Global reaction to Brexit has generally focused on its impact on the United Kingdom (UK) rather than the European Union (EU) more generally. Taiwan is no exception. From a purely commercial perspective, the days of the 1990s, when European ministers queued up to visit Taipei, to secure lucrative business deals, including major defense contracts, for their companies are long gone.[1] Two-way trade has stagnated since 2000; in 2015 the 28 members of the EU together only formed Taiwan’s fifth largest trading partner.
But, historically, the EU has been important to Taiwan for political as much as commercial reasons, as a group of countries sharing the same commitment to democracy, universal values and the market economy. As the second largest economy within the EU, the United Kingdom’s departure cannot but have an impact. Traditionally a liberal, outward-looking free-trading nation, its views are generally close to those of its fellow northern European members of the Union including Germany, Sweden and Denmark.
Antipathy within it towards the EU often obscures the extent to which it has been successful in achieving its objectives. Enlargement of the Union to incorporate former communist countries was very much a vision of Margaret Thatcher, for example. With the UK’s departure, the influence of “Mediterranean thinking”’ in the EU, more inclined to regulation and control of trade, will grow.
In the short-term, quite apart from the need to negotiate and agree on the details of “Brexit,” which will almost certainly be fraught and time-consuming, the EU still has to grapple with internal problems of sclerotic growth, high unemployment, and an ongoing refugee crisis. Until these issues are resolved, or at least better managed and controlled, areas of broader foreign policy concern—East Asia included—are unlikely to feature high on the agendas of EU leaders, beyond opportunities for commercial business and investment.
But the potential impact of the UK’s departure from the EU goes beyond the short-term. Particularly from Taiwan’s perspective, the UK has a longer and deeper history of engagement in Northeast Asia than other European countries, with the possible exception of France. This extends to its position on the status of Taiwan. Although the UK was the very first western European country to recognize the People’s Republic of China (PRC), on January 6, 1950, and although it goes to great lengths to avoid any public statement on the subject, its position on the status of Taiwan has not changed since 1955 when the then Foreign Secretary stated that “Formosa and the Pescadores are therefore in the view of Her Majesty’s Government, territory the de jure sovereignty over which is uncertain or undetermined” (emphasis added). The United Kingdom is one of a small minority of current EU members to hold to this position, even if it does so discreetly. France, which had initially adopted a not dissimilar position, agreed to an explicit ”One-China policy” as part of the price of repairing relations with the PRC after its sale of Mirage fighters and Lafayette frigates to Taiwan in the 1990s.[2] Some newer members of the EU, most notably Cyprus, are quite explicit in their support of the PRC’s version of a “One China policy” and the EU collectively follows a “One China policy.”
Without a moderating British influence, one might therefore assume that the EU would become more explicit in its support for China, at Taiwan’s expense. Yet perhaps ironically, given history, the reverse might be the case. China’s Global Times pulled no punches in its analysis, describing the outcome of the referendum as “a lose-lose situation” (for the UK and the EU), seeing it as reflecting the general decline of Europe and crucially, from China’s perspective, making it easier for the US to influence Europe.
The UK is currently China’s 3rd largest export market and its relations with it increasingly form the cornerstone of its relations with the EU generally, helped by the UK government’s own hard-nosed pragmatism. The European Council on Foreign Relations has been critical of member states generally in their scrabble for Chinese trade and investment but in its most recent Foreign Policy Scorecard was particularly scathing about the UK, which it described as a “slacker” in its approach to both economic relations with and human rights in China.
So while the UK’s departure from the EU may reduce the latter’s attention to East Asia generally, it does not automatically mean that the EU will be any less sympathetic to Taiwan than at present. Indeed, there are good reasons for the Taiwanese to feel optimistic about the future of relations with an EU shorn of the UK. While the EU’s own guidelines on its Foreign and Security Policy in East Asia make little mention of Taiwan in terms of its engagement with the region, they are explicit in recognizing the United States’ security commitment to Taiwan and the need for the EU to be sensitive to this. Furthermore, in its first major statement on China since the UK voted to leave, the European Council adopted a noticeably harder tone, stating that human rights and the rule of law remain a core part of the EU’s engagement with China, at the same time striking a supportive note for Taiwan by saying, “The EU confirms its commitment to continuing to develop its relations with Taiwan and to supporting the shared values underpinning its system of governance” (emphasis added).
A specific and potentially very significant example of this commitment to developing relations was the European Commission’s announcement in autumn 2015 of its readiness to enter discussions with Taiwan on a Bilateral Investment Agreement. Coming after several years in which Taiwan had pressed unsuccessfully to open negotiations on a free trade agreement, and while the Taiwanese presidential election campaign was already underway, the full significance of the investment agreement does not appear to have been fully grasped by Taiwanese policymakers who continue to be more concerned with accession to the TPP. This is understandable. But for a bloc the size of the EU to offer negotiations to Taiwan is unprecedented. While described as an “investment agreement” there is nothing in international trade rules or doctrine that states what such an agreement may or may not cover. In short, this is a rare opportunity for Taiwan to negotiate exactly the sort of comprehensive trade enhancement agreements it claims to seek. But faced with its own internal issues and other international distractions, it is not an opportunity that the EU is likely to leave on the table for long. Taiwan should grab it.
The main point: Despite the uncertainty generated by Brexit, Taiwan has a rare opportunity to develop its relations with the EU through talks on a Bilateral Investment Agreement. It should grasp it.
[1] Francoise Mengin, “A Functional Relationship: Political Extensions to Europe-Taiwan Economic Ties,” The China Quarterly 1692002).
[2] Mengin, “A Functional Relationship.”