Improved Taiwan-EU Relations Will Bring Great Mutual Benefits

Wang Wan-li
Assistant Professor, Graduate Institute of European Studies
Tamkang University
(Reprinted from the Taipei Journal, November 2 and 9, 2001)

Although the European Union is not responsible for setting up industrial cooperation schemes with third countries, it is necessary for it to develop a dynamic approach in order to establish a framework conducive to the mutual industrial interests of the union and third countries. The objectives of developing industrial cooperation by the commission include the following:

First, helping to bolster the presence of EU industry in high-growth markets on the basis of harnessing mutual interests. Second, encouraging private schemes involving operators from member states, particularly where the operators face research and development costs beyond their industrial capacity. Third, making business more competitive by facilitating transfers of experience and know-how between businesses, particularly for small companies.

Among these measures, one of the most important schemes is to organize industrial roundtables to enable industrialists from inside and outside the European Union to identify mutual interests both multisectoral and geographical, and to encourage the development of private initiatives in the form of joint projects.

The commission so far has organized multisectoral roundtables with the United States, Japan, Russia, some South American countries and Taiwan, and specific industry roundtables such as maritime, agrifood and consumer electronics.

The first EU-Taiwan industrial roundtable, held in Taipei in 1996, brought together 30 industrialists from different sectors, as well as EU and Taiwan government officials, including Commissioner Bangemann, who initiated the meeting, and Taiwan's minister of economic affairs.

A commission official gave the following reasons why Taiwan was selected as a priority country for an EU roundtable. First, the European Union is Taiwan's third largest trading partner. Second, Taiwan's role as a major economic actor is evolving both in Asia and the world economy. Third, the island possesses an advanced capacity and potential for high-tech development, particularly in the information industry. Finally, EU industrialists also appreciate the vast potential of the dynamic Taiwan market and the opportunities the island can offer in accessing other Asian markets.

From Taiwan's point of view, it was a good opportunity for Taiwan companies to strengthen competitiveness by seeking technology transfers from European companies through industrial cooperation.

The minutes of the meeting report stated that this kind of cooperation can bring general benefits for both sides in improving reciprocal market access, including recommendations about procedures, duties and tariffs, standards and nontariff barriers, and restrictions on foreign investment. Both sides can also make joint efforts to develop markets in mainland China and other countries in the Asia-Pacific region.

The two parties also agreed to promote common interests in such sectors as the maritime industry, aeronautics and aviation, telecommunications and information technology, and environmental technology. The second roundtable was held in July 1998 in Brussels. Besides following up on major issues from the first meeting, it included some new sectors.

These annual trade consultations with the commission, which started in 1981, are the most important framework for Taiwan and the European Union to improve communications and solve problems. Taiwan concluded a market access agreement with the union and is in the process of becoming a member of the World Trade Organization.

Some of the new measures discussed included amending laws and further opening markets. These will be implemented before Taiwan accedes to the WTO. In addition, because of closer economic and trade relations, more noncommercial relations have been developed and expanded.

Although trade issues are still the major items on the agenda, other issues have been added over the years. As long as relations with the union in other fields remain unofficial, expanding the functions and issues of the trade consultations seems the best way to promote informal dialogue, improve understanding and solve various commercial problems.

Taiwan has issued a long-standing invitation to the European Union to set up an office in Taipei to handle relations with Taiwan directly. Thus far, the European Commission has not approved such a move because of anticipated problems with the mainland. The commission has long insisted on WTO membership as a prerequisite for setting up a commission office in Taiwan in order to convince the council and avoid political tensions with Beijing.

However, as a result of improved Taiwan-EU economic and trade relations and Taiwan's impending WTO membership, it appears that the commission has decided to open an office as soon as possible. As Sir Leon Britten, former EU trade commissioner, said in his statement to the European Parliament, "The commission believes that an office, operating along similar informal lines to the trade offices of many member states there, would help promote European economic and trade interests in Taiwan, not least in view of significant progress made recently in negotiations for a bilateral market access package."

The commission therefore considers it important that such an office be opened as soon as possible, depending on an evaluation of commission priorities for the development of its network of external representations. This in turn will depend on the overall availability of human and financial resources.

The new commission adopted a communication on "The Development of the External Service" July 3, 2001. The communication mentioned that since Taiwan is expected to join the WTO soon, the commission is expected to have a major role in monitoring market access, application of WTO commitments and other matters related to its policy so it considered opening a trade office in Taiwan. It was the first official announcement from the new commission agreeing to open an office in Taiwan. Officials in Taipei hope the office will become a reality sometime next year.

European Union member states would welcome such an office since it could provide more information about EU rules, dumping policies and other matters, and in managing trade policy, in particular market access agreements to monitor Taiwan's progress. The office could also play a quasi-political role for improving general relations between Taiwan and the union since some trade-related measures could be handled collectively, and individual states could use the union as a shield if they preferred not to act individually. It also could expand some of its functions within the WTO framework to deal with multilateral issues with Taiwan and monitor the island's compliance with WTO rules.

Within the changing international political climate, Taiwan-EU relations provide sufficient ground for the following general observations and policy suggestions.

Since 1958, the union and its member states have never had a set of clear and independent policies toward Taiwan. Their policy toward and relations with the island have been largely affected by external factors, and grew out of practices and experience. There is no uniformity in those practices among EU members toward Taiwan, and these differences have historically made it difficult to create a common European position.

Beijing is the key factor determining EU and member state policies toward Taiwan. Subdivisions of the "China factor" in EU policy include various interpretations of the "one China" policy, Beijing's changing attitudes toward Taiwan and concern over Beijing's possible reactions to overtures to Taiwan. EU and member state policies are drafted and implemented in the shadow of this factor. It conditions absolutely the ground rules for any European Taiwan policy and any potential for expanded relations between Taiwan and the European Union.

The union and its member states officially consider Taiwan an economic entity, with which they are allowed to develop economic but not political relations. In practice, however, political and economic issues are so closely intertwined that the distinction has blurred. Economic policies are often based on political considerations and have political effects. Any binding of economic contact or agreement with Taiwan limits in some way EU or member freedom of action and can restrict political interests.

The union and its member states have historically eschewed involvement in relations between the two sides of the Taiwan Strait. Therefore they have not played as active and important a role in cross-strait relations or general East Asian relations as the United States. Yet the future development of mainland-Taiwan relations will deeply influence the stability and security of East Asia, and growing EU economic and political interests in the region. Therefore the union needs to review its cross-strait policy and consider a more active role in cross-strait affairs.

The European Union, with its great economic strength and rising political power, will certainly continue to have an increasing influence on international affairs. If member state policies can be integrated and coordinated, this would enhance EU political will and capacity to help solve disputes and maintain international peace and stability. Unfortunately, divergent national interests often weaken its ability to play a decisive global role and its real influence on international affairs is much less than its apparent influence and potential.

The union and its member states do not seem strong enough to stand up to an irate Beijing. They not only anticipate very cautiously mainland reactions to their policies toward Taiwan, they immediately flinch when Beijing reacts. Member states need a greater union to project their influence on the world stage. Any improvement in EU-Taiwan relations is in the best interests of both. Paradoxically, improved relations are also in the best long-term interests of Beijing as its best interests are to see a stable and prosperous Taiwan.