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Making Way for Taiwan

Currently there are more than 300 Taiwanese companies with capital holdings in Mexico
By The News · 13 of October 2016 09:35:32
President Tsai Ing-wen gives a speech during Taiwan's National Day in Taipei, President Tsai Ing-wen gives a speech during Taiwan's National Day in Taipei, Taiwan, October 10, 2016. REUTERS/Tyrone Siu, photo: Reuters/Tyrone Siu

It’s been 105 years since the founding of the Chinese republic, and 57 years since the establishment of Taiwan, but for mainland China, the idea that its renegade province is now a fledgling independent nation is hard to swallow.

China still considers Taiwan an integral part of its national territory, and is not shy to use either economic coercion or political bullying to get most of the rest of the world (including Mexico) to maintain a One-China policy that excludes diplomatic recognition of the de facto island nation.

But for the Taiwanese people — who have carved out a booming democratic society of 23 million people — the Republic of China (ROC), based in Taipei, is and will remain a sovereign state that cannot and will not submit to the pressures and intimations of Beijing.

When the anti-unification Democratic Progressive Party’s (DPP) outspoken Tsai Ing-wen took office as Taiwan’s new president last May, it did not sit well with Beijing.

And when, four months later, she outright refused to recognize the 1992 Consensus — a tacit agreement between Beijing and Taipei to acknowledge that there is only one China and both sides of the strait are free to interpret that declaration however they see fit (in other words, a noncommittal treaty to agree to disagree while still allowing both sides to save face) — Beijing decided to punish its wayward province in the harshest way it knew how, the pocketbook.

No need for more ballistic missiles or military shows of force (China already has at least 1,600 such missiles pointed at Taiwan), Beijing had only to begin to cut commercial ties and economic accords to get Tsai’s attention (along with that of her constituents).

Taiwan’s export-dependent economy was already struggling, and China is by far the island’s largest trade partner, with combined commercial interchange topping $130 billion in 2014.

But in the first seven months of this year, two-way trade between China and Taiwan dropped by nearly 10 percent, and Taiwanese companies began to feel the pinch.

So last week, Tsai took on a softer approach, stressing that while she will not give in to pressure from Beijing, she wants to establish a dialogue with the People’s Republic that would not revert to confrontation.

Toning down her rhetoric and walking a delicate diplomatic tightrope, Tsai said that she hopes to “build a consistent, predictable and sustainable cross-strait relationship” with the mainland.

Exactly how Tsai’s proposal will be received by Beijing is yet to be seen.

Hedging her bets, Tsai is meanwhile courting an array of new trade partners, in particular Southeast Asian nations and Latin American markets.

She is also actively pursuing membership for Taiwan in the Trans-Pacific Partnership (TPP).

Any signing of the partnership that would exclude Taiwan but include its major trading partners would put the island on an uneven footing for global commerce and would strike a heavy blow to its already-fragile economy.

The proposed Pacific trade deal, which will include Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam, will account for about 40 percent of all world trade today, potentially making it the world’s largest economic partnership, and Taiwan is logically eager to get in on the ground floor of the pact.

“Taiwan is ready and willing to join the TPP, as we have already expressed to the 12 current subscribers, and we are very interested in becoming a member,” Carlos S. C. Liao, director general of the Taiwan Economic and Cultural Office in Mexico, said in his national day reception speech last week.

“So far, both the United States and Japan have said that they welcome our proposal and are in favor of the eventual admission of Taiwan into the TPP as a productive, constructive and beneficial partner.”

Liao added that Taiwan’s entry into the massive trade bloc would also lead to increased commercial and economic ties with Mexico.

But so far, Mexico has not endorsed Taiwan’s membership into the still-unrealized club, even though Taipei has been a faithful trade and investment partner for more than a decade.

Currently there are more than 300 Taiwanese companies with capital holdings in Mexico, providing direct jobs to no less than 60,000 workers.

“Taiwan remains Mexico’s third-largest Asian investor, and its ninth-largest trade partner worldwide, with a combined bilateral commercial exchange of about $7 billion annually,” Liao said.

“Taiwanese investment in Mexico amounts to more than $3 billion.”

By comparison, mainland China has only $281 million in investment holdings in Mexico.

But despite those figures, Mexico still maintains an archaic and counterintuitive one-China policy implemented in the 1970s by then-President Luis Echeverría.

Since that time, the Taiwanese government has consistently and actively tried to modify the Mexican stance through subtle political overtures and considerable pocketbook diplomacy.

Clearly, it is time for Mexico to take a more rational and 21st-century stance regarding Taiwan, beginning with the endorsement of its proposed membership into the TPP.

Thérèse Margolis can be reached at therese.margolis@gmail.com.