Sydney Morning Herald, Australia
Australia abandoned plans for Taiwanese free trade agreement after warning from China
By Fergus Hunter
24 October 2018
Australia walked away from plans for a free trade agreement with Taiwan after China warned any deal would hurt relations between Beijing and Canberra.
Taiwan was on a list of economies the Coalition government was considering for bilateral trade deals but, in a series of meetings over 2017 and 2018, Chinese Foreign Minister Wang Yi conveyed directly to former foreign minister Julie Bishop that China was opposed to Australia boosting formal ties with the government of President Tsai Ing-wen.
"The Chinese government made it clear to me that circumstances had changed between Taiwan and mainland China and that China would not look favourably on Australia seeking to pursue a free trade agreement with Taiwan, as New Zealand had done some years ago," Ms Bishop told Fairfax Media.
Taiwan, a self-governed democracy of 23 million people, operates under de facto independence from China. The Chinese Communist Party – viewing the island as a renegade province that needs to be unified with the mainland – actively seeks to restrict Taiwan’s international engagement and influence its domestic politics.
Relations between Beijing and Taipei have deteriorated since the 2016 election of Dr Tsai, leader of the traditionally pro-independence Democratic Progressive Party, who has angered the CCP by refusing to endorse the "1992 consensus" – an agreement between the two sides that affirmed the principle of one China but allowed for different interpretations.
Since 2016, China has peeled away five of Taiwan’s remaining diplomatic allies, excluded it from international forums and forced global companies to classify it as part of China. Both sides have escalated military exercises to demonstrate their capability in any Taiwan Strait conflict.
Tensions have also been exacerbated by the election of President Donald Trump, who has adopted a hardline approach towards China and overseen a strengthening of the United States’ relationship with Taiwan.
The strain in cross-strait relations follows a warm stretch between 2008 and 2016 under the more Beijing-friendly Kuomintang administration of president Ma Ying-Jeou, who boosted Taiwan’s ties with China.
"During my time as foreign minister, I observed an increasing assertiveness on the part of China to encourage nations to disengage from their relationship with Taiwan," said Ms Bishop, who was foreign minister between 2013 and 2018.
"This included in the Pacific and where some nations still formally recognise Taiwan and in some of the major multilateral forums where Taiwan had observer status to participate in such meetings."
A senior Taiwanese official told Fairfax Media there was strong political will in Taipei for a trade agreement with Canberra "but we understand the difficult political situation Australia faces" and emphasised there was already a healthy trading relationship.
"We will be patient," the official said.
In a statement, Trade Minister Simon Birmingham said: "Taiwan is an important economic partner and Australia’s eighth largest goods export market, however the government has no immediate plans to begin negotiations on a free trade agreement."
Richard McGregor, a senior fellow at the Lowy Institute, said the retreat on an Australia-Taiwan agreement was "collateral damage" from the change in cross-strait relations since the 2016 election.
"Beijing’s response has been to squeeze and isolate Taiwan at every turn, and stop the island’s government from building closer ties around the world. Hence the pressure on Australia to back away from any FTA," Mr McGregor said.
Under prime ministers Tony Abbott and Malcolm Turnbull, the Coalition pursued free trade agreements with a number of economies in Asia, striking deals with South Korea, Japan and China over 2014 and 2015. The Morrison government is hoping to finalise deals with Indonesia and Hong Kong soon.
Other countries, including New Zealand and Singapore, have previously inked agreements with Taiwan after securing separate deals with China.
The Taiwanese economy is heavily reliant on China and Dr Tsai’s government has sought to reduce this exposure through strengthened ties with Asia-Pacific countries, including Australia.