Photo credit: pang yu liu via Flickr, used under Creative Commons
Today’s blog post is written by Karl Baldauf, Vice President of Policy and Government Relations at the Ontario Chamber of Commerce. We nominated Karl to participate in the Delegation of Young Leaders of Canada trade mission to Taiwan on behalf of the chamber network.
The island of Taiwan is well-noted for the abundance of products that are “Made in Taiwan.” But its thriving economy can often distract from the complex political situation that the former “Formosa” finds itself in. Or so it would seem until the American President-elect broke ranks with decades of American foreign policy and accepted a call from recently-elected Taiwan President Tsai Ing-wen.
I had the honour of participating in the Delegation of Young Leaders of Canada trade mission to Taiwan in November on behalf of Canada’s chamber network. In fact, I was there the night of the American election, and so the various meetings were dominated not only by the relationship between Canada and Taiwan, but also the importance of American politics in the geopolitical health of the region.
Taiwan is presently the 19th richest economy in the world, as measured by GDP, and its manufacturing and computer technology industries are remarkably accomplished. Most of your iPhone is developed in Taiwan, for example, as was the first personal computer. But the ability of these products to continue to find new homes for export is constantly challenged by Taiwan’s complex and often misunderstood status in the world.
Canada, America and most other western, industrialized nations recognize the “One China” policy, which maintains that that there is only one state called "China," despite the existence of two governments that claim to be "China." This means that countries seeking diplomatic relations with the People's Republic of China (PRC, Mainland China) must break official relations with the Republic of China (ROC, Taiwan) and vice versa.
During the trade delegation, we learned about the various challenges that Taiwan encounters in trying to grow new markets for export. We met with the Taiwan Institute for Economic Research, the Ministry of Economic Affairs, the Ministry of Foreign Affairs, the Canadian Trade Office in Taipei, the Director of the Department of General Planning at the National Development Council as well as other organizations. In all of these meetings, we learned of an economy that worked hard to innovate constantly. In Canada, we frequently take for granted the abundance of natural resources that keeps our economy strong. In small geographies like Taiwan, they do not have the same luxury.
The various government officials we met also portrayed a system that very much relied on the good advice of the chamber network. Taiwanese officials pointed to various publications by the American-Taiwanese Chamber, the EU-Taiwanese Chamber and the Taiwanese Chamber, itself, to learn business practices that could be adopted within Taiwan to improve commerce.
But, in all these discussions, what remained clear is that the sensitive political climate that guided trade and diplomatic relations between Taiwan and the rest of the world inevitably has a significant impact on the ability of its economy to grow. For example, any country that recognizes a “One China” policy would proceed with caution before freely engaging in trade talks with Taiwan.
This is why the recent call between President-elect Donald Trump and Taiwan President Tsai Ing-wen was such a surprise. Officially, the U.S. broke off relations with Taiwan in 1979 in order to establish relations with the People’s Republic of China. Ever since that time, U.S. policy has not recognized Taiwan as a sovereign country. Recent events suggest this approach could change under the new administration.
The good news is that as an economic entity and a Separate Customs Territory, Taiwan is in fact a lot more connected globally than the politics may otherwise reveal. As a member of the World Trade Organization and APEC, Taiwan has even negotiated a free trade agreement with New Zealand – a nation that has a fully functioning FTA with the People’s Republic of China.
Notwithstanding the politics and the seemingly fluctuating approach to China in the United States, Canada should carry on building a prosperous relationship with both China and Taiwan. Regardless of the politics, Taiwan remains an important and affluent market of 23 million people and our fifth largest trading partner in the Asia Pacific. Recent headlines should serve to remind us that the region, as a whole, is worthy of engaging with.