Much ink has been spilled on the topic of the relationship between the European Union and the People's Republic of China over recent weeks; from imbalanced trade to values and principles. As the EU recalibrates its policy towards China, it is worth remembering the position of strength the EU finds itself in and the power it can wield, both in values and economics, writes Ming-Yen Tsai, Ph.D, representative, Taipei Representative Office in the EU and Belgium.
As the President of the European Commission, von der Leyen mentioned in her first State of the Union address, “[the EU] will continue to believe in open and fair trade across the world. Not as an end in itself – but as a way to deliver prosperity at home and promote our values and standards”. We too in Taiwan have long upheld this notion of free and fair trade and it is why we believe the time is right to begin negotiations on a Bilateral Investment Agreement (BIA) between the EU and Taiwan.
Indeed, the EU and Taiwan are like-minded partners in many respects, both are committed to freedom, democracy, open society, free markets and human rights. The relationship between Europe and Taiwan is stronger than it has ever been. Support for Taiwan has been growing over the past several years among lawmakers across the continent. In May of this year, over 100 MEPs and members of various European national parliaments came together to sign a joint letter supporting Taiwan's bid to attend the World Health Assembly, in part due to Taiwan’s effective efforts to contain the spread of the COVID-19 pandemic.
Just in the past week, we have seen a joint op-ed, written and signed by a number of influential experts and Members of the European Parliament, calling on the EU to “revise” its out-dated One-China policy and to “realign its policy towards Taiwan”.
This support is widely welcomed and hugely important. Nevertheless, what is now needed more than ever is concrete action to deepen the ties between the EU and Taiwan. By commencing negotiations with Taiwan on a BIA, the EU can, not only further deepen trade relations and show its strong support for a likeminded partner, but also enhance EU-Asia connectivity and the EU’s geopolitical and economic interest.
The EU has in recent years demonstrated this strong will to enhance EU-Asia trade links by signing FTAs with Japan, Korea, Singapore and Vietnam. Taiwan simply represents a logical next step in this process.
European investment in Taiwan already stands at record levels, having reached an accumulated value of €48.6 billion to date and accounting for 31% of Taiwan’s total inward FDI.
Taiwan’s cumulative FDI in the EU has reached €7.9bn, of which over 60% was made during the past 5 years, and has created more than 60,000 European jobs. The EU is Taiwan’s 5th largest trading partner, and likewise, Taiwan is the EU’s 5th largest partner in Asia. As it stands, the economic relationship is clearly built on a strong foundation. Furthermore, Taiwan has already signed BIAs with Japan, the Philippines, India and Vietnam, and Economic Cooperation Agreements with Singapore (ASTEP) and New Zealand (ANZTEC) respectively.
What's more, this number looks only set to rise as investors concerned about the worsening situation in Hong Kong, look for safer, more stable destinations for their investments. There is currently €80bn worth of EU investment and 300,000 EU citizens present in the city. For all those Europeans in Hong Kong considering the precariousness of their situation, Taiwan clearly presents an obvious alternative.
Taiwan also offers fantastic opportunities for the EU’s world-leading green energy sector.
The Taiwanese government have put in place a range of ambitious green energy production goals, including the target of 20% renewable energy generation by 2025. In particular, offshore wind capacity is set to increase vastly, with plans to make Taiwan the largest offshore wind energy producer in Asia. This represents a great opportunity for European companies, who have already won the largest proportion of the development projects from now until 2025.
From a broad perspective, the U.S.-China trade friction and the COVID-19 pandemic have exposed the risk of over-reliance on single country or supplier. It has also highlighted the importance of establishing resilient and diverse global supply chains among like-minded partners. Taiwan has long played a key role in the global supply chain.
An EU-Taiwan BIA will bring mutual benefits to both the EU and Taiwan and will provide a stable, reliable and predictable investment environment for European companies in Taiwan and Taiwanese companies in Europe respectively. EU member states have also actively signed various arrangements with Taiwan to enhance co-operation. The European Parliament has in recent years adopted three resolutions, all of which, inter alia, expressed consistent support for a bilateral investment agreement between the EU and Taiwan. Simply put, an EU-Taiwan BIA is supported by all stakeholders.
A BIA can not only give European investors peace of mind and greater protections when investing in Taiwan, but also contribute to the diversification of European supply chains, and even the EU's own pursuit of its “EU-Asia Connectivity Strategy” and “Open Strategic Autonomy”. More than this, however, it would demonstrate the EU’s commitment to its founding principles and to the global alliance of liberal democracies.
What we need to do as like-minded partners in this increasingly interconnected world is turn our words into actions and use these actions to support one another in real, concrete ways.
After all, as players on the international stage, we are certainly playing on the same team. And as President von der Leyen recently pointed out, “[the EU] must deepen and refine its partnerships with its friends and allies”, and pledged to “use [its] diplomatic strength and economic clout to broker agreements that make a difference”. I am convinced that a BIA with Taiwan would be one such way that the EU could make a difference, and that with joint effort, EU-Taiwan relations will go from strength to strength for the benefit of all in years to come.