Written evidence submitted by Hsin-Huang
Michael Hsiao and Liang-Chi Russell Hsiao
TAIWAN'S EXTERNAL SECURITY ENVIRONMENT AND
THE EVOLUTION OF TAIWAN'S SOUTH ASIA POLICY
This report, updated as warranted, discusses
the extent of Taiwan's relations with South Asia and describes
both the challenges and opportunities of Taiwan developing economic
and political ties with the countries in South Asia since 2000,
with a particular emphasis on India. The scope of Taiwan's relations
with other countries in South Asia: namely Bangladesh, Bhutan,
India, Maldives, Nepal, Pakistan and Sri Lanka has been extremely
limited both economically due to the region's foreign and distant
perception to Taiwan in spite of its geographic proximity, and
even more politically because of most countries (with Bhutan as
an exception),[18]
adherence to China's interpretation of the "One China"
principle which excludes any interaction between the countries
in the region with Taiwan on an official level. In spite of Taiwan's
isolated diplomatic status with only 24 official diplomatic applies
recognising Taiwan as an independent state, Taiwan has nearly
100 non-official representative offices around the world in other
countries that perform functions as these countries' embassies
for conducting relations in Taiwan. However, for the South Asia
region, India is the only country with a non-official representative
office in Taiwan and vice versa. Based on this premise, this report
analyzes the scope of Taiwan's relations with South Asia using
India as the centerpiece of Taiwan's South Asia policy.
The warming of relations between Taiwan and
India since 2000 can be attributed in part to a convergence of
strategic policies: Taiwan's "Go South" policy complemented
by India's "Look East" policy. The direction of the
two policies which were initiated both in the early 1990s targeting
the blossoming ASEAN economies, and over time amalgamated due
to growing concerns of a region undergoing rapid and profound
transformations in its economic and political security environment:
namely the aftermath of the 1997 Asian Financial Crisis, the rise
of China's economic and political clout in South and Southeast
Asia and its' the risks to Taiwan's national security.
The impact of China's rise on the region's economic
and political development is a widely debated issue in all Asian
countries. It undoubtedly poses serious concerns for both Taiwan
and India albeit for different reasons. The risks for Taiwan's
economy are growing more acute as Taiwan's economic security become
increasingly dependent on China's inflated economy. This dependency
in the Chinese market is aggravated by a reconfiguration of China's
grand national strategy and tactic towards Taiwan: from one of
direct confrontation to a more sophisticated approach that involves
three overall strategies: divide Taiwan domestically, isolate
internationally and absorb economically.
South Asia is a region which Beijing treats
as its own backyard and its engagement with India is a veneer
of partnership masking its attempt to actively constrain India's
influence to the South Asia region: evidenced by its support of
Pakistan and sell of offensives arms to Pakistan and Bangladesh.
The increasing competition between China and India has also unearthed
decades long worth of entrenched suspicions resulting from the1962
borders war which precludes China as a competitor rather than
a partner. As such, India still employs a cautious policy of engagement
with China by balancing it with its "Look East" policy
and while forming a strategic partnership with the United States.
In that regard, India encourages strengthened relations with Taiwan,
which according to statistics compiled by the World Economic Forum
is the fifth most competitive economy in the world, as a means
of applying pressure on the PRC.
Taiwan's primary interest in pursuing economic
engagement with India is to reduce its degree of economic dependency
on the PRC. India's emergence as one of the widely heralded BRIC
economies with a globally competitive software industry are also
creating the incentives necessary for helping Taiwan's government
policy of "looking beyond" China in luring Taiwan businesses
away from China's market trap. Taiwan has been keen on signing
a Free Trade Agreement (FTA) with India. India is also an ideal
springboard for Taiwan to enter the South Asian Free Trade Agreement
(SAFTA) trade network and develop relations with other countries
in the region. Since Taiwan is not a party to any free trade agreements
with countries in the region or trade zone, it can enter other
markets via India and Bangladesh. Although the current trade in
terms of investment made by Taiwan in India pales in comparison
with the amount of investment by Taiwan in China: by the end 2004,
Taiwan's investment in India totalled just $116 million, dwarfed
by Taiwan's $41.7 billion investment in China. The Ministry of
Economic Affairs (MOEA) and other government agencies reported
that two-way trade between Taiwan and India from January to November
2005 grew at a brisk pace amounting to US$2.27 billion, a nearly
30% increase over the previous year. Representative Vijay Gokhale,
Director-General of the India-Taiwan Association, India's de facto
embassy in Taiwan, has set the goal of increasing bilateral trade
to $7 billion in 2007.
At the same time, Taiwan's policy makers are
paying close attention to India's nascent rise as a regional power
that is of increasing geo-political importance to the West, evidenced
by US acquiescence of a nuclear India. This policy stretch made
by the US is perceived by many policy analysts in Taiwan as largely
driven by the purpose of neutralizing Pakistan, but more important
is the impact of China's uncertain rise which has unsettled the
dominant regional power in the Asian region that the US had welcomed
China to play a more prominent role in regional affairs. The concerns
of policy makers in Taiwan of China's growing threat were only
accentuated by the passage of China's so-called "anti-secession
law" in March 2005, which legitimates the use of military
force against Taiwan should the island exercise its sovereign
right to claim de jure independence. Therefore, it is only logical
that Taiwan considers the necessary precautionary measures to
look for friendly partners and diversify its economy.
The scale of Taiwan-India relations cannot be
weighed on economics alone. There have been an increasing number
of private visits made by politicians and former officials from
political parties and government agencies from both sides. Several
examples are the visits made to Taiwan by Narindra Modi, the secretary-general
of the Indian Bharatiya Janata Party, George Fernandes, a House
of the People member and former defense minister, and Jaya Jaitly,
former head of the Samata Socialist Party. These visits are reciprocated
by visits made to India by high ranking officials from the National
Security Council, other government agencies and political parties.
There is also a Taiwan-India parliamentary amity panel, made up
of members from the ruling Democratic Progressive Party, the Kuomintang,
the People First Party and the Taiwan Solidarity Union. This panel
organises delegation visits to India to would meet with Indian
parliamentarians to advance mutual understanding and friendship.
Nevertheless, India's reception of strengthened Taiwan relations
is not without concerns for Beijing's wrath. The rejection of
Vice-President Annette Lu's attempt in 2001 to visit India with
humanitarian aid to the victims of the Tsunami is a prime example
of India's careful approach to handling Taiwan.
In lieu of India's increasing strategic importance
and calls for reducing Taiwan's economic dependence on China,
Taiwan launched the Taiwan-India Cooperation Council (TICC) in
February 2006 to advance mutual understanding and cooperation
between Taiwan and India in the economic, social, cultural and
related dimensions, and focuses on the two approaches as "Network
Building" and "knowledge-sharing." The government
backed association is composed of politicians, business leaders,
academics, and chaired by former premier Yu Shyi-Kun, who is also
the Chairman of the ruling Democratic Progressive Party (DPP).
Taiwan and India have also made significant
headways in track two dialogues as below the fray mechanisms for
promoting mutual understanding and confidence building measures
when official channels are closed. Indian scholars and young graduate
students are more visibly represented in a number of Taiwan's
universities. Taiwan's research institutes and think tanks with
encouragement from India have also expanded their presence in
India. Indian think tanks like the Institute for Defence and Analyses
Studies, the Observation Research Foundation, the Confederation
of Indian Industries, the India International Center, the Center
for Policy Research and the National Institute of Advanced Studies,
among others have exchange programs with their counterparts in
Taiwan. International conferences are also becoming more frequently
held in both India and Taiwan, wherein leaders and academics alike
hail Taiwan and India as two countries that share a common culture
of democratic values can serve as the bedrock of solid future
relations. These are all positive signs of a comprehensive relationship
that is developing between India and Taiwan.
In conclusion, the extent of Taiwan's relations
with South Asia can be framed on the premise that since the end
of World War II, Taiwan has had limited relations with countries
in South Asia and the region was indeed considered under China's
sphere of influence. However, beginning in the 1990s there emerged
two major trajectories that propelled relations between Taiwan
and India. Firstly, the rise of China and its threat to Taiwan's
national security raised concerns that having an economy become
overly dependent upon China will severely limit the policy options
available to Taiwan's national leaders. Secondly, as competition
between India and China increases, India is also growing wary
of China's increasing political and economic clout and its intentions
in South and Southeast Asia, including access to the Indian Ocean.
For Taiwan the emergence of India's growing market provides a
safer alternative for its businesses due to volatile cross strait
relations. Additionally, India's political and economic clout
acts as a counterweight to China's growing predominance in the
region. Taiwan's South Asia policy is the tip of a nascent hedging
strategy for managing stability across the Taiwan Strait and ensure
that a balance of power endures within the Asian region.
Hsin-Huang Michael Hsiao, Executive Director of
Asia-Pacific Area Studies, Academia Sinia and
Liang-Chi Russell Hiao, Special Associates of Department for International
Cooperation, Taiwan Foundation for Democracy
18 Bhutan neither recognises the PRC nor the ROC. Back
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