Tue, Aug 01, 2023 page8

• Boosting Taiwan-UK economic ties

  • By Huynh Tam Sang
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  Despite the absence of formal diplomatic relations, Taiwan and the UK have maintained long-standing and substantial trade ties, with London ranking as Taiwan’s 21st-largest trading partner globally and third-largest trading partner in Europe. Taiwan is an “important trading partner” of the UK, the British Department for Business and Trade said, with bilateral trade reaching ￡8.6 billion (US$11.1 billion) last year.

  Since 1991, both sides have participated in ministerial-level economic and trade talks to exchange views on common interests and address shared concerns. Annual trade talks are also utilized to foster mutual understanding and explore potential areas for collaboration in other sectors. At the last trade talks in Taipei in November last year, both sides pledged to encourage more British firms to invest in Taiwan, as well as to expand cooperation in fintech, food and pharmaceuticals. This year’s trade talks are to take place in London, and will center on common interests in reinforcing trade and investment ties.

  Taiwan and the UK are working on an Enhanced Trade Partnership (ETP), with investment, digital trade, net-zero emissions and energy at the locus. The ETP is a strategic initiative that builds on the yearly trade talks’ underpinnings, and its goals include addressing trade impediments more effectively, highlighting British expertise and offering commercial potential for both markets. This economic framework could then function as an embodiment to bilateral commitment to “free and fair trade” anchored by a rules-based global trading system.

  For Taiwan and the UK, concrete steps toward making the ETP a reality demonstrates the shared vision of enhancing economic ties. In terms of investment, the two partners aim to jointly create an investment environment that promotes fair competition. Both sides also pledged to boost energy cooperation to address climate change and promote decarbonization, as well as to collaborate closely in digital trade to jointly improve data flow and security. The upcoming meetings are likely to pave the way for measures to boost Taiwan’s and Britain’s global stature, particularly in the economic realm.

  This important milestone in Taiwan-UK trade relations comes at a time when thousands of British companies are “rethinking their supply chains” in response to mounting challenges and geoeconomic fragmentation exacerbated by the West’s ongoing divorce from China and the increasingly formidable downturn caused by Russia’s invasion of Ukraine. As a result, expanding economic frontiers has emerged as one of London’s top priorities.

  In the post-Brexit era, Britain — under the rubric of “Global Britain” — has actively sought to broaden its bilateral economic and trade relations with partners through various channels with a view to establishing long-term trade partnerships. In the Indo-Pacific region, the UK has begun discussions on deepening trade partnerships with India, Thailand and other countries. Taiwan is the third country in the area where the UK has made efforts to promote the ETP, reflecting Taipei’s growing prominence in British calculations. While the issue of economic reliance on China has featured heavily in Britain, Taiwan has come to light as a more stable trade partner whose economic resilience could benefit Britain.

  As global political and economic gravity has shifted east, the UK has steadily pivoted to the Indo-Pacific region. Although British Prime Minister Rishi Sunak has been circumspect on US-China strategic competition and remains unlikely to drag Britain into the cross-Strait crisis, his administration has been more vocal about London’s displeasure with Beijing’s growing aggression.

  Britain’s Integrated Review Refresh 2023, released in March, reasserts that the UK supports “stability in the Taiwan Strait, where we oppose any unilateral change in the status quo,” while stating that China’s “aggressive stance” in the Taiwan Strait is “threatening,” because it could “create a world defined by danger, disorder and division.” In May, Sunak demonstrated his strong support for democracy and freedom by underlining the UK’s resolve to keep the Indo-Pacific region “free and open,” while sending a warning to Beijing against any attempts to seize Taiwan through “force or coercion.”

  While Britain is taking Taiwan’s security seriously, its engagement with the thriving democracy represents a watershed moment in making economic progress a groundbreaking arena in UK-Taiwan relations. The ETP and bilateral economic development between London and Taipei might help leverage Taiwan’s economic prowess while highlighting the importance of supporting Taiwan, which could be a strategic manner of amplifying Taiwan’s strategic value in the global arena.

  There are vast opportunities for Taiwan and the UK to strengthen economic ties. Exploring strategies to further offshore wind collaboration is one example, given that Taipei and London have invested efforts to investigate each other’s strengths and study untapped fields for collaboration. Taiwan is Britain’s largest offshore wind market in the Asia-Pacific region, with more than 30 British offshore wind firms establishing operations there.

  At the 5th UK-Taiwan Energy Dialogue in London in the middle of June, Taiwan and Britain underscored the necessity of fostering ties to address energy security. Representative to the UK Kelly Hsieh (謝武樵) stated that the UK is “a role model for Taiwan to learn from,” citing London’s expertise and status as the “global leader in offshore wind power and innovative research in renewable energy and decarbonization.”

  Forming a trilateral mechanism with cross-border collaboration on offshore energy projects has potential. As Japanese leading businesses Marubeni Corp, Sumitomo Corp and Sumitomo Electric Industries have been working to invest in the UK on offshore wind and green hydrogen projects, Taiwan should get a foothold in Britain and collaborate with Japanese energy firms there. Taiwan’s contribution is auspicious, given its growing role in the Asia-Pacific region as a leader in offshore wind planning and implementation. Taipei is also exploring strategies to expand its wind-powered energy grid. The intimate relationship between Taiwan and Japan is another motivating factor that could help. For the UK, Taiwan and Japan, sharing offshore wind power knowledge and experience through minilateral collaboration could offer opportunities to enhance ties in other sectors.

  In May, when traveling to Tokyo for the G7 summit in Hiroshima, Sunak told reporters that the UK had “a very strong, unofficial relationship with Taiwan.” Yet the UK’s efforts to accentuate economic collaboration with Taiwan necessitates political acumen to demonstrate Britain’s determination to adhere to the promised independent foreign policy, which includes the European power’s unwavering support for stability across the Taiwan Strait. In post-EU Britain, London should align its Indo-Pacific engagement with economic tradecraft, and strengthening economic ties with Taiwan, notably through an ETP, should be a crucial part of Britain’s grand strategy.

  Huynh Tam Sang is a lecturer at the Faculty of International Relations, Ho Chi Minh City University of Social Sciences and Humanities, a member of the Young Leaders Program of the Pacific Forum and a Research Fellow at the Taiwan NextGen Foundation.
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