Trends in the U.S.-Taiwan Relationship
Deputy Assistant Secretary, Bureau of East Asian and Pacific Affairs
As prepared for delivery
Good morning, and thanks for being here today.
Some of you might have seen the recent comments of U.S. –that U.S. – Taiwan relations are “fairly grim” and that he is “pessimistic” about the relationship.
I respectfully disagree. Indeed I am optimistic about U.S. –Taiwan relations and I am here today to tell you why.
Recap of U.S.-Taiwan Relations
The U.S. – Taiwan relationship is long-standing, and encompasses business, culture, education, trade, environmental protection, and security ties. This relationship has thrived for decades to the benefits of both of our peoples.
Maintaining and deepening our strong unofficial relations with Taiwan is an important part of U.S. engagement in Asia, a region of great and growing importance to the United States.
Much of the history of the 21st century will be written in Asia, and the United States has a significant role to play. A critical part of our strategy is building the comprehensive, durable, mutually beneficial relationship between the United States and Taiwan.
Our broad ranging, unofficial relationship is deeply in the interests of the United States. It is founded on our shared values—a commitment to freedom and democracy—and cultivated through our ongoing spirit of cooperation.
It is rooted in shared history. The financial and technical support provided to Taiwan by the United States in the 1950s, and President Eisenhower’s visit in 1960, embody the U.S. commitment to Taiwan.
Over more than six decades, our engagement with Taiwan has supported the economic and political success story that Taiwan is today – an outcome achieved through the hard work and determination of the people on Taiwan.
Today, Taiwan is one of the 20 largest economies in the world. Once an agricultural economy, it became an economy based on heavy industry, and is now a world-class manufacturer of innovative high tech products. Today, Taiwan is an important part of global supply chains, particularly in information and communications technology, and Taiwan companies are world leaders in semiconductors, flat panel displays, and solar panels. Taiwan companies are also important investors in the United States, mainland China and other nations.
Hundreds of thousands of people from Taiwan travel to the United States and other nations each year as tourists, students and business persons. Taiwan is the sixth largest place of origin for international students studying in the United States, with over 23,000 Taiwan students attending U.S. educational institutions in the 2011-2012 academic year. Tens of thousands of Taiwan students have obtained degrees in the United States and returned home to lead companies, develop the economy, and help build a modern infrastructure of ports, rails, airports and highways.
Moreover, Taiwan has developed into a vibrant democracy, holding regular, free, and fair elections.
None of this would have happened without the active support of Taiwan’s flourishing media and civil society, based on the free flow of opinions and information. Taiwan is now recognized around the world as a model for both economic development and democratic reform.
Clearly, the U.S.-Taiwan unofficial relationship is multifaceted and overwhelmingly in the United States’ interest. It is worth remembering that the Taiwan Relations Act of 1979 remains, more than three decades after its signing, a critical guide for the U.S. – Taiwan relationship. The American Institute in Taiwan, or “AIT,” and the Taipei Economic and Cultural Representative Office or “TECRO” are the instruments through which we conduct this relationship.
Within the framework of our unofficial relations, Taiwan remains a close partner with whom we engage in a full range of substantive interactions, including trade negotiations, scientific and technological cooperation, environmental protection, academic and cultural exchanges, delegation visits, and security cooperation.
Now let me talk in more detail about specific components of our relationship, and how they demonstrate that this relationship is in robust good health.
Economics & Trade
As Taiwan’s third largest trading partner, the United States plays an important role in Taiwan’s economy. For 60 years, the American Chamber of Commerce in Taipei has been promoting American business on Taiwan. Today it represents the interests of more than 500 companies.
Yet the relationship is undeniably a mutually beneficial one. Taiwan is the seventh largest market for U.S. food and agricultural products. Taiwan is our 11th largest trading partner, and the value of our two-way trade was over $63 billion in 2012. That exceeds our trade with, for example, the Netherlands or India.
Since 1994, the Trade and Investment Framework Agreement or “TIFA” has been our main channel for dialogue strengthening our trade and investment links.
Taiwan’s positive action on beef imports paved the way for the most recent TIFA meeting - the first since 2007 – which was led on the U.S. side by Deputy U.S. Trade Representative Demetrios Marantis. His March visit to Taipei this year brought renewed momentum and improved communication to our economic relationship.
Notably, the meetings yielded new joint statements on investment principles, and on information and communication technology services. The new TIFA working groups on investment and on technical barriers to trade were launched, too.
The TIFA working group on investment held its first meeting in September. There was a discussion on promoting a transparent and predictable investment regime, and an exchange of preliminary views on a potential U.S.-Taiwan Bilateral Investment Agreement.
The TIFA Working Group on Technical Barriers to Trade will convene this month.
Through these TIFA processes, we aim to pave the way for new trade opportunities, renew the commitment to international trade disciplines, and improve the investment climate. We hope that Taiwan continues to build confidence in the trading relationship that was affected in recent years by Taiwan’s exclusion of many U.S. beef and pork products.
Work to Be Done on Trade
On trade, Taiwan has made progress in liberalizing its policies and opening up to international markets. We encourage further steps in that direction.
For example, U.S. companies seek greater transparency and predictability in Taiwan’s processes for approving foreign direct investment. Clarifying market entry and market exit processes will improve Taiwan’s investment climate and generate new opportunities for U.S. investors, manufacturers, and service providers.
Through legislative amendments, Taiwan has taken important steps to enhance the protection and enforcement of trade secrets, but challenges remain. Addressing those challenges is crucial for the continued success of both foreign and domestic companies.
We greatly appreciate the work done by President Ma and the Legislative Yuan in summer 2012 to address issues related to beef imports. We hope that Taiwan will continue to work to seen as a reliable trading partner by consistently applying science-based rules to agricultural trade.
These measures will no doubt face challenges of political will and protectionist inclinations but if implemented they would build confidence in Taiwan as a trading partner and as an investment destination. These measures would also generate a more favorable impression of Taiwan for possible inclusion in regional economic initiatives.
Trans-Pacific Partnership (TPP)
I know Taiwan has begun to consider whether it should seek to join the Trans-Pacific Partnership, or “TPP.”
In our discussions with Taiwan, we have said that any TPP candidate must be willing to adopt the high standards and ambitious commitments of TPP.
The United States is focused on concluding the agreement among the twelve current TPP partners. We are also developing TPP to potentially include other regional economies, noting that existing TPP partners must approve by consensus the addition of new partners.
The high visibility and sheer size of the TPP market may be a spur for Taiwan to liberalize its trading regimes. We encourage moves in that direction, and by fully utilizing the TIFA process, Taiwan will build confidence in its trade relationship with the United States.
Wrap-Up on Trade and Select USA
In addition to promoting trade and tourism, the U.S. government has also focused on attracting inward investment in the United States. The Department of Commerce has designated Taiwan as a focus market under the SelectUSA investment initiative.
Over the next two months, two distinguished Taiwan business delegations will travel to the United States seeking investment opportunities. The first will attend the SelectUSA Summit in late October. The second, traveling in November, will have high-level meetings in Washington, New York, and California on trade and on investment in the United States.
Taiwan is a valuable member of APEC and plays an important role in helping APEC to increase regional economic prosperity and integration.
Benefits of Taiwan’s Participation in the International System
I’d like to turn now to the benefits of Taiwan’s meaningful participation in international organizations, which we think is an important acknowledgement of Taiwan’s status as positive and responsible contributor to the international community.
The United States continually reaffirms the importance of Taiwan’s participation in cooperative regional and multilateral fora like APEC and the WTO, where Taiwan is a full member.
The United States fully supports Taiwan’s membership in international organizations where statehood is not a requirement, and encourages Taiwan’s meaningful participation in organizations where its membership is not possible.
With our support, Taiwan has participated as an observer in the World Health Organization, or “WHO,” Assembly for four consecutive years. However, obstacles remain to Taiwan’s participation in WHO technical meetings.
Taiwan should participate in the WHO’s reporting and response efforts. With the rise of global pandemics such as SARS and H1N1 influenza, it is imperative that Taiwan be part of the conversation on how to prevent the spread of infectious disease.
Taiwan is participating in the 38th International Civil Aviation Organization or “ICAO” Assembly as a guest of ICAO Council President Kobeh. Taiwan’s participation was arranged through international dialogue and cooperation. The ICAO Assembly ends tomorrow, October 4, but the active participation of Taiwan’s delegation supports ICAO’s mission to promote global aviation safety and security, and will strengthen ICAO as an institution.
Benefits of Cross-Strait Stability
Discussing our relationship with Taiwan requires some comments on our view of cross-Strait relations.
We do not see any inconsistency between developing a partnership with China and maintaining a strong unofficial relationship with Taiwan.
It is very much in our interest to see improvements in cross-Strait relations. We commend the progress that has been achieved in recent years and we encourage both sides to continue these efforts. The reason is straightforward: maintenance of cross-Strait stability is essential to the U.S. goal of promoting peace and prosperity in the Asia-Pacific region.
We support peaceful resolution of differences in a manner acceptable to people on both sides of the Strait. Likewise, we oppose any efforts to resolve differences through intimidation or coercion.
Steadfast U.S. Support for Taiwan's Self-Defense Capabilities
It is our judgment that our strong security partnership with Taiwan and our support of Taiwan’s development of defensive capabilities has provided the security and confidence necessary for improvements in cross-Strait relations.
The United States offers defense equipment and services necessary to enable Taiwan to maintain a sufficient self-defense capability. This is consistent with the Taiwan Relations Act and the United States’ one China policy.
The Obama Administration has notified Congress of our intent to sell over $12 billion in new defense articles and services to Taiwan. Such sales support both our commitments to Taiwan and our interest in maintenance of stability across the Taiwan Strait and in the region.
We support Taiwan’s efforts to develop innovative and asymmetric capabilities to deter coercion or intimidation, and we encourage Taiwan to increase its defense budget to a level commensurate with the security challenges it confronts.
Taiwan’s Role as a Regional Leader
We do not just view Taiwan through the prism of cross-Strait relations. We also look to Taiwan as a partner with whom we work on transnational issues such as environmental protection, disaster relief, development assistance, and combatting human trafficking.
U.S.-Taiwan cooperation on trafficking in persons has been particularly positive. For the last four years, Taiwan authorities have fully complied with the minimum standards for the elimination of trafficking in persons, and Taiwan has therefore received the highest or “Tier 1” ranking in the Department of State’s Trafficking-in-Persons Report. Because of its efforts, Taiwan is becoming a model for anti-trafficking efforts in the region.
On nuclear security, Taiwan and the United States have worked closely through the “Megaports” program to detect radiation in shipping containers. Given Kaohsiung’s importance as a shipping center, Megaports has made a significant contribution to regional and global security.
Environmental Protection Cooperation
Environmental protection policies and practices are global topics on which Taiwan is also emerging as a leader. Taiwan is demonstrating its ability to play a constructive and responsible role in protecting the environment, an issue that does not recognize boundaries or different political systems.
This year, the U.S. Environmental Protection Administration and Taiwan’s EPA are marking twenty years of cooperation. During those years, Taiwan has moved from being a consumer of information on environmental practices to being a leader, for example by hosting environmental protection training for officials from China, Asia, Africa and the Americas.
On dispute resolution, Taiwan has worked peacefully and constructively with its neighbors to manage and resolve disputes, for example its agreement with Japan earlier this year on fisheries in the East China Sea. Similarly, Taiwan and the Philippines resolved the dispute surrounding an incident between the Philippine Coastguard and a Taiwan fishing vessel.
The United States welcomes cooperative dispute resolution, reducing tensions through dialogue, and promoting peace and stability in the region. Dispute resolution also establishes procedures which reduce the likelihood of future miscalculations or unwanted, harmful confrontations.
Let me summarize the U.S – Taiwan relationship by saying that Taiwan has been and remains an important partner of the United States.
Taiwan’s entry into our Visa Waiver Program in November 2012 enhanced our already-flourishing people-to-people exchanges by simplifying business travel and tourism.
Taiwan can and should play a constructive role in more international organizations so that the goals of the international community are more fully supported.
We encourage Taiwan to use the Trade and Investment Framework Agreement process to strengthen our bilateral trade and investment relationship.
In APEC and the World Trade Organization, we will work with Taiwan to pursue rules-based trade regime liberalizations to benefit consumers, manufacturers, service providers, and farmers.
The friendship between the people of the United States and the people on Taiwan is long-standing and deep. We look forward to continued substantive engagement with Taiwan to promote business opportunities and academic exchanges to strengthen the ties that bind our two peoples together. We look forward to welcoming friends from Taiwan to every corner of our United States.