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Britain-Taiwan Relations After Brexit 

Britain-Taiwan Relations After Brexit 

Britain-Taiwan Relations After Brexit 

The United Kingdom’s (UK) vote on June 23 to leave the European Union (EU) sent shock waves through the global financial and stock markets. The sterling pound fell to a 31 year low against the dollar and the Bank of England subsequently cut interest rates to a record low of just 0.25% in a bid to head off a recession. In Korea, the government immediately considered plans for a U.S. $17 billion stimulus amidst fears about the impact on the country’s exports.

While political leaders around the world, including the United States, weigh the impact of Brexit on its relations with the United Kingdom, reaction in Taiwan was much milder. Most of the nation’s vernacular press gave more prominence to the end of a strike by the Taiwanese-owned China Airlines’ staff. Only the China Times (中國時報) led with a story on Brexit in its June 25 edition, titled “Black Friday.” The official government reaction foresaw only a limited impact.

Premier Lin Chuan (林全) went further, portraying the outcome as an opportunity, possibly leading to both Britain and the EU expanding their economic and trade relations with Asia. This view was shared by the Ministry of Foreign Affairs (MOFA), which confidently expected Brexit to lead to a further deepening of ties with the UK. All of these responses are a far cry from the nervous reaction in Seoul and stances that must have been reassuring to the UK’s Minister for International Trade Greg Hands, who made a rare visit to Taiwan in September in an effort to reassure Taiwanese exporters and investors that, despite Brexit, it was ‘business as usual.’ In an op-ed in the Taipei Times on September 26, he portrayed the UK as a ‘reliable ally and trusted partner’ and bilateral trade as being ‘as strong today as it has ever been.’ It fell to a foreigner, Jakub Piasecki, writing in a foreign publication, to suggest that “Brexit is bad news for Taiwan.”  Have Taiwanese officials missed something? Or are foreigners misreading the impact of Brexit?

To some extent, the differing views reflect different perspectives. Examination of the respective bilateral trade figures quickly helps explain why Taiwanese officials are more relaxed than their Korean counterparts. Korea’s bilateral trade with the UK is at record levels, its imports alone having trebled in value since 2000. But UK-Taiwan trade over the same period has stagnated. Greg Hands wrote bravely of trade volumes having grown 50% in the past five years, but as IMF figures show, Taiwan’s exports to the UK peaked in 2000, while its imports from the United Kingdom have grown just 14% in the last 20 years. The underlying reasons are complex and have much to do with the changing nature of Taiwan’s economy. But the reality is that the United Kingdom is no longer as important a market for Taiwan as before. Even if the United Kingdom leaves the European Single Market or Customs Union and seeks to negotiate its own standalone Free Trade Agreements, membership in the TPP (subject, inevitably, to the future of the TPP itself) and a Bilateral Investment Agreement (BIA) with the EU will be much higher priorities for Taiwan. So Taiwan’s policymakers can afford to be relaxed.

In presenting a gloomy prognosis, Piasecki was not considering the impact on Taiwan’s relations with the United Kingdom so much as its relations with the European Union more generally and the European Parliament in particular, where British MEPs have been the most ardent and influential in their support for Taiwan. But need this affect bilateral relations or could it indeed mean a deepening of them as Taiwan’s MOFA seems to think?

Those taking the optimistic view can point to recent experience in which the United Kingdom has often been in the vanguard among European countries in deepening its ties with Taiwan. The United Kingdom led the way in removing short-term visa requirements and is the only EU member to have an Open Skies Air Service Agreement; it was one of the first to sign a Double Taxation Agreement, agree to a Working Holiday-maker scheme, a Prisoner Transfer Agreement, and more. But optimism that a United Kingdom apart from the European Union will be freer to pursue more agreements along these lines may be misplaced. None of these agreements were in areas within the scope of EU policy at the time they were signed, so the idea that the United Kingdom will be suddenly free to sign still more on leaving the EU does not apply.

For the next few years at least, U.K. diplomatic efforts will be concentrated on its immediate neighbourhood and the need to build a post-Brexit relationship. Despite Prime Minister May’s brave rhetoric that “Britain will be bold and outward looking,” it is unlikely to have either the resources or inclination to devote much effort to the Asia-Pacific region or countries, at least until its relations with its neighbours are clarified.

But perhaps most importantly, the British government’s attitude towards China has been transformed since then Prime Minister David Cameron incurred Beijing’s wrath by meeting the Dalai Lama in 2012. Since then, the UK government has gone to considerable efforts to engage with China, culminating in a high profile visit by President Xi Jinping to the United Kingdom in the autumn of 2015. It is possible that new British Prime Minister Theresa May will adopt a more cautious attitude toward China than her predecessor but the United Kingdom is likely to remain wary of doing anything that might incur Beijing’s displeasure once it can no longer hide behind its EU partners.

But at least one section of Taiwanese society is likely to be more welcome than ever in post-Brexit Britain. According to the British Office in Taipei, some 4-5,000 Taiwanese students currently enrolled for long term courses at UK universities each year, paying high fees to do so. Britain’s universities have been disproportionate beneficiaries of EU research funding, receiving considerably more than their counterparts in other EU states.  The UK government is unlikely to be able to replace this in full, so universities will work harder than ever to attract overseas students in order to help offset the loss of EU funds.

Indeed, the opportunity for Taiwanese students could well prove to apply more broadly: outside the European Union, the United Kingdom will have to work much harder for its place in the world. For Taiwan, long forced to do so by its diplomatic isolation, Brexit is at worst an inconvenience.

Main point: Brexit will be no more than an inconvenience to Taiwan’s bilateral ties with the UK; don’t expect any major change.

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