Current Trends in Cross-Strait Relations Remarks by David J. Keegan, Deputy Director of the American Institute in Taiwan

BGT-0515 | Date: 2005-07-19

(As Prepared)

Barely a year ago, political rhetoric on both sides of the Strait was so emotional and at times so confrontational that many people worried that worsening cross-Strait friction was inevitable.  Since then, however, tensions have eased considerably.  We believe that trends, at least in the short term, are now moving in a generally positive direction, and we are cautiously optimistic that Beijing and Taipei will be able to further ease tensions and resume pragmatic contacts on economic and technical issues.  We believe it is important for Taipei and Beijing to continue to take actions that will build trust between the two sides and lay a foundation for a political-level dialogue further in the future.

This year started on a positive note.  The results of the December 2004 elections clearly gave Beijing confidence to moderate its approach to cross-Strait relations.  This year also got off to a positive note with helpful statements from both President Chen and President Hu and the implementation of New Year direct charter flights.  However, the passage of the anti-secession law (ASL) by China's National People's Congress in March and the negative reaction in Taiwan to it threatened to return the relationship back into the cycle of increasing frictions we had seen during the previous three years. (Note, while I don't accept "secession" as an accurate translation of "fen-lieh" I will use that term, given the PRC's success in making it commonly accepted.)  President Hu gave a speech on March 4 stating that the Chinese people will never compromise in opposing the "Taiwan independence secessionist activities," but also spoke about conciliatory measures such as the possibility of cross-Straits cargo charter flights.  Taiwan focused its concern, with some justification, on the ASL's authorization of "non-peaceful means" to stop Taiwan's secession from China and "to safeguard China's sovereignty and territorial integrity."

That said, the passage of the ASL has also raised international awareness of the cross-Strait issue as we saw in the European Union's decision to postpone the lifting of its arms embargo against China.  More importantly, the ASL has reminded leaders in Europe and elsewhere that the PRC's military modernization poses real dangers to regional peace and stability.  Because of the international attention the ASL has received, Beijing has been under pressure to show some measure of goodwill towards Taiwan.

In the immediate aftermath of the ASL passage, we were told, in public MAC statements but also in private comments by a variety of officials and DPP politicians, that it had made it impossible for Taiwan to consider any forward movement on cross-Strait contacts until a "cooling off period" of some months passed.

The PRC's recent offers on economic liberalization and enhanced cultural exchanges are clearly part of an attempt to ease Taiwan reaction to the ASL.  While the PRC's own political agenda played into the decision to invite the two opposition leaders to Beijing in May, Hu's meetings with Lien and Soong also served to ease Taiwan reaction to the ASL.   Beijing has also shown modest signs of flexibility on Taiwan's participation in the WHO, although we hope they will do more in the future to allow Taiwan full observer status in that organization.  Despite these modest signs of flexibility, Beijing has kept its hard-line stance on Taiwan's full participation in the WHO and is seeking to circumscribe Taipei's participation in the WTO.

While recognizing the complex motivations of both Beijing and the Taiwan opposition leaders, the United States welcomed the visits to China by KMT Chairman Lien Chan and PFP Chairman James Soong as steps toward dialogue between Beijing and Taipei.  As Secretary Rice reiterated recently in Beijing, we call on Beijing to follow up on these contacts with a dialogue with the democratically elected leaders of Taiwan.   We believe that the visits by the opposition leaders Lien and Soong to the mainland are good first steps to opening up the channels of communication between Taipei and the PRC, but they are only first steps.  Ultimately, the Taiwan issue is for people on both sides of the Strait to resolve, and we encourage Beijing and Taipei to pursue dialogue without preconditions as soon as possible.

It is in our interests to promote an environment in which cross-Strait differences can be managed peacefully.   Our foremost concern in encouraging trust and dialogue is maintaining peace and stability in order to spare the region from war, to ensure the peaceful resolution of cross-Strait differences, and to promote China's constructive integration into the global community.

We see a number of positive signs that Taipei and Beijing are on a slow but nonetheless positive path towards resuming practical contacts, leading toward dialogue.  Premier Frank Hsieh's June 13 response to PRC offers on direct flights, agriculture, and tourism was both creative and constructive.  The designation of private, but authorized, organizations like the Taipei Airline Association should bridge the gap over preconditions for talks.  This model worked in January for the New Year charter flights and should work in the future as the two sides move towards regular direct passenger and cargo air links.  It seems that both sides are moving towards a compromise on priorities that would permit discussions on cargo and passenger charters simultaneously.  Working on both is a pragmatic way to move ahead.

These sorts of technical and economic contacts, and the indirect talks to enable them can provide a basis of trust and mutual understanding for Taipei and Beijing to engage in a broader dialogue further down the road.   Just as importantly, these discussions will address barriers that make a real difference for business people and travelers on both sides of the Taiwan Strait.

Despite the official investment and trade barriers that still exist, cross-Strait trade and investment has continued to grow over the past decade, so that China now has surpassed the United States as Taiwan's largest trading partner.  In recent months, Taipei has started moving to help facilitate this growth in economic exchange between Taiwan and China.  Initial reforms that make it easier to move company personnel between Taiwan and China and to train Mainland employees in Taiwan have added incentives for Taiwan and international businesses to use Taiwan as a base of operations for the region.  More progress in this area as the American Chamber of Commerce in Taipei has advocated will further encourage cross-Strait business relations to continue and grow.

The short term easing in cross-Strait economic barriers and political tensions does not gainsay the growing military threat Taiwan faces from the PRC.  The U.S. Department of Defense has estimated that China spent between $50 billion and $70 billion on defense in 2003, placing it as the highest level of defense spending in Asia and third highest level of defense spending in the world (after the United States and Russia).  Taipei must maintain a defense that can effectively deter in order to reduce the chances of a cross-Strait conflict.  A strong defense is also not only compatible with positive economic and political relations, but it is likely a prerequisite.  Taiwan cannot negotiate with the PRC from a position of strength if Beijing calculates that it has the means to intimidate or coerce Taiwan at a time of its choosing.  In addition to procuring critical C4ISR, anti-missile and anti-submarine systems, Taiwan needs to ensure that it adequately funds readiness, training, maintenance, and sufficient stockpiles of munitions for its forces.

Change is the only certainty in Taiwan's rapidly evolving political environment, as we are reminded by this weekend's election of a new KMT chairman.  But, regardless of such political variables, the challenge is for Taiwan's leaders to move beyond partisanship to advance common interests in cross-Strait defense and stability.  Leadership and responsible governance are required from all parties in Taiwan in order to ensure that Taiwan will remain economically vibrant and militarily secure.

Thank you.