U.S.-Taiwan Relations in a Changing Regional Landscape

OT-1523E | Date: 10/15/2015

Remarks by AIT Director Kin W. Moy to the
Monte Jade Science & Technology Association of Taiwan Annual Meeting September 30, 2015

Introduction

Deputy Minister Linghu, Director General Hsueh, Chairperson Chang, Mt. Jade Chairman Wang, members of the Mt. Jade board, colleagues, friends, good evening. I am honored to be here.

I am humbled to have been invited to this annual event and to have the opportunity to speak in front of so many esteemed officials and heads of industry. More than anyone, you are responsible for much of the astonishing development of this island of 23 million people over the past several decades, as well as for the continued vibrant ties between the United States and Taiwan.

I am a relative newcomer to Taiwan, but I am like many of you – with one foot in the door of the United States, and one foot in the door of East Asia. Indeed, I have spent the better half of my career trying to forge strong relations between the U.S. and Asia, and trying to formulate the policies that will ensure our bonds endure for coming generations.

In the few months that my family and I have been here, we have seen and understood firsthand what we have heard now for many years: Taiwan has transformed itself into one of the most dynamic places in the Asia-Pacific region.

From the high-speed rail, the clean and on-time subway systems, the remarkable tunnels and freeways that snake through the island, the parks and bike paths that run along the Danshui river – to the universities, the science parks, recycling centers, research institutions, world-class public hospitals, “min-su’s”, culture parks and Taipei 101 – Taiwan has done so much with few resources beyond the ingenuity, drive, and sacrifice of its people.

There’s much to be proud of here in Taiwan, and the United States is certainly proud of the contributions we have made to Taiwan’s incredible success.

Taiwan’s evolution into the world’s only Chinese democracy, a laboratory and workshop for the information and communication technology products that power the 21st century economy, and an important source of financing and investment all have made it a critical enabler – a model, even -- of the kind of Asia-Pacific region the United States envisions.

So with that brief introduction, let’s look ahead at how and why Taiwan will remain a critically important player as the United States continues to implement our rebalance in the months and years ahead.

The Xi Visit, China, and U.S. Interests in the Asia-Pacific

At the outset, let me quickly state U.S. goals and interests in the Asia-Pacific region: peace, stability and a rules-based order; economic openness and sustainable development; and an expanding commitment to democracy and human rights.

Now all of you are aware that last week the President of the People’s Republic of China, Xi Jinping, was in the United States for talks with President Obama. I am sure many of you watched the visit carefully.

As Taiwan people know, stable and constructive U.S.-China relations are and will be key to the future of the Asia Pacific region. Managing the relationship is an important objective for the United States and one to which we devote substantial resources. I personally have spent much of my career working on China.

The list of issues discussed during the Xi visit is stunning: cybersecurity, climate change, human rights, energy security, North Korea, South China Sea, and free trade. But this greater U.S.-China engagement has not been at the expense of engagement with Taiwan.

It is also important to note that U.S. interests and objectives in the Asia-Pacific region extend beyond U.S.-China relations. We have a robust set of alliances in the region, significant military deployments, and longstanding and emerging strategic partnerships, including relationships with countries where our efforts in support of freedom and human rights take center stage.

U.S. trade, investment, and development assistance have been part of the fabric of the Asia-Pacific region’s economic development for decades.

And finally, the United States is home to significant immigrant populations from just about every corner of the region who drive the people-to-people relationships that serve as our most important bridges across the Pacific. The Mt. Jade Association, of course, is one of many such organizations helping to build those bridges.

In other words, the United States, as we say, is a resident Asia-Pacific power, and our role and interests in this region are appropriately broad and multifaceted.

How Taiwan Fits In

Given what I’ve just said about U.S. interests in Asia, how should we look at Taiwan? There is general and widespread agreement in the United States, across parties and including both the executive and legislative branches about the critical importance of the U.S.-Taiwan relationship, and about the valuable and beneficial role Taiwan plays in Asia.

Here I would reflect on what my good friend and successor as Deputy Assistant Secretary of State for China and Taiwan Susan Thornton said at Brookings last May, which is that Taiwan has been and is “a force for good in the world.” That’s a very powerful statement, and says everything we need to say about why the United States continues to invest in our relationship with Taiwan. We share many values, including democracy, free markets, and security.

With respect to cross-Strait issues, we uphold our commitments under the Taiwan Relations Act. That includes our attention to Taiwan’s legitimate self-defense needs, and our firm insistence that any resolution to cross-Strait disagreements be pursued through peaceful dialogue and in line with the will of people in both Taiwan and China.

We have also welcomed and will continue to welcome cross-Strait dialogue and cooperation that promotes stability and dignity in cross-Strait relations.

The United States does not take a position on the particulars of cross-Strait engagement. We also do not take a position on what form cross-Strait economic engagement should take, although we believe in general that trade liberalization is good and that prosperous and institutionalized trade and investment support stability.

With respect to Taiwan’s approach to cross-Strait relations, as U.S. officials have stated time and time again, we recognize this issue is for the Taiwan people and their elected representatives to decide.

Finally, we take our commitment to Taiwan’s democracy very seriously, and we will not get involved in Taiwan’s elections or choose sides between the major parties. Taiwan has worked very hard in some very challenging circumstances to develop and consolidate its democratic institutions. This is something that should be celebrated. Taiwan’s strong democracy is a competitive advantage, a substantial source of your soft power, and an example to your neighbors in the Asia Pacific region and further afield.

The United States looks forward to next year’s presidential and legislative elections in Taiwan, and we are committed to a positive relationship with whoever is elected.

Strong Relations and Room to Grow

High level officials in both Taipei and Washington are fond of saying that bilateral relations are at their highest point in decades. I endorse this opinion, and it makes sense to look at some of the evidence:

First, On November 1st we will celebrate the third anniversary of Taiwan’s entry into the U.S. Visa Waiver Program. Those of us like me who have long careers in the Foreign Service know how important consular work, including visa issuance, is to the conduct of U.S. diplomacy. So it is hard to overstate the prestige that comes with membership in the Visa Waiver Program. Taiwan earned that right and became only the seventh economy in the Asia Pacific region and one of 38 worldwide to enjoy visa free travel to the United States. This has been good for the United States, good for relations, and we hope good for Taiwan travelers.

With respect to Taiwan’s defense needs, Congress has been notified of over US$18 billion in foreign direct military sales since 2008. In addition, our militaries pursue extensive exchanges that aim to support Taiwan’s ability to deter coercion and create space for Taiwan to pursue constructive dialogue across the Strait.

On the economic front, by the end of last year the United States and Taiwan were each other’s second and tenth largest trading partners, respectively. Moreover, it’s not just the overall numbers that count, but also the kinds of trade the United States and Taiwan engage in. The U.S. and Taiwan economies are highly complementary. Taiwan is a major consumer of U.S. agricultural products, for example, and licensing and other intellectual property. And the United States is the most valuable destination for the consumer electronics that Taiwan components power. Both economies are critical nodes in a global high-technology supply chain.

We have ramped up our cooperation on global issues too, including the environment, clean energy, health, and disaster relief and humanitarian assistance. We are exploring new ways to highlight Taiwan’s transition from technical assistance recipient to technical assistance provider, to create opportunities for Taiwan officials and civil society representatives to engage with counterparts in neighboring countries, and to ensure that Taiwan’s achievements are recognized and celebrated on the global stage.

All of these achievements in recent years have been buttressed by a steadily increasing exchange of senior level visits and by a strong level of comfort and trust enjoyed by both sides. And more important than government-to-government relations, of course, are the extensive network of people-to-people ties and family relationships that bind U.S. and Taiwan societies together. These ties are bolstered by the large number of Taiwan students who have studied in the United States. In fact, Taiwan remains the sixth largest source of international students in the U.S. These connections lay the foundation for our mutual interests and accomplishments and for our shared values. Attention to and investment in those values, including and especially among our youth populations, will be absolutely critical to the future of our longstanding friendship.

Economic Relations on the Eve of TIFA

Many of you know that our annual Trade and Investment Framework Agreement talks – our TIFA talks – will be held in Taipei tomorrow. Just a few hours ago I had an opportunity to welcome to Taipei our senior representative to the talks, Deputy U.S. Trade Representative Robert Holleyman.

In general, whenever we meet senior economic policymakers from Washington, the same several questions regarding Taiwan seem to pop up:

First: how much does Taiwan’s economic health really depend on its trade and investment ties with mainland China?

Second: when is Taiwan going to pursue an economic regulatory regime that reflects its status as a major global trade and investment player?

Third: will Taiwan’s political system allow it to undertake the kinds of market reforms necessary to broaden its trade tries overseas and effect an important economic transformation at home?

Much of the content of our TIFA meeting tomorrow will be the kind of technical discussions expected between two mature trading partners –complex issues such as pharmaceutical patents, maximum residue levels on agricultural imports, how best to discourage and prevent intellectual property rights infringement in the online world, conditions on certain kinds of financial investment…

But just behind all of these technical discussions is the question of Taiwan’s continuing commitment to economic liberalization and ability to harness the political will to make it happen.

And of course, underneath all of this is concern about Taiwan’s economic future, the changing composition and expectations of the Taiwan people, questions about Taiwan’s relationships with others, especially China, and, I would say, long-running debates about Taiwan’s identity.

We recognize all of these tensions in Taiwan. We understand that for Taiwan questions of liberalization and openness have meaning beyond the economic realm.

And yet we also recognize that the questions Taiwan is asking itself about its economic future are largely a consequence of the island’s success.

Taiwan is asking itself, for example, how to find well-paying jobs for its university graduates, rather than how to educate its population. Taiwan is considering how to enable a food safety inspection regime that balances science, consumer choice, and affordability, rather than worrying about how to feed its population. Taiwan is worrying about coping with the rising costs of a world-beating universal healthcare system, rather than coping with inadequate access to health care. Taiwan is trying to figure out how to transition to new industries that create jobs while balancing respect for labor rights and the environment.

What I am trying to say is that Taiwan’s problems – the problems that attract so much attention in Taiwan’s newspapers and multiple 24-hour cable news channels – are relatively good problems to have. Your neighbors around the Asia Pacific region would be delighted to face Taiwan’s challenges.

Taiwan’s challenges are the challenges of a society and system of governance that have already succeeded in making difficult transitions. In the parlance of American football, you are already more than halfway down the field.

This is what America sees when we look at Taiwan. And the essential ingredients that have enabled Taiwan’s successes over the past forty years are as present today as they ever were: the ingenuity of its people; the strong moral foundation and capacity for hard work and sacrifice; the willingness to leave the island, go abroad, and make the connections and bring back the knowledge that have enriched Taiwan and broadened its economic options.

This is Taiwan’s heritage, the source of its strength, and what makes Taiwan such a valuable and reliable partner for the United States and our interests in the Asia Pacific region. And moving forward, this is what we will highlight and attempt to cultivate as we contemplate the next phase in U.S.-Taiwan relations.

What’s Next for U.S.-Taiwan?

So while I would agree that we will face certain challenges and uncertainties during my next few years here, I am assured that they will be nested in a bilateral U.S.-Taiwan relationship that is secure and full of unexploited opportunity.

We expect Taiwan’s elections to be a celebration of Taiwan’s democracy and to set a positive example for the world. We will work patiently with Taiwan during the transition between administrations, regardless of who is elected, to ensure full comfort and continuity across our cooperative portfolio. We intend to leave no doubt about the solidity of the U.S.-Taiwan relationship during times of change.

We want our exchanges at all levels to continue to enable a full exploration of new opportunities. We have new frameworks in place, notably the Global Cooperation and Training Framework, which recognize Taiwan’s capacity to make valuable contributions regionally and globally on a host of issues. We want Taiwan to embrace leadership on such issues, and to work with us to find innovative ways to ensure appropriate recognition. Both Taiwan and the world benefit from Taiwan’s meaningful participation in regional and global discussions.

Expanding trade and investment ties and supporting diversification of Taiwan’s trade and investment relationships will remain an important focus. The short-term outlook for the global economy is uncertain, but potential hazards are emerging, particularly with respect to major developing economies, many of whom are among Taiwan’s most important markets. The U.S. economy has been growing at a healthy clip, which our economic policymakers are working to sustain.

During this time of economic uncertainty, both the United States and Taiwan should take stock of the factors that have made our economic relationship so complementary and mutually profitable, and to pursue policies that protect existing trade and investment and promote new growth.

While we hammer away at remaining areas of trade friction, we should also be sure to emphasize the positive side of the ledger. Every time we tell a success story, we are creating new constituencies for and opening new opportunities in our relationship. Governments can help, but it is all of you -- the private sector – who need to drive this effort. You do it through investment missions, buying missions, partnerships, the trade shows and conferences you attend; even the travel choices you make for your holiday and for your children’s universities.

The private sector also has an important role to play in the conversations you have with your elected officials and regulatory authorities regarding the importance of Taiwan’s relationship with the United States. We believe they want to do what’s best for Taiwan’s people and Taiwan’s future. And we believe that any investment of Taiwan’s policy resources in actions that expand ties with the United States is well spent. We acknowledge that democracy and liberal trade involves a competition of resources and interests, but we have to ensure that ties with the United States do not become an unintended casualty of political disagreements about other issues.

As AIT Director, I intend to ensure that within the breadth and complexity of U.S. relations around the world, Taiwan will receive proper attention – as a long-time strategic partner, a top-10 trade counterpart, a strong democracy, and a major economic player on the regional and global stage. We may share certain of these qualities with other countries around the world, but there are very few with whom we share all of them.

Our friendship with Taiwan is secure, solid, and important. And that will be the basis for our work together in the coming years. Thank you for your time, and I look forward to taking a few questions.