South China Morning Post | 11 March 2023
EU tells Taiwan to forget about a bilateral investment pact even as bloc seeks more chips
by Finbarr Bermingham
The European Union has told Taiwan to forget about a bilateral investment agreement, which Taipei insists is still “top of our agenda”.
The EU has no desire to begin talks over that or any formal deal with the self-governing island, officials said in Brussels this week, even as the bloc tries to bring investment from Taiwan’s world-leading semiconductor giants to its nascent chips sector.
At an event in the European Parliament on Wednesday, Taiwan’s vice-foreign minister Roy Chun Lee said a “bilateral investment agreement [BIA] is top of our agenda, and has been for many years”, hinting that such an agreement could lead to increased semiconductor investment.
The European Parliament has also taken up the cause in recent years, passing multiple non-binding resolutions urging the commission to start talks.
However, these advances have been rejected by EU officials, who reiterated there was no economic rationale for such an agreement.
“Taiwan matters a lot for the EU,” Gunnar Wiegand, the EU’s top official for Asia-Pacific, said in the parliament debate. “It is a like-minded and democratic partner in the Indo-Pacific.”
He said the commission had considered a bilateral pact under previous leadership in 2015, but that it had not progressed because “you negotiate new agreements when you need new agreements”.
“On a bilateral investment agreement, we try to ensure stable conditions for investors. Stable conditions for investors do exist in Taiwan, with a functioning rule of law system … why otherwise would we have such a huge amount of foreign direct investment coming from Europe to Taiwan? So that is the most rational reason why we don’t seek a BIA,” said Wiegand.
“I know that others are asking for a BIA perhaps for more political reasons, as a sign of our engagement, but for the pure reason of supporting our companies, we don’t necessarily need this,” he added.
At a separate event in the city on Thursday, the European Commission’s unit head for trade with China and Taiwan said “times have changed” since the idea of a bilateral pact with Taipei was floated in 2016.
“The issue was linked to the negotiations on investment with China and exploring potentially negotiations with Hong Kong and Taiwan,” said Adeline Hinderer, adding that since then the “investment policy has changed”.
“The economic assessment we have made on the necessity of the agreement, it is currently not on the cards because we don’t see the need to change the situation,” she said, adding that many of the tenets of a BIA could be covered through existing dialogue channels.
While officials publicly cite economic rationale as a reason for not commencing talks, there is also reluctance behind the scenes to rock the boat with Beijing, which has said that any formal pacts with Taipei would breach the EU’s one-China policy.
Nabila Massrali, an EU spokeswoman, said that within its one-China policy, the bloc could “strengthen trade and investment ties with Taiwan, a WTO member since 2002”.
“It is the EU which assesses what falls within the scope of its one-China policy,” Massrali told the Post.
Officials also point to a lack of demand from the business community. Speaking in Brussels on Thursday, a representative from a major business lobby group confirmed that companies are not interested in such a pact.
“Tensions in the Strait of Taiwan are very high at the moment and it’s not in the interest of companies, neither Europe nor in Taiwan, that our governments take measures that would increase these measures,” said Benedikt Wiedenhofer, adviser at Business Europe.
“European business is in favour of working towards a closer economic relationship with Taiwan, but believe that in the current context, such close economic ties are best reached through cooperation on a technical level, rather than a more headline-grabbing agreement,” he added.
However, some disagree with the official stance.
Reinhard Buetikofer, the head of the European Parliament’s delegation to China and an outspoken proponent of closer ties with Taipei, urged the commission to reconsider.
“Taiwan is under fatal threat if that would be the rule, and I cannot just shy away from that fact and say whatever might enrage Beijing cannot be considered. If that would be the rule, then we should recommend that Taipei hands over the island tomorrow morning,” said Buetikofer.
“We should understand that a discussion about trade is not just about trade. It’s also about the role of trade in geopolitical relations and the role of trade to foster our own values and not just our own interests.”
Hosuk Lee-Makiyama, director of the European Centre for International Political Economy, agreed with Buetikofer’s position, noting that China had trade and investment deals of its own with Taiwan.
These cross-strait agreements should remove any fear of reprisals from Beijing, he said.
“Here’s what I think is really, really important to remember: China has a trade agreement with Taiwan. If it wasn’t for this fact, my analysis might be slightly different, but China has crossed its own red lines,” Lee-Makiyama added.
“So we have to ask ourselves: why can China – and New Zealand by the way – sign a trade agreement Taiwan and we can’t?”