[Congressional Record Volume 140, Number 148 (Wednesday, November 30, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: November 30, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                THE COSTS OF OVERLOOKING THE OTHER CHINA

 Mr. SIMON. Mr. President, for some time now, United States 
relations with Taiwan have lagged far behind the remarkable political 
and economic progress that country has made. Taiwan has made great 
strides in opening and democratizing its political system; the contrast 
between Taipei, with its free elections and free press, and Beijing 
could not be more striking. And while China is touted for its booming 
economy and seemingly limitless market, fewer people are aware that 
Taiwan is now the 20th largest economy in the world, and that last year 
its 21 million citizens bought more from the United States that the 1 
billion people of China did. Yet from the standpoint of official, 
governmental contracts with the United States, Taiwan in many ways 
remains a non-person, an outcast.
  That is simply wrong. It is wrong from a political standpoint, that a 
country which is working hard to measure up to democratic standards 
should be treated worse than countries which are openly contemptuous of 
those very values. And increasingly, it is wrong from an economic 
standpoint. While we keep our distance from Taiwan, other countries 
have sent more than 30 Cabinet-level officials to Taipei in the past 
3\1/2\ years to promote business interests. Our government's 
unwillingness to accord Taipei similar respect puts American business 
at a serious disadvantage in the increasingly important Taiwanese 
market.
  An article in the October 8 National Journal makes very clear the 
costs of our overlooking the other China. I request that the article, 
``The Other China,'' be printed in the Record.
  The article follows:

               [From the National Journal, Oct. 8, 1994]

                            The Other China

                          (By Dick Kirschten)

       The corporate moguls who accompanied Commerce Secretary 
     Ronald H. Brown to China at the end of August were 
     essentially stage props for a triumphal series of ceremonial 
     contract signings. Still, they were delighted that President 
     Clinton has avoided angering Beijing by declaring that human 
     rights concerns should not pose a barrier to trade.
       When it comes to greasing the skids for deals with Taiwan--
     the ``other China''--however, the U.S. business community 
     wants the White House to be less timid about offending the 
     rulers of mainland China, formally the People's Republic of 
     China (PRC).
       After the results of a long-awaited Clinton Administration 
     review of U.S. policy toward Taiwan--formally the Republic of 
     China (ROC)--were disclosed on Sept. 7, Clinton was roundly 
     criticized as excessively cautious by business lobbyists and 
     congressional boosters of trade with Taiwan.
       As one of the tigers of the so-called East Asian Economic 
     Miracle, Taiwan has built up massive foreign-exchange 
     reserves and has both the desire and capacity to purchase 
     large quantities of advanced technology for both civilian and 
     military purposes.
       After many profitable years as Taipei's dominant business 
     partners, American businesses suddenly find themselves 
     competing for a share of the lucrative Taiwanese market. 
     ``The kind of client-state relationship that we used to have 
     is gone,'' explained David N. Laux, president of the USA-ROC 
     Economic Council, a business group that seeks to foster trade 
     with Taiwan.
       Laux, whose council represents scores of Fortune 500 firms, 
     argues that higher-level contacts by U.S. officials are 
     needed to nurture the commercial ties that have made Taiwan 
     the United States sixth-largest trading partner. ``We are not 
     paying the proper attention to Taiwan that we should for its 
     economic performance,'' he said in an interview.
       Current trade statistics support Laux's argument. Mainland 
     China may be the world's premier emerging market, but for 
     now, Taiwan is by far the larger customer for U.S. goods. 
     American exports to Taiwan last year totaled $16.3 billion, 
     compared with $8.8 billion to mainland China.
       The Taipei government wants more attention, too. ``There is 
     a growing feeling among the people of Taiwan that they don't 
     get adequate respect around the world because they are not 
     recognized as a state by other countries,'' explained Ralph 
     Clough, a professor of Asian studies at the Johns Hopkins 
     School of Advanced International Studies. Taiwan has 
     ``functioned in the world community as a de facto sovereign 
     state for more than 40 years,'' but does not enjoy membership 
     in the United Nations and many other international 
     organizations, Clough noted.
       After its defeat by the Communists in 1949, the nationalist 
     Chinese government fled to Taiwan, a 14,000-square-mile 
     island in the South China Sea, 80 miles from the mainland, 
     where for decades it held that it was the legitimate 
     government of China in exile. In recent years, the Taipei 
     government--while still committed to eventual reunification--
     has come to accept the reality that China is governed by 
     separate political entities.
       As Taiwan's political system has become more democratic, an 
     aggressive opposition party, the Democratic Progressive Party 
     (DPP), has emerged that pledges to declare independence if it 
     wins next year's national elections. Citizens born on the 
     mainland now constitute a shrinking minority, and the 
     island's population increasingly regards itself as Taiwanese 
     rather than Chinese.
       In the face of growing DPP support, the ruling Kuomintang 
     (KMT) party--though mindful of Communist China's threats to 
     go to war to prevent Taiwanese sovereignty--has been forced 
     to adjust its positions to seek greater international 
     recognition. Taiwan is now on track for inclusion in the 
     General Agreement on Tariffs and Trade (GATT) and is seeking 
     ``parallel representation'' in the United Nations, citing 
     Germany and Korea as precedents for dual U.N. representation. 
     Taipei, despite rumblings of displeasure from Beijing, is 
     also courting diplomatic recognition by other sovereign 
     nations.
       But the United States officially recognizes only one China, 
     and since diplomatic relations were shifted from Taipei to 
     Beijing in 1979, that has been the PRC. America's ``one 
     China'' policy, of course, has always been largely a fiction. 
     Unofficially, America has maintained the closest of economic 
     and military ties to Taiwan.
       Washington's contacts with Taipei are restricted to 
     relatively low-level officials. Most communication is carried 
     out through the artifice of an allegedly private entity, the 
     American Institute in Taiwan (AIT), whose offices in both 
     countries are staffed by people on leave of absence from the 
     State Department.


                            delicate balance

       When Lynn B. Pascoe, the director of the AIT's Taipei 
     office, called on Taiwan's foreign affairs minister on Sept. 
     7, he became a minor footnote to history. It was the first 
     time since 1979 that the de facto senior American official in 
     Taiwan was permitted to make such a visit.
       The less-than-earth-shaking diplomatic breakthrough was 
     occasioned by the Administration's Taiwan policy review, 
     approved on Labor Day by the President while he was 
     vacationing on Martha's Vineyard. Indeed, Pascoe's visit to 
     the Foreign Ministry was to inform Taipei of the changes.
       Billed as the first comprehensive review of Taiwan policy 
     since 1979, the new policy strains to strike a balance 
     between Taipei's growing desire for higher-level contacts 
     with U.S. officials and Beijing's demands that America 
     continue the pretense of not officially recognizing Taiwan as 
     an entity separate from the rest of China.
       The policy review keeps America's one China policy 
     officially intact and reiterates that the United States does 
     not back Taiwan's entry into the United Nations. It supports 
     Taiwan's expected admission to the GATT, however, and says 
     that Taipei's voice should be heard in other ``appropriate'' 
     international groups, including the new forum on Asia-Pacific 
     Economic Cooperation.
       Visits to the United States by Taiwan's president and other 
     top leaders are still forbidden, but the new policy 
     specifically permits such officials to ``transit'' America. 
     The latter provision responds to the congressional furor in 
     May when Taiwanese President Lee Teng-hui's airplane made a 
     refueling stop in Hawaii but was denied permission to stay 
     overnight.
       The key adjustment in the policy is to boost the octane of 
     Washington's backing of U.S. corporate interests in Taiwan. 
     The idea, Administration officials say, is not to raise 
     the diplomatic stakes but rather to facilitate solving 
     problems and doing business.
       The policy sets guidelines based on the somewhat murky 
     proposition that some government contacts are official but 
     others are not. No meetings are to occur between senior 
     officials, whose duties are considered to be primarily 
     diplomatic, military or political. But officials ``at a 
     relatively senior level'' whose portfolios involve 
     commercial, cultural or technical issues will be permitted to 
     get together.
       To promote commercial and cultural ties and to foster a 
     ``sub-Cabinet economic dialogue'' with Taipei, high-level 
     U.S. officials from economic and technical agencies will now 
     be permitted to go to Taiwan. Even visits by Cabinet officers 
     involved with trade or technology appear possible, subject to 
     case-by-case approval.
       Senior Taiwanese officials visiting the United States would 
     be barred from setting foot in such ``official'' sanctums as 
     the White House, the Old Executive Office Building, the 
     Pentagon and the State Department. But a meeting at the 
     Commerce Department would be OK.
       At the same time, State Department officials at the 
     undersecretary level who have nonpolitical portfolios can now 
     meet with senior Taiwanese visitors, just so long as they 
     don't do so in their offices at Foggy Bottom.
       Another mini-refinement permits the Taiwanese government 
     representatives who are stationed in Washington to include 
     the word ``Taipei'' in the same of their office, which 
     currently bears the uninformative name of the Coordination 
     Council for North American Affairs. The new title will be 
     Taipei Economic and Cultural Representative Office in the 
     United States.
       A delegation of Taiwanese legislators recently passed 
     through Washington on the way to a rally at the United 
     Nations, whose agenda committee voted on Sept. 22, at the 
     urging of the PRC, not to take up the question of 
     representative for Taiwan. The lawmakers met with State 
     Department officials on Sept. 21 to register their 
     disappointment with the Clinton policy review, which Sen. 
     Parris H. Chang, DPP member, described in an interview as 
     ``retrograde in certain respects.'' Albert Lin, the 
     information director for Taiwan's Washington outpost, said 
     his office's new title was selected from a list of acceptable 
     options but was not his country's first choice.


                         keeping beijing happy?

       Beijing's reaction to the Clinton policy adjustment, 
     although predictably negative, was perfunctory in tone. A 
     government spokesman declared that Washington's action 
     ``interferes with the internal affairs of China'' and 
     ``seriously'' violates the three joint communiques that form 
     the basis of U.S. relations with Communist China. At the same 
     time, however, the Chinese governments repeated an invitation 
     to Clinton to come to Beijing for a summit meeting.
       Taiwan's government offered lukewarm praise for the modest 
     changes but complained that they don't go far enough. Its 
     official response called the policy review ``welcome'' but 
     added that ``these adjustments have not sufficiently 
     addressed the needs arising from the close relationship 
     between the United States and the Republic of China.''
       In an interview, American Enterprise Institute for Public 
     Policy Research director of Asian studies James R. Lilley, a 
     U.S. ambassador to China during the Bush Administration, 
     faulted the Clinton team for making too large a deal out of 
     too small a change. ``There should have been no review in the 
     first place,'' he said, citing the fact that the Bush 
     Administration, with no fanfare, had permitted Carla A. 
     Hills, who then held Cabinet rank as U.S. Trade 
     Representative, to visit Taiwan in December 1992.
       ``You just do these things,'' Lilley argued. ``You don't 
     put it out in the press [as a major policy review] and stick 
     your tongue out at Beijing.'' Citing Commerce Secretary 
     Brown's recent trade mission to China, he said that ``Clinton 
     ought to have Brown do the same thing in Taiwan.''
       That would be fine with Laux, whose business council 
     lobbied the Bush Administration to permit Hills to address 
     its 1992 conference in Taiwan. In December, the council will 
     convene again in Taipei and hopes the highlight will be an 
     appearance by a Clinton Cabinet officer.
       Responding to the White House policy review, Laux pointed 
     out that ``more than 30 Cabinet-level officers from European 
     and other countries have visited Taiwan in the last three-
     and-a-half years to promote the business interests of their 
     companies.'' He added that despite Beijing's misgivings, 
     those countries have been able to maintain diplomatic 
     relations with China. ``The sky has not fallen in on any of 
     those countries,'' he said.
       Acknowledging that during his tenure in government, he was 
     ``part of the process'' that led to America's current China 
     policy, Laux said, ``I'm not blaming anyone in particular, 
     but we have unnecessarily put ourselves in a straitjacket'' 
     in terms of trading with Taiwan.
       For the ailing U.S. defense industry, Taiwan's prodigious 
     appetite for armaments is a tempting target. Michael T. 
     Klare, a military affairs expert at Hampshire College, said 
     that ``the China-Taiwan nexus probably constitutes the most 
     vibrant arms market in the world today.'' Despite improved 
     communications between the two Chinas, he noted, neither has 
     repudiated historical claims to the territory of the other.
       Although the Reagan Administration, in a 1982 communique 
     with Beijing, agreed to reduce arms sales to Taipei, the 1979 
     Taiwan Relations Act authorizes U.S. contractors to sell 
     Taiwan whatever is deemed necessary for its defense. And when 
     Taipei appeared interested in buying French-built Mirage 
     fighters, the Bush Administration responded by approving the 
     1992 sale of 150 U.S.-made F-16 fighters to Taiwan. Delivery 
     of the advanced fighters is still more than a year away.
       Klare, in an interview, noted that military technology 
     acquired from other countries, including U.S. ships, aircraft 
     and electronic equipment, is helping Taiwan establish its own 
     defense manufacturing capacity through ``reverse 
     engineering.''
       Despite the F-16 deal, the American League for Exports and 
     Security Assistance Inc., a defense industry trade 
     association, has estimated that restrictions on arms sales to 
     Taiwan have cost as much as $20 billion in U.S. revenues and 
     affected more than 400,000 American jobs.
       But military technology is not the only commodity that 
     Taipei is in the market for. Having blossomed into the 
     world's 20th-largest economy. Taiwan has entered into a 
     massive six-year infrastructure improvement program to meet 
     the demands of an increasingly affluent population of 21 
     million.
       The U.S. Commerce Department has said that Taiwan's $235 
     billion national development plan creates the ``largest 
     market in the world today for major infrastructure 
     projects,'' including up to $50 billion worth of foreign 
     procurement for energy, pollution control, telecommunications 
     and transportation projects.
       Thus far, said William S. Botwick, president of the 
     American Chamber of Commerce in Taipei, European bidders have 
     won more than $5 billion in contracts under the Taiwan 
     development plan, ``four times more than U.S. firms have.'' 
     Botwick, the General Motors Corp.'s managing director in 
     Taiwan, said that he traveled to Washington twice last year 
     to urge Administration officials to take bolder steps to 
     ``redress past slights'' and restore ``mutual trust'' to the 
     U.S.-Taiwan bilateral relationship.
       After being upstaged by the highly publicized debate over 
     extending preferred trading status to mainland China and its 
     emerging market, Taiwanese interests are clamoring to remind 
     Washington of their own business relationship and their 
     government's success in reducing the U.S. trade deficit with 
     Taiwan, while the deficit with mainland China has been 
     growing.
       The Washington lobbying firm of Cassidy and Associates, and 
     its public relations affiliate, Powell Tate, recently signed 
     a three-year, $4.5 million agreement to represent the Taiwan 
     Research Institute, a private, nonprofit study center with 
     ties to Taiwan's ruling party. With help from its U.S. 
     consultants, the Taipei think tank joined the chorus 
     condemning what it said was the timidity of the Clinton 
     policy review.
       A Powell Tate press release said that ``if the United 
     States sincerely wishes to recognize the remarkable progress 
     of democracy in Taiwan, it should treat Taiwan officials with 
     the respect and consideration it affords representatives of 
     other democratic nations.''
       Taiwan's allies on Capitol Hill also weighted in. Sen. Paul 
     Simon, D-Ill., said that Clinton passed by a golden 
     opportunity to significantly revise long-outdated policies 
     that today ``seem like official pettiness.'' Simon lauded the 
     development of free elections, multiple political parties and 
     a free press in Taiwan and expressed dismay that ``we 
     continue to cuddle up to the mainland government, whose 
     dictatorship permits none of those.'' Sen Frank H. Murkowski. 
     R-Alaska, lamented that ``bolder and more-substantive steps'' 
     were not taken. Sen. Hank Brown, R-Colo., alluding to U.S. 
     willingness to engage North Korea directly, branded the 
     policy review a ``slap in the face to Taiwan.''
       Johns Hopkins Asian expert Clough, however, gave the 
     Administration credit for maintaining the delicate balancing 
     act that enables the United States to pursue relations with 
     both Chinas. ``At best, it's a marginal change in the 
     management of our policy,'' he said of the Clinton review, 
     ``It's fascinating, the amount of ambiguity that's 
     required,'' he added.

                          ____________________