Text: Testimony by East Asian and Pacific Bureau Deputy Assistant Secretary Susan L. Shirk before the House International Relations Committee May 20, 1998
Mr. Chairman, I am pleased to report to you today, almost twenty years after the Taiwan Relations Act became law, that our unofficial relations with the people on Taiwan are more robust and stronger than ever. Taiwan, with only 21 million people, is the world's 14th largest trading economy and our seventh-largest trading partner. In 1979 our annual two-way trade was less than $10 billion; today it exceeds $40 billion. Today the United States is a market for one-quarter of all Taiwan exports, and Taiwan is the seventh-largest market for U.S. exports. Most notably, Taiwan is our fifth-largest foreign agricultural market and a major market for U.S. automobiles.
Mr. Chairman, Taiwan's economic growth rate last year was again impressive -- above 6% -- and per capita income for the people on Taiwan is now more than $12,000. And in the midst of the very troubling Asian financial crisis, Taiwan's increasingly sophisticated and well-regulated economy, with its sound financial underpinnings, is among the least affected. Taiwan is an incredible economic success story -- an "Asian economic dragon."
And U.S. companies have shared in this success. U.S. firms have invested more than $3 billion in Taiwan. The Taiwan authorities are pursuing an ambitious, multi-billion dollar development plan which includes major infrastructure projects in transportation and telecommunications, for which U.S. firms are providing professional services and equipment.
Taiwan is also a model of peaceful democratic change. Under martial law until 1987, Taiwan now freely elects its leaders -- mayors, magistrates, legislators, National Assembly members -- in regular and dynamic political campaigns. We were impressed by Taiwan's first popular election for President and Vice President in 1996 -- the culmination of Taiwan's political evolution from authoritarian, one-party control to a vibrant democracy. The ruling Nationalist (KMT) Party has faced increasingly stiff challenges from two major opposition parties -- indeed the candidates of the opposition Democratic Progressive Party, only twelve years old, outpolled KMT candidates in local elections last November.
On the human rights front, Taiwan also stands out. Its people are free to voice their opinions; its print media are outspoken and aggressive; its airwaves are more open than ever in the past. Dissidents of yesterday -- once in jail or in exile for their political beliefs -- are today leaders of the opposition and full participants in the political process.
Our links are also strong in areas other than economic relations. Indeed, a sense of mutual respect and friendship permeates our relationship. The American Institute in Taiwan (AIT), the organization that carries out our unofficial relationship, is one of our highest-volume visa-issuing centers in the world; it grants more than 300,000 visitor visas each year, making Taiwan our second-largest source of non-immigrant visas. More than 30,000 students from Taiwan study in U.S. colleges and universities. Many of its senior leaders have their Ph.D. degrees from the United States, including both President Lee and Vice President Lien. Not only have American political and economic values gained adherents, but aspects of American culture are popular on Taiwan as elsewhere in Asia: blue jeans, fast-food franchises, American movies and television programs.
The Taiwan Policy Review Mr. Chairman, since 1979, we have broadened and deepened our ties as Taiwan has evolved both economically and politically. In recognition of these changes and with a view to better advancing our national interests, this Administration four years ago conducted an extensive interagency review of the way we manage our Taiwan policy, the first such review since 1979. Developments over the ensuing years in themselves have validated the decisions resulting from that review, which has provided a firm basis for expanding and improving our unofficial relations.
As one of the outcomes of the review, we agreed to a new name for the Taiwan representative office in the U.S. -- now the Taipei Economic and Cultural Representative Office (TECRO). Let me take a moment to commend the TECRO Representatives and staff -- as well as the leadership and staff of AIT -- for their commitment and dedication in making our unofficial relationship work so effectively.
In the Policy Review, the Administration said that we would be prepared to send high-level U.S. officials from economic and technical agencies to Taiwan when appropriate. And I am pleased to report that cabinet-level officials -- then Secretary of Transportation Pe(a in 1994 and then-Small Business Administrator Phil Lader in 1996 -- were both able to visit Taipei to attend meetings of the U.S.-Taiwan Business Council; I should mention that we also had cabinet-level attendance when this group met in the U.S. in 1995 and 1997. A significant number of U.S. officials of various ranks in economic and technical fields regularly travel to Taiwan each year and an impressive number of Taiwan officials at all levels come to the U.S. For example, Minister of Finance Paul Chiu and GIO Director-General C.J. Chen are visiting Washington this week. Koo Chen-fu, Chairman of the Straits Exchange Foundation, is also here this week.
Reflecting the tremendous growth of U.S.-Taiwan economic ties, the 1994 Policy Review also paved the way for closer interactions when we agreed to hold both Trade and Investment Framework Agreement (TIFA) talks and Subcabinet-Level Economic Dialogue (SLED) meetings with Taiwan. Under AIT auspices, USTR has led the TIFA talks and then-Under Secretary and now Deputy Treasury Secretary Larry Summers has been the lead for the SLED process. We look forward to holding both TIFA and SLED sessions later this summer.
As a result of the 1994 Policy Review, the Administration announced that we would support Taiwan's participation in appropriate international organizations where statehood was not a requirement for membership and where Taiwan had contributions to make. At the time, Taiwan was already a member of both the Asian Development Bank and the Asia Pacific Economic Cooperation (APEC) forum. I am pleased, Mr. Chairman, to tell you that in February the United States and Taiwan completed a bilateral market access agreement, an important step which moves Taiwan closer to membership in the World Trade Organization. We appreciate the hard work by both sides over seven years and seventeen rounds of complex negotiations; we believe the result is a strong agreement that benefits our manufacturing, agricultural, and service sectors as well as the consumers on Taiwan.
Our list of accomplishments continues to grow. We were pleased, Mr. Chairman, that AIT initialed last year and signed earlier this spring a bilateral "Open Skies" agreement which is helping to expand opportunities for U.S. airlines in Taiwan and onward into Asia. We have begun technical-level talks and exchanges of information which may lead to a Bilateral Investment Agreement between AIT and TECRO. I can assure you, Mr. Chairman, that we will continue to seek opportunities to make our bilateral economic and cultural relations even stronger.
Security Issues Mr. Chairman, let me also assure you that this Administration remains firmly committed to fulfilling the security and arms transfer provisions of the Taiwan Relations Act. Our arms transfers are in accordance with the TRA, consistent with the 1982 U.S.-PRC joint communiqu( and serve one of our key objectives in the region: to maintain and enhance peace and stability in the Taiwan Strait.
Our record on arms transfers speaks for itself -- we have made it possible for Taiwan to acquire the wherewithal for a robust self-defense capability. These transfers, undertaken without upsetting the cross-Strait military balance, have promoted stability in cross-Strait relations and given Taiwan the confidence to liberalize its policies and develop flourishing ties with the mainland. Significant arms transfers have included F-16s, Knox class frigates, helicopters, tanks, and a variety of air-to-air, surface-to-air, and anti-ship defensive missiles.
Mr. Chairman, I am aware of the interest of some your colleagues in the theater missile defense program, and, in particular, TMD for Taiwan. Through commercial channels, we have made available to Taiwan the Modified Air Defense System (MADS), which is similar to the Patriot and has limited anti-missile capabilities. We have also briefed Taiwan, as we have many other friends, on the concept of missile defense. As you know, however, U.S. development of TMD is a long-term and complex project that is still in the early development phase. Taiwan has heretofore has not expressed an interest in TMD. In any possible future decisions on this issue, we would of course take into account the security situation in the Strait, including the PRC's actions and deployments.
In 1996 we demonstrated our commitment to maintaining peace and stability in the Taiwan Strait by deploying two carrier battle groups to the region in response to provocative PRC missile exercises. We believe that the preparedness of our forward deployed military forces in the Pacific enhances stability and dramatically reduces the prospect of a crisis occurring or escalating.
Indeed, we believe that since 1979 the continuity and stability of our policies have contributed to maintaining overall peace and security in the Strait. Our policies have created a benign, predictable environment for the two sides to move their relationship in a positive and productive direction, and in general they have made impressive progress in doing so. We have been pleased to see the significant growth and development of exchanges and ties between the two sides during the past decade. In 1997 trade with the PRC accounted for over ten percent of Taiwan's total trade with the rest of the world -- up from 2.5 percent ten years ago -- making the PRC Taiwan's third-largest trading partner last year after the United States and Japan. Taiwan investment in the PRC exceeds $30 billion, and Taiwan residents have made more than ten million visits to the mainland since cross-Strait travel opened a decade ago.
This positive trend is important for Taiwan's security which really depends upon more than military factors. In fact, Taiwan's security over the longer term will be contingent upon further steps the two sides of the Strait can take to develop peaceful and productive relations. For this reason, the Administration has encouraged Taipei and Beijing to reopen dialogue. We have delivered the same message to both sides, and we are pleased to see the recent exchanges and signs that Taiwan's representative, C.F. Koo, may visit the PRC and meet with his counterpart, Wang Daohan, before the end of the year.
Mr. Chairman, the consistent position of this Administration, as of previous Administrations, is that cross-Strait issues are matters to be resolved by the people on the two sides of the Taiwan Strait themselves. We have not pressured either side to negotiate, nor have we offered to mediate between the two sides. Each side can best judge its own interests, and we do not believe greater involvement on our part would be helpful or serve our interests. In fact, such involvement could well be counter-productive.
Let me add, however, that the United States continues to have an abiding interest that the resolution of cross-Strait differences be peaceful. We have no plans to revise the TRA or to alter our long-standing policy on arms sales. In this regard, we continue to believe that our 1982 communiqu( with the PRC, especially Beijing's commitment to a fundamental peaceful policy toward the Taiwan issue, has complemented the arms sales provisions of the TRA in helping to ensure peace and stability in the Taiwan Strait.
Improvement of U.S.-PRC Relations Not at Taiwan's Expense
Continuing our firm policy on arms sales to Taiwan is a key element within our broad approach toward the PRC and Taiwan. Another key element is engagement of the PRC on the wide range of issues that have divided us -- from human rights to proliferation -- in order to convince Beijing to adopt responsible policies that we believe are in its interest as well as ours. We are proud that we have been able to strengthen our relations with the PRC, and to see that Beijing's policies in many important areas have been moving increasingly in a direction that is in our interest, while at the same time in no way sacrificing our robust relations with Taiwan.
Let me emphasize that this Administration does not consider the three relationships -- U.S.-PRC, U.S.-Taiwan, and Taiwan-PRC -- as a zero-sum game. Improvements in U.S.-PRC relations do not result in damage to U.S.-Taiwan or cross-Strait relations. Both U.S.-PRC and cross-Strait relations, for example, took serious downturns in 1995-96, and both are improving now. Though unofficial, U.S.-Taiwan relations are as strong as ever, and let me assure you that improvements in U.S.-PRC relations will not come at the expense of Taiwan. We will not sacrifice Taiwan's interests as we prepare for President Clinton's June visit to China. There will be no fourth communiqu( on Taiwan arms sales or Taiwan issues at the summit.
We understand the natural feelings of anxiety that Taiwan is experiencing during this sensitive period. But these anxieties do not reflect reality, and we believe the authorities in Taipei understand we are doing nothing to Taiwan's detriment. Taiwan experienced similar anxieties before the Summit last October, and, of course, nothing happened at the Summit to damage Taiwan's interests -- as we had frequently assured Taiwan would be the case. As we prepared for the October Summit, we kept the Taiwan authorities fully informed; after the Summit, AIT Chairman Richard Bush visited Taipei to brief the leaders on the results. We are maintaining, via AIT and TECRO, good communication about the upcoming Summit and will once again ensure that Taiwan authorities are fully briefed on the results.
Mr. Chairman, my comments so far have focused on the excellent state of our unofficial relations with Taiwan. I have not addressed a direct role for the United States in resolving Taiwan's future. Some will find it disappointing when I conclude without doing so. However, as stated earlier, this Administration, like the previous five Republican and Democratic Administrations, believes strongly that the future of Taiwan is a matter for the Chinese people on both sides of the Taiwan Strait to resolve themselves. No Administration has taken a position on how or when they should do so. What we have said, and what I will repeat today is our consistent statement: the United States has an abiding interest and concern that any resolution be peaceful. We will continue to pursue a "one China" policy. Consistent with this policy, we do not support "two Chinas" or "one China, one Taiwan," Taiwan independence, or Taiwan's membership in the UN.
A critical role that we will continue to play is to maintain regional stability through our forward deployment of military forces. Within this stable environment, we hope the two sides can return to a regular and fruitful cross-Strait dialogue which has, eventually, the potential to address these larger issues. We believe that our engagement with the PRC adds to this regional stability -- and is thus of direct benefit to the people of Taiwan. And we believe that active cross-Strait communication also reduces a significant source of regional tensions -- and is thus of benefit to the U.S.
We reiterated our encouragement during the Clinton-Jiang Summit last October for the two sides to resume cross-Strait dialogue and welcomed last month's visit to Beijing of a Taiwan delegation led by Deputy Secretary-General Jan Jyh-horng of Taiwan's Strait Exchange Foundation. This is the first step toward ending the three-year suspension of formal contacts. The two sides have much to talk about and to resolve, and we welcome their efforts.
Mr. Chairman, I should add that, although we expect the two sides to resolve the differences between them, the issue of Taiwan's future is of great interest and concern to the United States and its people. I think this explains the broad range of advice provided to both sides by American Congressional leaders, academics, and former officials. Americans want to be helpful; we would like to see this area of potential difficulty resolved. I think this is natural, but let me affirm that the advice being offered by, in many cases, very distinguished Americans and former Administration officials reflects their personal opinions. They do not represent or speak for the Administration.
Our policy remains firm. It is up to the two sides to resolve their differences directly. We should stay out of the middle. But this does not mean that we will be inactive. We plan to work hard on maintaining -- and even improving -- the strong web of unofficial relations we have with the people on Taiwan. We will work equally hard on improving our relations with Beijing. We will continue to encourage Taipei and Beijing to return to an active and direct dialogue. All three sides of this triangle reinforce each other. The result will be beneficial to all of us as well as to the Asia-Pacific region.