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Remarks by Richard C. Bush, Chairman and Managing Director, American Institute in Taiwan, at the Annual Conference of the Taiwan Chamber of Commerce of North America, Chicago, Illinois June 26, 1999

BG9908E | Date: 1999-07-01

I must begin by paying tribute to all of the Taiwan Chambers of Commerce around North America. You and your members both strengthen the community of people from Taiwan who live and work in the United States and Canada, and serve as important links in the chains of commerce, investment, and professional exchanges that connect the United States and Taiwan. But you also make important contributions to your local communities, making them better places to live. In part through your efforts, it appears that Taiwan's economy will pick up this year, and so survive the Asian financial crisis better than any of its neighbors. You all should take satisfaction from the important roles that you play.

This evening, I would like to share my views on three aspects of United States relations with Taiwan. First, I wish to say some things about Taiwan itself. Second, I will talk some about U.S. policy toward Taiwan and the Taiwan Strait issue. And finally, I will discuss relations between Washington and Beijing, which have deteriorated I hope temporarily in recent months, especially after the tragic and accidental bombing of the PRC embassy in Belgrade.

The Taiwan Miracle

With respect to Taiwan itself, I think it is important once in a while to step back and marvel at what the people on Taiwan have achieved in our lifetimes.

Fifty years ago, the Nationalist government was retreating to the island, with little hope that a PLA invasion could be stopped. On Taiwan itself, the economy was in bad shape -- per capita GDP was less than $200 in current dollars. Relations between the Mainlander government and the native population were tense and hostile. Forty years ago, the government was only just beginning to institute policies that would foster export-led growth and growing prosperity for the island population. Per capita GDP was still under $200. And the year before, 1958, the armed forces with American help had defended Jinmen against a fierce artillery barrage. Thirty years ago, per capita GDP was $320. Martial law continued. And President Nixon secretly began the U.S. rapprochement with the PRC. Twenty years ago, Taiwan was reeling from the shock of U.S. de-recognition and the coming termination of the mutual defense treaty. There was anxiety about whether the new unofficial structure of relations with the United States would serve Taiwan well. And the per capita GDP had quadrupled but was still only $1760. Ten years ago, per capita GDP had quadrupled again to around $7000. The process of political liberalization and democratization had only just begun. Trade with the Mainland was growing but investment was still limited.

Today, in 1999, Taiwan is a modern, urban, wealthy, middle-class, and increasingly cosmopolitan society with a per capita GDP of over $13,000 -- a sharp contrast to the poor, rural society that it was fifty years ago. Substantive relations with the United States are better than ever. There is a growing economic interdependence with the Mainland: two-way trade is over $20 billion and contracted investment exceeds $35 billion. Again, this was unthinkable only fifteen years ago. Most important, Taiwan has a thriving democratic system, where the government is accountable to the public, the Legislative Yuan and National Assembly, and the mass media. This political transformation from the harsh authoritarian system of the past is even more startling than Taiwan's social and economic modernization, for democratization is not an easy process and it occurred on Taiwan without undermining the island stability. It is one of the most remarkable examples of peaceful political change in the last half-century, and a point of reference for the Mainland.

Now, I try to remain objective about Taiwan. I am aware that economic modernization on Taiwan has brought problems like environmental pollution, and that social change has disrupted the traditional family system and fostered problems like juvenile delinquency. Identity has been a subject of extended debate. There is concern about the role of money, corruption, and gangs in politics. Some believe that spiritual values have suffered and must be revitalized. These are all serious problems, the problems of any open modern society. By and large, however, they are the consequences of success, not of failure. As we enter the twenty-first century, Taiwan is adapting well to the trends of democracy, global economic integration, and the information revolution. As an American whose work is focused on Taiwan, I would not trade the current period for any time in the last fifty years.

The progress that has occurred over the past fifty years -- much of which bore fruit only in the last ten years -- is a remarkable achievement, an achievement that the people on Taiwan, yourselves included, should be very proud. Moreover, it should give the people and authorities on Taiwan confidence about the future. Having met challenges in the past, they can meet the challenges that are still to come. Having overcome obstacles in the past, they should be able to overcome the obstacles that they are yet to face. When predicaments do occur, it is all too easy to lose one's confidence and become consumed by a sense of disaster. Yet I think if the people and authorities on Taiwan step back and look at what they have accomplished in spite of the difficulties, this record of achievement should more than balance any new sense of anxiety. Of course, one should not get over-confident, but neither should one be excessively anxious.

The United States and Taiwan

One of the reasons that I believe that Taiwan's people and authorities should remain confident is the policy of the United States. For the last fifty years, the United States has sought to create an environment in East Asia in which peace, stability, and prosperity are fostered and in which Taiwan can thrive. It was partly the advice of our economic advisors that led to the policy changes forty years ago that created Taiwan economic miracle. Taiwan of course did not initially accept the U.S. opening to the PRC, but I think that looking back many would agree that this is not a zero-sum game, and that Taiwan's security and prosperity are better off when U.S.-PRC relations are good. Fifteen years ago, there were high tensions and little economic contact across the Taiwan Strait. Would anyone really want to go back to that situation?

Moreover, there is broad support for Taiwan among the American public, the media, and the United States government. From time to time, there are differences between the Congress and the Executive Branch, but these are more over implementation than over goals. On fundamental objectives, there is broad and deep consensus.

As the United States has sought, with broad public support, to foster a positive environment in East Asia, it has naturally had a long-term concern about the security of Taiwan. And it will continue to do so. The Taiwan Relations Act, which was enacted twenty years ago, codifies that concern. It authorizes the Executive Branch to sell weapons to Taiwan to ensure its sufficient self-defense. It also proclaims that any effort to determine the future of Taiwan by other than peaceful means would be a threat to the peace and security of the Western Pacific area and of grave concern to the United States; and that we should maintain the capacity to resist any resort to force or other forms of coercion that would jeopardize the security, or the social or economic system, of the people on Taiwan. The commitments to these provisions of the TRA are as strong as ever. Just two months ago, President Clinton said, "Our interests lie in peace and stability in Taiwan and in China, in the Strait and in the region, and in a peaceful resolution of the differences. We will do what is necessary to maintain our interest."

Moreover, I believe strongly that people on Taiwan have nothing to fear from the approach of the United States to cross-Strait relations, which is part of our one-China policy. That approach consists of five principles:

* The United States insists that the Taiwan Strait issue be resolved peacefully.
* The Administration believes that constructive and meaningful dialogue and
cross-Strait exchanges are the best way to resolve cross-Strait differences.
* It believes that these differences should be resolved by the two sides themselves.
* The United States will remain even-handed in its approach to cross-Strait dialogue,
and not apply pressure to either side.
* The Administration believes that any arrangements concluded between Beijing and
Taipei should be on a mutually acceptable basis. And because Taiwan is a democratic
system, it is the Taiwan public that ultimately must approve any such arrangements.

It is my understanding that some people in Taiwan have focused like a laser beam on a statement that my good friend Stanley Roth made three months ago encouraging the two sides of the Strait to reach "interim agreements." Some people fear that maybe he had a specific type of agreement in mind, that the United States in effect was imposing such an agreement, and that such an agreement would be bad for Taiwan. Frankly, I think that these people are over-reacting.

When Mr. Roth spoke of "interim agreements," he was referring to agreements that are less than an ultimate resolution, less than comprehensive, less than total. But he also had in mind agreements that are objectively achievable, that are meaningful, and that lead to a significant reduction in tensions. We agree that a total solution to the Taiwan Strait issue won't occur overnight. But even without a full agreement, would not the people of Taiwan be served by agreements that are possible and which reduce tensions, expand cooperation, and so build mutual trust?

It is not for the United States to suggest or dictate a substantive solution to the Taiwan Strait issue. And indeed, Mr. Roth made clear that it was the two sides themselves, and not the United States, that should reach these agreements because only they are the ones who can craft the specific solutions which balance their interests while addressing their most pressing concerns.

The key word in Mr. Roth's statement, and the word that should have received the most attention, was "creativity." The situation in the Taiwan Strait is more stable than it was three years ago, but it is still not stable, and that is not in anyone's interest. We hope that both sides will demonstrate the creativity to find ways to foster more stability and less tension and to take advantage of the opportunities for cooperation. And Taiwan should approach that effort with a sense of confidence, in part because it knows that the United States shares those objectives.

Some may ask, "How can Taiwan show confidence and creativity when the PRC is deploying ballistic missiles targeted on Taiwan?" That is a very good question. The first answer I would offer is the statement that Secretary of State Albright made in Beijing in March, when she urged the PRC to consider the reactions to its missile deployments and to exercise restraint in these deployments. Secretary Albright said: "Instead of worrying about a decision that has not been made to deploy defensive technologies that do not yet exist, China should focus its energies on the real source of the problem -- the proliferation of missiles. . . . Nothing would better serve China's interest than using its developing dialogue with Taiwan to build mutual confidence and reduce the perceived need for missiles or missile defense". My second answer is that future U.S. decisions on whether to provide Taiwan with TMD, which does not yet exist, will be guided by the Taiwan Relations Act and considerations related to Taiwan security. The U.S. government has certainly not precluded Taiwan from receiving TMD.

So people on Taiwan should not only be confident about their achievements but also be confident about the role and long-standing policy of the United States. Washington believes that Taipei and Beijing possess the creativity to resolve the problems between them, and will continue to encourage them to do so. But it will not impose a solution of its own.

U.S.-PRC Relations

Let me now turn to trends in U.S.-PRC relations. As we all know, the bombing of the Chinese Embassy in Belgrade on May 7th by U.S. planes acting on behalf of NATO was a tragic mistake that no-one in NATO or our government intended. After the accident, the United States' government acted promptly and properly to express our apologies and condolences. President Clinton spoke personally with President Jiang to express our nation's deepest sympathies. Moreover, a thorough investigation of the accident was made, and the results were recently reported to Beijing. Throughout this episode, the United States has sought to restore stability to its relationship with Beijing and re-create an atmosphere in which the two sides can maximize the potential for cooperation and manage our differences in a prudent manner.

The key question is whether Beijing will be prepared to restore U.S.-PRC relations to a more productive level in spite of its reaction to the bombing and the other problems in the relationship. The United States certainly does not want to see a new period of increased tensions with the PRC. Quite the contrary, we seek a friendly, constructive, and cooperative relationship with the PRC. The Administration believes that the combination of a sincere apology, the investigation, and the report should be sufficient to close this issue and thus facilitate a return to a more stable and productive relationship. And there are a number of areas on which cooperation between Washington and Beijing can and does make an important contribution to world peace and stability: North Korea, South Asia (both areas of current tension), the Persian Gulf, control of weapons of mass destruction, protection of the environment, and so on. Moreover, our two economies have great potential for mutual benefit. As an aside, let me offer my impression that Taiwan understands that this is not a zero-sum game, and that its own position becomes more tenuous when U.S.-PRC relations deteriorate.

There are no doubt those who speculate that perhaps this crisis in U.S.-PRC relations represents an opportunity for the PRC to press for concessions from the United States on issues such as Taiwan, WTO, human rights, Tibet, and non-proliferation. These speculations are mistaken. U.S. policy in these areas is determined by clear and long-standing assessments of U.S. national interests and fundamental values. Our fundamental interests will not change in reaction to either the bombing error in Belgrade or the Chinese reaction to it.

On the PRC application to the WTO, significant progress in defining the details of a commercially justifiable agreement was made during Zhu Rongji's early April visit to the United States. In the aftermath of the bombing, those trade discussions were interrupted, and the Administration awaits the PRC indication that it is prepared to resume the WTO accession talks.

Concerning Taiwan's entry to the WTO, the United States' position is clear and long-standing. When Taiwan is ready to enter, it should enter. Its accession should be based on commercial criteria alone, and considered independent of the PRC application. And Taiwan continues to make good progress in resolving substantive problems. On the other hand, not all members of the WTO take the same position as the United States, and the WTO is a multilateral organization. How this situation plays out remains to be seen.

Over the long term, the United States' long-term strategy toward the PRC must be, as President Clinton said in April, to encourage the right kind of development in China to help China grow at home into a strong, prosperous and open society, coming together, not falling apart; and to integrate China into the institutions that promote global norms on proliferation, trade, the environment, and human rights. The PRC has already moved down this road in the past twenty years, in part because of the economic cooperation that has developed between Taiwan and the Mainland. We should all hope that it continues to do so, for that will contribute to peace, stability, and prosperity in the East Asia region in general and across the Taiwan Strait in particular.


We of course do not know how the PRC will evolve in the next century. We can neither assume that it will be a constructive player nor that it will be a disruptive spoiler. So we need realism and balance. As President Clinton has stressed, we believe we have to work for the best, but do it in a way that will never leave us unprepared in the event that our efforts do not succeed.

Similarly, Taiwan should be realistic. It does not live in a completely peaceful neighborhood. It cannot afford not to prepare for the worst, and the United States will help it prepare. Taiwan need not act in a way that excites the worst fears and misperceptions of the other side. Instead it should strive for the best and work to bring it about. Indeed, Taiwan has already contributed to economic growth and social welfare on the Mainland, and it serves as a good example of democracy in action. With creativity and political will, it can foster a more peaceful neighborhood, assuming that the other side is equally creative and forthcoming.

This realism should be strengthened by confidence. The people on Taiwan should draw confidence from their impressive achievements. They should retain high confidence in the United States. They should be confident about their ability creatively to resolve cross-Straits issues. And they should know that the United States has confidence that the people on Taiwan are wise and prudent enough to support responsible approaches regarding Taiwan's future.