Vol. 2, Issue 4
Global Taiwan Brief – Volume 2, Issue 4
“America First” and Taiwan Policy
By: Russell Hsiao
Economic Coercion against Taiwan: Divide and Conquer
By: Parris H. Chang
Tsai Ing-Wen in Central America: Shoring Up Defenses Before the Collapse of the Truce?
By: R. Evan Ellis
Diversifying Demography: Immigration Reform in Taiwan
By: Sinclaire Prowse
“America First” and Taiwan Policy
Russell Hsiao is the Executive Director of the Global Taiwan Institute and Chief Editor of the Global Taiwan Brief.
On January 20, Donald J. Trump was sworn-in as the 45th president of the United States of America. On an often-fiery campaign trail that rallied behind the “America First” slogan, Trump, as president, is vested now with the authority to direct government policies in pursuit of that goal. Following his oath of office, President Trump delivered his administration’s first major policy speech. Clear in tone but short on specifics, the President laid out his vision for America at home and abroad. What might “America First” mean in application?
Three notable statements from his inaugural speech, which are relevant to Taiwan policy, highlight President Trump’s distinct contribution to American foreign policy:
- “Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families.”
- “We [the United States] do not seek to impose our way of life on anyone, but rather to let it shine as an example for everyone to follow.”
- “We [the United States] will reinforce old alliances and form new ones.”
In light of President Trump’s inaugural address, we can discern three prongs to his “America First” agenda (perhaps in order of priority): 1) emphasis on the economy 2) pragmatic foreign policy and 3) maintaining and creating new alliances.
In an apparent attempt to assuage concerns about the 45th President’s statements on the campaign trail that suggested the United States might turn its back on allies and disengage from world affairs, the Trump White House explained on its website that an “America First” foreign policy will be “focused on American interests and American national security.” Specifically, the administration’s policies will be geared towards maintaining US “military dominance,” and, more interestingly, reminded readers that, “[t]he world must know that we do not go abroad in search of enemies, that we are always happy when old enemies become friends, and when old friends become allies.”
A signal of how the Trump administration may triage policy priorities—both foreign and domestic—was on clear display in his first official work day in office. That Trump would withdraw from the TPP is not surprising, since he previously stated that this was one of his administration’s policy priorities for the first 100 days. As one of his first executive orders as president, Trump directed the US Trade Representative to “withdraw the United States as a signatory to the Trans-Pacific Partnership (TPP), to permanently withdraw the United States from TPP negotiations, and to begin pursuing, wherever possible, bilateral trade negotiations to promote American industry, protect American workers, and raise American wages.”
There are signs that foreign businesses are responding to Trump’s call. For example, Taiwan-based Foxconn Technology Group (富士康), which is the world’s largest contract electronics manufacturer, indicated that it was considering “build[ing] a plant for displays,” possibly in Pennsylvania, thus potentially investing more than $7 billion domestically, and creating 30,000 to 50,000 jobs.
What is the takeaway from these preliminary data points? Despite the actions and statements made by Trump while he was the president-elect, it seems increasingly apparent that the primary emphasis of his administration is on the economic prong of a tripartite policy. While President Trump acknowledged the importance of international values embodied in the American “way of life,” it is not clear how this element fits into the new administration’s views with regard to dealing with allies and potential adversaries. That said, it is still too early to tell.
Indeed, it should be reassuring to allies that President Trump has stated his administration’s intent to “reinforce old alliances”; the administration should also remember that the value of such alliances stems, in part, from a shared commitment to creating a liberal order.
As former 2016 Republican presidential candidate and current-Ohio governor, John Kasich, wrote in a recent Times article:
Why is it essential that we support our allies? … It’s also about protecting the collective human values that have for so long sustained the United States and what we rightly call the Free World—values such as freedom of speech; universal respect for all without distinction as to race, sex, language or religion; and a world open to free enterprise, travel and trade. These are the shared values that we and our allied nations believe in; the same values others scorn and deny to those they rule.
The main point: There appear to be three discernible prongs to Trump’s “America First” policy: 1) emphasis on the economy; 2) pragmatic foreign policy; and 3) maintaining and creating new alliances.
Economic Coercion against Taiwan: Divide and Conquer
Dr. Parris Chang is professor emeritus of Political science, Penn State University and President of the Taiwan Inst. for Political, Economic and Strategic Studies; he was member of Taiwan’s Legislative Yuan, Deputy Secretary-General of the National Security Council, and Taiwan’s Representative to the Kingdom of Bahrain.
President Tsai Ing-wen’s phone call with US President-Elect Donald Trump last December and his questioning of the “one China” policy have angered Beijing. Chinese officials have blamed Taiwan for creating the trouble and there are indications that Beijing is planning to undertake a series of economic measures to coerce Taiwan. A retired military officer stated that China need not fire any missiles to bring Taiwan to its knees; he asserted, “We can just cut them [Taiwan] off economically, no more direct flights, no more trade, nothing. Taiwan would not last long.”
Since President Tsai came into office in May 2016, Beijing has frozen official communications and engagements with Taipei (although other channels remain in place), delayed meetings mandated by the Economic Cooperation Framework Agreement (ECFA) and barred Taiwan’s ministers, deputy ministers and other ranking officials from attending meetings in China. However, Beijing’s relentless pressure has failed to force Tsai to accept the so-called “1992 Consensus” and its “one China” principle. Measures include restriction of Chinese tourism to Taiwan (in the past year, tourism from the People’s Republic of China has declined by almost 50 percent); suspension or reduction of imports of Taiwan’s agricultural commodities, milkfish and industrial products.
Reinforcing this gradual shift in Beijing’s strategy are ties with Taiwan’s large enterprises and corporate leaders, who have benefited from the liberalization of cross-Strait trade and investment made possible by the ECFA. Moreover, Beijing has also set up and utilized economic forums such as the Boao and Nanjing Forums to co-opt Taiwan’s business elites. Many of them have strongly supported cross-Strait rapprochement and provided large donations to Kuomintang (KMT) candidates during previous elections.
Indeed, the Chinese authorities have applied pressure on Taiwanese merchants in China to keep their distance from the Tsai government and refrain from supporting what they perceive to be an independence movement in Taiwan. Hai-Pa-Wang (H.P.W) International Group, which owns a major food supply chain in China, was audited for tax evasion and investigated for the violation of regulations. The company was compelled to take out a front-page advertisement in Taiwan’s major newspapers on December 5, 2016 to disassociate with the Tsai government and proclaim its adherence to Beijing’s policy that “both Taiwan and the Mainland belong to one China.” An Feng-shan, TAO press spokesman, likewise admonished Taiwan businessmen last December that Chinese authorities encourage and support Taiwan merchants investment in China, but would never allow someone who made money in China to support Taiwan independence.
As part of Beijing’s political warfare and united front operation against Taiwan, several Taiwanese tycoons have, at Beijing’s behest, acquired newspapers and TV outlets, including the China Times, Want Daily. CTV, and CTITV, all owned by the WantWant Group. Beijing directs these media outlets and others that have received Chinese funding to engage in political polemics, propagate “correct” information and promote Beijing’s agenda on Taiwan.
How did we get here? Soon after taking over party leadership from Hu Jintao in late 2012, Xi Jinping was quick to amend his predecessor’s soft and gradual approach; instead, he pushed harder and faster on his own Taiwan policy agenda. Xi exerted immense pressure on President Ma to move toward a cross-Strait political dialogue that would lead to a peace agreement, but Ma insisted on a formula of “economics first, politics later,” limiting cross-Strait interaction to economic relations. Ma was well aware that the two sides are far apart on key political and security issues, and Taiwan’s public cannot accept a peace agreement with China or terminate Taiwan’s special security relationship with the United States.
In the economic arena, Beijing tried also to move further toward cross-Strait economic integration, in order to push political reunion. Taiwan’s Straits Exchange Foundation signed the Cross-Strait Service Trade Agreement (CSSTA) in June 2013, but its approval was blocked by the Legislative Yuan. Beijing put immense pressure on Ma and the KMT-dominated LY to railroad the passage of the CSSTA, but the pressure tactics backfired and triggered a massive protest movement, much to Chinese leaders’ chagrin.
The Sunflower Movement started in March 2014, when scores of college students abruptly broke into the Legislative Yuan compound and occupied the assembly chamber. Over the next weeks, a huge rally of half-a–million protesters demonstrated in front of the Presidential Palace against Ma’s pro-China policies and his failure to consult lawmakers and the affected enterprises with regard to the CSSTA. The protesters were concerned that the CSSTA would harm local businesses, especially small and medium-sized enterprises. Other concerns included fears that China’s secret agents and a “fifth column” of PRC sympathizers would, in the guise of businesspersons, worm their way into Taiwan to engage in espionage, sabotage, subversion, and a united front operation to harm Taiwan. Student protesters feared that China could annex Taiwan as Russia did Crimea.
Xi may be bewildered that China has failed to win over the hearts and the minds of Taiwanese. But Beijing’s strategy to buy Taiwan has only enriched a handful of compradors and business tycoons, while alienating ordinary people, who have suffered from the flight of capital and the relocation of production facilities to China, resulting in high unemployment and stagnant wages, especially among young Taiwanese.
With the Chinese economy slowing down, many Taiwanese people are questioning the wisdom of Taiwan’s excessive dependence on China’s market. A growing number of Taiwanese merchants are leaving China and investing in Vietnam, Indonesia and Burma. In his message to Taiwan, Xi has called for ethnic solidarity, national unity, and extolled the glorious rejuvenation of the Chinese nation—stale cliches which do not appeal to young Taiwanese at all. They have been alienated by Xi’s repressive Communist regime and harsh crackdown on dissent, and want no part of it. On the contrary, Xi is ensuring that his “China Dream” (中國夢）of reunification is only further beyond his reach.
The main point: Beijing has employed a divide and conquer strategy to alternately buy and coerce Taiwan into closer ties with the PRC. However, neither approach has successfully won the hearts and minds of the Taiwanese people.
 Based on my interview with an official from the Taiwan Bureau of Tourism.
 Terry Kuo (chairman of the Foxconn Technology Group) is among the business tycoons who made huge political contributions to President Ma, Mayor Jason Hu of Taichung and other KMT candidates—many TV talk show guests openly talked about such information, which is highly plausible but impossible to document.
 H.P.W’s advertisement appeared in Taiwan’s major papers on Dec 5th, 2016.
 Chien-jung Hsu, “China’s Influence on Taiwan’s Media,” Asian Survey, 54, no. 3 (June 2014), 517-18, http://as.ucpress.edu/content/54/3/515.full.pdf+html.
 This summary is based on my talks with Sunflower Movement activists inside the LY assembly chamber, in March 2014.
Tsai Ing-Wen in Central America: Shoring Up Defenses Before the Collapse of the Truce?
Dr. R. Evan Ellis is research professor for Latin America at the Strategic Studies Institute of the US Army War College. The views expressed in this work are his own, and do not necessarily represent his institution or the US government.
From January 7-15, 2017, Taiwanese President Tsai Ing-wen visited four of the five nations in Central America that still diplomatically recognize her government: Honduras, Nicaragua, Guatemala, and El Salvador. While each stop was filled with discussions of friendship, trade and aid, the unspoken imperative for President Tsai was to shore up Taiwan’s position in the face of the likely resumption of the diplomatic struggle between Taiwan and the People’s Republic of China (PRC).
In 2008, then Taiwanese President Ma Ying-jeou and PRC President Hu Jintao agreed to suspend the diplomatic competition between their nations, while Taiwan and the PRC pursued closer economic and political ties. From 2008 through 2016, both honored the truce, even though virtually all of Central America’s presidents informally expressed interest in recognizing the PRC, including Richard Martinelli in Panama, Manuel Zelaya and Pepe Lobo in Honduras, and Mauricio Funes in El Salvador.
After the election of Tsai Ing-wen and her Democratic People’s Party (DPP) in January 2016, the PRC signaled a shift away from rapprochement toward a more conflictual course. In March 2016, two months before President Tsai’s inauguration, the PRC abruptly accepted a 3-year old offer by the African government of Gambia to establish diplomatic relations. Eight months later, Sao Tome and Principe also changed its diplomatic posture and recognized the PRC. In January 2017, as President Tsai left for Central America, the African country of Nigeria (which recognizes the PRC), ordered Taiwan to move its commercial office out of the capital, apparently at the behest of the PRC, which was providing its friend a new $40 billion aid package.
Given that 11 of the 21 countries that recognize Taiwan are located in Central America and the Caribbean, it is not surprising that Taiwan has paid close attention to the region during such difficult times. January’s trip to Central America was President Tsai’s second (she travelled to Panama in June 2016); her predecessor visited Honduras in both 2009 and 2014, Guatemala in 2009 and 2016, Belize in 2009 and 2016, and El Salvador in 2009 and 2014. Taiwan has sustained generous donations to each of the countries, from development programs to investment, to military support, to regularly bringing the region’s leaders to Taiwan for lavish trips. Taiwanese aid to the region also includes multilateral aid, given through the Central American Integration System (SICA), and the Central American Bank for Economic Integration (BCIICE).
Before the “diplomatic truce” period, the PRC was ostensibly working to lay the groundwork for a long game to establish diplomatic relations with the remaining countries in Central America once circumstances permitted. In March 2007, it established the Central American Federation for Friendship with China, to coordinate the activities of pro-PRC groups across the region, including the Salvadoran Association for Friendship with the China (ASACHI), the Foundation for Friendship between the Chinese People and Honduras, and the China-Guatemala Friendship Association.
On the commercial front in Central America, even without diplomatic relations, the PRC had begun to overshadow Taiwan as a commercial partner. In Honduras, Chinese construction companies won contracts for two hydroelectric power facilities: Patucha III and Aqua Zarca; while in Guatemala, they participated in the thermoelectric plant Jaguar. In telecommunications, Huawei and ZTE have become major product vendors and infrastructure providers in the Central American market.
As President Tsai set off on her January 2017 trip, she recognized just how tenuous Taiwan’s position had become, noting that the trip was not just about consolidating friendships, but also raising the morale of her diplomats.
Given the increased diplomatic pressure from the PRC, the most striking aspect of President Tsai’s trip to Central America was that she largely went empty handed, making almost no public promises of new development projects or other aid. Indeed, the focus of her trip was notably on trade and investment, rather than donations, perhaps reflecting that, in previous years, Taiwan was largely seen as “paying” its partners for diplomatic recognition. On this most recent trip, the focus was subtly but importantly different. President Tsai was accompanied by a large delegation of businesspeople, emphasizing the role of Taiwan as a bridge for Central American states to access Asian markets, leveraging vehicles such as the 2007 Taiwan-Honduras-El Salvador Free Trade Agreement, and separate free trade agreements with Nicaragua and Guatemala.
In Honduras, President Tsai met with her counterpart Juan Orlando Hernandez and spoke of a new era of trade and investment between the two, with a focus on textiles, tourism, agriculture and manufacturing.
In Nicaragua, in addition to attending the Presidential inauguration of Daniel Ortega, President Tsai spoke of importing more Nicaraguan agricultural goods, possibly revising the free-trade agreement between the nations. The “Nicaragua Canal” went notably unmentioned, although PRC funding for the Canal would be a logical incentive, were Nicaragua to switch diplomatic recognition from Taiwan, as some in Nicaragua have suggested is under consideration.
In Guatemala, by contrast to the preceding stops, President Tsai was more willing to highlight Taiwanese aid, mentioning Taiwan’s participation in improving the highway from Guatemala City to the Atlantic coast, as well as providing medical equipment, scholarships for studying in Taiwan, and equipment to transmit the proceedings of the Guatemalan Congress to the nation.
In her meeting with El Salvador’s President Salvador Sanchez Ceren, President Tsai emphasized Taiwan’s collaboration with El Salvador in education, science and technology, tourism, institution building, and even climate change, as well as Taiwan’s work with the multilateral Central American Integration System (SICA). Yet as during her other stops, President Tsai did not highlight any single new program or donation.
It was notable that President Tsai did not visit Panama, the only other country in Central America that still recognizes Taiwan.
What President Tsai said to these leaders behind closed doors may never be known. Yet, even the most skillful diplomacy might not be enough to keep Central America in Taiwan’s corner if the PRC fully resumes its diplomatic offensive. Such a war is not predetermined, and if it occurs, it will not necessarily play out quickly, but rather in slow motion, as Beijing picks off Taiwan’s diplomatic allies one by one, year after year. The ultimate effect of the latter approach would be the same, but would probably avoid serious scrutiny. It is likely that President Tsai’s triumphant tour of Central America in reality points to even more challenging days ahead for Taiwan.
The main point: Even the most skillful diplomacy might not be enough to keep Central America in Taiwan’s corner if the PRC fully resumes its diplomatic offensive.
Diversifying Demography: Immigration Reform in Taiwan
Sinclaire Prowse is a Resident Vasey Fellow at Pacific Forum CSIS.
Over the last 25 years, the demographic landscape of Taiwan has dramatically changed. In February 2015, the Taiwanese government revealed that Taiwan’s working population (aged 15 – 65) will start shrinking by 180,000 annually in 2016 and that the number of workers will peak at 17 million in 2015. If nothing is changed, the working population will fall to 9 million in 2060, or just 50 per cent of the total population. This trend poses a serious threat to national development. Relevant government agencies have been directed to reassess policymaking in the areas of education, industrial development, social services and immigration.
Immigration will serve as a crucial means of addressing the problems associated with the demographic challenge of a shrinking workforce in Taiwan. This is a problem that has seized many other countries in Asia. Daunting demographic challenges have been broadly discussed in Japan, China and South Korea as well. The advantages of Taiwan increasing its foreign workforce are numerous. Some obvious examples include filling workplace gaps, diversifying the workforce and assisting Taiwan in becoming a more multicultural and cosmopolitan island. A more open immigration policy would also revolutionize Taiwan’s manufacturing and export-oriented economy. This would have the added benefit of attracting foreign investment, which is always made easier when a country has a solid base of highly skilled foreign workers living in the country.
Table 1 below outlines the rise in immigration of two of the three key migrant groups in Taiwan since 1995. Two key points can be taken from this: First, the number of migrants working as labourers in Taiwan has now reached a level that sees them as irreplaceable. Second, more needs to be done to encourage skilled foreign workers to come to Taiwan.
Table 1. Foreign Residents at 10-Year Intervals
|Total Foreign Residents||Total Foreign Labour Workers||Skilled workers (Engineers, teachers, technicians)|
Source: National Immigration Agency (April 2015)
Although the number of foreign residents living in Taiwan has increased impressively over the past 20 years, there is a distinct stagnation in the immigration of skilled workers to the island. Table 1 shows that skilled workers in the fields of engineering, teaching and technical studies have stayed stagnant at around 10,000 for the past 10 years. As a percentage of the foreigners in Taiwan, this has dropped from 2.5 percent in 2005 to 1.5 percent in 2015. This can be attributed to poorly targeted immigration policy in these fields, which has provided no incentive for skilled foreign workers to come to Taiwan, especially when compared to other competitive Asian nations. In other Asia-Pacific countries with a similar population size, the number of skilled foreign workers given visas each year is much higher. In Australia, more than 120,000 places were made available in the 2015-2016 skilled migration scheme. In 2015, South Korea welcomed upwards of 49,000 highly skilled migrant workers. More than 33 percent of these were foreign language teachers—a source of migration that Taiwan has not yet fully utilized.
According to the Oxford Economics Global Talent 2021 Report, Taiwan is facing the most pronounced talent deficit trend among the 46 countries examined. Factors assessed include economic growth, population change, industry competition and immigration. Taiwan loses between 20,000 – 30,000 white collar workers each year to countries with better opportunities. Reforming the Taiwanese immigration system is essential in order to address this problem.
For Taiwan to further diversify its demography, modernise and become more competitive with other advanced economies, more needs to be done to encourage skilled foreign workers to come to the island. The government has worked hard recently to address these matters with its New Southbound Policy and the National Development Council’s Plan for Retention of Talent in Taiwan.
Changes outlined in these plans include:
- Issuing six month intern visas to recent undergraduates of foreign universities, with an extended stay of maximum one year.
- Issuing “Personal Employment Passes” to high level foreign professionals.
- Permitting foreign spouses to engage in full-time or part-time work.
- Removing the renunciation requirement for high-level professionals and conditionally permit dual nationality.
- Amending the Immigration Act to permit spouses and minor children of applicants for permanent residency to apply for permanent residency simultaneously.
- Simplifying visa applications by creating a single online platform for foreign professionals to obtain visas, Alien Residency Cards, and work permits and by accepting English-language documentation and eliminating the Chinese translation requirements for authentication of visa documents.
The measures outlined above would thoroughly modernize Taiwanese immigration policy. These changes would make it easier for foreigners to gain employment in Taiwan after graduation, ease restrictions on visas for high-skilled workers and address institutionalised problems in Taiwan that dissuade foreigners from wanting to live and work there. Each issue is linked to Taiwan’s demographic challenges and will assist in shifting the country towards a younger, more professional and more dynamic population.
There are a number of concerns that have not been addressed in the plan that need urgent attention if the government is serious about addressing immigration policy and, in turn, demography.
First, changes to the work permissions for foreign spouses should include the foreign spouses of permanent residents, not just citizens. The Ministry of Labor has recently permitted foreign spouses of citizens to work full or part time with certain conditions, but not the spouses of permanent residents.
Second, the requirement of renunciation of original nationality should be eliminated. Currently, it is not possible to be a dual citizen of Taiwan and another country. Taiwanese law stipulates that one must renounce their original citizenship before being permitted to become a Taiwanese citizen. In order to simplify the lives of foreigners in Taiwan, it is necessary to allow for dual citizenship. This simplification will improve the perception of life in Taiwan and incentivize more people to want to live and work on the island. A bill (904-1846) before the Legislature seeks to change this, but it is not yet clear if it will pass.
Third, there are no proposals to allow for permanent residents or even citizens to sponsor elderly parents to live in Taiwan. This is a common element of immigration policy in many countries and is important for Taiwan to consider.
Finally, reconsideration of the “high-level professional” visa category is needed. Foreign professionals with extraordinary ability have been permitted to apply for Permanent Residency (Plum Blossom Cards) since 2006, but very few cards have been issued over the past decade Any definition of “high-level professional” must include a reasonable understanding of the realities of the employment market in Taiwan. This visa class could be better utilized by broadening it to allow a greater number of high-level professionals to live and work in Taiwan.
The Taiwanese government has requested direct public feedback on its proposed reforms in this area, which is a good sign that these changes are being deeply and carefully considered.
Overall, the changes in each of these new plans are overwhelmingly positive for Taiwan, and will help to better embed Taiwan into the fabric of the Asia-Pacific region. President Tsai Ing-wen and Taiwan’s government have identified areas where Taiwanese competitiveness is lacking and are acting to help address these. These changes have the added benefit of addressing Taiwan’s demographic challenges, and filling gaps that desperately need attention.
The main point: Taiwan faces serious demographic challenges that threaten to hamper its international competitiveness. New immigration measures implemented by the Taiwanese government, if passed, will assist in addressing these demographic challenges.