If Kuwait's primary export had been tangerines, would it have been possible to forge the allied military coalition? Because of oil, a primarily regional conflict became a major global issue. As the twentieth century draws to a close, international politics and global economics are perhaps more closely integrated than any other time in modern history. If nothing else, the Gulf War demonstrated once again that economic concerns can be the driving force behind major political decision-making.
The development of a more integrated worldwide economy has changed the face of international trade as much as it has complicated the process of diplomacy. To stay competitive, nations must go far beyond traditional bilateral trade relationships. And there is always room for creativity. A nation can now form substantive economic ties with cities, states or provinces, countries, and regions. No where is this trend more obvious than when dealing with Europe. In 1992, political adjustments will transform the European Community into an economic powerhouse. All trading countries, whether next door or on the opposite side of the globe, will have to cultivate this market or suffer the consequences of being cut out of one of the world's largest and richest marketplaces.
Thus, the role of bilateral political relations between nations has begun taking a back seat to a range of economic linkages, ties that often circumvent the niceties ─ and occasional ponderousness ─ of formal diplomatic relationships. In recent years, various forms of cooperation between primarily economic institutions have expanded strikingly. In the case of the Republic of China on Taiwan, these have helped the island remain one of the world's top traders, even though it lacks formal diplomatic relations with most of its trading partners.
Beginning in the early 1970s, the ROC entered a phase of diplomatic difficulties as dozens of nations broke off formal relations in order to establish official ties with Peking. On October 25, 1971, the ROC withdrew from the United Nations, and in September of the next year, diplomatic relations were severed with Japan, a major trade partner. Even after these setbacks, the ROC maintained a high international profile. It went on to establish diplomatic relations with developing countries, and also began setting up new relationships with nations that had ended formal diplomatic ties. It was a creative process, and one pursued by all the nations involved in order to provide a continuity in trade relations despite the lack of formal political links.
In the case of Japan, nongovernmental agencies in the form of the Association of East Asian Relations in Taipei and its counterpart, the Japanese Interchange Association in Tokyo, were set up after formal relations ended. These agencies continue to handle political, economic, and cultural affairs.
Ties of substance ─ creative cooperation at work in a Canadian exhibit of environmental protection equipment.
Another diplomatic blow came in January 1979, when the U.S. broke diplomatic relations with the ROC in favor of communist China. The official setup was soon replaced with a new framework for what had been a long-term and productive relationship. The Coordination Council for North American Affairs (CCNAA) of the ROC and the American Institute in Taiwan (AIT) were established as unofficial agencies. To solidify and govern this relationship, the U.S. adopted the Taiwan Relations Act in 1979. This solution proved especially useful, because it became an adaptable model for other nations seeking a pragmatic way to maintain substantive ties with the ROC in the absence of formal diplomatic ties.
Yet the provisions of the Taiwan Relations Act did not come easily. They took hard and creative work on both sides of the Pacific. John H. Chang (章孝嚴), political vice minister of the Minis try of Foreign Affairs (MOFA), recalls the negotiations: "When the establishment of CCNAA and AIT was being discussed, President Carter wanted AIT to be translated into mei-chou tsai-tai hsueh hui (美洲在台學會), the literary meaning of which is 'the American continent's learned society in Taiwan.' He wanted to get rid of anything official. But the idea was unreasonable, because the United States is not the entire American continent, and the institute was not a learned society. The translation would have given the impression that the body was handling scholarships or educational matters for the States. So after further discussions, we finally came to an agreement and called it mei-kuo tsai-tai hsieh hui (美國在台協會), the literal translation of "American Institute in Taiwan. "
These negotiations repeated a problem the ROC was already having with another nation. When the Philippines broke off formal relations with the ROC in 1975, names also became an issue. The Philippines set up a representative office in Taipei called the Asian Exchange Center, a name easily mistaken for a stock or futures exchange. After years of discussion, the names of the Philippines' and the ROC's representative offices were finally changed in December 1989 to better reflect realities. In the ROC's case, its office in Manila is now called the Taipei Economic and Cultural Office; its counterpart in Taipei is the Manila Economic and Cultural Office.
Today the world ─ plans for global trade expansion include building relations with Europe.
According to Chang, every foreign institute and representative office has its own history. Each required difficult negotiations concerning names, choice of representatives, and the functions of the offices. The process was especially difficult because new ground was being broken. Such substantive relationships between nations are rare in the absence of diplomatic ties, and both the ROC and other nations had to negotiate, experiment, and adjust policies to make the relationships workable.
In 1988, the ROC made a major adjustment in the basic principles of its own diplomatic policies. The political waters were first tested in March 1988, when Wei Yung, then chairman of the Research, Development, and Evaluation Commission of the Executive Yuan, raised the idea of "double recognition," suggesting that Taipei neither cut nor refuse diplomatic ties with nations that recognized Peking. The suggestion brought a storm of controversy, but it also signaled a major shift in official and public opinion.
Not long after Lee Teng-hui was sworn in as President in January 1988, he started promoting a "pragmatic policy" for diplomatic relations. In an early step to initiate the policy, the ROC sent a delegation to Manila to attend, under protest, the Asian Development Bank (ADB) annual meeting in April 1988. Although the ROC was a founding member of the ADB, the meetings had been boycotted for two years following the organization's adoption of "Taipei, China" to designate the ROC.
Then, in early March 1989, President Lee made a historical visit to Singapore together with a number of ROC officials. It was the first time in four decades that an ROC president had visited a foreign country. The following month, the ROC went a step further with its pragmatic diplomacy when, in an unprecedented move, it sent an official delegation, led by Finance Minister Shirley Kuo, to Peking to attend the twenty-second annual ADB meeting. Kuo's high-profile participation in Peking signaled a bold new flexibility in ROC foreign policy that has continued unabated.
David Liu ─ "CETRA has a staff of seven hundred to provide any information about local business opportunities. "
According to Bernard T.K. Joei (芮正皋), who has served as an ambassador in many African countries and is currently director of the Center for Area Studies at Tamkang University, the ROC is breaking new ground in international relations. "The situation of the ROC on Taiwan and the matter of diplomatic recognition is a unique case, one unprecedented in international law," he says. "Even though we have diplomatic relations with only twenty-eight countries, Taipei has semiofficial and non-official relations with more than 120 countries in commercial, cultural, and scientific fields." He adds that the ROC belongs to hundreds of international organizations at both governmental and nongovernmental levels.
A prime reason for the ROC's success in forging and maintaining substantive relations with other nations is its status as a world trader. To facilitate trade, the ROC has eighty representative or trade offices in fifty countries. No less important, there are a large number of foreign representative offices in Taipei, all of them emphasizing building trade ties with Taiwan. The number of foreign offices has been growing steadily. "At present, there are thirty-five offices from thirty countries, and twenty-nine of these offer visa service," says John H. Chang. "This total does not include the trade and representative offices established by U.S. states and Canadian provinces. "
Joei says that changes in global economics require the ROC to come up with creative responses to international relations. "At present, the trend is moving toward an integrated economic system and a rise in importance of regional economic groupings," he says. "The signing of the Free Trade Pact between the U.S. and Canada and the market integration in Europe in 1992 show how the world of the twenty-first century will be structured. In the mean time, the ROC must actively develop its foreign relations, participate in international organizations, and playa constructive role in the international arena."
The ROC's economic strength has already attracted greater interest from countries in search of investors, tourists, and traders. Previously difficult markets to penetrate, such as India, Pakistan, Sri Lanka, and Mexico, are now welcoming Taiwan businessmen.
Tarja Kuokkanen ─ "To have balanced trade, we need to turn our focus more to Asia."
David Liu (劉大俊), deputy executive director of Market Development at CETRA (the China External Trade Development Council), says: "Take Mexico, for example. It was not until 1989 that we succeeded in tapping its market. We set up our trade office in Mexico in April 1989, and its counterpart in Taipei was set up in July 1990. The office is now planning to offer visa services, because they know that commercial relations will be impossible if people have to wait six months for visas to be approved by the Mexican office in Hong Kong."
Relations speeded up in early 1989 after ROC investors broke ground for an industrial park at Mexica1i, on the border of Mexico and California. The industrial park is expected to include fifty to sixty medium-sized businesses, representing an estimated investment of approximately US$50 million.
CETRA, established in 1970 and co sponsored by the ROC government and the private sector, has major responsibility for building trade ties. One of its more successful programs has been its assistance to U.S. state trade offices as they set up operations at the Taipei World Trade Center. To date, seventeen states, plus Guam and the city of Tucson, have active offices at the Trade Center. This number ranks second only to Japan, which hosts thirty U.S. state trade offices.
Liu says: "After holding two American industrial product shows in 1988, CETRA decided it was time to carry out some follow-up measures. So we encouraged U.S. states to establish trade offices in Taipei. Since not all of them can afford to do so, we offer them preferential treatment on their leases at the Trade Center. More important, perhaps, CETRA has a staff of seven hundred to provide them with any information they need about local business opportunities. "
To help the ROC move away from over-dependence on trade with the U.S., CETRA is pursuing a global trade expansion project, and it is paying off. Turkey, Ireland, Norway, Jamaica, Puerto Rico, and Chile have all begun probing the Taiwan marketplace and its investment potential. Oftentimes, the establishment of trade or representative offices in Taiwan is seen as the most effective means to achieve economic goals.
According to Michael Garvey, director of the Institute for Trade and investment (ITI) of Ireland, his country was already a little slow in setting up its office in Taiwan in August 1989. But in short order he has seen a substantial increase in the movement of products and services between the two countries. Tourism from Taiwan is also on the rise, especially since ITI speeded up the visa process from six weeks to three days.
In another case, the opening of the Office of Finnish Industry and Transport (OFIT) in February 1991, was just in time for a major trade show at the Taipei World Trade Center. OFIT is sponsored by the Finland and Pac-Rim-East-Asia Trade Association. The association consists of the major Finnish companies already engaged in trade with Taiwan. They include Finland's largest shipping company, largest trading company (with thirty-six overseas branches), largest chemical products and petrochemical industry, and a major mining and metal smelting operation.
Ted Lipman ─ "Our role Is basically to serve as a bridge."
"Since Taiwan is the thirteenth largest trading country in the world, we recognize the importance of developing a trading partnership," says Tarja Kuokkanen, the first Taiwan-based Finland representative. "Many of the Taiwan products are manufactured with brand names now, such as Acer computer, which is well-known in Finland, and they are becoming competitive." She adds: "The outstanding performance of made-in-Taiwan products made us more aware of this market and the Finnish exporters are pleased to develop a closer connection with it." Finland, like the ROC, has a trade diversification policy. In the past, 65 percent of its trade used to be with the countries of the European Economic Community and the European Free Trade Association. "To have balanced trade, we need to turn our focus more to Asia," Kuokkanen adds.
Kuokkanen is very much impressed by Taiwan and its people. She says: "For ten years, I've been involved in trade in Asian countries and cities, such as the Mainland, Thailand, and Hong Kong. It's nice to be in a region where the economies are growing so rapidly. Taipei is a fast-moving city. I like the phrase je-nao [hot and noisy], which I think is suitable for describing Taipei. Everything is happening here."
According to David Liu of CETRA, the establishment of representative offices is a natural course of action. "Actually it's simple," he says. "Businessmen everywhere have a common interest making profits. Whether it's imports or exports, it doesn't make any difference. So trade commissions in the ROC and other countries start having contacts, and these are followed by discussions on other issues such as telex, shipping, and insurance matters. Oftentimes these businessmen, who are also politically important, influence their government's decision on setting up representative offices here or upgrading the status of existing ones."
Lately, CETRA has been looking closer at Eastern European markets, as well as other communist states where markets still remain unexplored. For example, Vietnam. With a cheap labor force and rich natural resources, it is already attracting considerable interest among Taiwan businessmen. To promote trade with Vietnam, Professor Joei runs a Sino-Vietnam Industrial and Commercial Association in Taipei. This is the first private organization approved by the Ministry of the Interior to assist local people in developing business relations with a communist country.
"We have been to Vietnam a few times already," Joei says. "We have unofficially explored issues such as establishing direct flights between both countries, simplifying visa procedures, and helping plan an industrial zone there." The association has offered assistance to various government agencies, such as the Ministry of Communications. Although no formal cooperation has been initiated between the two countries, these initial unofficial steps indicate the continuing importance of the private sector in promoting substantive relations between the ROC and other nations.
Bernard T.K. Joei ─ "The ROC must actively develop Its foreign relations ... and play a constructive role In the International arena."
MOFA Political Vice Minister Chang says: "We are now rewriting history, and creating a new concept for international law. Before this, there was nothing like what we are doing. For example, we are now able to maintain pacts and agreements with the U.S., Singapore, and Indonesia ─ without formal diplomatic ties. Half the credit should go to the foreign offices, which also play a unique role to the benefit of their countries. We do our best to see the advantages of such a substantive relationship to their country as well as to the ROC."
In fact, foreign office representatives have already recognized the advantages. For example, Ted Lipman, deputy director of the Canadian Trade Office in Taipei (CTOT), says: "Our role is basically to serve as a bridge. We try to introduce the relevant parties from both sides to each other. We provide an open door for people, giving them information that they can use to develop trade relations themselves. Trade is done by business men, not by organizations like ourselves. What we try to do is to help businessmen get a better understanding of each other. It's really up to the private sector to undertake the business and then do it themselves. "
"Looking at the increasing number of foreign offices makes one feel both happy and sad," says Chang. "We are glad to see that we are able to maintain substantive relations with so many countries since it shows that 'we are too big to ignore,' as the headline of an editorial in the New York Times put it. Yet it is also a sign to remind us that no matter how well substantive relations work, they cannot replace diplomatic relationships. To establish formal diplomatic ties is our ultimate goal. The recognition of the twenty-eight countries is actually the base of the ROC's international status. Substantive relations is second best. But within them we always try to find a means to develop formal diplomatic ties."