Taiwan’s President: Go South, Young People!

In a previous blog posting I discussed PRC President Xi Jinping’s major policy for not only rejuvenating his country’s increasingly sluggish domestic economy but also to bring about a regional burst of infrastructure development: the “One Belt, One Road” initiative along the old Silk Road.

Taiwan’s new President Tsai Ing-wen faces corresponding domestic challenges to stimulate Taiwan’s economy, redirect some trade and investment away from overdependence on the Chinese mainland, create new job opportunities for a younger generation, and engage Taiwan in the increasing interconnectedness of the Asian region’s economies.  At the same time,  Taiwan seeks a vehicle to expand its  international space through a bona fide intent to push forward with cooperation projects and to engage in talks and dialogue.

There an old American saying “don’t put all of your eggs in one basket.”  It seems that both the United States and Taiwan have been guilty to a degree in the past of putting too many eggs in the mainland Chinese basket and not leaving enough to be distributed elsewhere.  Look at the merchandise on your local  Walmart store shelves and the overdependency on trade with China will be immediately obvious.  Taiwan’s New Southbound Policy is a means of correcting this economic dependence on just one market, no matter how attractive that market may seem to be.  At the same time, Taipei has been clear that the New Southbound Policy is a pro-active, engagement policy  and not part of some containment strategy directed at any particular nation.  The goal is to broaden Taiwan’s economic, trade and people-to-people ties in the region, not to stymie those of another party.

Almost every American child has heard the following words in a history classroom taken from nineteenth century newspaper writer Horace Greeley’s editorial in the New York Tribune published on July 13, 1865:  “Go West, young man and grow up with the country!”  With the epic American Civil War having ended only three months before, the American West, under the slogan of “Manifest Destiny,” was then considered a place of golden opportunity where a young person of talent and ambition could achieve great things.  President Tsai has identified Taiwan’s southern neighbors in ASEAN, South Asia, Australia, and New Zealand as providing similar, new opportunities for both seasoned Taiwanese entrepreneurs and for a younger generation looking to a future career.  She seems to be saying “Go South” to Taiwan’s younger generation.

With the Trans-Pacific Partnership (TPP) currently rejected by the two chief candidates for the American presidency in the upcoming election, and with the U.S. Congress highly unlikely to act upon this key trade measure in the foreseeable future, alternative venues for expansion of trade in the world’s most economically robust region, Asia, need to be highlighted.  In an August meeting, convened to launch her “New Southbound Policy,” President Tsai declared the key aims of this economic and trade strategy:  “to identify a new direction and a new driving force for a new stage of economic development.”  (http://www.roc-taiwan.org/bn_en/post/644.html)  As a multi-faceted policy with a co-equal focus on cultural and other people-to-people exchanges as well as trade, President Tsai’s new initiative goes far beyond the limited investment focus of the “Go South” policy of previous Taiwanese administrations.

Guidelines provided by the Office of the President immediately after the meeting stated that the long-term goals of the policy are:  “to strengthen Taiwan’s economic, technological and cultural links with Southeast Asia, South Asia, Australia and New Zealand so as to promote the sharing of resources, talent and markets… The guidelines for the New Southbound Policy also state that the Office of the President and all related government agencies should develop their own protocols, comprehensive programs and flagship projects for the initiative. They also note that the central government should build mechanisms for negotiating and communicating with the Legislative Yuan and local governments in order to ensure the integration and effective use of associated resources.”  (http://taiwantoday.tw/ct.asp?xItem=247068&ctNode=2175)   In naming former Foreign Minister James Huang ((黃志芳)) to head up a New Southbound Policy task force within the presidential office, President Tsai underscored the critical importance which is attached to this policy.  (http://focustaiwan.tw/news/aipl/201606080032.aspx)

Presidential Office spokesman, Alex Huang, said that “The short- and medium-term goals of the New Southbound Policy are to facilitate increased exchanges with the targeted nations on investment, tourism, culture and human resources, encourage Taiwan companies to explore opportunities in these countries in line with the Government’s new economic development model, develop the local talent pool to facilitate the growth in interaction with these regions, and to expand bilateral and multilateral dialogue to enhance economic co-operation and to tackle disputes.  The guidelines also list 10 implementation standards, including actively participating in international co-operation, collaborating with the private sector on boosting Taiwan’s exchanges with the regions, revising related laws and regulations, and drawing up risk management procedures.  (http://www.asiatodayinternational.com/content/taiwan-details-new-southbound-policy-%E2%80%93-targetting-south-asia-southeast-asia-oceania)
In seeking to foster links with other economies in the Asia-Pacific, Taiwan has already achieved some important milestones.  It signed a free trade pact — ANZTEC – with New Zealand in July 2013, the first such agreement concluded with a developed economy.  (http://www.taiwantoday.tw/ct.asp?xItem=207130&ctNode=445)  This was quickly followed, in November 2013, by a similar agreement with Singapore  –ASTEP – the first of its kind with a Southeast Asian country.(http://www.wsj.com/articles/SB10001424052702303309504579182900090244112)   The New Southbound Policy will seek to build on these first trade agreements to forge a  regional-wide sense of community.  The initiative aims to create a comprehensive mechanism for negotiations and dialogue to effectively resolve differences, and to build trust and consensus.  Taiwan, through the talent and energy of its hard-working people, has already earned a place in global supply chains and a well-deserved reputation as one of the Asian economic tigers.
 Tsai’s new economic  policy also calls for the creation of a New Model for Economic Development.  “Structural transformation and sustainable development are to be achieved through innovation, employment and distribution, core values of New Model for Economic Development for Taiwan,” Ministry of Economic  Affairs (MOEA) Minister Lee Chih-kung said. “They are necessary if we are to engineer a rebound in domestic demand and export growth.”  The four measures adopted by MOEA are encouraging industrial innovation, promoting sustainable energy, expanding trade and exports, and fostering a solid investment environment in Taiwan. (http://taiwantoday.tw/ct.asp?xItem=245089&ctNode=2182)
The new policy is a people-focused strategy aimed at knitting Taiwan seamlessly into the economic and social fabric of these Southeast Asian, South Asian and Pacific societies through tourism and educational and cultural exchanges.  People-to-people contacts, therefore, are key factors in promoting the New Southbound Policy and making new linkages.  Taiwan recently added, for example, Cambodia, Laos, and Myanmar to the list of Southeast Asian nations included in streamlined visa procedures.  (http://www.vir.com.vn/taiwan-extends-streamlined-visa-processing-for-tourists.html)
India, especially, with a population of 1.25 billion and a GDP growth rate last year of 7.6 percent represents an exciting new frontier for Taiwan investors looking for an alternative to overreliance  on the mainland Chinese market. (http://www.forbes.com/sites/ralphjennings/2016/09/08/sidelining-china-taiwan-turns-to-investment-in-tough-but-eager-india-2/#1f94a1355599)

Taiwan also invested $400 million in Vietnam in the first quarter of this year, making it the third-largest source of foreign investment in that nation, according to statistics provided by the Vietnamese Ministry of Planning and Investment. (http://www.taipeitimes.com/News/biz/archives/2016/03/29/2003642657 )  As a result of all of this economic activity with this Southeast Asian neighbor, Vietnamese migrant brides to Taiwan have been naturally increasing among the large and growing immigrant community in Taiwan of over half a million people.   Eighty-five percent of the foreign brides in Taiwan who come from Southeast Asian countries are, in fact, from Vietnam.  The Vietnamese have, as a result, become the largest non-Chinese immigrant group in Taiwan. (https://en.wikipedia.org/wiki/Vietnamese_migrant_brides_in_Taiwan)


The Taiwanese perceive the New Southbound Policy as being a natural complement to their American partner’s “rebalance” to Asia.  Former Assistant Secretary of State for East Asian and Pacific Affairs, Kurt Campbell, in his newly released book, “The Pivot: The Future of American Statecraft in Asia,” sees the linkage with Taiwan in this way:  “The American partnership with Taiwan advances U.S. economic and security interests, is rooted in shared values, and will have a big impact on the way American partners and allies view the United States across Asia.”   In other words, an enhanced economic and people-to-people role for Taiwan in ASEAN, in India and other South Asian countries, and with Australia and New Zealand, is a clear win-win for both Taipei and Washington.  The New Southbound Policy promises, therefore, to become an essential element in Taiwan’s close, ongoing partnership with the United States in Asia.  It is especially complimentary to President Obama’s U.S.-ASEAN Connect framework, announced at the U.S.-ASEAN Leaders’ Summit in Sunnylands last February, designed to “better coordinate U.S. economic engagement in the region and connect entrepreneurs, investors, and businesses.”  (http://thediplomat.com/2016/02/obama-unveils-new-asean-economic-initiative-at-sunnylands-summit/)   With a dead king in Thailand and a new Philippine president looking for new friends in Beijing and Moscow, America  needs loyal friends out in the Asia-Pacific right now.  Taiwan is certainly at the top of the list.

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