AmCham Taipei played a key supportive role when formal diplomatic ties ended 40 years ago.

Forty years ago, it seemed inevitable to many that Washington would eventually establish diplomatic ties with Beijing. But one of the big unknowns was how this monumental shift would affect Taiwan.

Before President Jimmy Carter finally announced the switch on December 15, 1978, American and Taiwanese officials had never discussed how to assure the maintenance of relations after the break in formal mutual recognition.

A number of major questions were left unanswered: Could trade and travel flows continue without major disruption? Although the Mutual Defense Treaty was being abrogated, would the U.S. still include Taiwan within its security umbrella? Would Taiwan be able to buy defensive weapons from the U.S., its main supplier of military equipment? Could Taiwan retain the rights to its assets in the U.S., including nearly all the foreign-exchange holdings of the Central Bank? Most fundamentally, without embassies and other normal diplomatic channels, how could the two governments interact?

The eventual solution to the quandary was the Taiwan Relations Act (TRA), passed by Congress in March 1979 and signed into law by President Carter on April 10. The statute established the foundation for continued robust – albeit unofficial – interaction between the two countries. Although the lack of officiality was a blow to Taiwan, “at least the TRA made it possible for us to have the second-best situation,” says political scientist Tien Hung-mao, a former foreign minister.

Celebrations marking the 40th anniversary of the TRA are currently being held in both Taiwan and the U.S. The American Institute in Taiwan (AIT), the quasi-embassy that owes its very existence to the provisions of the TRA, is holding a series of forums and other observances throughout the year. AIT’s counterpart in Washington, the Taipei Economic and Cultural Representative Office, is sponsoring a gala reception to which many of the leading political figures in the U.S. are being invited. And AmCham Taipei, which played a key role – much of it behind the scenes – in the drafting of the TRA, has made the anniversary the main theme of its high-profile 2019 Hsieh Nien Fan banquet on April 10.

During that critical period 40 years ago, AmCham Taipei made a pivotal contribution by speaking out vigorously in favor of strengthening the content of the bill that became the TRA. The chief spokesman was Chamber Chairman Robert Parker, who went to Washington to testify at hearings conducted by the Senate Foreign Relations Committee and House Foreign Affairs Committee. His testimony stressed the paramount importance to the American business community of including a “clear and sufficient legal framework for U.S. investments and trade with Taiwan” in the proposed legislation, as well as incorporating a strong statement of U.S. support for Taiwan’s security in the face of threats from China. Those messages were repeated in numerous private meetings with U.S. officials.

When the American and Taiwan sides began communicating about the precise language to use in the draft legislation, the Taiwanese found themselves at a disadvantage. Since “we didn’t know how to write American law, we turned to AmCham for help,” recalls Fredrick Chien, the deputy foreign minister at the time. Parker and three other lawyer members of the Chamber “gave us a lot of tips about what we should request, so in a way the TRA was partially written by AmCham,” Chien says.

Besides its role in crafting the TRA, AmCham during that period was also instrumental in ensuring that American community institutions in Taipei – including the Taipei American School, American Club, English-language radio station, and youth activities – could continue operating despite the departure of the embassy and military. [See the accompanying article in this section].

“That period was undoubtedly AmCham’s finest hour,” says AmCham Taipei President William Foreman. “The embassy was winding down and AIT hadn’t been established yet, so there was a real leadership vacuum. Rob Parker and other Chamber leaders stepped up and took on the challenge. We should all be grateful for their efforts, which helped ensure continued social stability and business confidence in Taiwan.”

Rebuilding a relationship

That positive outcome was by no means guaranteed. Back in 1978 and early 1979, the absence of any concrete plans for TRA-like legislation left Taiwan – and multinational businesses operating on the island – in a state of uncertainty and anxiety. For years the U.S. and Taiwan had preferred to avoid the sensitive topic of the nature of the post-“derecognition” relationship, even though the Shanghai Communique signed during President Richard Nixon’s groundbreaking trip to China in 1972 had made the eventual normalization of U.S.-China relations appear inevitable.

The White House and State Department had been careful to keep Taiwan in the dark about their intentions for fear the Taiwanese would seek to rally support from their friends in the U.S. Congress, complicating the administration’s room for maneuver. On the Taiwan side, some officials – sensing what was coming – considered whether their government should seek negotations with the U.S. in order to salvage the best possible deal, but they were overruled by superiors who regarded that as prematurely sealing Taiwan’s fate. Fredrick Chien said Foreign Minister Shen Chang-huan told him it would be like putting the lid on your own coffin.

The suddenness of the Carter announcement, without adequate forewarning, was taken by the Taiwan side to be almost as much of an affront as the derecognition itself. American Ambassador Leonard Unger – who learned of the pending break in relations only late in the evening when he received a call from Washington while attending AmCham Taipei’s holiday ball – had to have President Chiang Ching-kuo awakened well past midnight so he could break the news in person.

To help ease the shock of the Carter speech, American officials passed the word that a bill would be sent to Congress to set out the legal basis for the new relationship. But when a U.S. delegation headed by Deputy Assistant Secretary of State Warren Christopher arrived in Taipei on December 27, the Taiwanese were in no mood to be appeased.  Receiving the group at the military section of the Sungshan Airport, Deputy Foreign Minister Chien sternly expressed Taiwan’s resentment at having been shunted aside by an old friend.

As the Christopher motorcade left the airport, a crowd of angry demonstrators pelted it with eggs and mud. Some wielded sticks that cracked windows in several of the vehicles. (Riding in the press bus at the back of the motorcade, this writer was hit by a ham sandwich flung through a broken window).

In meetings the next day, the Taiwan officials asked to see a copy of the draft legislation they had been told about. According to Chien, the Taiwan side was further exasperated when Christopher admitted that nothing had yet been put on paper. The U.S. mission soon returned to Washington with little accomplished.

When an administrative bill, dubbed the Taiwan Enabling Act, finally appeared, Taiwan and its supporters found it woefully insufficient. “The administrative draft was very simple, consisting of just three articles,” Chien recalls. Article 1 allowed the U.S. government to continue to deal with “the people on Taiwan” without defining who those people are. Article 2 called for the establishment of AIT as a non-profit institution to be staffed by officials on leave from the U.S. government, and Article 3 authorized U.S. government agencies to assist AIT in implementing government-assigned programs and projects. “Nothing about security or arms sales, and no definition of Taiwan’s future legal status under U.S. law,” says Chien.

AmCham shared that disappointment. Over the previous several years, AmCham Board members had given considerable thought to the future of U.S.-Taiwan relations and already had a policy document in place. The main author was Corning executive Marinus “Dutch” van Gessel, who had served as a deputy assistant secretary of commerce in the Reagan administration. Having made the strategic decision not to oppose U.S. recognition of China per se, the Board concentrated on lessening the potential impact on U.S. business in Taiwan.

Robert Parker adhered to that principle in his testimony before the Congressional committees. Citing the serious weaknesses in the administration bill, he urged Congress to enact legislation that would declare America’s strong commitment to Taiwan’s defense and assure Taiwan’s continued ability to obtain defensive weapons from the U.S. “Business thrives on certainty, and no element of certainty is more essential than a reasonable assurance of physical security,” he told the committee members.

Parker went on to identify numerous other practical issues, unaddressed in the Taiwan Enabling Act, that could impinge on business operations. He stressed that the final legislation should contain the following assurances:

• Existing treaties and agreements between the U.S. and Taiwan (other than the defense treaty) would remain in effect.
• Future agreements between the U.S. and Taiwan would have the force of law.
• Taiwan would have the capacity to enter into contracts and sue in U.S. courts.
• U.S. courts would recognize and enforce Taiwan’s laws and judgments.

Parker’s full testimony was broadcast live in the U.S. over PBS and rebroadcast in Taiwan over what were then the three local TV networks. “Thanks to the power of television, practically eveyone in Taiwan knew the stand taken by AmCham,” Parker and van Gessel later wrote in the April 2009 issue of Taiwan Business TOPICS. When the final version of the TRA was released, those who had heard the broadcast “recognized that vitually all of AmCham’s principal recommendations had been written into the law.”

Without the TRA, “it would be hard to imagine how all the economic, cultural, and security connections between Taiwan and the United States could have been maintained” over the past four decades, says onetime foreign minister Tien Hung-mao. “But thanks to the TRA, the U.S. has been able to have closer relations with Taiwan than it does with many countries where it enjoys a full diplomatic relationship.”