Taiwan Should Keep Its Eyes on the Prize

Last month, Central Bank of the Republic of China (CBC) Governor Yang Chin-long spoke to lawmakers regarding the U.S. possibly labeling Taiwan a currency manipulator, one of the criteria for which is a trade surplus with the U.S. of more than US$20 billion. Yang noted that the U.S. market has become increasingly reliant on Taiwan for semiconductors and ICT products during the COVID-19 pandemic, and if it insisted on reducing its trade deficit with Taiwan, “we just won’t sell [them] our products.”

The comment was intended as a joke, but it also raises questions about whether such an attitude is helpful or harmful to Taiwan, especially in light of the increasingly warm relationship it has developed with the U.S.

Yang’s assertion also follows rumors in late January that the Ministry of Economic Affairs (MOEA) requested a deal involving supplying automotive semiconductors to Germany in exchange for vaccines, after the MOEA’s German counterpart approached it directly for help with easing a shortfall in chips.

While Minister Wang Mei-hua did discuss a vaccine deal with Germany’s representative in Taipei, she categorically denied any kind of quid pro quo, saying “Taiwan is a free and democratic country. It is beyond the government’s power to interfere with private commercial contracts.”

“Taiwan can help” is not just a catchy slogan; it has gained purchase among an increasing number of like-minded partners across the world. Originally used to refer Taiwan’s COVID-19 assistance to countries that were struggling to contain the virus, it has now come to include the technological and manufacturing advantages of Taiwan’s industries. Their high-value production capacity has greatly benefited countries where much of the economy and educational system have had to go remote.

However, flippant comments like those made by Yang and even rumors of using Taiwan’s semiconductor and ICT strengths as a bargaining chip are not only bad optics, but could also easily backfire. Taiwan over the past year has rightfully received an unprecedented amount of international goodwill. Injecting an overtly transactional element to new or improving relationships with other countries may deter them from building on or deepening those ties once the worst of the pandemic is over. It would therefore be unwise for Taiwan to mix or imply that it can mix political influence with legitimate business transactions.

Taiwan finds itself in one of the most outstanding periods in its short history as a liberal democracy. It is making steady progress toward improving and expanding its international profile. Its leaders cannot afford to become complacent at this time, but should keep their focus on the main goals of concluding a free trade agreement (FTA) with the U.S. or becoming a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Considering the political obstacles at play, it’s imperative that Taiwan stay on the correct path and do everything it can to show it is a responsible member of the international trading community. Treating interactions with friendly countries as a trade-off risks tarnishing the good reputation that it has worked so hard to develop.

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