Shift on Washington-Taipei Ties Might Give a Boost to US Business

Upgrade in relations could bring adverse reaction from China

TAIWAN has ambitious plans for the 21st century, highlighted by a $224 billion National Development Plan aimed at making the Asian island nation a center for transportation, communications, and trade.

That spells opportunity for the foreign firms, including those from the United States, that can supply the airliners and nuclear power plants and communications infrastructure Taiwan wants. Some key decisions, such as whether to hire the Seattle-based Boeing or French-based Airbus to build $3 billion worth of commercial aircraft, are expected in the next few months.

Against that backdrop, the United States business community is hopeful that the US's announcement last week of a slight upgrade in Washington's unofficial relations with Taiwan will boost trade relations.

Officially, the US still holds to its ``one-China policy,'' maintaining formal ties with mainland China and keeping Taiwan at arm's length. But in its first policy change toward Taiwan in 15 years, the US has signaled a willingness to send more high-level officials to Taiwan in an effort to enhance business and economic ties.

Since 1979, when Washington switched its diplomatic recognition from Taiwan to the Communist government in Beijing, only one Cabinet-level US official has visited Taiwan: Trade Representative Carla Hills, who attended a conference in the capital, Taipei, in December 1992.

During that 15-year period, more than 30 Cabinet-level officials from Europe and other countries have visited Taiwan to promote business interests, points out David Laux, president of the Washington-based USA-ROC Economic Council, which promotes US business interests in Taiwan (otherwise known as the Republic of China, or ROC).

The council, in a Sept. 13 communique, welcomed the long-awaited result of the administration's Taiwan policy review. But it reserved judgment as to its potential effect. ``The real impact of the new policy will only become apparent in the way it is implemented,'' the communique said.

Prof. Ralph Clough, a Taiwan expert at the Johns Hopkins School of Advanced International Studies in Washington, says his guess is that the new policy ``isn't going to make a lot of difference'' for US business in Taiwan. But in a broader sense, he says, ``it gives the Taiwanese people a little more face.'' That boosts the US's image in Taiwan, which could redound to US business efforts there, say Taiwan watchers.

In recent months Taiwan has mounted a full-court press to improve its standing with the US as well as in international organizations. This nation of 21 million people, which has served as the base of the Chinese Nationalist government since the civil war in 1949, occupies a paradoxical position on the world stage.

Among most nations, Taiwan remains a virtual diplomatic pariah because of their desire to keep ties with China, which views Taiwan as a rogue province.

BUT as a de facto independent nation, Taiwan is an economic powerhouse. It is the world's 13th-largest trading economy, and the US's sixth-largest trading partner. Its foreign exchange reserve of $90 billion, is second-highest in the world.

The challenge for the US, and other leading nations, is to make the most of economic ties with Taiwan while maintaining enough diplomatic distance so as not to rupture ties with Beijing.

This bifurcated approach has at times led to odd scenarios, such as during the Gulf war, when Taiwan offered $20 million to the anti-Iraq cause and was turned down by some front-line countries. Taiwan also offered $2 million for Rwandan humanitarian aid, and again had to shop around for a taker before finding one.

``We pay the bill, but are not invited to the dinner,'' says Albert Ching-Hsiu Lin, information director of Taiwan's representation in Washington.

In the US policy review, Taiwan did achieve one of its more modest goals: the renaming of its office here. It has been called the Coordination Council for North American Affairs, a title that offers no clue as to its nation of origin. The new name will be the Taipei Economic and Cultural Representative Office.

Taiwanese representatives here argue that the US need not be quite so solicitous of the mainland. Mr. Lin points out, for example, that when President Bush sold F-16 fighter jets to Taiwan, US-China relations survived.

But if the US were to go so far as to grant formal recognition to Taiwan, ``we'd probably lose our embassy in Beijing,'' says Professor Clough. Membership in the United Nations, or any of its member organizations, remains an equally distant dream for Taiwan. China sits permanently on the Security Council, and would veto any attempt by Taiwan to join the world body.

A more feasible scenario is for Taiwan to join the General Agreement on Tariffs and Trade (GATT) and its successor body, the World Trade Organization, a move the US supports.

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