Taiwan - Foreign Relations

The defining characteristic of Taiwan's international relationships is its lack of diplomatic ties with most nations of the world. The authorities on Taiwan call their administration the "Republic of China," and for many years claimed to be the legitimate government of all China. Foreign nations wishing to establish diplomatic relations with a government of China could recognize the "Republic of China" or recognize the People's Republic of China (PRC), but not both. Most chose to recognize the PRC. The People's Republic of China replaced Taiwan at the United Nations in 1971, and the PRC was admitted to -- and Taiwan left -- most related organizations in the early seventies.

The U.S. switched diplomatic recognition to the PRC in 1979. Taiwan's diplomatic position has continued to erode, as many countries changed their official recognition from Taipei to Beijing. Twenty eight countries maintained diplomatic relations with Taiwan in 2005.

Hundreds of thousands of people from Taiwan travel to the United States and other nations each year as tourists, students and business persons. Taiwan is the sixth largest place of origin for international students studying in the United States, with over 23,000 Taiwan students attending U.S. educational institutions in the 2011-2012 academic year. Tens of thousands of Taiwan students have obtained degrees in the United States and returned home to lead companies, develop the economy, and help build a modern infrastructure of ports, rails, airports and highways.

Taiwan is one of the 20 largest economies in the world. Once an agricultural economy, it became an economy based on heavy industry, and is now a world-class manufacturer of innovative high tech products. Foreign trade has been the engine of Taiwan's rapid growth during the past 50 years. Taiwan's economy remains export-oriented, so it depends on an open world trade regime and remains vulnerable to fluctuations in the world economy. The total value of trade increased more than five-fold in the 1960s, nearly 10-fold in the 1970s, doubled in the 1980s, nearly doubled again in the 1990s, and grew more than 85% in the past decade. Export composition changed from predominantly agricultural commodities to industrial goods (now 99%). The electronics sector is Taiwan's most important industrial export sector. Taiwan became a member of the World Trade Organization (WTO) as a special customs territory in January 2002.

Taiwan firms are the world's largest suppliers of computer monitors and leaders in PC manufacturing, although now much of the final assembly of these products occurs overseas, typically in China. Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports coal, crude oil, and gas to meet most of its energy needs. Reflecting the large Taiwan investment in China, the P.R.C. supplanted the United States as Taiwan's largest trade partner in 2003. In 2010, China (including Hong Kong) accounted for over 29.0% of Taiwan's total trade and 41.8% of Taiwan's exports. Japan was Taiwan's second-largest trading partner with 13.3% of total trade, including 20.7% of Taiwan's imports. The United States is now Taiwan's third-largest trade partner, taking 11.5% of Taiwan's exports and supplying 10.1% of its imports.

In 2010, Taiwan was the United States' ninth-largest trading partner, with Taiwan's two-way trade with the United States amounting to $61.9 billion. Imports from the United States consist mostly of machinery and equipment as well as agricultural and industrial raw materials. Exports to the United States are mainly electronics and consumer goods. The United States, Hong Kong, China, and Japan account for 60% of Taiwan's exports, and the United States, Japan, and China provide almost 46% of Taiwan's imports. As Taiwan's per capita income level has risen, demand for imported, high-quality consumer goods has increased. The U.S. trade deficit with Taiwan in 2010 was $9.88 billion, down $74 million from 2009. In addition to its formal diplomatic relations, Taiwan also maintains trade offices in nearly 100 countries. Taiwan is a member of the Asian Development Bank, the WTO, and the Asia-Pacific Economic Cooperation (APEC) forum. Taiwan is also an observer at the Organization for Economic Cooperation and Development (OECD). In 2009, Taiwan acceded to the WTO Government Procurement Agreement. These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.

While still admitting that Taiwan is part of China, Taiwan sought recognition as one of two "legitimate political entities" in China, the other being the PRC. Under this policy, the Taiwan authorities sought to join various international organizations, including the United Nations. During the administration of President Chen, Taiwan lobbied strongly for admission into the United Nations and other international organizations, such as the World Health Organization (WHO). The P.R.C. opposes Taiwan's membership in such organizations, most of which require statehood for membership, because it considers Taiwan to be a part of its territory, not a separate sovereign state.

The PRC has sought to limit Taiwan's participation in other international organisations, insisting it do so under a name other than the 'Republic of China'. Taiwan is a member of Asian-Pacific Economic Cooperation (APEC) dialogue as an "economy", the Asian Developoment Bank (ADB) under the titles 'Chinese Taipei' and 'Taipei, China' respectively, and joined the WTO in 2002 as a "customs territory" under the title 'The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu', or Chinese Taipei for short.

In the new century Taipei's head-of-state diplomacy had grown narrower and actually transformed into 'transit diplomacy.' Over the past few years, whenever a Taiwan president went overseas to visit other countries, the visit itself became less important, while at the same time, his transits in those countries that are not Taiwan's diplomatic allies, particularly the United States, became the focus of those visits. President Chen Shui-bian's transits in New York in 2001 and 2003, respectively, were perhaps the peak of Taipei's 'transit diplomacy' in the United States. With the strong support and tacit agreement of the Bush administration at the time, Bian's activities in New York were no longer a simple 'transit' but truly a 'visit'.