EU Forges Stronger Trade Ties with Taiwan

(Condensed from the Taipei Journal, December 15, 2000)

The ABN AMRO Bank is one of the many successful multinational businesses operating in the Taiwan market. (Photo by Chang Su-ching)

With a population of about 23 million industrious people, Taiwan has been known as one of the "Asian Tiger" economies for the last two decades. Taiwan is the world's 15th-largest trading economy, with most of those exports bound for the United States and Asia. But, as Taiwan has become increasingly important in global business, Taiwan has expanded its trade and economic relationships with many other countries in the world, including those in the 15-member European Union (EU).

With mutual trade amounting to about US$33.5 billion in 1999, the EU is Taiwan's third-largest trading partner. Taiwan ranks tenth among the EU's trade partners. For many years, the two sides have held annual consultations to resolve trade disputes and discuss key issues.

The prospect of Taiwan's World Trade Organization membership has encouraged the EU to consider opening a liaison office in Taipei. Some think this could be a step toward formal diplomatic ties, but even Taiwan's friends are urging a "go slow" approach.

Chairman Paul Scholten of the European Council of Commerce and Trade, an organization representing EU industries in Taiwan that helps to promote commercial relations and bilateral trade and investment, said that the association between Taiwan and the EU has seen two major changes over the past few years. First, increasing bilateral trade has meant that the European Commission (the EU's civil service) and the European Parliament have become much more interested in Taiwan. Second, the European Parliament, as well as the parliaments of its member states, has been impressed by Taiwan's development into a mature democracy. These two factors have led to calls for formal ties.

"The only thing missing right now is the liaison office," Scholten said. However, the timing for setting up an EU office in Taipei is still under discussion. "Although there's no specific timetable, the issue is on the top-priority list of the EU Commission," said one EC official in charge of Taiwan affairs. "It is likely to happen when Taiwan joins the World Trade Organization."

One of the main functions of the liaison office would be to examine trade issues between Taiwan and the EU in the WTO context, promote interaction between the two sides, and facilitate bilateral interaction in economic, cultural, and other areas.

In fact, Taiwan's accession to the WTO is a primary focus of current EU-Taiwan relations and is seen as helping the further development of bilateral economic relations.

The EC believes the multilateral nature of the WTO framework will give additional stability and confidence when resolving trade disputes and investment issues. Overall, the WTO will bring a very positive influence to EU-Taiwan relations, the EC official said.

Negotiations on Taiwan's accession to the WTO have been completed, and the island's efforts to become a member of the multilateral trade organization have been approved by the EU. In fact, the EU has openly praised Taiwan, noting that its commitment to open markets goes far beyond that of most current members of the WTO.

Nonetheless, the ROC is still unable to gain official recognition from the EU. As with many other countries and international organizations, the EU recognizes Taiwan as an economic entity--or a "separate customs territory"--instead of a sovereign state.

The Taiwan-based Giant Group, one of the leading international bicycle producers, has established branches all over the world, including the Giant Europe plant in the Netherlands set up in late 1990s. (Photo by Deborah Shen)

This is in keeping with the EU's official position on relations with Taiwan and the Chinese mainland. In 1999, the EU presidency issued a statement supporting Beijing's version of the "one China" principle. While clearly favoring the mainland, the statement urged that cross-strait disputes should be resolved through constructive dialogue. It also said both sides should avoid taking actions or making statements that would increase tension.

"Basically, we hope to see a peaceful resolution of the cross-strait disputes. And we believe that WTO membership for the two sides will help to improve relations between them," said the EC representative.

Still, Taiwan does have its allies within the EU. George Jarzembowski, a member of the European Parliament (EP) and a leader of the pro-Taiwan group inside that legislative body, said it is difficult for the EU to establish diplomatic relations with Taiwan, since none of the 15 member states currently recognizes the ROC. Nor is there an official delegation within the EU. "The commission has to be careful because of the member states," Jarzembowski said.

As an alternative, some members of the EP formed the Taiwan Friendship Group in 1991, to improve EU-Taiwan contacts and the overall relationship between the two sides.

Since ROC President Chen Shui-bian was inaugurated on May 20, 2000, the group has tried to persuade Beijing to accept the new reality and has urged mainland leaders to relax their relationship with Taipei.

The EP has long been an important pressure group promoting the EU's relations with Taiwan beyond the level proposed by the EC and the Council of Ministers. In 1985, the parliament adopted the Van Aerssen Report, which urged the EU to further develop trade relations with Taiwan. Then in 1993, members of the EP presented the Hindley and Reding Reports, which supported Taiwan's accession to the WTO.

The reports also provided a basis for discussions on the reintegration of Taiwan and the Chinese mainland into the international economic system. Furthermore, in 1996, the EP publicly condemned the Chinese mainland's attempts to influence Taiwan's first direct presidential election by conducting military exercises in the strait.

Recently, to further its efforts to promote Taiwan-EU relations, the EP passed an amendment to its resolution on the EU's diplomatic and security policy, which urges the European bloc to strengthen political relations with the ROC.

The amendment called on the Council of Ministers--the EU's decision-making body--to find practical methods of promoting closer political ties to support Taiwan's democratization. The amendment also urged the EU to press for early resumption of dialogue between Taipei and Beijing. In addition, the EP advocated the opening of an EU representative office in Taipei.

Besides expressing optimism that WTO membership will help stimulate trade relations between Taiwan and Europe, the EU hopes that the accession into the WTO of both Taiwan and the mainland will help improve relations between the two sides of the Taiwan Strait. That could even lead to official ties with Europe.

"Taiwan has a lot of friends in the parliament," said Jarzembowski. He added that the EU's relations with Taiwan should be improved, and that the mainland cannot undermine Taiwan's position in WTO.

The official from the EC concurs. "I believe that the WTO will help significantly in the cross-strait relations," he said. "We're looking forward to better communication and interaction between the two sides brought by the WTO."

All parties within the EU think that Taipei, Beijing, and the EU should steadily and carefully improve their relations, building a solid foundation that allows for the possibility of growth.

Jarzembowski believes that as long as Beijing is unsure of its direction, Taiwan should not push too much on the status issue. Instead, it should take a step-by-step approach to bilateral relations with the EU. Taiwan's primary goal is to open the EU trade office and subsequently improve relations, he said.