Taiwan Government and International Affairs – August 2017

WELCOME TO TAIWAN — President Tsai Ing-wen and Paraguayan President Horacio Cartes review an honor guard at the start of Cartes’ three-day visit. Photo: AP/Chiang Ying-Ying

Panama Cuts Ties With Taiwan

Panama switched diplomatic recognition from Taipei to Beijing, the latest in a series of developments that further isolate Taiwan on the global stage. Panamanian President Juan Carlos Varela cited “economic interests” as the incentive to sever the diplomatic ties. In response, Taiwan plans to halt all bilateral cooperative projects and cut all aid to Panama, according to Taiwan’s Minister of Foreign Affairs David Lee. Panama’s decision is widely regarded as a result of China’s attempts to put pressure on Taiwan after the election of President Tsai Ing-wen in May last year. Panama is the second country to switch recognition to Beijing since Tsai took office, following São Tomé and Príncipe’s break with Taipei last December. The loss of Panama leaves Taiwan with only 20 formal diplomatic allies.

U.S. Announces New Arms Deal

The U.S. State Department approved the sale of US$1.42 billion in weapons to Taiwan on June 29. The announcement brought the usual strong criticism from China, which urged the United States to immediately revoke its “wrong decision.” U.S. officials responded that they were acting in accordance with the Taiwan Relations Act, which requires the United States “to provide Taiwan with arms of a defensive character.” The deal, the first of its kind under the Trump administration, is a slight reduction from the last previous arms deal with Taiwan of US$1.8 billion in December 2015. The State Department said the package included technical support for early warning radar, high speed anti-radiation missiles, torpedoes, and missile components.

In related news, the U.S. Senate Committee on Armed Services approved a provision that will re-establish “regular ports of call by the U.S. Navy at Kaohsiung or any other suitable ports in Taiwan” and permit the “U.S. Pacific Command to receive ports of call by Taiwan.” Taiwan’s Ministry of National Defense said it welcomes any provisions that will help bolster defense security and regional stability. However, observers following U.S.-Taiwan relations say they do not foresee the establishment of mutual port calls happening anytime soon.

Foxconn to Invest in Wisconsin Project

Foxconn Technology Group’s founder Terry Gou pledged July 26 at the U.S. White House to build a US$10 billion LCD display panel plant in Wisconsin that could directly employ up to 13,000 workers as well as creating an additional 22,000 jobs in related supplies and services and 10,000 construction jobs. “American jobs – that’s what we want,” said President Donald Trump, who joined Gou at the podium for the announcement, along with Vice President Mike Pence and Speaker of the House Paul Ryan, who represents a congressional district in Wisconsin.

The deal was based on tax breaks and other subsidies valued at US$3 billion, 50 times larger than the previous record subsidy package offered in Wisconsin, and would involve building a virtual village encompassing 1,000 acres and including housing, stores, and other service businesses.  Foxconn issued a statement saying that the deal “signifies the start of a series of investments by Foxconn in American manufacturing in the coming years.”

Many U.S. media misidentified Taiwan-based Foxconn, also known as Hon Hai Precision Industries, as a Chinese firm.

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