Trade Winds Determine Taiwan's New Course

(Condensed from the Taipei Journal, December 22, 2000)

European Trade shows are regularly attended by Taiwan buyers. (Photo by Huang Chung-hsin)

Currently, the European Union (EU) is Taiwan's third largest trading partner, and Taiwan is the EU's tenth largest trading partner. Bilateral trade has been expanding since the EU was formed in 1993. The close economic relations between the EU and the Republic of China, as well as the integration of the EU, have increased Taiwan's interests in boosting its cultural, social, and academic ties with the EU.

Shortly after President Chen Shui-bian's inauguration on May 20, 2000, he announced that the new government would emphasize trade and expand Taiwan's relationship with the European Union.

This does not mean that the ROC will change its long-term goals of gaining diplomatic recognition or de-emphasizing relationships with the United States and Japan, both of which have long been important to the ROC's strategic and national security concerns. Rather, it means that the government will devote more time, energy, and resources to Taiwan-EU relations.

The president said that the government will not only intensify cooperation with the EU administration, but also with various political groups, academics, and nongovernmental organizations (NGOs) in Western Europe. "Taiwan will endeavor to establish a comprehensive relationship with the EU," President Chen Shui-bian said.

An important part of this strategy to upgrade Taiwan's presence in Europe is to establish a representative office in Brussels. Furthermore, the president believes that the continuing absence of an EU liaison office in Taipei is contrary to the interests of both sides. "The EU should open its representative office in Taipei as soon as possible to enhance mutual benefits," President Chen Shui-bian noted.

Huang Yen-chao, director of the Taipei Representative Office in Belgium, is responsible for many aspects of the ROC-EU affairs, in the absence of formal diplomatic relations. Director Huang said that since the formation of the EU in 1993, it has become an increasingly important grouping, both politically and economically, and its significance to Taiwan is unquestionable.

The three-month exhibition of treasures from the National Palace Museum in Taipei at Grand Palais in Paris was extremely popular. (Courtesy of the National Palace Museum)

Currently, the main focus of the ROC's policy is to develop trade and technology cooperation between Taiwan and the EU, Huang said. The government is also making efforts to increase cultural and academic exchanges.

The ROC tries to gain political support from the EU, especially concerning disputes between Taiwan and the Chinese mainland. However, Huang admitted, it is unlikely that the EU will change its current position on relations between the two sides of the Taiwan Strait. Despite some support for Taiwan within the European Parliament, all of the EU's 15 member states support Beijing's "one China" principle. That is a fact the ROC has to face.

Still, the senior diplomat expressed his optimism and said the EU's position favoring the mainland government, or even seeking to further its relations with Beijing, is not harmful to Taiwan. But Huang did urge the EU to maintain its current policy of distinguishing between political issues and economic concerns, as the best way for future development.

The ongoing process of Taiwan's accession to the World Trade Organization (WTO) is a case in point. Even though Beijing has repeatedly said it would not block Taipei's entry to the WTO, the mainland authorities have repeatedly tried to undermine Taiwan's position. Earlier this year, in a last-minute ploy to embarrass Taiwan, the mainland insisted that "Chinese Taipei" be admitted as an "affiliated tariff area of China." Although the United States had just ratified a favorable trade deal with the Chinese mainland, it quickly quashed that idea. "Political issues should not be involved in economic cooperation," Huang said. The representative admitted that challenges and obstacles remain. The government must endeavor to increase interaction and better understanding between the two sides.

Since the mid-1980s, the government has helped Taiwan businesses enter the European market, and the EU has become one of Taiwan's major export markets, second only to the United States. The expansion of the EU has helped the interrelationship grow increasingly stronger.

Close trade relations led to the establishment of a formal mechanism to discuss trade issues or conflicts. Since 1987, when the Western European group was still called the European Economic Community, there have been annual consultative meetings between government officials and business representatives from the two sides. Also, conferences on industrial cooperation have been held in Taipei and Brussels, attended by high-level officials from both sides.

Henry Yang is the director of the economic division at the Taipei Representative Office in Belgium. He said increasing trade with the EU helps Taiwan to diversify its investments in countries with stable societies and well-established legal systems. Currently, most of Taiwan's investments are on the Chinese mainland and in Southeast Asia.

The EU's current advantages in certain high technologies and skilled labor also make it an attractive trade partner, Yang explained. Economic cooperation between the two sides helps Taiwan to introduce those technologies and skills it currently lacks, he said. Yang further pointed out that the EU's potential expansion, which could double its membership in the next seven years, and its adoption of a single currency will turn the EU into the world's largest market. Therefore, he said, the government's goal is to continue helping Taiwan businesses capture their share of the profitable European market.

Yang believes the WTO will help strengthen trade relations between Europe and Taiwan. The WTO will open more channels of com- munication, rules relating to bilateral trade will be clearer and more transparent, and trade barriers will be further reduced. "The WTO structure will better secure the trade interests of Taiwan and the EU, as well as planting the root of trade between the two sides," he said.

Chang Ya-chung, a political science professor at Nanhwa University, agreed. Chang said the EU has become an international organization as important as the United Nations. It should be seen as a main focus for the ROC's foreign policy.

In the past, the development of Taiwan's relations with the EU was based on relations with individual countries. That is because the previous government had a foreign policy that put little emphasis on Europe. The EU has become important to Taiwan and should be taken as a distinct and independent entity.

One of the EU's major objectives is promoting the economic interests of its people and enhancing their quality of life. Therefore, Chang said, the emphasis of Taiwan's relations with the EU should be trade and cultural exchanges, not politics. "It's impractical for Taiwan to place high expectations on the EU to change its political policies," he noted.

Many trade representatives from around the world have offices at the Taipei World Trade Center. (Photo by Huang Chung-hsin)

Chang acknowledged that the support of the European Parliament members, especially that of the Taiwan Friendship Group, is quite encouraging to the ROC, which has been relatively isolated from the official international community. However, these initiatives have limited political effect, the professor said. In fact, he admitted that it is hard to imagine any substantial development of diplomatic relations between Taiwan and the EU, unless there is first a breakthrough in cross-strait relations.

The EU sees the Chinese mainland as the key to maintaining stability in Asia. Thus, in addition to supporting Beijing's "one China" principle, the union continues to develop relations and even alliances with Beijing. This year, the EU worked out a trade agreement that will allow the mainland's accession to the WTO.

Such close relations make it less likely for the EU to change its position. "It is a fact that Taiwan has to admit," Chang said. However, trade relations between the EU and the Chinese mainland are not necessarily an obstacle to economic cooperation between the EU and Taiwan.

The professor further suggested that Taiwan should take active steps to upgrade its relations with the EU, instead of remaining passive. For instance, the government should expedite the process of opening an EU representative office in Taipei, and it should not delay opening a Taiwan trade office near the EU headquarters in Brussels.

To carry out the mission, overall planning and a well-connected working structure should be established first, he said. Also, experts capable of speaking different European languages must be recruited to improve Taiwan's relations with European countries.

Despite these shortcomings, Chang expressed the hope that EU integration would serve as a model for Taiwan and the mainland.

The development of a united Europe shows that the people of the continent have succeeded in transcending national interests. "This new way of thinking has helped maintain peace and enhance the prosperity of the people," he said.

"People on both sides of the Taiwan Strait, who have long been in conflict with each other over the issue of the island's sovereignty, should be inspired by Europe's successful experience," Chang said.