the seven cases brought by Taiwan against the EU, India, Indonesia, Canada and the U.S. all ended successfully, insofar as they have been concluded to date. On the other hand, no dispute settlement pro­ceedings have yet been initiated against Taiwan, which can be seen as evidence of the island’s open trade policy that conforms to the rule of law. By participating as a third country in 129 consultations to date in the context of dispute settlement proceedings, Taiwan is demonstrating a presence on the inter­national stage and building up legal expertise in international trade law.23

Unilateral level

Taiwan has always pursued an active foreign trade policy to promote development, industrialisation and growth.24 In order to grant multinational companies operating in or from Taiwan the necessary foreign trade freedom, the country successively opened its import markets and lowered industrial tariffs to a comparatively low level even before its WTO acces­sion in 2002. Currently, Taiwan’s bound average tariff rate is 6.9%, while the trade-weighted average tariff rate is 1.9%. However, to protect domestic agriculture, the average bound agricultural tariff is high at 18.5%.25

In view of the irresistible economic attractiveness of the People’s Republic, Taiwan’s outward economic orientation threatened to have a self-destructive effect from around the mid-1990s. On the one hand, there were concerns of an industrial hollowing-out of Taiwan, as numerous production facilities were relo­cated to the mainland. On the other hand, it was feared that the political loyalty of its domestic busi­nesses investing in China could erode to such an extent that they, as economic interest representatives of the People’s Republic, could become Beijing’s “fifth column” in Taiwan. The Lee Teng-hui and Chen Shui-bian administrations (1996–2008) countered this trend with the “Go South” policy that proactively pro­moted Taiwanese foreign investment in Southeast Asia. However, in view of incomparably favourable locational conditions and superior profit opportunities in China, this policy could not significantly change the investment behaviour of Taiwan’s com­panies.26

By contrast, the “New Southbound Policy” of the current administration under President Tsai Ing-wen, which is also aimed at diversifying foreign investment, has a much more favourable outlook. Due to rising labour costs, stricter environmental regulations and an increasingly difficult political environment on the mainland, Taiwan’s investors had already been increasingly turning to Southeast Asia since around the mid-2010s. Since 2018, the Trump administration’s decoupling policy has provided another argu­ment to invest outside China.27 Indeed, Taiwan’s foreign trade with Southeast Asia has grown dis­propor­tionately in recent years. Notably, Taiwan’s direct investment in ASEAN increased from US$1.8 billion (2015) to US$4.9 billion (2020).28 Moreover, the “New Southbound Policy” not only has the countries of Southeast Asia in mind, but also South Asia as well as Australia and New Zealand. Taiwan generally strives for a partnership with all these countries, beyond a purely economic interest in low wages and export platforms. In addition to supply chain co­opera­tion, training and investment guarantees, tourism, education and people-to-people relations are also key elements of the “New Southbound Policy” initiative.29 Such diplomatic successes in Taiwan’s relations with its southern neighbours, however, are an important reason why Beijing has reservations about the inter­nationalisation of Taiwan’s economy and systematically tries to limit Taiwan’s room for manoeuvre. For example, Beijing refuses Taipei the right to par­ticipate in the Belt and Road Initiative (BRI) and to become a member of the Asian Infrastructure Invest­ment Bank (AIIB).30

Cross-Strait

In the course of China’s opening-up and development, the two economies on either side of the Taiwan Strait have grown closer together through trade, in­vest­ment and passenger traffic, despite the efforts of the administration under Chen Shui-bian (2000–2008) to prevent investment on the mainland. The Economic Cooperation Framework Agreement (ECFA) concluded with the People’s Republic in 2010 by the administration of President Ma Ying-jeou (2008–2016) can be seen as a form of political backing to this thoroughly economic process. The agreement provided for sectoral market openings and initial tariff reductions in trade in goods, and it was to form a framework for further agreements between Beijing and Taipei. In 2008, transport and telecommunications links as well as direct trade in goods, the so-called three links, had already been resumed.

However, the political calculations associated with the ECFA could hardly have been more contradictory. While Beijing saw the agreement as a necessary inter­mediate step on the way to integrating the island into the Chinese economic area and to political reunification, Taipei saw the ECFA as an instrument to con­clude the desired bilateral and regional FTA with third countries. It is therefore hardly surprising that the cross-strait trade policy rapprochement reached an impasse. When the cross-strait Service Trade Agree­ment (CSSTA) negotiated by the Ma adminis­tration in 2013 raised fears of Chinese dominance over Taiwan’s infrastructure, domestic economy and media, civil society groups under the name of the “Sunflower Movement” and the opposition Democratic Progressive Party (DPP) strongly protested against the agreement. The domestically controversial CSSTA was never ratified by the Legislative Yuan (Taiwan’s par­liament). Negotiations on an FTA, which had also been announced, did not even begin. Beijing, on the other hand, tried to thwart Taiwan’s efforts to reach trade agreements with third parties.31

Bilateral and regional level

Beijing’s vehemently championed one-China policy systematically limits Taiwan’s ability to enter into bilateral trade agreements with third countries or join a regional trade agreement. There is little doubt about Beijing’s determination to inflict economic or politi­cal damage on the third country if the one-China policy is violated.

Against this background, trade policy agreements are only possible for Taiwan if Beijing explicitly agrees to them or if the partner(s) are prepared to resist pressure from the People’s Republic. Taiwan’s accessions to the WTO (2002) and the Asia-Pacific Economic Cooperation (APEC, 1991) took place with Beijing’s consent.

Taipei can only conclude trade agreements if Beijing agrees or the partners resist its pressure.

The reason for the approval was that China had also sought membership at the time and there was a political link between the two membership applications. Nevertheless, Taiwan’s memberships in the WTO and APEC are extremely significant for the island’s trade policy ambitions. Taiwan’s designation in the WTO as a separate customs territory of Taiwan, Penghu, Kinmen and Matsu opens up a politically viable path for bilateral agreements without violating the one-China policy. APEC provides a foreign policy framework for realising the long-held vision of a Free Trade Area of the Asia-Pacific (FTAAP)32 or at least for concluding multilateral FTAs, such as the Asian Free Trade Area Regional Comprehensive Economic Part­nership (RCEP) or the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).33

For the time being, however, accession to RCEP is out of the question for Taiwan, as RCEP member China is unlikely to agree. The chances of joining the CPTPP, on the other hand, are somewhat better. In fact, Taiwan – like China shortly before – officially submitted an application at the end of September 2021. Unlike China, Taiwan should be able to fulfil the CPTPP accession criteria well and quickly, even if the liberalisation of agricultural imports is domestically sensitive for Taipei. However, it is to be expected that China will exert political pressure on all CPTPP members to oppose Taiwan’s admission. It is there­fore conceivable that in the medium term Taiwan and China’s membership applications will be politically linked, as was the case with APEC and the WTO.

The economic cooperation agreements that Taiwan (as the customs territory of Taiwan, Penghu, Kinmen and Matsu) concluded with New Zealand (ANZTEC, 2013) and Singapore (ASTEP, 2014) had Beijing’s approval. New Zealand and Singapore had each agreed an FTA with China several years earlier, and under Ma Ying-jeou’s administration at the time, Beijing was much more tolerant of Taipei’s efforts to reach trade agreements with third parties than it is at present. However, this window of opportunity to conclude trade agreements with third countries with Beijing’s placet was apparently only open for a short time. Negotiations launched in 2013 with Indonesia, the Philippines and Malaysia failed to get beyond the preparation of a feasibility study.34 Taiwan seems to find it easier to conclude bilateral investment agree­ments, as happened with Macedonia (1999, since 2019 North Macedonia), India (2002/2018), Japan (2011), the Philippines (2017) and Vietnam (2019), among others. Meanwhile, negotiations for a bilateral investment agreement with Canada were launched at the begin­ning of 2022.

In addition, Taiwan has signed a number of FTAs with countries that have or have had diplomatic rela­tions with Taiwan (as the Republic of China). Notable among these are the FTAs with Panama (2003), Gua­temala (2005), Nicaragua (2006), El Salvador and Honduras (2007). Economic Partnership Agreements were agreed with Eswatini, Paraguay, Belize and the Marshall Islands in 2019.35 However, all these coun­tries are partners that play a marginal role in world trade, and whose share of Taiwan’s foreign trade was just 5% in 2019.

Economically and politically far more important for Taiwan are the trade agreements it has reached with the U.S. and Japan. Both countries respected the one-China policy and accepted diplomatic conflicts with China.36 Japan has concluded a number of sectoral agreements with the Taiwanese administration, while avoiding direct government contacts. This mainly concerns agreements on investment (2011), open skies (2011), financial information exchange (2012), fisheries (2013), industry (2012), e-commerce (2013) and patent protection (2013).

The U.S. has had a Trade and Investment Framework Agreement (TIFA) with Taiwan since 1994. Both sides have largely considered it possible in principle to agree on an FTA. However, domestic political hurdles usually stood in the way. For some time, pre­liminary talks failed because of Taiwan’s refusal to allow imports of beef and pork with the use of the feed additive ractopamine. At the beginning of 2021, Taiwan relaxed this import restriction, and the refer­endum against this measure failed in a popular ref­erendum on 18 December 2021. In the U.S., on the other hand, the conclusion of trade policy agreements is low on the list of priorities of the current Biden administration.

Conclusion

Despite its small size, Taiwan is a formidable player in world trade and the global economy, especially in the field of electronic components. Due to its tech­nologically leading production facilities and globally dominant market position, the TSMC group has stra­tegic relevance not only in supplying global value chains, but also for foreign and security policy. On the other hand, Taiwan has become subject to eco­nomical extortion and vulnerabilities in the course of its integration into mainland industrial production. The foreign economic diversification move towards Southeast Asia and India from the mid-2010s onwards has not noticeably reduced Taiwan’s economic de­pend­ence on China. At the same time, in view of the growing number of free trade and investment agree­ments worldwide, Taiwan’s foreign economic policy faces the difficult task of limiting the discrimination that works against the country and keeping up with new trade policy regulations. It is true that Taiwan has been more successful diplomatically at the for­eign trade level than in other areas, given its member­ships in the Asian Development Bank (ADB), APEC and WTO. However, the country’s efforts to reach bilateral and regional trade and investment agreements remain piecemeal.

U.S. Taiwan Policy: A Balancing Act under Difficult Conditions

Marco Overhaus*

The U.S. one-China policy and its unofficial relations with Taiwan have been largely based on the same po­litical and legal foundations for over 40 years. Rather than shifting in fundamental ways, the bi­lateral rela­tionship has developed gradually on this basis. Through­out the process, Washington has per­formed a delicate balancing act between seeking a stable and predictable relationship with Beijing, advocating for Taiwan’s security, and also trying to avoid steps that could encourage Taipei to move unilaterally towards independence.

This balancing act has become increasingly difficult due to two developments in particular. First, recent years have seen the emergence of a bipartisan percep­tion in Washington that views the rivalry with China as an epic struggle between the free-market democratic system of the West, on the one hand, and the state-capitalist authoritarian counter-model of China, on the other. This trend has solidified with the inauguration of U.S. President Joseph Biden, who has made the self-assertion of democracies against autoc­racies a programmatic feature of his administration’s foreign policy. At the same time, the dismantling of democratic institutions in Hong Kong has clarified beyond doubt that the offer of “one country, two sys­tems” by the People’s Republic of China to Taiwan is a farce.

Second, there is a growing fear in the U.S. that China may try to decide on Taiwan’s status by mili­tary means sooner rather than later, given that the balance of power is shifting in its favour. At the same time, U.S. confidence in its own deterrent capabilities is declining.

These developments have helped to increase domestic political pressure further in Washington in support of stronger relations with Taiwan and ex­pand­ing U.S. defence capacities in the Indo-Pacific. Nevertheless, both the Trump and the Biden adminis­trations have shied away from a fundamental reorien­tation of U.S. policy towards Taiwan. Ultimately, the fear of a military confrontation with China weighs too heavily.

Political and social relations between the U.S. and Taiwan

When the U.S. moved towards normalising its rela­tions with the People’s Republic of China (PRC) in 1972, the Nixon administration announced in a joint communiqué that it recognised the position of “all Chinese on either side of the Taiwan Strait”, that there was “but one China” and that “Taiwan is a part of China”.1 In the communiqué, the U.S. also stated its interest in a peaceful resolution of the Taiwan ques­tion “by the Chinese themselves.” The second joint communiqué of the U.S. and the People’s Republic in 1979 established bilateral diplomatic relations, there­by sealing the end of formal relations with Taiwan. Washington thus recognised “the Government of the People’s Republic of China as the sole legal Government of China.”2

Shortly before a third U.S.-Chinese communiqué was published in 1982, U.S. President Ronald Reagan gave Taiwanese President Chiang Ching-kuo some assurances – albeit behind closed doors – to which subsequent U.S. administrations have felt committed to this day. In this context, Washington3 promised Taiwan, among other things, that the U.S. would neither seek a mediating role between Beijing and Taipei nor press Taiwan to negotiate with the People’s Republic. Another item on the list of assurances concerned the United States’ position on the island’s sovereignty. However, this was ambiguous and remains so to this day.

The Taiwan Relations Act (TRA) of 1979 established the legal and political-institutional framework for un­official relations. It set out the creation of the Ameri­can Institute in Taiwan (AIT), which represents the interests of the U.S. in Taiwan as a non-governmen­tal/non-profit organisation4 rather than a regular embassy. Despite this legal construct as a non-profit organisation, the AIT assumes quasi-governmental tasks, for example in the consular area. It is financed from the budget of the U.S. Department of State. While the staff of the AIT is mainly recruited from the U.S. State Department and other U.S. government agencies, the employees do not have diplomatic status. Thus, the AIT is not headed by an ambassador, but by a director. Currently, Sandra Oudkirk, a diplo­mat at the U.S. State Department, holds this position.

The TRA also contains the legal basis for Taiwan’s representation of interests in the U.S. Operating under the name Taipei Economic and Cultural Rep­resentative Office (TECRO) since the early 1990s, it maintains 12 branches in the U.S. The representation’s staff also do not have the official status as diplomats, but they do enjoy privileges similar to those of diplomats.5

Political dialogue between the two sides is complicated by a lack of formal government relations. Only since the early 1990s has the U.S. allowed high-rank­ing representatives of the administration to visit Tai­wan, provided they represent “economic and tech­nical” ministries or agencies. Carla Hills, as the Trade Representative under the administration of President George H. W. Bush, was the first American cabinet member in 1992 to visit Taiwan since Washington severed diplomatic relations. Until 2014, only five other visits by U.S. representatives at this level were recorded by the Congressional Research Service.6 It was not until 2020, during Donald Trump’s presidency, that the U.S. again sent a cabinet member – Health Secretary Alex M. Azar II – to the island. When Azar met Taiwan’s President Tsai Ing-wen, it was considered the highest-level bilateral meeting “in decades”.7

Visits by high-ranking U.S. representatives to Taiwan continue to be the exception rather than the rule.

However, no U.S. president, secretary of state or secretary of defence has visited Taiwan since 1979, although it was reported in the (social) media that U.S. Secretary of State Mike Pompeo had considered such a step. As a matter of policy, senior State Depart­ment and Defence Department officials as well as high-ranking military officers refrained from travel­ing to Taiwan until the early 2000s.8 This policy seems to have changed in recent years, however. The Taiwan Travel Act, which came into effect in March 2018, is a congressional call for government contacts “at all levels” among other things.9 According to reports, Taiwan subsequently received officials from both the U.S. State Department and the Pentagon, as well as a two-star general from the Indo-Pacific Com­mand.10 Some observers commented that these were by no means precedents and that there had been high-level trips before. Nevertheless, such visits still seem to be the exception rather than the rule.

Far-reaching restrictions also apply when Taiwanese political representatives visit the U.S. In the course of its internal Taiwan Policy Review, the Clin­ton ad­ministration in 199411 stipulated, among other things, that Taiwan’s political leadership – the presi­dent, vice-president or prime minister – were only allowed to enter the U.S. for short-term transits.12 Nevertheless, these transits are used for political talks, for example with members of the U.S. Congress.

Executive regulations on government contacts in Washington specify, among other things, the build­ings in which U.S. and Taiwanese envoys are allowed to meet. A few days before leaving office, Secretary of State Pompeo made headlines in January 2021 when he announced that he would lift all existing restric­tions.13

The Biden administration, however, apparently has not carried out this far-reaching decision. Antony Blinken affirmed at his Senate hearing that as the new Secretary of State he wanted to create “more space for contact”.14 However, the U.S. State Department later announced that new guidelines would merely liberalise existing rules without providing details.15 Still, Biden’s invitation of Taiwan’s top representative in the U.S. to his inauguration cer­emony in January 2021 was of symbolic significance, as no incoming U.S. president had taken such a step since diplomatic relations had been severed.

Another important aspect of U.S. policy towards Taipei is its support for Taiwan in international orga­nisations and forums. Following the aforementioned Taiwan Policy Review, Washington has backed Tai­wan’s membership in those international organisations that do not require statehood. In cases where full membership is not formally possible, the U.S. is working to ensure that Taiwan can make its voice heard in other ways, for example as an observer.16 The Biden administration has declared its support for this goal, and has also called on the World Health Organisation to restore Taiwan’s observer status in its general assembly, the World Health Assembly.

Security and defence relations

Successive U.S. administrations and bipartisan major­ities in Congress have vehemently emphasised Ameri­can interest in Taiwan’s security, to a far greater extent than in many other U.S. security partnerships. With reference to “strategic ambiguity”,17 it is often pointed out that the U.S. is not committed to whether and if so, how it would come to Taiwan’s aid in the event of a military attack. However, at least in terms of the “how”, such ambiguity also characterises for­mal alliances in which the U.S. is a member such as NATO. The Taiwan Relations Act stipulates that the U.S. will supply Taiwan with “defensive” armaments and at the same time maintain its own military capa­bilities to counter a possible attack on Taiwan.18

Until the Taiwan crisis in 1995/96, security and defence relations between the U.S. and Taiwan were based almost exclusively on American arms sales. The U.S. has also treated Taiwan as a major non-NATO ally since 2003. This status implies privileges that facilitate arms cooperation.19 In fiscal years 2016 to 2020, the U.S. sold approximately US$16.7 billion worth of arms to Taiwan under its Foreign Military Sales programme, although the figures fluctuated significantly from year to year.20 In fiscal year 2020, Taiwan was actually Washington’s largest arms buyer, with purchases amounting to US$11.8 billion. From 2017 to 2021, the Trump and Biden administrations requested from Congress the sale to Taiwan of weapons systems such as F-16 fighter aircraft, Abrams battle tanks, and Harpoon missile systems for coastal defence and artillery.21

From the perspective of the U.S., the Taiwan crisis in the mid-1990s demonstrated not only its own deterrent capability vis-à-vis China, but it also made clear that the sale of weapons systems to Taiwan alone was not sufficient to guarantee the island’s defence capability.22 Therefore, Taipei and Washington have since expanded and intensified their ex­changes beyond arms sales. For example, American educational programmes have been made accessible to Taiwanese military personnel, and the two sides have engaged in joint assessments of Taiwan’s mili­tary capabilities while also establishing bilateral dialogue formats.23

U.S. military observers have regularly participated in Taiwanese military exercises for some time,24 but joint manoeuvres have not taken place for a while, at least officially. In November 2020, however, local Taiwanese media reported the presence of Special Forces from the U.S. Army as well as the U.S. Marines for joint exercises in Taiwan.25 Apparently, exercises also took place the following year, with the Wall Street Journal reporting about two dozen U.S. Special Forces in Taiwan in October 2021.26 Joint manoeuvres may also have been held in earlier years.27 The shift from a silent presence of a few military advisors in connec­tion with U.S. arms sales to a more active U.S. role in training Taiwanese naval forces seems to have been initiated by the Trump administration.28

In its October 2020 report that draws on conversations with former U.S. government officials, the Task Force on U.S. Policy Toward Taiwan established by the Center for Strategic and International Studies (CSIS) lists a total of nine dialogue formats that take place regularly. Participants from the U.S. in these meetings include senior officials, officials and military leaders from the Departments of State and Defense and the National Security Council.29

There is a debate in Washington on whether the U.S. should be more explicit in its defence of Taiwan.

The U.S. administration is extremely cautious about publicising information on these dialogue for­mats. For instance, no such mention is made on the website of either the State Department or the Depart­ment of Defense. Moreover, the U.S. and Taiwan do not hold regular dialogues at the political level, un­like the “two-plus-two” talks between the U.S. and Japan, and the U.S. and South Korea.

In the U.S., the debate has recently intensified on whether and how security and defence relations with Taiwan can be further developed. At the core of this is the question about whether Washington should abandon its “strategic ambiguity” regarding its secu­rity commitments to Taipei and instead commit itself much more explicitly to the island’s defence.

The background to these discussions includes the widespread perception in Washington that the mili­tary balance of power in Asia is shifting in favour of China. Taiwan’s military advantages based on its tech­nological edge and its geographical isolation as an island are shrinking. In addition, China has been in­vesting for years in so-called anti-access/area-denial capabilities such as ballistic missiles and cruise mis­siles. These capabilities make it particularly difficult for the U.S. to come to Taiwan’s aid in the event of a conflict.

Consequently, the U.S. sees itself increasingly on the defensive and assumes that sooner or later China will use its enhanced military strength to create facts in Taiwan. Doubts are mounting about the United States’ ability to deter China from an attack on Tai­wan, which could conceivably take the form of a naval or air blockade, targeted air strikes or even an invasion of the island by the People’s Liberation Army.30 In the spring of 2021, for example, the then commander of the U.S. Indo-Pacific Command attracted some attention when he stated before the U.S. Con­gress that China could attempt a military unification with Taiwan within six years.31

In October 2021, U.S. President Biden caused con­fusion inside and outside the U.S. by publicly sug­gest­ing that the U.S. had an explicit alliance commitment to defend Taiwan against attack.32 So far, however, it does not look as if the U.S. under the Biden admin­istration intends to fundamentally alter the open, ambiguous nature of the security and defence rela­tionship.33

Biden’s spokesperson “clarified” the president’s statements to the effect that the fundamentals and direction of U.S. Taiwan policy, including the Taiwan Relations Act, have not changed. Instead, the Biden administration, like its predecessor, is focusing on strengthening Washington’s deterrence against Bei­jing by investing specifically in military capabilities and focusing geographically on the Indo-Pacific region.

U.S. economic interests vis-à-vis Taiwan

Taiwan is an important market for U.S. manufactur­ing and agricultural producers. With US$31 billion in U.S. exports and US$54 billion in U.S. imports, Taiwan was the 13th largest trading partner for the U.S. in 2019.34 Moreover, Taiwan has essential eco­nomic and technological importance for the U.S., as Taiwanese firms are market leaders in microelectronics.35 Nevertheless, economic and trade relations have long been considered a rather neglected area in U.S.-Taiwan relations.

From the U.S. perspective, Taiwan, as a high-tech country, plays a prominent role in the global struggle for technological leadership, especially with China. Taiwanese companies, above all the Taiwan Semiconductor Manufacturing Corporation (TSMC), are world leaders in the production of semiconductors and microchips. The fragility of the supply chains for these products has recently been felt by car manufacturers in the U.S. and beyond.36 In addition, Taiwanese companies like TSMC are pioneers in the produc­tion of particularly advanced chips and processors. These are indispensable for future technologies such as artificial intelligence, 5G quantum computers and autonomous systems, all of which are also of enor­mous military relevance.

TSMC’s largest customers include both U.S. companies (such as Apple) and Chinese companies (such as Huawei). In May 2020, the Trump administration imposed export controls, forcing TSMC to stop sup­plying chips to Huawei. Against a backdrop of politi­cal pressure and economic incentives, TSMC announced as early as May 2020 that it would build a new chip factory in Arizona and invest around US$12 billion in it for the period 2021-2029.37 The Trump administration celebrated this as an important step “to move critical technology supply chains back to the U.S.”.38

President Biden has also expressed a desire to in­crease the U.S.’s manufacturing capacity in order to reduce vulnerabilities and dependencies in critical chip manufacturing supply chains.39 To this end, substantial public funds are to be made available for the expansion of domestic infrastructure.

In the U.S., there is a growing number of voices that want to deepen and formalise economic and trade relations with Taiwan.

In the U.S., voices in support of greater and more formal economic and trade relations with Taiwan as a whole have recently been growing. As early as 1994, Washington and Taipei concluded an agreement (Trade and Investment Framework Agreement, TIFA) with the primary aim of creating a framework for regular consultations on economic and trade policy issues. However, discussions on concluding a bilateral trade agreement did not make progress for years because of bilateral disputes over Taiwanese import restrictions on agricultural products such as beef and pork. Recently, U.S. Congress has increased domestic political pressure to reach a comprehensive agreement with Taiwan. Proponents in particular justify their position by pointing to the America’s growing economic and technological rivalry with China.40

The Biden administration has indicated that it would support a deepening of trade relations with Taiwan. In June 2021, trade talks were held under TIFA for the first time since 2016.41 These had been suspended by the Trump administration. However, the question remained open as to whether negotiations on a formal trade agreement were to be initiated, and if so, with what level of ambition. Against the backdrop of resumed talks, U.S. Trade Representative Katherine Tai explained that there were still hurdles from the U.S. perspective, including access restric­tions to the Taiwanese market for American beef and other agricultural products.42

Social and scientific exchange

The U.S. has not only worked to strengthen Taiwan’s international networking within the framework of unofficial relations, but has also promoted social and scientific exchanges between the U.S., Taiwan and other states. A key instrument in this regard is the Global Cooperation and Training Framework (GCTF),43 which was established in June 2015 through a memo­randum of understanding between the AIT and TECRO. In March 2019, Japan was added as a partner country. Promoting the GCTF as a forum for tackling global problems, the three partners organise expert work­shops in this context on topics as diverse as com­bat­ing digital piracy and protecting the world’s oceans.44

The 148 twinning agreements between cities in the U.S. and Taiwan are also intended to promote social exchange. Since 2012, the Taiwanese have benefited from the Visa Waiver Programme, which allows them to enter the U.S. without a visa. According to the latest information from the U.S. Department of State in 2018, Taiwan was also the seventh largest country of origin for international students in the U.S. This exchange is supported by the Fulbright Program and the International Leadership Program.45

In December 2020, AIT and TECRO signed a memorandum of understanding to promote educational cooperation. Among other things, it is intended to encourage more U.S. students to learn Chinese in Taiwan.46 A few days later, the two representations also sealed an agreement to facilitate an exchange between scientists and experts from the two countries,47 which also contains provisions on the mutual protection of intellectual property.

Conclusion

The intensifying political, security and economic rivalry with China and the dismantlement of demo­cratic institutions in Hong Kong have amplified voices in the U.S. calling for a fundamental rethink of rela­tions with Taiwan. So far, however, there are no signs that Washington is abandoning the course of the last few decades. The traditional principles of U.S. Taiwan policy still apply, namely keeping relations unofficial, avoiding a clear position on Taiwan’s sovereignty and calling for a peaceful solution. In line with this, the U.S. has merely taken some visible but small steps to deepen relations.

Restrictions on personal contacts at the political level, at the level of senior officials and between the military have been eased. Nevertheless, these contacts continue to take place mostly confidentiality. There are still no regular and institutionalised dialogue for­mats at the political level, all the more so in the par­ticularly sensitive areas of foreign and defence policy.

Despite calls from Congress and from think tank representatives focused on security policy, both the Trump and Biden administrations refused to commit more clearly to the military protection of Taiwan against a Chinese attack. Decisionmakers in Washington continue to be aware of how important the Tai­wan issue is in the context of relations with China and of the military risks that a confrontation in the Taiwan Strait poses for the U.S. Therefore, the U.S. administration is unlikely to trigger a new Taiwan crisis by taking a unilateral step that would endanger the status quo. The question rather is whether Chi­na’s increased self-confidence could tempt the lead­er­ship in Beijing to try to create facts vis-à-vis Taiwan.

Japan-Taiwan Relations: More than Meets the Eye

Alexandra Sakaki*

Japan is Taiwan’s closest geographical neighbour. Yonaguni, a small, inhabited island is Japan’s western­most point and is about 110 kilometres1 from Taiwan. After the Sino-Japanese War (1894–95), Taiwan was a Japanese colony until 1945. This historical chapter still shapes bilateral relations today, though not nec­es­sarily in a negative way. Assessments of the Japa­nese colonial period in Taiwan are less critical than those in South Korea or the People’s Republic of China (PRC), for example. Compared to the subsequent “occupiers” of Taiwan – the mainland Chinese under the Kuomintang – the Japanese rulers took less repressive measures against the population of Taiwan and decisively advanced modernisation in areas such as infrastructure and education.2 Even after 1945, Japan and Taiwan were thus able to main­tain close cultural and social ties, thus facilitating further development of bilateral relations.

In 1972, however, Tokyo severed its official ties with Taipei, recognising instead the PRC as the “sole legal Government of China”3. Nevertheless, Japan has since maintained close economic, cultural and civil society relations with Taiwan, while also developing a variety of political channels through which to enable working level exchanges. In Tokyo’s view, these are “non-state” relations.

In principle, nothing has changed in Japan’s approach in recent years. Nevertheless, some im­por­tant shifts in Japanese thinking on Taiwan can be observed: for example, debates over the last five to 10 years reflect a significant increase in awareness of Taiwan’s international role and importance among policymakers and scholars.

Against this backdrop, the 2020 version of Japan’s Diplomatic Bluebook for the first time described Tai­wan as an “extremely crucial partner and an impor­tant friend”.4 Ten years earlier, the Bluebook had barely referred to the uncertainties in the Taiwan Strait at all.5 The April 2021 joint statement by Prime Minister Suga Yoshihide and U.S. President Joe Biden was also notable, emphasising the “importance of peace and stability across the Taiwan Strait”6 – the first mention of Taiwan in such a statement since Japan severed diplomatic relations with the island.

Reassessing Taiwan’s significance

Three factors have contributed to the reassessment of Taiwan’s importance: first, threat perceptions vis-à-vis the PRC have grown in Japan. The military regional balance is shifting in China’s favour and Beijing is show­ing an uncompromising posture both internally and externally. With its military and paramilitary presence, the People’s Republic is putting pressure not only on Taiwan but also on Japan – especially in the area around the Senkaku/Diaoyu Islands, con­trolled by Tokyo but claimed by the PRC (and also by Taiwan), about 170 kilometres7 from Taiwan (see Map 1, p. 6). Mistrust has grown between the great powers, namely the U.S. and China, thereby increasing the risk of military escalation.

From Japan’s point of view, a military confrontation over Taiwan can therefore no longer be ruled out. The Russian invasion of Ukraine in February 2022 triggered renewed discussions about this risk. In such a scenario, Japan would be directly affected – both because of its geographical proximity and be­cause of the U.S. military bases on the island of Okinawa, which would be crucial for potential American opera­tions. In Japan, the view thus prevails that a military contingency over Taiwan will quickly spill over to involve the country directly.8

The Japanese public increasingly perceives a strong bond with Taiwan.

Secondly, the Japanese public increasingly feels a strong social bond with Taiwan. Generous and largely private donations from Taiwan after the triple dis­aster in Japan in March 2011 have left a lasting feel­ing of gratitude on the part of the Japanese. The aid amounted to around 20 billion yen (about €200 mil­lion) – the largest contribution from abroad follow­ing the U.S.9 At the same time, awareness of shared values such as democracy and human rights has heightened. Taiwan’s status as a pluralistic, mature democracy stands in marked contrast to Beijing’s authoritarian and repressive system.

Thirdly, especially since the start of the COVID-19 crisis in Japan, Taiwan’s importance as a technology partner has been highlighted. The increased global demand for semiconductors and the resulting supply shortfalls have underlined the prominent position of TSMC, the world’s leading chip producer. TSMC also supplies Japanese corporations.10 At the same time, the technological rivalry between the U.S. and China is intensifying. Tokyo, therefore, sees the need to draw on Taiwan more extensively as a technology partner.11

Political relations

After 1972, Tokyo and Taipei developed various quasi-diplomatic as well as informal political channels for exchange. Furthermore, Taiwan’s democratisation in the 1990s gave relations a boost. Because of the rela­tively positive assessment of the Japanese colonial period in Taiwan, historical disputes rarely dominate the bilateral agenda. The biggest point of contention – the territorial dispute over the Senkaku/Diaoyu Islands – was defused in 2013 with a fisheries agreement.

Quasi-diplomatic channels

After breaking off diplomatic relations, Japan founded the Interchange Association in 1972 – a de facto embassy in Taipei to promote cultural, economic and civil society ties. Taiwan established a counterpart in Tokyo, the Association of East Asian Relations. Both representative offices not only take the lead in politi­cal dialogue, but they also negotiate and sign bilateral agreements, such as an investment protection agree­ment in 2011 and a whole series of other mostly func­tional agreements in recent years (see Table 1). In 2013, both sides signed a fisheries agreement that allows Taiwanese and Japanese fishermen to use con­tested waters around the Senkaku/Diaoyu Islands. This has largely calmed the territorial dispute, al­though the sovereignty issue remains.12

Table 1 Selected agreements between Japan and Taiwan since 2010

Month /
Year

Agreement

4 / 2010

  • Memorandum on strengthening exchange and cooperation

9 / 2011

  • Arrangement for the liberalisation, pro­motion and protection of investments

11 / 2011

  • Open skies agreement

4 / 2012

  • Memorandum on the exchange of financial information related to money laundering / terrorist financing

4 / 2013

  • Fisheries agreement

11 / 2013

  • E-commerce cooperation agreement

  • Arrangement for cooperation on medical products regulation

  • Memorandum of understanding (MoU) on cooperation in financial supervision

11 / 2014

  • Memorandum on cooperation in tourism

  • Memorandum on cooperation on border control

11 / 2015

  • Agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income

  • Memorandum on disaster prevention collaboration and exchanges

11 / 2017

  • Agreement on cooperation in customs matters

  • Memorandum on cultural exchange cooperation

12 / 2017

  • MoU on maritime emergency and rescue cooperation

11 / 2018

  • Memorandum on support for small and medium-sized enterprises (SMEs) and promotion of cooperation between SMEs

12 / 2018

  • MoU on cooperation in tackling smuggling and illegal immigration

10 / 2019

  • Memorandum on exchange/cooper­ation in environmental conservation

  • Memorandum for mutual cooperation in the field of patent prosecution

Source: Analysis of the website of the Japan-Taiwan Exchange Association, https://www.koryu.or.jp/; abbreviated titles of agree­ments with some translated from Japanese.

Tokyo’s representative office, which is headed by a high-ranking representative of the Ministry of Foreign Affairs, was renamed the Japan-Taiwan Exchange Association in 2017. This was a symbolic step: Japan was not only defying China’s efforts to impose the term “Chinese Taipei” internationally instead of “Tai­wan”, but the juxtaposition of Japan and Taiwan in the name also suggests the Republic of China’s equali­ty as a political actor. Taipei followed suit a few months later by renaming its representative office the Tai­wan-Japan Relations Association.

The de facto embassies also enable contact between ministerial officials from both sides, but not between top representatives of the foreign and defence ministries. For other ministries, meetings up to director or even vice-minister level are considered feasible in principle, but require a case-by-case assess­ment.13 Japan’s highest-ranking visitor to Taiwan since 1972 was Akama Jiro, Senior Vice-Minister of Internal Affairs and Communications, who arrived in March 2017 for a tourism fair.14 In July 2021, Tai­wan’s Minister of Digital Affairs Audrey Tang was expected for the Olympic opening ceremony in Tokyo. However, this plan could not be realised due to the COVID-19 pandemic.15

Former heads of state serve as another channel for bilateral political dialogue. Since 2003, for example, former prime ministers Mori Yoshiro, Aso Taro and Abe Shinzo have visited Taiwan and held talks with high-ranking politicians there.16 Conversely, former Taiwanese President Lee Teng-hui has repeatedly visited Japan. Taiwanese presidential candidates also regularly fly to Japan to exchange views with poli­ticians.17 For example, the current President Tsai Ing-wen is said to have met Prime Minister Abe Shinzo in 2015 before her successful election.18

Functional and Think Tank Dialogues

Represented by the Japan-Taiwan Exchange Association, Japan since 2019 has been an official co-host of the Global Cooperation and Training Framework (GCTF), which was launched by the U.S. and Taiwan in 2015 with Japan holding observer status from the beginning.19 The GCTF is a cooperation platform that enables Taiwan to pursue exchanges with experts and government officials from other countries on topics such as public health, energy efficiency, cyber secu­rity and disaster relief.20 Japan perceives the GCTF as a useful framework, because it has thus far not pro­voked a strong backlash from Beijing.21

Japan and Taiwan have institutionalised a series of think tank dialogues.

Japan and Taiwan have also institutionalised a series of think tank dialogues. Officially, these are con­ducted at track 2 level. However, ministry officials and politicians from both sides regularly participate – for example as “observers” or guests at joint dinners, so the dialogues are de facto more like track 1.5 formats.22

Among these exchanges is a trilateral dialogue with the U.S., organised by the think tanks Japan Insti­tute for International Affairs, Prospect Foundation (Taiwan) and the Project 2049 Institute (USA). This dialogue format, which has existed since 2011, has been held under the name Taiwan-U.S.-Japan Indo-Pacific Security Dialogue since 2018. In addition to academics, parliamentarians and former high-ranking ministerial bureaucrats also take part.23

Since 2019, the Japan-Taiwan Strategic Dialogue has been held as a bilateral exchange with a focus on security policy. On the Japanese side, this is organised by the Security Strategy Research Institute of Japan – an independent think tank with close ties to the Vet­erans Association. Amongst others, retired Japa­nese lieutenant generals and vice admirals of the armed forces have so far participated.24

Parliamentary and Party Dialogue

Reciprocal visits by parliamentary groups provide another important channel of communication. The cross-party Japan-ROC Diet Members’ Consultative Council, better known as Nikkakon, is the central organ on the Japanese side. According to its chairman Furuya Keiji, Nikkakon had 287 members in 2019 – thus comprising around 40% of Japanese parliamentarians in both chambers.25 On Nikkakon’s initiative, the Upper House unanimously passed a resolution for the first time in June 2021 endorsing Taiwan’s partici­pation in the World Health Assembly (WHA).26

Nikkakon also took the lead in initiating a trilat­eral “strategic dialogue” with parliamentarians from Taiwan and the U.S. The first meeting took place in July 2021 via video conference, during which about 30 participants discussed topics such as economic cooperation, dealing with China’s military pressure and the vision of a “free and open Indo-Pacific”.27 While Japanese Defence Minister Kishi Nobuo did not take part himself, he had a greeting read out.28

On Japan’s initiative, the governing parties of both sides held a digital dialogue for the first time in August 2021. This serves as a substitute for the so-called 2+2 dialogue format, which in the case of other countries brings together the respective foreign and defence ministers. The respective representatives of the parliamentary committees for foreign and defence policy participated on behalf of Taiwan’s Democratic Progressive Party (DPP); meanwhile, the Liberal Demo­cratic Party of Japan (LDP) was represented by the heads of the corresponding internal party committees.29 Both sides discussed topics such as cooperation in the semiconductor sector and responses to China’s military pressure. The dialogue is to be continued in the future.

Security policy relations

In terms of security, Taiwan is important for Japan not only due to its geographical proximity, but also because of its location along important maritime trade routes. As early as 1978, the head of the Japa­nese Defence Agency at the time Kanemaru Shin emphasised that Taiwan’s security was important for Japan.30 To date, there has been no direct exchange between the armed forces of the two countries.31 However, Tokyo has been sending a retired two-star general to its de facto embassy since 2003.32

For a long time, the military superiority of the U.S. over China has been regarded in Japan as a guar­antee of stability in the Taiwan Strait, and the Taiwan crisis of 1995–96 did not fundamentally change that view.33 As mentioned above, however, Tokyo’s con­cerns over China’s military build-up and modernisation have grown in recent years.

Japan is deliberately vague on whether and to what extent it would participate in a military conflict over Taiwan alongside the U.S.

Tokyo’s policy towards Taiwan has been characterised by “strategic ambiguity” since 1997 – with cer­tain parallels to U.S. policy: Japan deliberately refrains from specifying whether and to what extent it would participate in a military conflict over Taiwan along­side the U.S. Through this ambiguity, Tokyo seeks to support the maintenance of Taiwan’s status quo and contribute to deterrence vis-à-vis the PRC. In 1997, Tokyo expanded the possible role of its defence forces within the U.S.-Japan alliance to include “rear-area support”, i.e. logistical support in “situations in areas around Japan”.34 Theoretically, this provision is appli­cable to a crisis involving Taiwan.35 Japan’s 2015 secu­rity laws could also apply in the event of a Taiwan conflict. According to these, Tokyo is allowed to par­ticipate in combat operations alongside the U.S. if the situation is classified as an immediate threat to Japan. Such a political decision would be easy to justify due to Taiwan’s proximity.36

The joint statement by Suga and Biden in April 2021 underlines Japan’s “strategic ambiguity” in that it emphasises stability in the Taiwan Strait as a com­mon goal of the allies. The proposal for the Taiwan reference apparently came from Biden; Suga went along with it despite initial concerns about China’s reaction.37 Subsequently, Tokyo lobbied for inclusion of similar language on Taiwan in the May 2021 sum­mit declaration with the EU and in the June 2021 G7 final declaration, for example. However, the Japanese government has kept silent on whether it is pursuing military planning for contingencies around Taiwan either on its own or jointly in the alliance following the Suga-Biden statement.

Economic relations

Japan and Taiwan are important economic partners for one another. With a bilateral trade volume of around US$68.8 billion in 2020, Japan was Taiwan’s third largest trading partner after the PRC and the U.S.38 In terms of Taiwan’s imports, Japan even ranks second after the PRC, with more than half of those imports consisting of chemical products, electronic components and machinery.39

Conversely, Taiwan was Japan’s fourth largest trading partner in 2020, after the PRC, the U.S. and only just behind South Korea.40 The neighbouring island state thus accounted for about 5.6% of Japan’s foreign trade.41 At around 43%, the largest sectoral share of Japanese imports from Taiwan is electronic components, especially semiconductors.

Japan is the fourth largest source of foreign investment in Taiwan after the Netherlands, the British Overseas Territories in the Caribbean, and the U.S.42 In cumulative terms, Japanese capital contributions amount to US$23.5 billion, representing 12.4% of foreign investment holdings in Taiwan.43 On the other hand, Taiwanese investments in Japan total US$9.6 billion.44 The comprehensive investment agreement of 2011, which covers all key protection standards for investors that are common among industrialised countries and which also prohibits discrimination (national treatment, most-favoured-nation treatment), likely had a positive effect on both sides.45 Overall, Japan and Taiwan complement one another economically. Companies from both sides work closely together in the IT and electronics sectors. Taiwan’s semiconductor industry is dependent on Japanese companies, which supply machines and chemical components for manufacturing, for exam­ple. In view of the increased international demand for semiconductors, a number of Japanese suppliers have invested in Taiwan. For instance, Shin-Etsu Chemical announced in October 2020 that it would participate in building a new photoresist pro­duction facility in Taiwan.46

Japan is courting Taiwan to invest in its semiconductor manufacturing industry and in research in this area.

Conversely, Tokyo is also courting Taiwan to invest­ment in its semiconductor manufacturing in­dustry as well as related technological research. Japan seeks to improve its competitiveness in key digital technologies such as semiconductor production and to ensure security in supply chains. At the end of May 2021, TSMC announced that it will establish a centre for research and development in Ibaraki, north of Tokyo, with the participation of Japanese companies. The Japanese government will cover about half of the project cost of about 37 billion yen (about €276 mil­lion).47 In October 2021, TSMC also revealed plans to build a semiconductor plant in Japan, with the in­volve­ment of Sony Corporation. According to media reports, the Japanese government will subsidise about half of the total cost of 800 billion yen (about €6 bil­lion).48 Taiwanese companies, in turn, hope to defend their technological advantage internationally by in­vest­ing in Japan or cooperating with companies there.

The quasi-embassies of Japan and Taiwan have hosted the Japan-Taiwan Economic and Trade Con­ference annually since 1976 to discuss bilateral eco­nomic issues. Discussions on a bilateral free trade agreement (FTA) have been on hold since Taipei banned the import of food from five prefectures in the wake of the Japanese triple disaster in 2011 due to possible radiation exposure.49 Although Taiwan lifted the import restrictions in February 2022, it remains to be seen whether such discussions will be taken up again.50 In Japan, the utility of an FTA is questioned, given the already low bilateral tariff level and the existing bilateral investment agreement.51

A more important step, however, could be Taiwan’s accession to the multilateral Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), in which Japan is considered the de facto leader.52 In September 2021, Taipei applied to join this trade bloc following membership application by the PRC.53 The Japanese government has repeatedly signalled its support for Taiwan in this endeavour, provided the accession criteria are met.54 However, Tokyo fears that in the event of admission, the PRC may increase pressure on Taiwan.55

Culture and civil society

Taiwan and Japan share close bilateral relations in areas of culture, civil society and education. For instance, mutual societal perceptions of the other country are generally positive.56 Since 2005, Taiwanese visitors to Japan have been exempt from visa re­quirements for stays of up to 90 days, thus benefiting people-to-people exchanges.57 In 2011, Japan con­cluded an open skies agreement with Taiwan, result­ing in the establishment of new bilateral flight routes.58

Mutual tourism flourished until the COVID-19 pan­demic. In 2019, more than 2 million Japanese tourists visited Taiwan for the first time, making up the sec­ond largest group of foreign visitors that year after the PRC.59 Conversely, nearly 4.9 million Taiwanese travelled to Japan in 2019 – the third largest group of visitors from abroad.60

There are also lively exchanges between schools and universities on both sides. Centres for Japanese studies at Taiwanese universities, such as at National Taiwan University, receive financial support from the de facto Japanese embassy.61 In 2019, more than 10,000 Japanese students were enrolled at Taiwanese universities – a fivefold increase from 10 years ear­lier.62 Young people in Taiwan are also showing inter­est in Japan, as evidenced by the rising number of applications for working holiday visas in Japan. For instance, in 2019, Japan doubled the number of such visas that it issues for Taiwanese applicants from 5,000 to 10,000 per year.63

At the local level, there is also a network of partner­ships between cities or prefectures of the two sides. A total of 99 such partnerships exist, 77 of which have been established in the last 10 years alone.64 These links help to promote exchanges between mayors of the two sides, which is of political signifi­cance, especially because Taiwanese local politicians subsequently often pursue careers in national politics.65

Conclusion

On a political, economic and civil society level, Japan-Taiwan relations are overall developing positively. Japanese debates testify to a growing political aware­ness of the role and importance of Taiwan. Never­theless, Tokyo maintains the appearance of having a one-China policy.

Based on increased awareness, the Japanese leadership has become more willing to approach Taiwan policy more independently, rather than subordinating it to that of the PRC. When Beijing imposed an import ban on Taiwanese pineapples in March 2021 citing concerns about plant pests, Tokyo showed soli­darity with Taipei by purchasing 10,000 tonnes of the fruit.66 Despite its own slow vaccination campaign, Tokyo also supplied about 3.4 million COVID-19 vaccine doses to Taiwan in June and July 2021 after Taipei accused Beijing of blocking a shipment of BioNTech vaccines from Germany.67

In Tokyo, there is a wealth of creative ideas for the further development of relations with Taiwan. For example, a newly founded “Taiwan Project Team” of the ruling LDP developed proposals in this regard in June 2021. The project members refer, for example, to the possibility of using music festivals and other cultural events of the armed forces as justification to enable contact between active military personnel of the two sides.68 Even under the premise of its one-China policy, Japan thus sees scope for further ex­pand­ing relations with Taiwan.

Much Diplomacy without Diplomatic Relations: Singapore’s Foreign Policy and Taiwan

Felix Heiduk

Introduction

The Republic of Singapore does not recognise Taiwan diplomatically, but perhaps more than any other state in Southeast Asia has for decades built up and main­tained both extensive and intensive relations with subsequent governments in Taipei. This is, first of all, for historical reasons, as relations between the island of Taiwan and the city of Singapore date back at least to the 19th century. During British colonial rule over British Malaya, migrant workers settled in Singapore, mainly from southern China, especially from the provinces of Fujian, Guangdong and Hainan, but also from Taiwan.1 As a result of these migration move­ments, transnational family networks developed be­tween southern China and Singapore, some of which still exist today. Chinese migration also brought linguistic, religious and cultural practices to Singapore. For example, religious networks developed between Buddhist temples in Taiwan and numerous places across Southeast Asia.2

In the 20th century, Singapore, as part of British Malaya, initially maintained diplomatic relations with the Republic of China (1912–1949), which was ruled by the Kuomintang (KMT) from 1928. When Singapore became independent in 1965, the People’s Action Party (PAP), which still rules today, briefly recognised the Republic of China under Chiang Kai-shek’s leadership. The United Nations’ decision in 1971 which recognised the People’s Republic of China (PRC) as the only legitimate representative of China to the United Nations3 also affected diplomatic relations between Singapore and Taiwan, but did not prevent further rapprochement between the two. On a politi­cal level, anti-communism, among other things, united Taiwan and Singapore during the Cold War era. However, relations were also intensified on an economic and, above all, military level. Trade mis­sions were established as early as 1969, and through the “Exercise Starlight” agreement of 1975, Taiwan became one of the central partners in building up Singapore’s armed forces. The agreement included, inter alia, the training of Singaporean forces at Taiwan­ese military bases and of Singapore Armed Forces (SAF) by Taiwanese military personnel at mili­tary bases in Singapore.4 In contrast, Singapore only maintained unofficial relations with the PRC since the 1970s, until it became the last Southeast Asian state to establish official diplomatic relations with the People’s Republic on 3 October 1990.5 Even before establishing official relations with the PRC, however, Singapore’s then Prime Minister Lee Kuan Yew had officially advocated a one-China policy, according to which the question of Taiwan’s reunification with the PRC was declared an internal Chinese matter and Taiwan’s independence was flatly rejected.

Political relations

Singapore’s founding father Lee Kuan Yew and his son and current Prime Minister Lee Hsien Loong, the city-state’s main political dynasty, have nurtured extensive political contacts with Taipei. For instance, Lee Kuan Yew travelled to Taiwan several times, as did his son, whose last private visit was in 2004, short­ly before he took office as prime minister. The Lee family’s close personal ties to the KMT can be seen, for example, in the fact that the then Taiwanese Prime Minister Ma Ying-jeou was present at the funer­al services for Lee Kuan Yew in 2015. However, he did not take part in the official state ceremony, but in­stead attended the family’s funeral service as their guest of honour, which was held before the state funeral. Although this anecdote primarily illustrates the intense personal ties between Singapore’s politi­cal elite and the KMT, it is also indicative of some of the challenges Singapore’s diplomats have to crea­tive­ly deal with in their relations between Taiwan and the PRC.

By contrast, relations with the Democratic Progressive Party (DPP), which is currently in power in Taipei, have traditionally been more distant. Singapore has been critical of the DPP’s independence course for years.6 The Singaporean ruling party, the PAP, argues that the DPP’s emphasis on Taiwanese statehood and de facto independence is primarily motivated by domestic politics, and proves counterproductive in terms of foreign policy, as it provokes Beijing and thus promotes instability in the region. At the same time, Singapore’s relations with Taiwan have become more difficult. This is mainly due to the increasing economic ties between Singapore and the People’s Republic of China, among other things, through large Singaporean direct investments in the PRC – some of which take place in the context of the Belt and Road Initiative.7 It is true that Singapore is economically less dependent on the PRC than many neighbouring countries, including Taiwan, due to its broad-based, global trade relations. Nonetheless, the Singaporean leadership is consistently careful not to snub Beijing.

Nevertheless, Singapore has established close political relations with Taiwan across changing gov­ern­ments in Taipei, without noticeably deviating from its one-China policy. Internationally, Singapore has been “silent”, or rather very “quiet”, about Tai­wan in this context.8 For example, there are no offi­cial expressions of support for Taiwan in international organisations, nor are there any official visits to the island by Singaporean government representatives or parliamentarians. Rather, political leaders visit Taiwan privately or only after leaving government service.9 Furthermore, bilateral dialogues are also rare. However, employees of the Ministry of Economic Affairs and the Ministry of Defence regularly travel from Taiwan to Singapore for talks – but without any press coverage.10 Taiwanese representatives are also regularly invited to the Shangri-La Dialogue, one of the most important security policy dialogue forums in the region, because of their function as experts or academics. In addition, government-level meetings between Taiwan and the PRC have repeatedly taken place in the city-state, such as the most recent meet­ing between Xi Jinping and Ma Ying-jeou in 2015.11

Singapore does not recognise Taiwan diplomatically, but has concluded a free trade agreement with the island state.

While Singapore does not recognise Taiwan diplomatically, this has not prevented the city-state from concluding bilateral agreements with Taipei, such as a free trade agreement (FTA) and an agreement on the Exercise Starlight military training programme. Taiwan­ese diplomats in Taiwan’s unofficial representation, the Taipei Representative Office in Singapore, are also granted privileges that are equivalent to formal diplomatic status.12 In return, they also apply to the staff of Singapore’s representation in Taiwan, the Singapore Trade Office, which was established in 1979. These privileges include the granting of diplo­matic immunity, the use of diplomatic passports, the use of diplomatic privileges at airports and tax exemptions.13

There is also cooperation with Taiwan in many areas at the technical level. For example, Taiwan supports Singapore in improving its public transport system.14 Another area of cooperation is public hous­ing, through which Taiwanese delegations have been able to gain new ideas and learn about best practices in Singapore.15 Represented by experts and academics, the city-state also participates in the Global Co­operation and Training Framework (GCTF), originally founded by the U.S. and Taiwan when it comes to topics such as industrial espionage and the protection of intellectual property.16 At the academic level, there is also cooperation with Taiwan in the ASEAN con­text. The Singapore Institute of International Affairs (SIIA) is a member of the ASEAN Institutes of Strate­gic and International Studies (ASEAN ISIS) network. Together with Taiwan’s Institute of International Rela­tions (IIR) at National Chengchi University, the network regularly organises academic dialogues on foreign and security policy issues.17

Dealing with pressure from Beijing

In recent years, the PRC has repeatedly tried to influence Singapore’s dealings with Taiwan both directly and indirectly. From Singapore’s point of view, it is remarkable that the People’s Republic apparently regards the city-state as a “Chinese coun­try” in ethnic, cultural and linguistic terms and there­fore expects it to follow Beijing’s positions “naturally”, so to speak, or at least not to contradict them. For Singapore, however, this would equate to putting its own national interests aside.18 Therefore, Singapore does not always act according to Beijing’s expectations, which has led to conflicts. For example, in 2004, the PRC vehemently protested against a private visit by Singaporean Deputy Prime Minister Lee Hsien Loong to Taiwan shortly before his swearing-in as prime minister. Beijing interpreted Loong’s behaviour as support for the “separatists” in Taipei. Singapore countered that the trip was private and therefore unofficial, and made clear that it would not deviate from its one-China policy and would continue not to support Taiwanese independence. At the same time, Singapore insisted on its own independence and sov­er­eignty and rejected Beijing’s demand to cancel the trip.19

Another example concerns the PRC’s protests during Exercise Starlight 2016. After Tsai Ing-wen’s presidential election victory in the same year, Beijing demanded that no more military education and training programmes be conducted in Taiwan in the future. Singapore refused and again referred to its sovereignty. In November 2016, Beijing then had SAF military transport vehicles, which were on their way to Singapore by ship after the end of Exercise Star­light, seized in Hong Kong for alleged illegal arms trafficking.20 In Singapore, this was interpreted by many as a test of how far the city-state would bow to Chinese pressure. Beijing suggested that Singapore could move its military training programmes from Taiwan to Hainan Island, but the Singapore government did not give in to the pressure. Observers specu­lated that Singapore refused because it primarily dis­trusted expanded defence cooperation with Beijing and also because Taipei and Washington intervened diplomatically.21

Several months later, the military vehicles were quietly released in Hong Kong and shipped back to Singapore.22 According to Singapore’s Foreign Minis­ter, the conflict was finally settled on the basis of “inter­national law” and “mutual respect”.23

The PRC is also trying to gain more influence over Singapore’s foreign policy indirectly. At least that is the point argued by some think tanks as well as former Singaporean diplomats. According to a report by a U.S. think tank, there are indications that busi­ness lobbyists are using market access to the PRC as a lure to promote pro-Chinese positions, for example in the conflict over the South China Sea. Beijing also instru­mentalises cultural exchange forums with Singa­­pore and Chinese-language media for propaganda purposes.24 Observers such as the former diplomat Bilahari Kausikan also believe that Beijing actively challenges Singapore’s “multi-ethnic” identity policies by emphasising cultural similarities between Singa­pore’s majority Chinese population and the PRC and deliberately blurring the distinction between the terms “Chinese citizens” and “overseas Chinese”. Singa­­pore’s identity policy, however, is a fundamen­tal component of the city-state’s independence and internal stability.25

In general, however, it can be said that significant changes at the political level in Singapore’s dealings with Taiwan have so far failed to materialise, although tensions between the PRC and Taiwan are growing. Singapore’s government is still clearly committed to its one-China policy and positions itself unequivocally against any attempts by Taiwan to gain independ­ence. In doing so, Taiwan is seen as an extremely sensitive diplomatic issue, and is avoided as much as possible in order not to provoke Beijing. At the same time, the city-state has successfully resisted attempts by the PRC to influence its close military-political and economic relations with Taipei – despite the fact that Singapore is neither militarily nor economically dependent on Taiwan. As Singaporean observers see it, Singapore would at least partially surrender its sovereignty if it downgraded its relations with Taiwan under PRC pressure.

However, according to some commentators, shifts at the regional level, especially the escalating Sino-American rivalry, have shrunk Singapore’s room for manoeuvre in its relations with Taiwan.26 In addition, changes in Taiwan’s domestic politics, especially fol­low­ing Tsai Ing-wen’s inauguration and re-election, have also affected Singapore-Taiwan relations. Singa­pore is trying to counteract a possible deterioration in the relationship between Beijing and Taipei. For instance, it continuously emphasises its friendly rela­tionship with both entities, adheres to its one-China policy and neutrality, and offers to serve as a media­tor should this be desired by both parties to the con­flict.27 At present, therefore, it is unlikely that Singa­pore’s political relations with Taiwan and the PRC will deepen further.

Security policy

Singapore’s relations with Taiwan stand out mainly for their intensive military cooperation. For instance, and as mentioned above, Exercise Starlight, a formal annual training programme for Singaporean military personnel on the island, has been in operation since 1975.

Singapore and Taiwan maintain intensive military cooperation.

Taiwan has long been Singapore’s main partner for military training and manoeuvres that are not pos­sible on the city-state’s territory due to its limited land area. For instance, in the 1980s and 1990s, up to 15,000 soldiers took part in Exercise Starlight, and the trainings now also include aspects such as counter-terrorism and dealing with natural disasters. In order to better coordinate joint military training and manoeuvres, delegations from the Taiwanese Ministry of Defence, and in 2014 even the Minister of Defence himself, repeatedly travel to Singapore. However, the Singaporean government has categorically ruled out supporting Taiwan (militarily) in the event of a crisis.

Since the early 2000s, Singapore has also entered into military cooperation with other states such as Australia, Brunei and even the PRC, nonetheless Exer­cise Starlight, with currently about 3,000 Singaporean soldiers participating annually, continues to exist today.28 At the same time, however, Singapore has expanded its military cooperation with the PRC. With­in the framework of the Agreement on Defence Exchanges and Security Cooperation (ADESC), which has existed since 2008 and was expanded in 2019, regular military exercises are held jointly with the People’s Liberation Army (PLA), as are regular dia­logues at the ministerial level and reciprocal naval port visits.29

Economy

Singapore is the only Southeast Asian country and, except for New Zealand, the only country in the Indo-Pacific that has concluded a free trade agreement with Taiwan despite diplomatic non-recognition. This FTA between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP) as signed on November 2013 was intended to contribute to the deepening of bilateral economic relations between Taiwan and Singa­pore. The ASTEP aims to liberalise mutual mar­ket access. Tariffs for trade in goods were either abolished directly upon the conclusion of the agree­ment or, with a few exceptions such as agricultural products, gradually reduced to zero within the fol­lowing 15 years. However, it also contains chapters on competition policy, customs procedures, dispute settlement mechanisms, e-trade, intellectual property rights, investment, technical barriers to trade and services.

At the time the agreement was concluded in 2013, Singapore was Taiwan’s fifth largest trading partner and fourth largest export market; for Singapore, in turn, Taiwan was its eighth largest trading partner and tenth largest export market.30 In 2020, 5.4% of all goods exports from Taiwan went to Singapore, and 3% of all Taiwanese goods imports came from Singa­pore. In the same year, 4.9% of all Singaporean prod­ucts were exported to Taiwan, while 8.8% of all products imported into Singapore came from Taiwan. Singapore accounted for 4.3% of all Taiwanese direct investment abroad, while Singaporean direct invest­ment in Taiwan accounted for 4.6%. In terms of vol­ume, Singapore is currently the fifth largest destination for Taiwanese exports after the PRC, Hong Kong, the U.S. and Japan. For Singapore, Taiwan is currently the seventh largest export market after the PRC, Hong Kong, Malaysia, the U.S., Indonesia and Japan. Over­all, however, Singapore faces a clear trade deficit with Taiwan, as the city-state imports significantly more goods from Taiwan (worth more than US$28 billion in 2020) than it exports to it (worth more than US$17 billion in 2020).31

The close trade relations between Taiwan and Singapore are not only important economically, but also strategically.

Although both countries have export-oriented economies, competitive relations exist in only a few economic sectors, for example in mechanical engi­neering and artificial intelligence.32 Taiwan mainly exports semiconductors, machinery, electronic goods and agricultural products, while Singapore focuses more on services and the financial sector. Some ob­servers therefore regard these two economies as com­plementary.33 For Taiwan and Singapore, however, neither prioritise the other as a crucial trading part­ner, as the PRC, Hong Kong and the U.S., among others, are far more important for both in this con­text. In addition to the concrete economic benefits of close trade relations and especially of the ASTEP, strategic aspects are, too, often emphasised.34

From Taiwan’s perspective, the FTA with Singapore in 2013 was extremely important from a strategic point of view, because it enables the island to reduce its high economic dependence on the PRC in the me­dium term through diversification. Taipei also hopes it will be able to conclude further FTAs with other ASEAN states in the near future on the basis of the agreements with New Zealand and Singapore. More­over, Taiwan’s Foreign Minister at the time, David Lin, described the agreement with Singapore as “paving the way” for his country’s later accession to regional FTAs such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Part­nership (RCEP), which were then being negotiated.35 For Singapore, which relies on exports, the deal with Taiwan was part of its strategy to expand free trade in the region. Singapore’s government considers bilateral as well as regional free trade agreements as key instruments to achieve this strategic goal.36 More­over, observers argue that despite a separate FTA between Beijing and Singapore, Taiwan is also attrac­tive for Singaporean companies. This is because many Taiwanese companies have specific economic links with mainland China through the Economic Coopera­tion Framework Agreement (ECFA) between Beijing and Taipei, which was made possible by the opening up of sectors such as banking and insurance.37

The conclusion of the agreement in 2013 coincided with the rapprochement between the Kuomintang government in Taipei and the Chinese leadership. There is some evidence to suggest that the PRC, with which Singapore had also previously agreed an FTA, tacitly approved the treaty.38 Strictly speaking, it was not signed by the government: for Taiwan, the repre­sentative of the Taipei Representative Office, Hsieh Fa-dah, and for Singapore, his counterpart Calvin Eu from the Singapore Trade Office, put their signatures on the document. The agreement with Taiwan is also not on Singapore’s official list of FTAs, which is pub­lished by the Ministry of Trade and Industry.39

Cultural and civil society relations

Civil society relations between Singapore and Taiwan are, at least in some subareas, less intensive than the close political, military and economic ties would suggest. For example, very few Singaporeans study in Taiwan. Although there is a scholarship programme set up specifically for this purpose,40 by far the major­ity of foreign students who study in Taiwan come from other countries in Southeast Asia, such as Indo­nesia and Vietnam. For many Singaporean students, studying in Taiwan is of little interest, as the uni­versities in their home country are better equipped and much higher placed in the international uni­versity rankings. Moreover, Singaporeans prefer to apply for places at more prestigious universities in the U.S., Australia or the U.K., partly because of their English language skills. In academia, there are never­theless some collaborations between Singaporean and Taiwanese universities, for example in the develop­ment of “smart” technologies.41 However, academic cooperation with the PRC far outweighs that with Taiwan.42

More significant, however, is the exchange on a cultural level. For decades now, Taiwan has been the centre of the Chinese-language music industry, espe­cially Mandarin pop (“Mandopop”). Chinese-speaking Singaporean musicians therefore regularly frequent recording studios in Taiwan, release their music through Taiwanese record companies and perform on the island. Taiwan’s film industry is also impor­tant for Chinese-language films. Accordingly, Chi­nese-speaking actors from Singapore often stay in Taiwan for film productions. Taiwanese films and series have been marketed in Singapore since the 1970s. But Singaporean film studios, likewise, have a long tradition of producing Chinese-language films and series, which in turn have been distributed in Tai­wan and other states in the region. As demon­strated, the distribution of films and music helps create common cultural markers and references between Taiwan and Singapore.43

Charitable Buddhist organisations such as Tsu Chi, Dharma Drum and Fo Guang Shan, which are head­quartered in Taiwan, have also established branches in Singapore. In addition to their charitable work, these religious organisations also see themselves as contact points for cultural exchanges between Taiwan and its neighbours, and there are several networks between temples in Taiwan and Singapore that have been established over decades.44

Before the COVID-19 pandemic, Taiwan was also a popular destination for Singaporean tourists. In 2019, more than 460,000 arrivals from Singapore were regis­tered on the island, with an annual growth rate of 5 to 8 per cent since the 2000s.45 A bilateral agree­ment allows both Singaporean and Taiwanese citizens to stay visa-free for up to 30 days in Taiwan and Singapore respectively.

Conclusion

Despite the lack of diplomatic recognition of Taiwan on the part of the city-state, Singaporean-Taiwanese relations are characterised by a large number of diplo­matic contacts and resulting cooperation. Substantial, close relations now exist in a number of policy areas such as trade, defence and culture. This is mainly due to historical reasons. On the one hand, Singapore had to find allies, since it had declared independence from Malaysia in 1965 and had become more vul­ner­able as a result. On the other hand, Taiwan was also forced to look for new partners after it lost its seat in the United Nations in 1971 and was in danger of becoming increasingly isolated. Close personal rela­tions developed between the political elites of Singa­pore and Taiwan, on the basis of which bilateral co­operation was intensified from the end of the 1960s and formalised through agreements such as Exercise Starlight and the ASTEP. Despite growing pressure from Beijing, a departure from this policy has not yet been observed, although Singapore’s economic and defence cooperation with Taiwan has lost material importance over the last two decades in view of the growing number of alternative partners. An impor­tant reason for the unbroken intensity of bilateral relations lies in Singapore’s efforts to assert its sov­ereignty as an ethnically majority Chinese city-state against an increasingly assertive PRC.

In the Shadow of the “1992 System” – Relations between South Korea and Taiwan

Eric J. Ballbach

Introduction

When discussing relations between South Korea (offi­cially the Republic of Korea or ROK) and Taiwan (officially the Republic of China or ROC), reference is often made to their shared history: from the experience of Japanese occupation to the anti-communist foreign policy after the Second World War to eco­nomic liberalisation and political democratisation in the 1980s and 1990s. However, the end of the Cold War and especially the normalisation of relations between South Korea and the People’s Republic of China (PRC) in 1992 led to an estrangement between the two countries. Despite the lack of formal diplo­matic relations, however, Seoul and Taipei have successively expanded their economic and cultural exchanges. Gradually, a network of complex, and in large parts highly informal and unofficial relations emerged. From a security perspective, however, Tai­wan remains an extremely sensitive issue for South Korea, and Seoul has so far refused to cooperate with Taipei in the field of security policy in view of its own difficult geopolitical situation and, at least during the rule of liberal governments, the primacy of its North Korea policy.

Political relations

Korea and Taiwan share a historical connection that goes back to before the founding of the Republic of Korea in 1948. The Kuomintang supported the Pro­visional Government of the Republic of Korea when it came into being in 19191 and during its subsequent recognition by the Republic of China. During the Cold War, both the ROC on Taiwan and South Korea were important allies of the U.S. Diplomatic relations between the ROC and South Korea, established in August 1948, were based on the principle of anti-com­munism pursued by both. This led to close politi­cal, economic, military and cultural cooperation between the two countries, especially in the 1950s and 1960s.2

South Korea’s foreign policy calculations changed fundamentally, however, against the background of the Nixon Doctrine, the takeover of China’s representation at the United Nations (UN) by the People’s Repub­lic in 1971, and the establishment of diplomatic relations between the U.S. and the PRC on 1 Janu­ary 1979 (which was linked to the breaking off of rela­tions between the U.S. and the ROC). In particular, South Korea moved away from the strictly anti-com­munist orientation of its foreign policy: not only did the first negotiations with North Korea take place in the 1970s but Seoul also gradually expanded its rela­tions with Beijing in the following years. The so-called “Northern Policy” of South Korean President Roh Tae-woo (term 1988–1993) explicitly aimed to improve Seoul’s relationship with North Korea’s closest allies in order to reduce military tensions on the Korean peninsula and diversify Seoul’s foreign (trade) rela­tions.

Breakdown of diplomatic relations and separation of politics and business

After secret negotiations between South Korea and the PRC, the two countries established diplomatic rela­tions on 22 August 1992; South Korea thus be­came the last Asian country to cut formal diplomatic relations with the ROC.3 Taipei reacted with open criticism and a series of punitive measures against the ROK. In particular, Taiwan revoked the air ser­vices agreement with South Korea, suspending all direct commercial air services to Seoul and banning South Korean aircraft from using Taiwanese airspace. For the next 12 years, only charter flights took place between the two countries.4 In addition, Taiwan ended South Korea’s preferential treatment in trade, initiated anti-dumping proceedings against Korean products and prohibited South Korean companies from participating in public projects in Taiwan. Last but not least, Taiwan banned Korean ships from tran­siting the Taiwan-Japan shipping route and Taiwan­ese state-owned enterprises from using Korean cargo ships. As a result, relations between South Korea and Taiwan cooled noticeably, and an increasingly anti-Korean sentiment spread throughout the ROC.5

The core of informal relations between South Korea and Taiwan is economic and cultural cooperation.

Despite the deterioration of the political relationship, South Korea and Taiwan could not afford to break off relations completely, not least because of the economic links between the two countries. With the resumption of informal relations in 1993, the focus shifted from political and military issues to main­taining and expanding economic cooperation and promoting cultural exchange. These private sec­tor relations formed the basis for the successive estab­lishment of a network of informal political relations.

Informal cooperation

Think Tank Cooperation and Track 1.5 Diplomacy

After the breakdown of official relations, Taiwanese and South Korean think tanks were among the first actors to try to fill the gap left by the lack of official dialogue between the two countries. A particularly im­portant early Track 1.5 project, the Taipei-Seoul Forum/Seoul-Taipei Forum (TSF/STF), was launched by the Institute of International Relations in Taipei and the Seoul Forum for International Affairs.6 It was first held in 1989 and shows how personal contacts and intensive social networking over several decades, as well as links between think tanks, helped to maintain fragile bilateral relations during an extremely diffi­cult period.7 Thanks to high-level political support and influential participants on both sides, the forum developed into a semi-official diplomatic space after 1992.8 Although it is hosted by academic institutions, most of the participants are either former or incum­bent high-ranking officials. The TSF/STF thus facili­tated direct dialogue between government officials, politicians, academics and major think tanks in Tai­wan and South Korea, which also served to clear up misunderstandings and discuss pertinent issues. For example, the TSF/STF played a crucial role in nego­tiating the agreement on the resumption of direct air links signed in 2004, which was the result of years of continuous dialogue between academia, industry and the public sector.9

Diplomatic missions

In July 1993, Taiwan’s Deputy Foreign Minister Fang Chin-yen visited Seoul to explore the possibilities of resuming bilateral relations. It was the first meeting at the vice-ministerial level since the severance of diplo­matic relations a year earlier.10 Shortly afterwards, both sides decided not only to resume infor­mal contacts, but agreed to establish quasi-diplomatic missions. The Korean representation in Taipei opened in November 1993, while the Taiwanese representation in Seoul did so in January 1994. Officially, the two offices take care of economic and cultural rela­tions and handle consular matters. In practice, how­ever, the Korean mission in Taipei functions as South Korea’s representative office in Taiwan and serves as a de facto embassy in the absence of official diplomatic relations. It reports directly to the Ministry of Foreign Affairs, and is headed by a representative (taep’yo), usually experienced officials from the ministry. Heads of mission from both sides regularly attend cultural, economic and public events, but also accompany high-ranking visitors from their respective countries and sign official documents and agreements (such as the one mentioned above on the resumption of direct air links).

Parliamentary Exchange

In August 1996, the South Korean National Assembly established the ROC-ROK Parliamentary Friendship Association. In response, the ROC-ROK Inter-Parlia­mentary Amity Association was established in Taipei in December 1996. Shortly before that, the highest-ranking delegation of South Korean parliamentarians to date, led by MP Chung Jae Moon, had visited Taipei. The core objective of the associations is to promote parliamentary exchanges. The then President of the Taiwanese Parliament, Liu Sung-pan, described their establishment as a crucial step in reviving relations between the two countries, noting that the diplomatic efforts of the parliamentarians had become an impor­tant means of improving Taiwan’s international relations.11

The parliamentary associations played a crucial role in successively increasing interactions and strengthening informal relations between South Korea and Taiwan in the following years. Especially after the election of Chen Shui-bian as President of the ROC in 2000, reciprocal parliamentary visits took place much more regularly. MPs also discussed rele­vant issues such as the option of reopening consultations at the level of economic and trade ministers, and negotiating a free trade agreement (FTA) between the two countries, as well as regional security issues and Taiwan’s possible accession (as an observer) to the World Health Organisation (WHO).

Diplomacy of the former

Another important informal channel between Taiwan and South Korea is what might be described as “diplo­macy of the former”, i.e. repeated reciprocal visits by former high-ranking government officials.

Of particular significance were the repeated trips to Taiwan by former South Korean President Kim Young-sam, making him the highest-profile visitor from the ROK following the severance of diplomatic relations between the two countries. In total, Kim travelled to Taiwan five times after leaving office in 1998.12 Remark­ably, these visits took place despite criticism from China, and Kim met personally with Taiwan’s former President Chen during all of them. The infor­mal consultations included discussions on how to restore direct air links, what measures could strength­en relations between the two countries, what challenges they faced and whether annual economic meetings at the ministerial level could be considered. There was also a regular exchange of views on strategic regional issues, including how to promote stability and pros­perity in the Asia-Pacific region.

On the Taiwanese side, former Vice President Annette Lu visited South Korea several times after leav­ing office (2008). During her stays, she met Korean politicians such as Deputy Speaker of the National Assembly Lee Ju-young and civil society leaders. Lu repeatedly advocated formalising bilateral relations between Taiwan and South Korea and called on both South Korea’s ruling and opposition parties to sup­port this cause.13

Security policy relations

South Korea’s foreign policy in East Asia is to a large extent a reflection of its difficult geopolitical situa­tion. Even more than other states in the region, it has to navigate carefully between China and the United States, its own position within the South Korea-U.S. alliance and its bilateral relations with Japan and North Korea. With the North Korean issue at the cen­tre of its foreign policy interest, especially for liberal governments in Seoul, South Korea is keen to main­tain diplomatic equidistance from China and the U.S. – its largest trading partners and the two main external actors involved in the question of peace and security on the Korean peninsula. Therefore, South Korea acts with extreme restraint in sensitive matters such as the Taiwan issue, not least to avoid Chinese punitive measures like in 2017.14

South Korea is reluctant to deepen security relations with Taiwan, fearing China’s reaction.

For South Korea, the opportunities for a stronger security relationship with Taiwan are subordinated to the dangers that a deterioration of the relationship with the PRC would presumably entail. Even though the newly elected President Yoon Suk-yeol takes a more critical stance towards China and stands for a foreign policy more closely aligned with the U.S., it remains unlikely that South Korea will, in the short term, directly accommodate Taiwan in terms of secu­rity policy or support Taipei’s quest for international recognition more directly than before.15

At the same time, South Korean decision makers also learned a bitter lesson in 2017 about the vul­ner­ability and risks of being (too) dependent on the Chi­nese economy. Moreover, the intensifying rivalry between China and the U.S. will further increase the constraints on South Korean foreign policy – and it is highly likely that it will become increasingly difficult for Seoul to navigate between the U.S. and China in the future. Also, there is growing inter­national concern about the development of the situation in the Taiwan Strait. Even if the U.S. is not expected to ask South Korea for direct military sup­port in the event of a crisis, an incident in that region would also directly affect South Korea, for example if U.S. troops in South Korea were to integrate or use military bases there.

Economic relations

Trade and investment

In 2020, bilateral trade between Taiwan and South Korea amounted to US$34.9 billion. According to the United Nations Conference on Trade and Development (UNCTAD), South Korea is currently the seventh most important export market and the sixth most important source of imports for Taiwan. The list of ex­port and import goods is headed by electronic com­po­nents (51.2% / 50.6%), petrochemical and chemical products (20.4% / 21.6%) and machinery (6.0% / 4.6%).16

While globally, and also with the active participation of South Korea and Taiwan, direct investment grew strongly in the 1990s and especially in the 2000s, the level of direct investment between the two economies is surprisingly low: according to the Invest­ment Commission of the Ministry of Economic Affairs in Taipei, Taiwan’s companies invested just US$1.6 bil­lion in South Korea up to and including 2020. Major investment sectors include electronic component manufacturing, finance and insurance, phar­ma­ceu­tical manufacturing, computer and electronic prod­uct manufacturing, and optical product manu­facturing. In comparison, South Korea’s investment in Taiwan up to the end of 2020 comprised only US$1.3 billion, representing a 0.7% share of the ROK’s total foreign investment. They were mainly in electronic component manufacturing, wholesale and retail trade, com­puter, electronic and optical product manufacturing, finance and insurance, information and communications, and construction.17

Current status and challenges of economic cooperation

To promote bilateral trade relations, a Taiwan-South Korea Economic Cooperation Forum was organised in 2007.18 The fact that this was the first of its kind since the severance of diplomatic relations, on the one hand, underlines the symbolic importance of this high-level meeting. On the other hand, it reflects the untapped potential of economic cooperation between the two countries, since both the low level of investment and trade relations, which are still operating below their potential, are primarily due to the unfavourable politi­cal framework. Key fundamentals such as an investment protection agreement or an agreement to avoid double taxation have not been negotiated to date.19 Similarly, repeated calls to start negotiations on an FTA have so far remained largely unanswered. Despite other interests of the South Korean economy, Seoul is reluctant to push for such talks in order to avoid conflict with the PRC.20 Moreover, various restric­tions imposed by the Taiwanese government on Korean shipping companies continue to exist.21 Despite that, in the past few years Seoul and Taipei have signed a number of smaller agreements and memoranda on their cooperation in various fields; for example, an MoU on the Exchange of Electronic Certificates of Origin (ECO, 2008), MoUs on the Patent Prosecution Highway (PPH, 2015) and Patent Priority Electronic File Exchange (2015), MoUs on the Ex­change of Industrial Property Information (2015) and the Electronic Exchange of Priority Documents (PDX, 2015), and the Mutual Recognition Arrangement (MRA) on Authorized Economic Operator (AEO) (2015).22

Development of further fields of cooperation

Due to the mutually shared desire for foreign political and economic diversification, there are certainly realis­tic opportunities – beyond the security policy level – to expand cooperation.

To begin with, Taiwan’s “New Southbound Policy” under President Tsai Ing-wen and South Korea’s “New Southern Policy” under President Moon Jae-in are pursuing similar goals, for example in terms of ex­panding strategic investments in the Indo-Pacific region. Deeper cooperation in Southeast Asia, which South Korea’s newly elected president Yoon Suk-yeol also explicitly seeks, is also realistic, for example in the (joint) financing of infrastructure projects, not least to counter the attractiveness of China’s Belt and Road Initiative (BRI) in the region. Although Taiwanese and South Korean companies compete with one another in semiconductor production, among other things, there is an opportunity to work more closely together, for example to improve the resilience of supply chains.

Moreover, relations between South Korea and Taiwan could also be improved through the Global Cooperation and Training Framework (GCTF), in which South Korea has so far only participated spo­radically. The GCTF was launched under the auspices of the American Institute in Taiwan and includes a series of workshops that allow Taiwan to share its expertise with other countries. Further cooperation between Seoul and Taipei within the framework of the GCTF is quite conceivable, not least because it deals with problems to which both countries have to respond and which are generally less sensitive than traditional security issues.

Educational and Cultural Relations and People-to-People Exchange

Cultural and educational relations between the two sides have intensified considerably in recent years. In this context, Heo and Kim argue that the networks created between South Korea and Taiwan through economic, cultural and educational exchanges have played a key role in the development of bilateral rela­tions.23 In addition to political progress such as the air transport agreement, the success of South Korean cultural products (such as Hallyu) also contributed significantly to the easing of tensions between the two countries. Against this backdrop, the number of Taiwanese students in the ROK grew from 631 in 2003 to 4,329 in 2018.24 In parallel, the number of recip­rocal tourist visits also increased significantly – from 300,000 in 1992 to more than 2.5 million in 2019.25 According to the Taiwan Tourism Office, the number of Taiwanese tourists in South Korea rose by 71.3% between 2013 and 2017. This makes visitors from Taiwan the third largest group of international tour­ists in South Korea after visitors from China and Japan.26 This is also reflected in a sharp increase in direct flights: while these were non-existent between 1992 and 2004, there are now roughly 10 flights per day between Taipei and important destinations in South Korea. On 1 July 2012, the two countries changed each other’s visa requirements to allow visitors to stay visa-free in the other country for 90 days.

In the academic field, 55 Taiwanese universities have partnership agreements with 92 Korean uni­versities and colleges. National Taiwan University alone has 99 partnership and cooperation agreements with various institutions and departments across 18 South Korean universities.27 In addition, many academic organisations in South Korea and Taiwan have established forums for academic exchange. Ex­am­ples include the Korea Society for Chinese Studies, the Korea-China Education Fund and the Taiwan Culture and Education Fund. Hankuk Uni­versity of Foreign Studies in Seoul opened a research centre for contemporary Taiwan studies in May 2011; meanwhile, similar facilities exist at Anyang Uni­versity and Hallym University.28

Conclusion

Relations between South Korea and Taiwan are com­plex, in large parts highly informal, and yet too im­por­tant for both countries to ignore. Despite tangible progress in mutual relations since 1992, especially in economic exchanges and trade as well as cultural cooperation, neither country has managed to fully exploit the potential of their relationship. The lack of security cooperation is primarily explained by South Korea’s geopolitical dilemma and the primacy of the North Korean issue for (liberal administrations in) Seoul, which makes direct security cooperation with Taiwan unlikely for the time being. To date, South Korea has made the strategic decision that the expect­ed costs of upgrading its relations with Taiwan exceed the potential gains. Against this backdrop, the devel­op­ment of new fields of cooperation in less sensitive areas is possible – but a fundamental departure from the current cautious course is at present not expected.

Australia and Taiwan: Finding Alignments amidst Great Power Competition

Mark Harrison

Australia-Taiwan relations function, on the one hand, as a normal, international relationship in which both sides complement each other, especially in terms of foreign trade. On the other hand, Canberra and Taipei share special and complex relations – shaped by the regional presence of the People’s Republic of China (PRC), Beijing’s territorial claim to Taiwan and the im­plications for regional security. Taiwan is Australia’s twelfth largest trading partner and a major market for Australian energy and resources exports. Simulta­neously, Taiwan is a critical parameter in Australia-China relations, the U.S. alliance, and Australia’s relations in the Pacific. The multivector and sometimes contradictory nature of the relationship pro­duces contested policy outcomes that expose com­peting imperatives in Australia’s foreign policy­making apparatus. While in the 1990s this policy was predominantly oriented towards economic issues, it was later increasingly determined by security and defence issues in the Indo-Pacific region. More recent­ly, Australia’s concerns about China under Xi Jinping’s leadership and Taiwan’s international space align more closely with Taipei’s outlook.

Australia, the Republic of China (ROC) and Japan

Australia-Taiwan relations have been complicated by their parallel experiences of colonialism and the over­lapping histories of the Republic of China (ROC) and the People’s Republic of China (PRC). Relations be­tween Australia and Taiwan can also be understood as Australia-ROC relations, highlighting the unstable national categories that beset Taiwan’s international relations and its place outside the international system.

From the founding of the Republic of China in 1912 by the Chinese Nationalists or the Kuomingtang (KMT) until the 1940s, Australia was constrained in its for­eign relations by its status as a British dominion. Even after the Balfour Declaration of 1926, which gave the Dominions the legal right to establish independent foreign relations, Australia’s foreign affairs were still largely conducted by Great Britain. Nevertheless, Australia did have a trade commissioner in Shanghai in the 1920s, and the ROC maintained diplomatic representation in Australia throughout that time.1 The Chinese diaspora in Australia, while diverse, also included organisations supporting the ROC as well as overseas chapters of the KMT.2

The island of Taiwan during this time was a colonial territory of Japan, and Australia regarded its citi­zens as imperial Japanese subjects. Therefore, rela­tions with Taiwan were subsumed under relations with Japan, including during WWII when around 1,000 Taiwanese people in Australia were interned on the basis that they were Japanese.

The bilateral relationship changed after the Second World War. The government of the Republic of China retreated to Taipei – the capital of the island of Tai­wan – in 1949, and the Korean War broke out the fol­lowing year. Relations between Australia and Taiwan were now framed by the Cold War and the ANZUS Defence Treaty signed in 1951 between the U.S., Australia and New Zealand. Both Australia and the ROC belonged to the American alliance system and were committed to resisting communism; never­theless, their bilateral relationship remained rela­tively cool. Australia maintained diplomatic relations with the Republic of China and did not recognise the PRC. However, for most of the 1950s and 1960s it did not have an ambassador-level official in Taipei.

Australia’s One-China Policy

In 1972, in the context of U.S.-PRC rapprochement, the Australian government recognised Beijing and broke off relations with Taipei. The Australia-China communique stated:

“The Australian Government recognises the Government of the People’s Republic of China as the sole legal Government of China, acknowledges the position of the Chinese Government that Taiwan is a province of the People’s Republic of China, and has decided to remove its official representation from Taiwan before 25 January 1973.”3

This established the foundations of a one-China policy, in which Australia does not recognise Taiwan as a state in the international system but remains ambiguous regarding its sovereignty, only going so far as to “acknowledge” Beijing’s position that Taiwan is part of the territory of the PRC. After Australia’s rec­og­nition of the PRC, relations with Taipei remained non-functioning throughout the rest of the 1970s, as Australia began to engage actively with Beijing.

For its part, the PRC in the post-Mao period entered the global system and began remaking its own poli­tics and political economy in the era of “reform and opening-up”. This included Beijing’s relations with Taipei. The 1979 Letter to Taiwan Compatriots, adopt­ed by the Standing Committee of the 5th National People’s Congress, drew a formal line under the Mao period and laid new foundations for Beijing’s Taiwan policy architecture, including the “one country, two systems” formula for the unification of the two sides sought by Beijing and for relations between the KMT and the Chinese Communist Party (CCP).4

The U.S. also began revising its Taiwan policy archi­tecture, ending diplomatic recognition of Taiwan and the U.S.-ROC Mutual Defense Treaty in 1979 and enacting the Taiwan Relations Act. The latter served as a model for Australia to re-establish unofficial rela­tions with Taiwan. In 1981, the Australian Commerce and Industry Office (ACIO) was set up in Taipei, assum­ing many of the functions of an embassy, but without formal diplomatic recognition of the host country. In 2012, the ACIO changed its name to the Australian Office.5

Since the 1980s, Australia has thus maintained political contacts with Taiwan within the framework of a one-China policy and promoted exchanges in trade, culture and education. However, while there are bilateral government contacts, Australia is cau­tious about any moves that might give the impression that Taiwan is being treated as a sovereign state. The last visit of an Australian prime minister to the island was that of Harold Holt in 1966. The two sides also engage with each other through Track 1.5 or Track 2 think tank dialogues.

Australia’s turn to Asia

Developments in the 1980s pointed to Australia’s change in its international course beyond the re­sponse to the Sino-American rapprochement and its geopolitical consequences. This created a new con­ceptual basis for relations with Taiwan, which were more clearly understood as Australia-Taiwan relations rather than relations with the Republic of China.

Under the simple catchword “reform”, Australia introduced a series of measures during this period aimed at liberalising the domestic economy and strengthening exports. This political economic shift was specifically oriented towards Asia; it affected Australia’s political culture as well as its foreign and trade policy orientation. The country’s identity as a former British colony and military ally of the U.S. receded, and it now sought an economic and cultural place in Asia. This upheaval was motivated by long-term changes in Australia’s international relations. These included Britain’s entry into the European Economic Community (EEC) in 1973 and the end of Britain’s “Imperial Preference” trade policies that had favoured Australia and other former British colonies.

For Australia, it was part of its own reform process to advance relations with Taiwan.

The new policy orientation was expressed in the policy paper “Australia and the Northeast Asian Ascendancy”.6 The report recommended that Aus­tralia should orient itself economically towards the fast-growing economies of Asia – especially Japan, but also the “tiger economies” of Taiwan and South Korea. These Asian economies were elevated for Aus­tralia as both policy models of dynamic and deregulated export-oriented economies and were themselves also new key export market targets, offering growing middle classes and consumer cultures for Australian exporters to sustain the nation’s economic prosperity.

This political economic shift in Australia created the parameters for a dual structure in Australia-Tai­wan ties. Trade relations were dynamic and profitable, while diplomatic exchanges were complicated by several factors including Taiwan’s precarious inter­national status, the lack of formal recognition by Can­berra, and relations between Australia, the PRC and the U.S.

Economic relations

In the late 1980s and the 1990s, it was trade relations that dominated Australian policy towards Taiwan and strengthened the bilateral relationship. This was not only in line with Canberra’s national priorities but also reflected the development of a global trade archi­tecture in the post-Cold War era of “globalisation”. Economic relations complemented each other, with Australia supplying mainly raw materials and agri­cultural goods, and Taiwan offering manufactured and industrial goods in the consumer and technology sectors.

From Australia’s point of view, it was part of its own political and economic reform process to ad­vance relations with Taiwan. Taiwan, however, faced different policy imperatives in the context of its deep­ening international isolation. For Taiwan, a functioning trade exchange was a means of maintaining its international space through intergovernmental con­tacts, even in the absence of formal diplomatic rela­tions. It was the start of an approach through the 1990s and 2000s that sought to “Taiwanize” Taiwan’s international relations and avoid competing directly with the PRC as the “Republic of China”. Instead, in the context of Beijing’s efforts to constrain Taiwan’s international space, Taipei tried to find ways to main­tain its existing space and new levers in the inter­national system to expand it.

For these overlapping purposes, Australia and Tai­wan in the 1990s took advantage of the international as well as the regional trade architecture that devel­oped after the Cold War. In 1989, the Asia-Pacific Eco­nomic Cooperation (APEC) was founded under Aus­tralian leadership. For Australia, APEC represented a regional architecture that was premised on free trade, regional investment and economic development, and regional economies were its foundational unit. It included Southeast and Northeast Asian states as well as the U.S. and Canada. For Taiwan, APEC was an oppor­tunity to build regional relations as an economy without formal diplomatic recognition. It joined the forum in 1991 as “Chinese Taipei”, while at the same time the PRC and Hong Kong became separate members.

APEC is trade and investment focused, with activities that emphasise cooperation in intellectual prop­erty, customs and trade regulation equalisation, as well as new economy sectors. It also facilitates inter­governmental cooperation in the fields of technology, health and labour. In this context, APEC organises numerous forums on technical trade issues and, more importantly, an annual economic summit attended by heads of government. Senior corporate or political figures represent the president of Taiwan at these meetings.7

In addition to APEC, Australia-Taiwan relations were institutionalised in the 1990s and 2000s through government-to-government memoranda of understand­ing (MoUs). These are focused on technical aspects of trade as well as specific areas of science and cul­tural collaboration. In this way, the bilateral ar­range­ments function within the parameters of Aus­tralia’s one-China policy, while at the same time creating the administrative conditions for relations to function effectively. Two of the MoUs date from 1996: first, an agreement between Taiwan’s Bureau of Com­modity Inspection and Quarantine and Australia’s Quality Assurance Services Pty Limited; and second, a memorandum of understanding between the Taipei Economic and Cultural Office and the Australian Com­merce and Industry Office on the application of competition and fair trade laws. In 2007, there was an exchange of letters, also between the Taiwan Eco­nomic and Cultural Office and the Australian Office in Taipei, on the mutual recognition of equipment covered by the Electromagnetic Energy (EME) Regu­latory Agreement. Other agreements address postal services, investment and industry-specific trade pro­motion. There is a 2001 bilateral agreement between the Taiwan Office in Canberra and the Australian Department of Agriculture, Fisheries and Forestry dedicated to cooperation in agriculture and agri­usiness.

Meanwhile, however, the PRC had become an increasingly important economic partner for Aus­tralia. In 1996, for the first time, the country con­ducted more trade with the People’s Republic than with Taiwan, with the volume in both cases account­ing for about 5 per cent of Australia’s total inter­national trade. Japan had a share of 16 per cent at that time.8 By 2017, Australia-Taiwan two-way trade had fallen to only 3 per cent of Australia’s total trade value while trade with China had grown to 28 per cent. The People’s Republic was now Australia’s largest trading partner by far. The 2014 agreement between Beijing and Canberra on a comprehensive strategic partnership and the 2015 China-Australia Free Trade Agreement (ChAFTA) contributed to this development.

Through the late 1990s and 2000s, the growing importance of the PRC to Australian trade marginal­ised Australia-Taiwan relations. As trade with China began to dominate Australian foreign policy, Can­berra became more sensitive to Beijing’s position on the status of Taiwan. As a result, issues of security, defence and diplomacy in Australian-Taiwan relations sometimes operated in tension with the positive trade relationship.

Such tensions eased as the relationship between Beijing and Taipei improved at the end of the term of China’s former President Hu Jintao (2003–2013) and especially under the Taiwanese government of Ma Ying-jeou (2008–2016). Trade briefly became the engine of Australia-Taiwan relations again, with each side seeking to open up new fields of economic ex­change according to their respective interests.

The Australian government considered a free trade agreement (FTA) with Taiwan in the mid-2010s – after the successful conclusion of ChAFTA –, which Taipei welcomed. On the Taiwanese side, a new approach was introduced when President Tsai Ing-wen of the Democratic Progressive Party took office in 2016: the New Southbound Policy (NSBP or NSP). This followed on from Taiwan’s earlier efforts, most nota­bly the Lee Teng-hui government’s “Go South” policy in the late 1990s. The NSBP aimed to diversify trade and investment and strengthen Taiwan’s diplomatic presence in the region. It targeted Australia and New Zealand, as well as South and Southeast Asia, and served as a policy framework for a series of bilateral and multilateral arrangements to promote trade, in­vest­ment and cultural exchange. Taiwan’s bilateral and regional relations were thus strengthened with­out conflicting with the partner states’ respective one-China policies.

These policy initiatives addressed long-standing substantive issues in Australia-Taiwan relations and were reminiscent of developments in the late 1990s. On the Australian side, however, the momentum was short-lived. In 2017 and 2018, the People’s Republic directly informed the government in Canberra that it was opposed to a possible FTA between Australia and Taiwan. The background to this was Beijing’s oppo­sition to the new Taiwanese government under Presi­dent Tsai. As a result, Canberra dropped the pro­posal.9

In the 2020s, the overall trade profile between Aus­tralia, Taiwan and China appears largely unchanged. The People’s Republic remains Australia’s largest export market, while Taiwan is a significant but rela­tively less important trade partner. Trade between Australia and Taiwan is worth around US$12 billion annually and has exhibited a consistent pattern of complementarity over many years. The main export sectors for Australia are mining and energy from which the primary resources exported include coal, iron ore, natural gas, aluminium and copper. There are also significant exports of agricultural and dairy products to Taiwan, which benefit individual regions in Australia. Taiwan, in turn, supplies Australia with industrial goods such as petroleum products, telecom­munications equipment, bicycles and computers.10

Relations in security and defence policy

From the mid-1990s onwards, security and defence aspects gained weight in Australian-Taiwanese rela­tions. The PRC triggered a crisis by firing missiles into the waters around Taiwan – first in 1995 when then leader Lee Teng-hui was visiting the U.S., then the following year during Taiwan’s presidential election campaign. In response, Australia reaffirmed its alli­ance with the U.S. and offered political, but not military, support for American naval action around Taiwan.11 At the same time, tensions in the Taiwan Strait increasingly made the Australian government realise that a good relationship with Taipei could come at the expense of relations with the People’s Republic, given the latter’s intractable commitment to its one-China principle.

In the 2000s, Canberra and Beijing also sought to develop the parameters of their relationship from trade and investment into broader issues of security and Australia’s support for China in the international system. In 2003, Chinese President Hu Jintao was invited to address the parliament in Canberra – one day after U.S. President George W. Bush had appeared there. In 2014, Australia and China signed the afore­mentioned Comprehensive Strategic Partnership Agree­ment during a state visit by President Xi Jinping.

Thus, with the changes in Australia-China rela­tions and Beijing’s growing determination to assert its policy goals internationally, the Australia-Taiwan relationship was also changing. The period of focus­ing on promoting trade and investment was coming to an end. Instead, a complex fabric of trade, defence and security concerns emerged, shaped by Australia’s relations with China, the U.S. and other countries in the region.

Canberra’s concern about regional stability in the South Pacific in the face of Taiwan’s “chequebook diplomacy”.

The new configuration was highlighted in 2004 when the then Australian Foreign Minister Alexander Downer made a statement that the ANZUS defence treaty would not necessarily be in effect in the event of a military clash in the Taiwan Strait that brought China and the U.S. into conflict. Even as debate continues over what Australian obligations would arise from ANZUS in the event of a U.S.-China war, Downer’s statement revealed how complicated and contradictory Australian foreign policy had become. For Australia, the future of Taiwan addressed fun­damental questions about the U.S. alliance system and its economic policy orientation towards China.12 Relations with Taiwan now appeared in light of what became known in Australia as the “China choice” – that is, the question of whether Australia should choose China over the United States.13

The debate about Australia’s defence commitments under ANZUS passed quickly, especially as Australia was supporting the U.S. involvement in Afghanistan and Iraq at the time. But it had become clear that spe­cific Australian and Taiwanese foreign policy objec­tives were in tension with one another.

Political relations in the context of national interests in the region

The bilateral political and security relationship is also complicated by competing regional and multilateral interests. In the late 1990s and the 2000s, Australia and Taiwan clashed as they pursued different goals in the Pacific: Canberra sought to promote development and stable governance in the region, while Taipei aimed to maintain or even grow the number of its diplo­matic allies.

Taiwan still has a small number of diplomatic allies around the world. Formal recognition is a fun­damental metric of Taiwan’s state identity, its inter­national space, and tension between Beijing and Taipei. The People’s Republic has at various times actively sought to turn Taiwan’s diplomatic allies, while Taipei has sought to retain the diminishing number of states that recognise it.

In the late 1990s and the 2000s, various Pacific governments switched recognition from China to Taiwan or vice versa. Both Beijing and Taipei used development aid and investment as incentives and sought to influence the domestic politics of Pacific coun­tries in order to gain recognition. Australia, however, was committed to the principle of non-inter­ference in the decisions of Pacific governments. It thus tended to view Taipei’s pursuit of recognition, especially through so-called chequebook diplomacy, as destabilising for Pacific nations during this period. This problem was heightened as Australia’s economic relationship with China grew and Australia-China re­lations expanded into broader parameters of regional security. The absence of a regional security architec­ture or formal diplomatic relations between Australia and Taiwan constrained the capacity of both sides to manage these issues.

A notable example in this context was Papua New Guinea. In 1999, under the former Prime Minister Bill Skate, the country decided to recognise the ROC/Tai­wan in return for soft loans. But only a week later, Skate resigned and his successor Mekere Morauta re­versed the decision. Papua New Guinea is Australia’s geographically closest neighbour, with strong histori­cal links and a major recipient of development assis­tance and therefore Canberra was concerned about political destabilisation on the island. In 2006, an­other attempt by Taipei was made to establish rela­tions with Papua New Guinea in exchange for US$30 million. This triggered a political scandal in Taiwan that claimed several senior government ministers and was part of corruption allegations made against the then President Chen Shui-bian. Since then, Papua New Guinea, while generally supporting Taiwan’s par­ticipation in international organisations, has main­tained and strengthened formal relations with Beijing.14

In 2004, the government of Prime Minister Serge Vohor of Vanuatu also recognised Taipei, and sought to play Beijing, Taipei and Canberra off against one another in the pursuit of development aid and invest­ment. Beijing responded with aid promises, and a diplo­matic delegation from Canberra travelled to Vanuatu’s capital Port Vila to pressure politicians to reverse the decision. A no confidence motion was passed in the parliament against Vohor, who then resigned as prime minister, and recognition returned to Beijing.15

Australia’s relations with Solomon Islands, where a low-intensity armed conflict took place in the 2000s, were especially challenging. The island state had already recognised Taiwan in 1983 after becoming independent from the British protectorate at the end of the previous decade. Because of the political tur­moil at the turn of the millennium, the Government of Solomon Islands had difficulties attracting inter­national aid and investment. It sought to extract con­cessional loans from Taipei by threatening to switch recognition to Beijing, thus drawing Taiwan into a deteriorating security situation. In 2003, Australia launched a military intervention with the goal of stabilising security in Solomon Islands, responding in part to circumstances created by the diplomatic com­petition. The situation came to a head when national elections were held in the archipelago in 2006. Various candidates accused either Taipei or Beijing of interfering in the vote so that Solomon Islands would maintain relations with Taipei or switch to Beijing, respectively. The political turmoil led to major riots after the elections, including in the capital Honiara, and the resignation of Prime Minister Snyder Rini.16

The role of the Pacific in Australian-Taiwanese rela­tions was attenuated in the years from 2008 to 2016, when Taiwan was governed by President Ma Ying-jeou. During this time, Taipei and Beijing implemented a so-called diplomatic truce. Both sides agreed tacitly not to poach diplomatic allies from each other. In prac­tice, this meant that Beijing made no further attempts to change countries’ minds about recognising Taiwan – and vice versa.

However, cross-strait relations broke down after the inauguration of the Democratic Progressive Party government of Tsai Ing-wen in Taiwan in 2016, when Beijing refused to engage with Taipei. This coincided with the start of a period of deterioration in Australia-China relations. In the late 2010s, Australia increasingly resisted Beijing’s attempts to interfere in the country’s domestic politics and took note of its bel­lig­erent diplomatic tone. Canberra made a series of policy decisions; for example, the Chinese company Huawei was excluded from tenders for Australian telecommunications infrastructure and new foreign interference legislation was enacted. Beijing responded with punitive actions against Australia in 2020. These included a range of trade sanctions on agricultural products, seafood and wine. These steps were politi­cally sensitive for Australia, while having a limited economic impact on China.17

The election of Tsai Ing-wen also meant the end of the diplomatic truce, and as a result Taiwan lost rec­og­nition from five other states, three of which were in Latin America – Panama, El Salvador and the Dominican Republic. In the Pacific, Solomon Islands and Kiribati switched to the People’s Republic in 2019. The period of chequebook diplomacy was over, but Australia was now taking action under the Pacific Step-up, signalling increased engagement in the region. Concerned about China’s growing presence, Canberra spoke out against the switch in the recog­nition policy of Solomon Islands.18

Against this backdrop, Australia’s zero-sum calculus on relations with China and Taiwan loosened. Given the activities of the PLA Air Force in the Taiwan Strait, Canberra became increasingly aware that Bei­jing’s behaviour towards Taipei was destabilising cross-strait relations and threatening regional security as a whole. These developments came at a time when relations between Australia and the People’s Republic were deteriorating and U.S. relations with both Taiwan and Australia were strengthening.

Cultural and civil society relations

Under its one-China policy, Australia has developed and strengthened its relations with Taiwan in the fields of culture, education and people-to-people exchanges. Australia has a community of Taiwan-born and second- and third-generation Taiwanese-Australians who are concentrated in Brisbane and number in the tens of thousands nationally.19 Fur­ther­more, Taiwanese tourists, international students and working holiday visa holders going to Australia totalled more than 200,000 per year before the COVID-19 pandemic.20 In 2019, there were also more than 18,000 Taiwanese students enrolled in Australian universities.21 In addition, people-to-people links have been fostered by both sides through support of cul­tural and creative engagement in such areas as visual and performing arts. However, social and cultural ties continue to be tested in Australian public institutions that have developed links with China. In 2020, a pub­lic museum in Perth, Western Australia, received a complaint from the consulate of the People’s Repub­lic for displaying a map of China that did not include Taiwan and altered the map in response – and simi­lar incidents are not uncommon.22

Growing alignment

Today, the parameters of the bilateral and multilateral relations of Australia, Taiwan and the PRC are largely in place. Australia’s one-China policy remains in effect, implying the non-recognition of Taiwan. And while the People’s Republic is Australia’s largest trade partner, the exchange of goods with Taiwan is significant but relatively less important.

However, at a time of growing Sino-American rivalry and diplomatic tensions between China and Australia, these patterns have undergone adjustments. Aspects of regional security and Australia’s relationship with China, the U.S. and the Pacific Island countries make it difficult to just have trade-dominated relations, and the economic and security concerns between Australia and Taiwan are increas­ingly aligning. Trade and investment is developing into a vector for Australia to support Taiwan’s de facto sovereignty and international space. Canberra sees this as a necessary condition for security and stability in the Indo-Pacific region.

This alignment has been signalled by a new diplomatic vocabulary from Australia and higher-level trade promotion. In a series of notable bilateral and multilateral statements, Canberra has identified Tai­wan’s security as a component of the regional order. A new phraseology has developed, including a “free and open Indo-Pacific” and to “underscore the impor­tance of peace and stability in the Taiwan Strait”. Australia has repeatedly called for Taiwan’s partici­pation in international organisations, most notably the World Health Assembly during the COVID-19 pandemic.23

At the same time, Australia and Taiwan have ad­vanced trade and investment, not only in traditional economic sectors such as mining and energy, but also in the new fields of hydrogen, space, and information and communications technology (ICT). This includes initiatives such as the Hydrogen Trade and Invest­ment Dialogue between the Australian Office – the Australian quasi-embassy in Taipei – and the Taiwan­ese Ministry of Economic Affairs. The format promotes trade and investment in favour of a post-carbon energy transition and action against climate change, while also enabling direct contacts between governments.24

These activities are reminiscent of the bilateral trade and investment promotion that took place during the 1990s within the framework of APEC. At that time, Australia sought to build export-oriented trade relations with the Asian “tiger economies”, while Taiwan hoped to overcome its international isolation through regional trade arrangements. Now, however, Australia’s approach is more closely aligned with Taiwan’s, and bilateral relations include minis­terial meetings as well as trade and investment in new sectors of the economy, thereby promoting eco­nomic exchange and addressing Taiwan’s isolation.

Going forward, these realigned parameters for Australia-Taiwan relations will be tested in new and developing regional trade architectures. Australia joined the Regional Comprehensive Economic Part­nership (RCEP) in 2020, which liberalises trade and economic flows between ASEAN members and coun­tries with which ASEAN countries have FTAs. How­ever, Taiwan is not a member of RCEP. Another impor­tant and larger arrangement is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was finalised in 2018 in the aftermath of the U.S. withdrawal from the Trans-Pacific Partnership (TPP). The CPTPP is made up of 11 economies in the Eastern and Western Pacific, though not the PRC or the United States. Both Beijing and Taipei have submitted applications to join. For the reshaping of the relationship between Australia and Taiwan, these changes in the region’s trade policy architecture are an important test case.

Australia-Taiwan relations cannot be described as normal. Formal normalisation could only be possible if the regional order erodes or collapses altogether, such as in the case of a military crisis in the Taiwan Strait. In the age of strategic competition, however, Canberra and Taipei are increasingly converging in their respective interests and approaches to international issues, while China’s relations with Australia and other countries in the region have become more difficult. As with earlier periods, contingent events may disrupt the current state but the intrinsic param­eters of trade and regional security will continue to anchor Australia-Taiwan relations for the foreseeable future.

In China’s Shadow: Indo-Taiwan Relations

Christian Wagner

India and Taiwan have continuously expanded their economic and political cooperation since the 1990s, starting with India’s economic liberalisation in 1991. Since then, the government in New Delhi has relied on foreign investment and strived for greater inte­gra­tion into the world economy. In this context, Taiwan has also become an increasingly important partner.

However, relations between India and Taiwan are shaped above all by their respective relationship with the People’s Republic of China. For India, relations with China have been at the centre of its foreign policy since 1947 during which time it has regarded China as a partner, competitor and systemic rival to varying degrees. The unsettled border dispute between the two states led to a brief war in 1962 and continues to burden bilateral relations to this day. However, since the end of the 1980s, the political and economic relations improved considerably. China turned into India’s largest bilateral trading partner for many years. Today, the two states cooperate in global governance forums.

But the clashes in the Ladakh/Aksai Chin region in the summer of 2020, in which 20 Indian and an un­known number of Chinese soldiers were killed, shook the foundations of the rapprochement of the past 30 years. The tensions on the border could mark a water­shed in bilateral relations as China increasingly sees its relationship with India in the context of its rivalry with the U.S. In Beijing, New Delhi is seen to be part of the ‘American camp’. New Delhi, on the other hand, officially continues to regard the border issue as a bilateral problem and not as part of a greater geopolitical dispute between Beijing and Washington.

New Delhi is likely to stick to its one‑China policy so as not to provoke Beijing.

The deterioration of relations with China has trig­gered a debate in India on possible counterstrategies, which also revolves around the issues of Tibet and Taiwan. In view of the power imbalance vis-à-vis China, the government in New Delhi is unlikely to be inclined to substantially change its relationship with Taiwan. And while further expansion of relations with Taiwan in areas such as economics and science is conceivable, New Delhi is expected to stick to its one-China policy despite the current tensions with Beijing.

Political relations

The first political contacts between China and India date back to 1942, when General Chiang Kai-shek was the first non-European politician to visit Mahatma Gandhi and Jawaharlal Nehru, the leaders of the Indian independence movement that gave rise to the later ruling party, the Indian National Congress (INC).25 After independence in 1947, however, the Indian government focused on relations with the People’s Republic of China (PRC) after 1949. Prime Minister Nehru intended to give Asia more weight in world politics and saw China as an indispensable partner for this. In 1950, India was the first non-communist country to break off diplomatic relations with the Republic of China, i.e. Taiwan.26

In the mid-1950s, India and China continued to draw closer and signed an agreement on Tibet in 1954. From then on, India no longer made any claims to Tibet and agreed with China on the five principles of peaceful coexistence (Panchsheel). In order to end the country’s international isolation, Nehru pushed for China’s participation in the Bandung Conference in 1955, a meeting consisting of 29 Asian and African countries. The culmination of this rapprochement is signified through the slogan “Hindi Chini Bhai Bhai” (Indians and Chinese are brothers), which was meant to symbolise the cordial bond between the two coun­tries. In the late 1950s, however, the unresolved bor­der issue overshadowed the bilateral rapprochement and resulted in a brief border war in 1962. India’s military defeat destroyed Nehru’s hopes for closer cooperation.

Nehru pursued an independent foreign policy, and worked towards keeping India and the newly de-colo­nised countries outside of the Cold War. In 1961, he became one of the key architects of the Non-Aligned Movement founded. However, the break-off of diplo­matic relations with China after the war in 1962 was not followed by a turn towards Taiwan, as India was critical of the island state’s intensive cooperation with the U.S. due to its non-aligned foreign policy. In 1971, the Indian government of Indira Gandhi supported the admission of China into the United Nations Secu­rity Council at the expense of Taiwan.27

Despite its territorial conflicts with China, India advocates a one-China policy. Of note, such conflicts between the two states exist largely in the northeast and northwest of India along the Line of Actual Con­trol (LAC), where it remains unsettled to this day. In the northeast, Beijing claims the Indian state of Arunachal Pradesh as Chinese territory. In the north­west, in the Ladakh/Aksai Chin region, which is part of Kashmir, China, after the violent incidents of the summer of 2020, again regards the LAC of 1959 as binding, but which India has never recognised.28 In view of the intensification of the border conflict with China, debates about a possible Chinese one-India policy,29 which would have accepted India’s territorial claims, now seem fruitless.

With its 1991 reforms, India initiated an economic and foreign policy turnaround. The new economic policy opened the domestic market to foreign invest­ment and promoted export production in order to achieve greater integration into the world economy. Meanwhile, in terms of foreign policy, the Look East policy during this period prompted India to turn towards the emerging economies in East and South­east Asia. Thus, due to Taiwan’s economic successes, the country subsequently also became an attractive partner for India.

In the early 1990s, an Indian delegation travelled to Taiwan for the first time. In 1995, the India Taipei Association (ITA) was founded in Taipei and the Taipei Economic and Cultural Center (TECC) in New Delhi.30 Initially, only retired civil servants worked at the Indian mission in Taipei. Since 2003, the Indian Ministry of External Affairs has also sent active civil servants there.31 Although it has no official diplomatic status, the ITA in Taiwan also issues Indian visas and passports and thus acts like an embassy.32 In 2010, the two countries agreed on a simplified visa regime. Since then, Taiwan has approved visa-free entry for Indian citizens under certain conditions.33 In addi­tion, there are repeated calls to further facilitate the issuance of visas for study and work stays in order to expand economic and cultural cooperation.34

The status of Indo-Taiwanese relations depends on domestic political constellations.

Bilateral relations often depend on domestic politi­cal constellations. The Democratic Progressive Party (DPP) government, which held office in Taiwan from 2000 to 2008, welcomed India as a counterweight to China and sought to expand relations between Taipei and New Delhi.35 In India, the Hindu nationalist Bharatiya Janata Party (BJP) government had tested nuclear weapons in 1998 for the first time since 1974, and the country’s Defence Minister Fernandes had declared China “enemy number one”. But after the election victories of the Congress Party in India in 2004 and the KMT in Taiwan in 2008, the common security interest of standing up to China took a back seat. Among other things, the Indian gov­ernment rejected Taipei’s proposal to send the former deputy secretary-general of the National Security Council in Taiwan as a representative to India, as he had pre­viously advocated an Indo-Taiwanese alliance against China.36

After the BJP returned to power in 2014, and the DPP in 2016, they again emphasised the threat from China and intensified the bilateral relationship.37 With its “New Southbound Policy” (NSP) adopted in 2016, Taiwan’s DPP government wanted to expand relations with states in South and Southeast Asia to include Australia and New Zealand, with a focus also on India as a trade and investment partner.38 Pre­viously, the Indian government had launched its Act East policy in 2014, emphasising the importance of East Asia for India’s economic development. Political contacts also intensified in 2016. In April, the Taiwan-India Parliamentary Friendship Association was founded in Taipei, and in December, 22 Indian par­liamentarians launched the India-Taiwan Parliamentary Friendship Forum.39

Tensions between China and Taiwan also affect rela­tions with India. In 2017, Beijing objected to the visit of a delegation of women parliamentarians from Taiwan to New Delhi and asked the Indian government to be more cautious in its Taiwan policy. Under pressure from the Chinese government, airlines, in­clud­ing Air India, had to change the name “Taiwan” to “Chinese Taipei”.40

Even though India’s Act East strategy and Taiwan’s NSP complement each other,41 it should not be over­looked that the rapprochement between New Delhi and Taipei took place at a time when India-China relations were also experiencing an unprecedented upswing. Between 1990 and 2020, India and China made five agreements to stabilise the situation along the disputed borderline. They also cooperated in the BRICS group and often pursued common interests in global governance forums. Economically, China be­came India’s largest bilateral trading partner. More­over, both sides invested politically in expanding their relations. Besides their official meetings, Prime Minister Modi and Chinese President Xi also held two informal summits in 2017 and 2019 to improve their countries’ bilateral relations.

Security policy

Due to its own security problems with China, which have further intensified since the border incidents of 2020, India is extremely reluctant to engage in any form of security cooperation with Taiwan. As a result, contacts between security forces are rare. For exam­ple, the chief of the Indian Air Force visited Taiwan discreetly in 2002, only for his visit to be revealed by media reports.42 In 2003, the Institute for Defence Studies and Analysis (IDSA), which is part of the Indian Ministry of Defence, and the Institute of International Relations (IIR) of Chengchi National University in Taiwan organised a conference on foreign policy. In 2006, the DPP government estab­lished the Taiwan-India Cooperation Council, which was seen as a strategic alliance against China. In addi­tion, members of the Taiwanese Ministry of Defence were sent to India to join the TECC.43 Representatives of the Legal Department of the Indian Ministry of External Affairs participated in bilateral negotiations with Taiwan on international terrorism, transnational organised crime and drug trafficking in 2008 and 2009.44 In recent years, a number of government-related think tanks in India, such as Observer Research Foundation (ORF), National Maritime Foun­dation and Vivekananda International Foundation (VIF), have entered into agreements with partner insti­tutions in Taiwan and held joint events.

The reports of the Indian Ministry of Defence show only one case of military equipment being exported to Taiwan in the period from 2014 to 2019.45 In view of increasing cyberattacks in India and Taiwan attri­buted to China, Indian experts advocate closer coopera­tion between Taipei and New Delhi in this area.46

Economy

Economic cooperation has been at the centre of India-Taiwan relations from the beginning. India’s post-1991 reforms opened the domestic market to foreign firms, and the technological successes of Taiwanese companies also put the country at the centre of India’s Look East/Act East policy. Bilateral trade grew more than fivefold between 2000 and 2020, from just over US$1 billion to around US$5.7 billion.47

In 2002, Taipei and New Delhi agreed on a Bilateral Investment Promotion and Protection Agreement (BIPA).48 A year later, Taiwan’s Ministry of Economic Affairs launched the Scheme for Strengthening Eco­nomic and Trade Relations with India, under which Taiwanese trade delegations travelled to India.49 Fur­thermore, in 2011, India and Taiwan signed joint agreements on taxes and tariffs, namely the Double Tax Avoidance Agreement (DTAA) and the Agreement for Mutual Assistance in Customs Matters (CMAA).50 Two years later, a Taiwanese and an Indian think tank published a study on a possible free trade agree­ment (FTA) between the two countries. However, nego­tiations on this have not progressed further,51 partly because Prime Minister Modi’s Indian government is critical of such agreements. India did not conclude a new FTA until the end of 2020 and with­drew from the Regional Comprehensive Economic Partnership (RCEP) at the last minute in November 2019. New Delhi and Taipei did, however, agree on a bilateral investment treaty in 2018.52 Nevertheless, this is a rather weak agreement as, among other things, it does not contain an MFN clause. It also lacks guarantees that are often promised in other treaties, such as the requirement of fair and equitable treat­ment.53

For India, Taiwan is attractive as a trading partner because it invests primarily in high technology.

Taiwan is of particular interest to India as a trading partner, as it invests mainly in high-technology areas such as nanotechnology, semiconductors, aerospace, satellite development, biotechnology and agriculture.54 Taiwanese technology companies such as Fox­conn and Wistron operate their own plants in India for mobile phone production in the growing Indian market. In 2020, Foxconn agreed with New Delhi to invest around US$5 billion in India, making it the largest electronics producer in the country.55

India and Taiwan have also extended their eco­nomic cooperation to small and medium-sized com­panies. In addition, Indian states such as Karnataka, where the high-tech metropolis of Bangalore is located, have signed agreements with Taiwanese com­panies to establish electronics firms.56 By the end of 2016, 90 Taiwanese firms had offices in India.57 In 2017, the Taiwan External Trade Development Coun­cil (TAITRA) launched an India Center in Taiwan. The following year, a TAITRA office was opened in New Delhi, also known as the Taipei World Trade Center, and an India-Taiwan Trade Forum was held in Taipei. These measures were intended to make Taiwanese investors aware of their opportunities in India.58

Economic relations between the two countries have indeed expanded since the early 1990s. How­ever, India is not a preferred production location for Taiwanese companies. For one thing, many foreign companies still complain about problems with infra­structure. In addition, the consequences of the new economic policy of self-reliance, which Prime Minis­ter Modi announced in May 2020, cannot yet be assessed. Among other things, the Indian govern­ment wants to increase the share of local production in order to strengthen the Indian economy in the medium term.

Cultural and civil society relations

Cultural cooperation has become another pillar in bilateral relations. In 2007, India and Taiwan signed their first memorandum of understanding to expand cooperation in the fields of science and culture. In 2010, the two countries agreed to mutually recognise university degrees.59 A year later, India’s first Taiwan Education Center (TEC) opened in New Delhi.60 The TECs offer Mandarin language courses and events on Chinese culture and history. Taiwanese teachers are financially supported by the Ministry of Education in Taipei.61 The various initiatives have ensured that academic cooperation has expanded. And while there were only 30 bilateral science projects in 2013, this number rose to 86 in 2019.62

Mandarin language teaching is proving to be par­ticularly useful, as there are repeated complaints that there are comparatively few China experts with Chi­nese language skills in India. After the tensions between India and China in 2020, the number of Tai­wanese teachers in India is more likely to increase. In 2018, 2,398 Indian students were enrolled in Taiwan­ese universities.63 The Taiwanese government also showed a willingness to significantly increase the number of scholarships for Indian students. In 2020, it had already awarded 1,143 such scholarships.64

Cultural exchange through visitor programmes, film and dance festivals, and exhibitions is supported by both countries, but is currently at a low level. Tourism could also be increased significantly. In 2019, only about 35,000 Indian tourists travelled to Taiwan.65

Outlook

The relationship between India and Taiwan is set relatively narrow limits by both states’ relations with China. India’s relationship with the PRC represents the country’s most important bilateral relationship and is crucial for understanding its foreign policy orientation. However, since the border incidents in Ladakh in the summer of 2020, India’s relations with China have deteriorated significantly. Nevertheless, India will stick to its one-China policy, even as it con­tinues to develop relations with Taiwan. Given the power imbalance between India and China and the uncertain situation in the border region, the decision-makers in New Delhi have little interest in letting the difficulties with China escalate further. After all, China has more options for retaliation at different levels should India push the rapprochement with Taiwan too far from the Chinese perspective. China’s shadow will thus continue to hang over cooperation between India and Taiwan.

European-Taiwanese Relations (Selected Member States of the EU, and the U.K.)

Volker Stanzel

Background

Historically, only a few European states had economic or other interests in Taiwan. It was only after the Sec­ond World War that the island truly came to the atten­tion of European nations: firstly, politically, as a place of refuge for Chiang Kai-shek’s government, a military dictatorship that fled Mao’s communists but continued to be supported by the U.S; and secondly, from the 1980s onwards, economically, as one of the four “little tigers” (along with South Korea, Hong Kong and Singapore) that experienced their own eco­nomic miracle. Moreover, during the 30 years after 1949, when the young People’s Republic of China (PRC) largely closed itself off to exchanges with the West, Taiwan made it possible for prospective West­ern European China experts to receive language training and encounter Chinese culture. Until 1971, Taiwan, as the “Republic of China”, occupied China’s seat as a founding member of the United Nations (UN). Nonetheless, Western European governments mostly (and Eastern European communist ones cer­tainly) avoided diplomatically recognising the island despite U.S. pressure.1

A larger European public has only become aware of the island’s situation since the beginning of the 2000s, i.e. since the PRC has experienced an increase in power that makes a military conflict over Taiwan not seem out of the question. What is more, since the Russian invasion of Ukraine, this danger has become even more apparent to Europeans, too.2

Europe and Taiwan: the big picture

Even though Taiwan, as an export-active “little tiger”, has been integrated into the international trade chains system in many ways since the beginning of its economic boom years, it is only in the last two decades that it has developed its own profile, which is strongly characterised by its orientation towards information and communication technologies (ICT). This is reflected in the relevant trade and investment statistics. Among Taiwan’s economic partners, the U.S., Japan and the PRC rank high, followed by Euro­pean countries.

The European states and Taiwan share the same liberal and democratic values.

As a liberal democracy,3 Taiwan stands on the same foundation of values as European states. Never­theless, Europeans have traditionally been reluctant to take a stand in Taiwan’s conflict with the PRC, espe­cially since the island’s security seems to be guaranteed under the protective umbrella of the U.S. Since the 1970s, European states have professed to respect Beijing’s position that there is only “one China” of which Taiwan is a part. However, they have always emphasised that unification is a matter for the inhab­it­ants on both sides of the Taiwan Strait, and must take place peacefully. At the same time, they avoid gestures that could be interpreted as recognition of Taiwan’s statehood. In particular, they deny themselves any contact at a higher state level, i.e. the head of state and the head of government, the vice-presi­dent as well as the foreign and defence ministers of Taiwan are not allowed to visit EU member states. The same applies accordingly in the opposite direc­tion.4

The new unpeaceful behaviour of the PRC now puts Europe in a difficult position: if it clearly op­poses China’s aggressiveness, it risks a conflict with this key economic partner; on the other hand, if it holds back with criticism of Beijing, it becomes untrustworthy in its commitment to liberal and democratic values.

The following presentation focuses on the EU as a whole and on Taiwan’s three most important partners in Europe, namely Germany, France and the U.K. How­ever, the relations of some other European states with Taiwan have aspects that are indicative of Tai­wan’s complicated situation in the world and are therefore briefly considered first:

The Holy See is the only European state that still maintains diplomatic relations with the “Republic of China”. Thus, this European pillar is not only of symbolic value for Taiwan, but also of logistical-stra­tegic importance in commercial and political traffic. The Vatican has been trying to prevent its relationship with Taiwan from disrupting the rapprochement with Beijing that it has sought for decades. For its part, Taiwan did not comment on the continuing quality of its relations with the Vatican after its agree­ments with the PRC in 2019/2020.5

The Netherlands is one of the most important recipients of Taiwanese investment, mainly because Philips corporation was involved early on in laying the foundations of Taiwan’s ICT industry (up to and including the founding of the now globally successful Taiwan Semiconductor Manufacturing Company, TSMC), but also because of the tax incentives it offers foreign investors.6 Today, the Netherlands does not pursue arms exports to Taiwan (U‑boats) as it did in the 1980s.7 The country, along with Sweden, is also a partner with Taiwan in the Global Cooperation and Training Framework (GCTF). This institution, estab­lished in 2015 by the U.S. together with Taiwan and since expanded to include Japan and Australia, inte­grates Taiwan into international development projects of various kinds.8

In the case of other EU states, there are demonstrative expressions of sympathy towards Taiwan from time to time, usually in the wake of deteriorating rela­tions with the PRC. The Taiwan visit of a 90-mem­ber Czech delegation led by the Senate President in August 2020 attracted international attention. At the meeting, the Czech Republic’s position as Taiwan’s fourth largest trading partner in Europe played a role, as did the Czech stance on human rights issues in the tradition of Václav Havel; domestic political disputes in Prague over the president’s positive attitude towards China were also a topic. The spokesperson of the Chi­nese Foreign Ministry called the visit a “despicable act”. The Prime Minister of Slovenia backed the Czech Republic with a statement. In addition, the then Ger­man Foreign Minister Heiko Maas said in a joint press conference at the end of Chinese Foreign Minister Wang Yi’s visit to Germany on 1 September 2020 that the respect with which the EU treats its partners is also expected in return, and that threats do not fit in with this.9

Another case is that of Lithuania, whose president cancelled his participation in a 17+1 conference with Xi Jinping in February 2021,10 after cooperation under the Belt and Road Initiative (BRI) proved less fruitful than expected. Lithuania drew sharp criticism from Beijing for this. In response, Lithuania announced its withdrawal from the 17+1 in May 2021, declared that it would exchange representative offices with Taiwan, and described the treatment of the Uyghurs as “geno­cide”. In June 2021, after further criticism from Beijing, the Lithuanian government decided to allow Taiwan representation in Vilnius, not under the name “Taipei representation” but as “Taiwan repre­sentation”, thus deviating from global custom. Beijing reacted not only with strong criticism, but by with­drawing its ambassador from the country and inform­ing Vilnius, no Lithuanian ambassador was welcome in the PRC anymore.11

To Beijing’s chagrin, a 66-member delegation of Taiwanese officials (including two at ministerial rank) visited the Czech Republic, Slovakia and Lithuania in October 2021.12 Finally, in early December 2021, the People’s Republic banned the import of goods from Lithuania and those from other countries that con­tained components manufactured in Lithuania, as well as the export of Chinese products to Lithuania. The EU foreign ministers declared their solidarity with Lithuania, but without adopting any countermeasures.13

The European Union as Taiwan’s partner

Politics

Especially given the caution with which exchanges with Taiwan must be handled, insofar as a state or association of states wishes to maintain fruitful rela­tions with the PRC at the same time, the web of European-Taiwanese relations is remarkably tightly woven.14 The EU’s relations with Taiwan span trade and investment, science and research, health and environmental issues, the digital economy and cybersecurity, and human rights. These exchanges take place through a variety of channels, including formal consultation and dialogue mechanisms at different levels, including annual meetings of line ministers on trade issues, industrial policy and human rights. Against this background, the Taiwan­ese representation to the EU explains, “the need for track‑1.5 dialogues between the two sides is low”.15

The more political aspects of EU-Taiwan relations are handled by the European Parliament’s Taiwan Friendship Group.

The density of contacts outlined above can be explained by the interests of the three sides involved. The PRC has close economic ties with both Taiwan and the EU and thus benefits from European-Taiwan­ese exchange. Nevertheless, the situation is politically always exposed to the risk of distortions. For this reason, EU institutions have long left the more politi­cal aspects of EU-Taiwan relations to the Taiwan Friendship Group of the European Parliament (EP). It was established in 1991, at a time when the Kuomintang government on Taiwan was seeking to use the international aftermath of the 1989 Tiananmen massacre to enhance Taiwan’s international status – as a “Republic of China” with aspirations to eventually rule all of China. Therefore, Taipei focused its atten­tion in particular on parliamentarians in demo­cratic states who could potentially exert influence on the executive branch.

The EP-Taiwan Group soon became a driving force in the EU, initiating numerous reports and resolutions on Taiwan, and visiting the island repeatedly (this was less the case in the other direction). More recently, it has initiated resolutions calling for Tai­wan’s participation in international organisations such as the World Health Organization (WHO), the International Civil Aviation Organization (ICAO) and the United Nations Framework Convention on Cli­mate Change (UNFCCC). On the initiative of the group, the EP Foreign Affairs Committee adopted a report on 1 September 2021 calling on the EU to “upgrade” its political relations with Taiwan and rename the “European Economic and Trade Office in Taiwan” the “European Union Office in Taiwan”.16 Already in 2019, parliamentarians from Germany, the U.K. and France, as well as from the EP Taiwan Group, established a “Formosa Club” in Brussels to make Taiwan’s concerns more audible through Europe-wide parliamentary support.17

The economic situation in the EU would be severely affected by a military or even economic conflict be­tween the PRC and Taiwan. In addition, there would be the likely expansion of the conflict through the inter­vention of the U.S. and its possible request to Europe to support it politically, logistically and/or materially. Therefore, one could assume that ques­tions of security policy would be at the forefront of European considerations on the relationship with Taiwan. This is not the case because of the possible consequences for the relationship with the PRC, at least not publicly. Thus, the issue is largely left out of Brussels’ accounts of relations with Taiwan.18

Economy

In 2020, 12.7% (US$43.9 billion) of Taiwan’s exports went to the EU and the U.K., 10.8% (US$31.1 billion) of Taiwan’s imports came from the EU and the U.K.; moreover, the EU is the most important foreign inves­tor in Taiwan with a share of 25.7%.19 Against this backdrop, both sides have been seeking to conclude a bilateral investment agreement since 2015 – al­though the time that has passed since then is an indi­cation of how difficult the EU is finding it to take such a step, which would certainly result in sharp reactions from Beijing.20

The Taiwanese semiconductor industry is presently the world leader. While Taiwan wants to minimise its dependence on cooperation with companies in the People’s Republic, European companies hope to solve the problems they face in the medium term due to the global chip shortage by cooperating with Taiwan­ese ones. This is why the EU is currently considering promoting the construction of a semiconductor fac­tory in Europe, probably in cooperation with Tai­wan’s TSMC.21 Taiwanese producers in the ICT sector have already established industrial clusters in EU member states such as the Czech Republic. Taiwan’s Global Wafers Co, the world’s third largest supplier of silicon wafers, announced in March 2021 that it would invest €4.35 billion to acquire a 70.27% stake in Germany’s Siltronic AG. This would double Global Wafers’ production and make it the second largest wafer manufacturer in the world. Such companies usually invest not only in Europe but also in the U.S. and the PRC at the same time, driving international integration in the ICT sector.

Arms exports, which Taiwan often sends requests for, are naturally attractive for Europe’s economy, but difficult to fulfil due to the political situation; how­ever, there are often exceptions, especially for dual-use goods.22

Culture and science

With Taiwan’s economic development and the liber­alisation of the country since the 1990s, cultural exchange has expanded from the classical China-related field to numerous, primarily technology-driven fields. In 2013, for example, the EU selected Taiwan as one of 12 target countries with whom to expand cooperation in the ICT sector. As of December 2020, Taiwanese researchers have participated in 81 international programmes of the European Research Council, concerning topics such as the development of 5G technology.23

In more traditional areas, the Taiwanese Ministry of Education offers annual trips to learn about Chi­nese culture and language, as well as scholarship programmes for European students and scholars. The Taiwanese Ministry of Foreign Affairs has launched a Taiwan-Europe Connectivity Scholarship Program to intensify academic cooperation through partnerships between universities and schools. Last but not least, the Taiwanese government has initiated working holiday programmes in which 11 EU countries par­ticipate. The EU has organised the Taiwan European Film Festival (TEFF) since 2005 and has been represented at the Taipei International Book Exhibition (TIBE), one of the largest book fairs in Asia, since 2013. Finally, the European Education Fair Taiwan (EEFT) is an initiative to make young Taiwanese aware of educational opportunities in Europe.

Germany as Taiwan’s partner

Politics

The Federal Republic of Germany has never had official relations with the “Republic of China” after Chiang Kai-shek fled to Taiwan.24 Nevertheless, a number of components of bilateral exchange have developed: since 1956, the Federal Republic has been represented by economic or cultural offices under various names (which were intended to avoid the suspicion that they were “official” bodies, which could have meant some kind of diplomatic recognition). Finally, in 2000, the name “Deutsches Institut Taipei” was chosen, which is now officially called “the official representation of Germany in Taiwan”. In addition, there is the Goethe-Institut Taipei, the German Business Office and an office of Germany Trade and Invest (GTAI), an information centre of the German Academic Exchange Service (DAAD) and the German School Taipei as part of the Taipei European School.

Conversely, Taiwan maintains unofficial representations in Berlin (established in 1956 as the “Freichina Information Service”, or today – also after several name changes – the “Taipei Representation in the Federal Republic of Germany”), Hamburg, Munich and Frankfurt, as well as a “Scientific Affairs Advisor” in Bonn. With these regional representations, “offi­cial” Taiwan is more strongly represented in Germany than elsewhere in Europe. However, the EU principle of avoiding any exchange at the level of the highest state representatives in the case of Germany in addi­tion to the aforementioned five state representatives the President of the German Bundestag and the head of the Supreme Court.

This development is driven by mutual economic interests, but also supported by political proximity since the beginning of Taiwan’s democratisation in the 1980s. It is reflected, among other things, in the large number of consultation forums, some of which are at the ministerial level. The close exchange also has an impact on the political statements of the fed­eral government. On 21 January 2019, for example, Foreign Minister Heiko Maas stated in a response to a parliamentary question on Xi Jinping’s 1 January 2019 speech “addressed to compatriots in Taiwan” that the German government continues to reject the threat of violence against Taiwan. Furthermore, the Federal Foreign Office supports Taiwan’s participation in international organisations such as the ICAO and the UNFCCC, as well as in the World Health Assembly (WHA), initially as an “observer”. This means that at the same time the German government continues to make every effort not to give Beijing any reason to claim that Germany supports Taiwanese efforts for independence.25

In view of this level of quality of official relations, the “Parliamentary Group of Friends Berlin-Taipei” in the German Bundestag, which was founded in 1989, only plays an accompanying role, but tries to promote the development of closer relations. For example, dur­ing the COVID-19 pandemic, the Parliamentary Group initiated a donation of Taiwanese medical masks to Germany and supported Taiwan’s efforts to have the vaccine developed by BioNTech/Pfizer deliv­ered via a route other than the PRC (as the manufacturer had intended). Since 1957, the German-Taiwan­ese Society (founded in 1957 as the “German-Chinese Society”) has stood alongside the Parliamentary Group as a civil society institution that “advocates the maintenance, cultivation and strengthening of the multifaceted rela­tions between Germany and Taiwan”, and a “Tai­wan policy corresponding to today’s requirements”.26

Cooperation is limited, however, in security policy. Over the decades, the German government has refus­ed to supply arms to Taiwan (or to the PRC).27 Ger­man armed forces are also barely visible in the region: it took almost two decades before the German govern­ment decided to send a frigate to the Indo-Pacific once again in 2021. There, the Bayern took part in exercises with Australia, Singapore, Japan and the U.S. and “sent a signal for free sea routes and the observance of international law”.28

Economy

Germany is Taiwan’s largest trading partner in Europe. In 2021, Taiwan exported goods worth US$8.17 bil­lion (an increase of 27.49% over the previous year) to Germany, while it imported goods worth a total of US$12.5 billion from Germany. In 2020, Taiwan ranked 30th among Germany’s most important sales markets, while Germany ranked 36th as a market for Taiwan.29

The quality of German-Taiwanese economic relations is evidenced by the volume of trade, bilateral agreements and forums.

The quality of economic relations can also be gauged from the large number of bilateral agreements: for example, a double taxation agreement and an extradition agreement were signed recently, as well as an agreement to combat fraud in the service sector and one each on cooperation in energy issues, autonomous driving and cooperation in financial supervision. In addition, there are joint forums to encourage companies from both sides to jointly devel­op innovative products, services or industries, such as the “Taiwan-Germany Smart Manufacturing Forum”, the “Taiwan-Germany Energy Transforma­tion Forum”, a German-Taiwanese call for joint research and development projects by medium-sized companies30 and a forum for smart manufacturing and system integration.

Culture and science

Cultural relations also increasingly encompass areas driven by economic interests. At the same time, Tai­wan’s attractiveness for students and academics has increased because access to institutions in the PRC has been made more difficult by Xi Jinping’s policies. In 2020, there were 3,155 students from Taiwan in Germany and 1,062 students from Germany in Tai­wan. The TOCFL (Test of Chinese as a Foreign Lan­guage) is held annually in Berlin, Düsseldorf, Munich and Stuttgart, with about 100 applicants per year. In addition, the Taiwanese Ministry of Education sends Chinese-speaking teachers to German universities, cu­rrently to the Free University of Berlin and the Hum­boldt University of Berlin, as well as to Heidelberg, Göttingen, Tübingen, Münster, Trier and Regensburg. Last but not least, it maintains so-called Taiwan Stud­ies Centres, which are partly financed by foundations (for example at the University of Tübingen).

France as Taiwan’s partner

Politics

The path of French Taiwan policy was initially marked by peculiarities. President Charles de Gaulle, for example, established diplomatic relations with the PRC as early as 1964, against U.S. entreaties. He thus secured France a privileged status in Beijing’s assess­ment of its Western partners. Later efforts to establish relations with Taiwan were not only based on the growing economic importance of the island, but – under President François Mitterrand with a strong human rights orientation – were also linked to the Tiananmen events and the incipient democratisation of Taiwan. Unlike the other European countries, France did not refer to Taiwan as part of “China” but of the “People’s Republic of China”. Nevertheless, Paris soon received Taiwanese orders for its arms industry – probably an expression of the then still intense competition between both parts of China for closer ties with European states. These in turn led to “penalties” from Beijing, which Paris in turn sought to neutralise through arms deliveries to the PRC.31

With the establishment of an unofficial representation of France in Taiwan in 1995 and a “Bureau de représentation de Taipei en France”, the status of French-Taiwanese relations had finally reached that of most other EU states. Most recently, a delegation from the French Senate visited Taiwan in October 2021, led by a former defence minister.32

However, the area of security policy remains where France’s policy differs from that of the other EU states. For instance, in its Indo-Pacific Strategy of July 2021, France sees itself as a “country of the Indo-Pacific”.33 Moreover, France is the only EU state to repeatedly send warships into the South China Sea and thus into Taiwan’s immediate neighbourhood, where a French ship also dropped anchor in 2021.34 In February 2021, a nuclear-powered French submarine passed through the South China Sea,35 and in the same year, French ships took part in a series of dif­ferent manoeuvres between Northeast and Southeast Asia together with U.S., Japanese, South Korean, Aus­tralian, New Zealand and UK ships. France is thus the only country in the EU that regularly sends military signals to express opposition to China’s advance in the Pacific (and receives sharp criticism from Beijing in return).36

Economy

According to Taiwanese statistics, bilateral trade be­tween France and Taiwan totalled US$4.25 billion in 2020, of which US$1.28 billion were exports to France and US$2.97 billion imports to Taiwan, leav­ing a Tai­wanese trade deficit of US$1.69 billion. Over­all, as a result of the pandemic, bilateral trade between France and Taiwan shrank by 7.5% in 2020.37

Culture and science

Traditional cultural exchanges between France and Taiwan are complemented by research in science and technology (often driven by economic objectives). The Taiwan Cultural Centre in France has organised more than 30 artistic and cultural events annually over the past decade, with around 1,000 performances and around 600,000 visitors in 2019. The French-Taiwan­ese Cultural Prize is awarded to French citizens who are committed to cultural exchange with Taiwan. The framework for Taiwanese-French cooperation in science and technology is provided by bilateral research cooperation agreements involving, on the French side, the National Research Agency, the Acad­emy of Sciences and the Institut de France.

Great Britain as Taiwan’s partner

Politics

In consideration of the precarious situation of its colony Hong Kong, Great Britain established diplomatic relations with the newly founded PRC as early as 1950, but continued to maintain a consular rep­resentation in Taipei. Since 1992, there has been a “Taipei Representative Office in the UK” in London (and in the meantime a representation in Edinburgh) and since 2015 a “British Office Taipei” in Taiwan. There are but a few institutionalised forums with gov­ern­ment participation: annual bilateral trade talks and forums on renewable energy, railways, smart cities and agriculture. The British-Taiwanese All-Party Parliamentary Group is primarily dedicated to the exchange of visitors and, with 140 members, is one of the largest groups of its kind in the UK parliament.

Despite the consideration for Beijing, the U.K. attaches importance to its traditionally global role in questions of security policy. Therefore, it frequently conducts “Freedom of Navigation Operations” in the South China Sea in coordination with the U.S. and in this way more than symbolically supports the posi­tion of the U.S. on security questions in the region, which is closely linked to the issue of the PRC’s threat to Taiwan.38 In July 2021, London deployed its aircraft carrier HMS Queen Elizabeth with an escort fleet to the South China Sea, which also moved in the waters around Taiwan and took part in the multilateral manoeuvres mentioned above.39 As the U.K co-founded the AUKUS military alliance in September 2021, it could potentially play a greater security role with regard to Taiwan in the future, prompted by America’s regional China strategies.40

Economy

According to Taiwanese statistics41, Taiwan’s exports to the U.K reached a value of US$4.8 billion in 2021 and its imports from there – US$1.88 billion. This made the U.K. Taiwan’s third most important trading partner in Europe, while Taiwan was the U.K.’s tenth most important trading partner in Asia. Taiwanese com­panies had invested a total of US$3.24 billion in 222 companies in the U.K. up to and including 2021. Reflecting the importance of London as a financial centre, five Taiwanese banks have a presence in the U.K.; two UK banks have branches in Taiwan. In addition, the U.K. and Taiwan concluded a double taxation agreement on 23 December 2021.

Culture and science

As for many young people around the world, the UK education system is highly attractive to Taiwanese. For Taiwanese university students, the U.K. is the fourth most popular destination after the U.S., Aus­tralia and Japan; in 2019/2020, 4,185 Taiwanese stu­dents were enrolled in UK universities. On the other hand, by awarding scholarships and cooperating with the University of Cambridge, the Taiwanese Ministry of Education is working to strengthen Taiwan’s role for prospective British students of China studies.

Moreover, interest is strong within civil society, especially on the British side. Taiwanese author Wu Ming-yi was longlisted for the Man Booker Inter­national Prize in 2018 for his book The Stolen Bicycle, and the Cloud Gate Dance Theatre of Taiwan was named Outstanding Company at the 19th National Dance Awards 2019. Also in 2019, British choreogra­phers Hofesh Shechter and Akram Khan were invited to perform in Taiwan.

In the U.K., cultural exchange also extends to the science and technology sector, with cooperation agree­ments between Taiwanese ministries and re­search institutions such as the UK Engineering and Physical Sciences Research Council funding around 40 research projects each year.

Outlook

In the last two years in particular, changes in the attitude of European states towards Taiwan have become apparent. This is largely due to China’s new robust and aggressive foreign policy and therefore suggests that the cautious reorientation of the pre­vious European “one-China policy” will continue.42 The basis of this long-standing policy was the assum­ed tacit agreement with Beijing that any unification with Taiwan would be peaceful. However, the basis of this has been shaken by Beijing’s threats of violence and the menacing gestures of the Chinese armed forces. Added to this is Beijing’s breach of the 1984 British-Chinese agreement on Hong Kong in 2020, which means the de facto end of the “one country, two sys­tems” experiment that Beijing had earlier also offered Taiwan.

The EU and European states have begun to review their previous one-China policy.

Some European states and the EU authorities in Brussels have therefore begun to review their one-China policy. This trend is reinforced by Beijing’s problematic handling of the pandemic, especially in the first weeks, and particularly when compared to Taiwan’s prudent behaviour.43

There are indications that this review is beginning to have consequences, at least for the rhetoric of Euro­pean states. For example, on 20 January 2021, the European Parliament expressed concern about China’s increasingly provocative military manoeuvres and threatening gestures directed at Taiwan and called on the EU and member states to work with like-minded partners to protect Taiwan. On 21 Janu­ary 2021, the EP adopted a resolution on cooperation with Taiwan in the field of connectivity to benefit from its exemplary success in addressing the COVID-19 pandemic and to reduce the digital divide in South­east Asia. Since April 2021, the EU Commission has been working on a strategy for the Indo-Pacific. The EP is keen to see a role for Taiwan in this and sup­ports the goal of an investment agreement with Taiwan.

In May 2021, the foreign ministers of the G7 (which includes Germany, France and the U.K. as well as the EU) advocated Taiwan’s participation in the WHO and the WHA. At the same time, they opposed any uni­lateral measures that could exacerbate ten­sions in the Taiwan Strait and undermine regional stability and the international order. In June 2021, the G7 Summit called for a peaceful resolution of the problems be­tween the two sides of the Taiwan Strait.44 It was the first time Taiwan was mentioned in a G7 summit communiqué since this group was founded in 1975.

In France, on 6 May 2021, the Senate unanimously adopted, for the first time, a resolution calling for Taiwan’s membership in the WHO, Interpol, ICAO and the UNFCCC. On 22 June, the French National Assembly followed with a similar resolution. Paris had already approved the establishment of a second Taiwanese representative office in Aix-en-Provence in autumn 2020.45

The U.K. joined Taiwan, the U.S. and Japan in organising an international seminar on building “international resilience to disasters” in March 2021.

Beyond the cautious reshaping of Germany’s Asia policy with the Policy Guidelines for the Indo-Pacific and Germany’s support for observer status for Taiwan in the WHA, Berlin made no gestures on the Taiwan issue until the end of the Merkel government. In its coalition agreement, the new German government reaffirms the principle of a peaceful solution to the Taiwan question and advocates Taiwan’s participation in international organisations (the first time ever that such a document mentions the problem of Taiwan).46 Taiwan itself wants to use its initiatives to, for exam­ple, “call on the German government to formulate a reasonable ‘One Taiwan’ policy instead of [...] sub­mitting to the ‘One China’ policy”.47 This means above all that Taiwan is seeking to have the ban on visits by its seven highest-ranking state representatives at least partially lifted.

Conclusion: The economic importance of Euro­pean countries’ exchanges with Taiwan is great and continues to grow, mainly in the high-tech sector.48 The social and political closeness based on liberal and democratic values continues to increase with the on­going political changes in Taiwan. However, despite the relevance of these two developments, their prac­tical impact on Taiwan’s situation will remain mar­ginal. This is true at least as long as the determining parameters of Taiwan’s status do not fundamentally change, i.e. the largely missing international diplo­matic recognition, the political, military and eco­nomic threat policy of the People’s Republic as well as the security dependence on the U.S.49

If these parameters change, this would have serious consequences for the European-Taiwanese rela­tionship: a unification of Taiwan with the mainland, regardless of whether it is brought about democratically – for example by a Kuomintang-led government – or by force by the PRC, would downgrade European relations with Taiwan to a part of Europe’s relations with the PRC. For Europe, a violent con­fron­tation with China would mean having to opt more or less clearly for one of the two sides (with presumably the U.S. on Taiwan’s side) – and there is little doubt which side Europe would be on. This would have corresponding consequences for Europe’s role in the Indo-Pacific region as a whole and its relationship with the PRC in particular. Finally, a democratisation of China would give Taiwan – the only democratic Chinese society to date – a role in the further devel­opment of the mainland. Here, Europe would pre­sumably provide significant support to Taiwan in build­ing rule-of-law institutions and civil society in China.

Russia’s invasion of Ukraine has brought home not only to the Taiwanese themselves, but also to many Europeans, how precarious the island’s situa­tion is and that it could be endangered by the PRC’s bellig­erent measures. The discussion about whether Tai­wan could become the “Ukraine of China” at some point in the future and how Europe should then act is now not only relevant, but increasingly urgent.50

Conclusions and Recommendations

Hanns Günther Hilpert, Alexandra Sakaki and Gudrun Wacker

This research paper examined the Taiwan policies of the U.S., Japan, Singapore, South Korea, Australia, India, the EU and selected European countries, revealing many similarities, but also significant dif­ferences and some remarkable peculiarities as out­lined below.

Commonalities

The most important common feature is that all coun­tries examined here have committed themselves to a one-China policy. This means that they diplomatically recognise the People’s Republic of China (PRC) as the legitimate representation of China and there­fore can­not maintain formal diplomatic relations with the Republic of China (ROC), i.e. Taiwan. Never­theless, informal relations in the areas of politics, economics, society, science and culture are possible. Informal rela­tions are pursued, institutionally, not through governments and embassies, but rather bilateral representations under the guise of an array of imagi­native names. In the case of Germany, for example, these are the German Institute Taipei and the “Taipeh Vertretung in der Bundesrepublik Deutschland”. These unofficial missions not only promote exchanges in trade, business, culture and science, but they also represent de facto political and other interests in the host country and assume real diplomatic, especially consular, tasks. Furthermore, these representative offices act on behalf of governments as contracting parties to intergovernmental agreements. Political contacts at the highest political level, on the other hand, are carefully avoided. At best, ministers who are responsible for an economic or technical port­folio travel to Taiwan.

Complementary to the executive level, the national parliaments of the countries studied (with the excep­tion of Singapore) have also established relations with the Taiwanese parliament, the Legislative Yuan. In many cases, the parliamentarians and parliamentary groups that are sympathetic towards Taiwan have served as driving forces for more intensive bilateral relations.

All of the countries studied maintain mutually beneficial, and quite substantial economic relations. And although these are nowhere near the level of trade and investment exchanges with the PRC, they are all considered important and expandable. In fact, Taiwan’s share in the foreign trade of the countries studied has tended to increase slightly from the middle of the last decade, after having declined in the pre­vious decade. Due to Taiwan’s leading global position in the manufacturing of semiconductors, all the coun­tries studied are somewhat dependent on the island for their supplies. In order to expand trade and eco­nomic relations as well as to advance economic and technical cooperation, all of the countries studied have concluded bilateral agreements of various kinds with Taiwan.