Opportunities and Challenges in U.S.-Taiwan and Cross-Strait Relations Remarks by AIT Director Stephen M. Young at the FICS Conference

OT0719E | Date: 2007-12-03

Chairman Chang, Doctor Bush, ladies and gentlemen, good afternoon.  It is my great pleasure to address this forum jointly hosted by FICS and the Brookings Institution.  It is also good to see so many distinguished participants, both from Taiwan and the U.S., many of you friends of long standing.  This afternoon I would like to discuss the "Opportunities and Challenges in U.S.-Taiwan and Cross-Strait Relations."  In choosing this title, I deliberately put the word "opportunities" ahead of "challenges."  I did this because I think it is important that we do not allow the difficult challenges all of us recognize to obscure the opportunities that lie ahead.

Optimism About Taiwan

I would like to lead off by first describing some of the reasons I remain optimistic about Taiwan and its future, despite the sometimes harsh rhetoric we are hearing in the run-up to the 2008 presidential election.  This is my fifth time to live in Taiwan, and I have never ceased to be amazed at the resilience of the people here and their ability to improve their situation regardless of the obstacles.  Based on what I have seen for myself in travels throughout Taiwan during this latest assignment, Taiwan's society continues to have deep underlying strengths, deriving from the creativity and energy of its well-educated and hard-working people.  I have been particularly impressed by the optimism of business people I have met around the island, especially in Taiwan's booming high-tech industrial parks.

As those of us who have tracked Taiwan's development for the past several decades have observed, its business community seems to have an unerring ability to continually identify new niches capable of maintaining the island's competitiveness in this highly competitive area of the world.  Right now it's microchips and LCD's, but focus on biotech may be the next phase.

Another reason for my optimism is the flourishing democracy Taiwan has created, based upon an increasingly vibrant civil society, featuring a very free press and gradually consolidating rule of law.  I had the good fortune to study democracy and its problems with Professor Samuel Huntington during a yearlong fellowship at Harvard University in the early nineties; he delineated precisely these elements, every bit as much as regular free and fair elections, as guideposts to successful emerging democratic systems.  Democracy of course also generates political controversy as we see here especially at election time.  In the end, however, we believe the people will make wise decisions based on their best interests, and that ultimately democratic systems enjoy a widely recognized legitimacy that authoritarian systems lack.

Third, the solid base of Taiwan's relationship with the United States and other important countries means that Taiwan enjoys international access and support, and is not so isolated as some would argue.  The strengthening of the U.S.-Taiwan partnership over the years reflects our deepening economic and security ties and also Americans' profound respect for Taiwan's democratic and economic achievements.  I would also like to add that the large numbers of students who have traveled to the U.S. for advanced study and then returned to help Taiwan's development have made a major contribution to the solid bond between the U.S. and Taiwan.

Just look at current leaders in the academic, business and politic sectors and you'll understand what I mean.  I still recall people saying about ten years ago, only partly in jest, that there seemed to be more advanced American degree holders in the Taiwan cabinet than in our own.

U.S.-Taiwan Relations

The upcoming legislative and presidential elections in Taiwan provide the backdrop for my remarks because these elections, regardless of who wins, will inevitably open up new possibilities for Taiwan and for U.S.-Taiwan and cross-Strait relations.  For many of us who remember Taiwan's authoritarian past, these elections represent a remarkable achievement.  I watch with fascination as the major political parties battle it out in the best democratic tradition to win control of the legislature and presidency.  The U.S. is observing these two upcoming elections with great interest and respect.

To restate a fundamental principle:  the U.S. does not and will not take sides in Taiwan's democratic politics.  We are pro-democracy, and therefore do not favor one or another political party.  The U.S. looks forward to working closely with whomever the people of Taiwan elect as their next president.  We have good communications with Hsieh Chang-ting and Ma Ying-jeou and are encouraged that both appear to be pragmatic leaders with an international outlook.  Both have publicly highlighted their commitment to strengthen the U.S.-Taiwan relationship.

As a remarkably successful example of peaceful democratization, Taiwan serves as a model for democratization in the region and around the world, perhaps most importantly, just across the Strait in the PRC.  Like other young democracies, however, Taiwan's system is undergoing reforms and maturing, processes that take time and can be contentious, and the results of which are not always predictable.  Major changes in Taiwan's legislative election process next January, for example, are intended to strengthen party politics and the legislative process.  However, some say many more reforms are needed to establish a more responsive and effective political process.  Democracy provides a framework for competition.  Political leaders and parties have an obligation to operate responsibly within this framework in order to protect their democratic institutions and basic security interests.

In our view, some actions and rhetoric by Taiwan politicians designed to secure domestic advantage during elections, or at other times, can be problematic and even risky.  Two recent episodes have been Taiwan's "ceasing" of the functioning and application of the National Unification Council and Guidelines and the current promotion of a referendum on joining the UN under the name "Taiwan."   Unfortunately, these types of episodes tend to have a cumulative effect, damaging trust in U.S.-Taiwan relations over time.  We hope and expect that strengthening trust between our two sides will be an important priority for Taiwan's next president.

Referenda are an important tool of democracy which provide the people a way to directly influence policy.  However, Taiwan's special situation calls for careful, responsible leadership to ensure that its referenda do not compromise its own security or the interests of its important partners, including the U.S.  That is why we have felt it our obligation, as a close partner with Taiwan, respectfully to express our opposition to the referendum on applying to the UN under the name of Taiwan.  As stated, we believe this particular referendum poses a threat to cross-Strait stability and appears inconsistent, at the very least, with the spirit of President Chen's public commitments to maintain the status quo.  As I have summarized our position, the referendum is neither necessary nor helpful [不必而不利].  We hope Taiwan's politicians and voters will adopt a careful and moderate approach to cross-Strait relations, avoiding risky acts that cannot really advance Taiwan's actual international status.

At the same time, the United States understands and supports Taiwan's desire to play a responsible role in the international arena.  While we do not support Taiwan's membership in international organizations for which statehood is a requirement, we continue actively to support Taiwan's greater participation in these international organizations where appropriate, and oppose efforts by Beijing to block such participation.  We support Taiwan's full membership in organizations for which statehood is not a requirement, such as APEC, WTO, the Asian Development Bank, and OIE, the animal husbandry safety organization.  We also actively support Taiwan's meaningful participation in WHO technical activities and its participation as an observer in some OECD committees.  However, some high-profile initiatives by Taiwan such as the current UN referendum make our efforts to support Taiwan participation in international organizations more difficult.

The U.S. and Taiwan work together cooperatively in key security and economic relationships.  Clearly, the ongoing enhancement of PRC military capabilities poses a major challenge to Taiwan's security.  We view the sustained PLA buildup across the Strait, including missile deployments, as a destabilizing factor in cross-Strait relations, and we raise this in our discussions regularly with Beijing, as Secretary of Defense Gates did most recently.  We are also concerned about Beijing's refusal to renounce the use of force against Taiwan and the lack of transparency in its sharply increased defense spending.  However, as much as we oppose the threat of force, we take it seriously, and so must Taiwan.

Under the Taiwan Relations Act, the U.S. will continue to work closely to help Taiwan meet this security challenge.  We do this through the approval of sales of appropriate defensive weapons systems aimed at ensuring Taiwan's ability to defend itself.  Our cooperation also includes what we sometime refer to as software reform, encouraging Taiwan to enhance critical infrastructure protection, cooperation between the military services, the maintenance of adequate stockpiles of armaments and supplies, and the development of a noncommissioned officer corps.

In this regard, I would like to congratulate both major parties for their bipartisan support for the defense budget and the vital work of the Ministry of National Defense.  The mutually reinforcing hardware and software programs contribute to maintaining peace in the Taiwan Strait and also to building the political confidence Taiwan needs to engage with the PRC.

The robustness of U.S.-Taiwan economic ties is demonstrated by our two-way trade, which reached $61 billion last year and is expected to rise, this year by an additional 4%.  The Trade and Investment Framework Agreement -- or TIFA -- process has proven a successful tool for managing this relationship and has addressed important issues, such as intellectual property rights and pharmaceuticals.  The TIFA process is also working to expand bilateral investment access.  Agriculture is another important area of our bilateral economic relationship, with Taiwan, on a per capita basis, being the second largest market for U.S. food and agricultural products.   We are now working closely together to resolve some impediments to imports of U.S. pork and beef, based upon science-based solutions in line with accepted international standards.

Taiwan's economic vitality, especially in the high-tech sector, is one of its greatest strengths.  Both presidential candidates have been talking quite a bit about economic plans for the future, and we encourage and applaud that.  We are also pleased to see that both Ma Ying-jeou and Frank Hsieh advocate greater liberalization of cross-Strait trade and investment, something that we have encouraged for some time, as have many business leaders, both Taiwan and American.  This is exactly what democracy is supposed to do:  give the voters a reasoned debate about issues they are concerned with and allow them to make their decisions based on informed judgment.

Cross-Strait Relations

Clearly, Taiwan's biggest conundrum is how to deal with the cross-Strait relationship, a challenge complicated by China's rapid economic development and growing international influence.  Although the quasi-official side of the cross-Strait relationship seemed to get off to a good start in the early 1990s, differences between the two sides led to the suspension of dialogue, and this suspension has now lasted for more than eight long years. Time has not stood still, however, as the unofficial side of cross-Strait relations, especially economic linkage, has expanded rapidly over this period.  Arguably there is much greater reason for holding dialogue now than there was in 1999.  In China, President Hu Jintao has replaced Jiang Zemin, and Taiwan will elect a new president next March.  This is an opportunity for the two sides to set aside past differences and work to create a new cooperative relationship.

I personally interpreted Hu Jintao's relatively moderate remarks on Taiwan policy at the recent 17th party congress as an indication Beijing may be looking for ways to open contact with Taiwan's next president.  If this interpretation is correct, the more clearly China can signal its intentions, the better the prospects that cross-Strait dialogue can actually be resumed down the road.  It is important for both sides of the Taiwan Strait to actively seek opportunities for dialogue and to make efforts to improve understanding and defuse mutual suspicions.

My own observation is that PRC leaders have a lot on their plates these days, having to deal with countless domestic problems -- including an alarming gap between rich and poor, rampant corruption, social tensions and ruinous environmental degradation -- while working to sustain a high economic growth rate.  Rather than seeking a speedy resolution of the cross-Strait issue on their own terms, their concern about Taiwan seems to be largely defensive and reactive at this stage, as they hope to avoid developments they do not want to see.  This suggests that Taiwan should have the room it needs to develop responsible policies, including toward the PRC, so long as it acts cautiously.  On the other hand, Taiwan's political moves and rhetoric clearly influence PRC thinking and can create pressure to take steps none of us would like to see.  Therefore, in the run up to the presidential election, it is imperative that Taiwan's politicians do not carry their actions and rhetoric to the point of closing off future possibilities.  Both sides need to avoid creating new obstacles and to look for ways to move forward.

There are several areas where the two sides can make progress even earlier.  Such progress could help build confidence, serving as a catalyst for the dialogue process.  These include expanding cross-Strait flights beyond the current level of four holiday periods during the year, and broadening opportunities for PRC tour groups to visit Taiwan.  Although progress may be impossible while election campaigning is underway, breakthroughs on these and other issues could play an ice-breaking role after the election that would improve the cross-Strait atmosphere.

We hope the two sides will grasp the opportunity to open some form of dialogue after Taiwan's new president is inaugurated next May.  While there has been a major expansion of cross-Strait trade, investment and other exchanges over the past eight years, the absence of dialogue has limited the ability of the two sides to establish mechanisms to address the practical issues in the relationship.   Furthermore, dialogue is key to improving mutual understanding and building trust.  We are encouraged that both presidential candidates have expressed interest in cross-Strait dialogue.  What they will need after the inauguration is a willing partner in Beijing.

It is true that a variety of difficult issues divide the two sides of the Strait, including the PRC military buildup, the question of Taiwan's international space, the rigidity in Beijing's positions and its strong exception to those it regards as "separatists."  These and other basic political questions may remain intractable or at least take a long time to resolve.  Nonetheless, a cross-Strait dialogue on practical issues could at a minimum help the two sides to manage their burgeoning relationship.  This is already long overdue.

As I conclude my remarks, it strikes me as worth noting that one of the most popular questions in discussions of cross-Strait relations seems to be to ask:  Whose side is time on, Taiwan's or the PRC's?  The implication of this question seems to be that either the PRC will "annex" Taiwan before it can become independent, or Taiwan will manage somehow to become "independent" first.  However, there is another way of looking at this question.  Time will not be on the side of either Taiwan or the PRC if cross-Strait conflict breaks out.  On the other hand, time will be on the side of both parties if they are able to resolve differences and determine their relationship in a peaceful manner.  I am optimistic that time is on Taiwan's side because of the underlying strengths I mentioned at the beginning of my presentation.  I am also cautiously optimistic that time is on Beijing's side, because I believe the continued development of China's economy and civil society will lead eventually to political liberalization and democratization; and in this I have the venerable Sam Huntington on my side!

China's democratization may turn out to be the single most important prerequisite for seeking a resolution of the Taiwan question that is acceptable to both sides.  Although this will take some time, both sides have much to gain from it.

Thank you for your attention.  I hope I've give you something to think about.  Now I am ready to take your questions.