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Taiwan’s Prime-Minister: ′Time is not ripe for political issues in cross-Taiwan Strait talks′

During our visit to the Republic of China (Taiwan), Prime-Minister Wu Den-yih kindly offered an exclusive interview opportunity to European Business Review.

By: N. Peter Kramer - Posted: Tuesday, April 13, 2010

Prime-Minister Wu Den-yih with N. Peter Kramer, editor in chief of EBR
Prime-Minister Wu Den-yih with N. Peter Kramer, editor in chief of EBR

We talked with President Ma Ying-jeou government leader about the strong position of his country in the IT industry, the relationship with Mainland China, participation of Taiwan in international organisations and the future of the island in times of global crisis.

It is surprising that Taiwan, as a relatively small country, is already for many years a leading country in the global ITC industry. How did this come about?

Taiwan plays a key role in the global ICT industry and many products of Taiwan are ranked number 1 in the world. A number of different factors made our success. First many years ago Taiwanese students went to universities in the US and took part in the boom of Silicon Valley. When they came back they contributed their knowledge and experience to the development of the ICT industry in Taiwan. Secondly, and we are talking about 30 years ago, the government recognised the opportunities this technology offered for the country and played an important role by facilitating and stimulating this.

Your country successfully extended manufacturing of IT products to mainland China while politically the People’s Republic of China didn’t (and don’t) recognise the existence of Taiwan as an independent state.

That’s a fact indeed. For years R&D activities have been situated in Taiwan and the manufacturing on the Mainland. But before the IT era, more traditional products were already made there, shoe manufactories, petro-chemical industry. You can call it a business model. Not only are labour costs lower on the Mainland, but it is also a huge market for us. For many products Taiwan is ranked number one on the Mainland. In 2008 Taiwan enjoyed a trade surplus of 70 billion US$.

This model is very efficient and benefits both sides of the Taiwan Strait. It is profitable for the Mainland government because Taiwanese manufacturers pay tax and inland companies assemble semi-manufactured Taiwanese component parts for their own export to Japan, Europe and the US, that results in a trade surplus with these countries of more than 200 billion US$ in 2008.

But it is astounding to hear this. On each side of the Taiwan Strait a modern army waits in readiness, with the barrel of the gun pointed to the other. In the meantime there is close cooperation in big business and trade…

It started more than 20 years ago. On the other side of the Strait there was a lack of international dialogue and investment was needed. There was only agriculture. Then, many Taiwanese companies went over, started new businesses and shared their experience and capacities on the Mainland. At the moment more than one million Taiwanese, many of them businessmen and managers, are living on the other side of the Strait. The People’s Republic also became more open in foreign relations and succeeded in accumulating capital; the economy started booming, the production increased in an unprecedented way, for the huge inland market and … for export. Recently Mainland China even took over Germany’s position as the biggest exporter in the world! This development reduced the tension between the two countries because it was and still is a peaceful development that delivers a win-win situation for both sides.

The political tension between the two countries does indeed look diminished by the strong ties in trade and commerce. In a relatively short period Mainland China’s position in the world became stronger than ever and its power will inevitably increase in the future. For me President, Ma’s policy is quite clear. Isn’t he looking for a peaceful cohabitation of the two countries?

The choice is to talk first about economic issues and after that about political issues. There is no tight timetable but we agreed on starting with easier subjects and tackle the more complicated ones later. It takes time to work on political understanding. What is important is that people on both sides are patient and feel empathy for their governments. For political understanding you need mutual trust. On the Mainland many people are saying you talked enough about economic subjects now go to the political ones. But from my perspective the time is not ripe yet. Taiwan needs more time; we have to build a broader consensus. Let’s not jump too hastily to the political issues. Let’s work further on more cooperation in trade, the economy, culture and art; that is very important to develop mutual trust.

What do you expect that the next step might be in a closer cooperation between both sides of the Strait?

As President Ma says, cross-Taiwan Strait ties must not become a burden but an asset. Some people in our country disagree with his policy, but this administration will stick to it because it is not only beneficial for Taiwan and Mainland China but to the entire East Asian region and the whole world beyond.

We expect signing of the Taiwan-China economic cooperation framework agreement (ECFA) before this summer. It will be a major step forward for Taiwan, enabling it to link more closely with other countries in the region and the rest of the world. Taiwan must not be left behind as Asia grows more economically integrated.

It is important to build consensus on the issue within our nation. As I said in my New Years Resolution, there are three major preconditions: national need, public support and legislative oversight. The government has gained considerable public support and reports regularly to the Legislative Yuan on the progress and content of the negotiations.

Are there prospects for Taiwanese participation in international organisations such as ICAO and UNFCCC?

Let me first tell you that Taiwan will take part, for the second time, as an observer in the World Health Assembly in May 2010. We have been formally invited by Margaret Chan, World Health Organisation Director-General, to participate in the 63rd WHA under the name “Chinese Taipei”. Taiwan’s second consecutive year of participation in the WHA is the result of the pragmatic “flexible diplomacy” policy of President Ma. Improving cross-strait relations also played a contributing role.

We are working on gaining admission (in a comparable way to our WHA participation) to the International Civil Aviation Organisation (ICAO) and the United Nations Framework Convention on Climate Change (UNFCCC). We are very happy and grateful for the support of the European Parliament which recently, in a Resolution, strongly supported Taiwan’s efforts to gain admission as an observer to both organisations. The European Parliament said Taiwan's role in ICAO and UNFCCC is key to the interests of both the European Union and the rest of the world.

Back to your country itself and its position of global leader in IT. How do you manage to keep this position? Very often you see market leaders bypassed by others who began by simply following the leader.

To keep a position at the top, it is important to keep your own country in a good shape! Before he was elected as President, Dr. Ma already realised that as an important condition of keeping up our global leadership position, Taiwan urgently needed a revitalisation of its own economy, living standards and culture. In his presidential election campaign he emphasised the importance of the strategy he called i-Taiwan Projects. After his election this strategy became practise.

The aim is to regenerate Taiwan’s economic miracle by an investment of US$ 125 billion in infrastructural projects such as a fast and convenient islandwide transportation network, a free trade zone around Kaohsiung Port International Container Terminal and Kaohsiung International Airport, modernising and extension of Taoyuan International Air City and a series of industrial innovation corridors on the island. This fits hand in hand with our strong environment policy and commitment to green energy. We are committed to work further within the Kyoto and Copenhagen frameworks.

The i-Taiwan projects are expected to create job opportunities for 120.000 people and also to improve living standards to keep the Taiwanese people motivated and involved. In the next period we will invest directly in our people by strengthening language and ITT education and encouraging lifelong learning. High priority is also given to our cultural and creative industries as you can see in ‘Creative Taiwan’, a plan launched by the government in May 2009.

It sounds ambitious Mr. Prime Minister…

Yes, it sounds ambitious, but we have to aim high to keep our global position. Things are progressing well and far from being complacent we continue to work very hard on creating the best future for Taiwan.

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