David And Two Goliaths: Taiwan Fears Getting Caught Between US And China

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By Michelle FlorCruz | December 21, 2012 5:12 AM EST

With the next crop leaders in Beijing chosen, and the president in Washington re-elected for the next four years, Taiwan ought to be relaxing. Instead, the island off mainland China can't help but wonder if its future has turmoil in store. As an empowered Obama continues with America's strategic refocusing on the Asia-Pacific region -- known as the "pivot," which really means containing China -- the island nation might get caught between the two giants. 

On paper, Obama's re-election to a second term should please Taiwanese officials. According to Taiwan's President and Kuomintang (KMT) party chairman Ma Ying-jeou, the two governments have achieved the most stable relationship they've ever had.

It's a relationship Taiwan needs badly. As the island has suffered from the global recession, it cannot do without the world's biggest economy to regain its economic footing. Together with mainland China and the European Union, America accounts for 75 percent of Taiwan's exports.

A spat with the United States over beef imports, which threatened to hurt Taiwan, has cooled off, and that has led to a possible renegotiation of the Trade and Investment Framework Agreement (TIFA) with the U.S.

TIFA is a pact between the two nations that established the framework for expanding trade and resolving disputes, and was briefly halted due to frustrations over Taiwanese beef imports. In 2007, Taiwan approved imports of U.S. beef containing traces of a previously banned additive, to the dismay of the Taiwanese. In 2010, lawmakers blocked the beef imports, angering U.S. officials.

But in July, Taiwan's ban on the beef containing the additives was loosened, allowing small amounts to be imported, to the satisfaction of both governments and leading to the re-opening of TIFA negotiations.   

With Taiwan and the U.S. on track to re-establish trade negotiations, Taiwan still needs the two superpowers China and America to get along.

Bruce Linghu, head of the North American division of the Ministry of Foreign Affairs, told Radio Taiwan International that the currently positive --yet fragile -- relations between the three governments are unlikely to change.

"The Obama administration's trilateral policy [of] China, the US and Taiwan, based on the Taiwan Relations Act… basically, will not change," he said,

Essentially, the US does not want to upset the mutually understood concept of "one China, two systems," established by President Jimmy Carter's Administration in 1979. The Taiwan Relations Act put forth by Carter satisfied all three parties, and basically acknowledged that Taiwan was part of China, but would operate without diplomatic relations, and instead through the channels of the American Institute in Taiwan (that is, instead of an embassy). 

However, the seemingly ideal solution to Taiwan's economic woes could be spoiled by the reality of souring relations between two of Taiwan's top three biggest trade partners.

This year's election debate showed that both Obama and Mitt Romney were very critical of China, and promised a crackdown, if they would be elected, on its allegedly unfair competition practices, turning the nation into what the international media has called "a political punching bag." 

Both candidates made bold statements about punishing China, but the Beijing government barely batted an eye over the negative comments. Indeed, long before the US election, the US-China relationship was largely focused on cooperation rather than confrontation.

In a few short months, however, that scenario is changing. 

Beijing and Washington continue to be at odds, as the two nation's struggle to be on the same page on various economic and political issues. 

For example, the well-publicized SEC filings against Chinese-affiliates of US accounting companies, has put the Chinese tax employees, and thus many Chinese companies, into a precarious situation. At the same time, after North Korea's rocket launch, the US has pushed the UN Security Council to impose sanctions on the isolated nation, but China's permanent membership on the council allows them to veto the US on behalf of their allies, North Korea. 

But as China and the US continue to act and react against each other in political and economic spheres, military bravado between the two nations should also have Taiwan worried.  

The U.S. seeks to expand its military forces in various parts of the Asia-Pacific region -- in response, China's government and military officials are objecting to American military ambitions, on grounds that the US is trying to surround and intimidate China.

A threatened China could take military action, and disrupt the fragile status quo of Taiwanese independence. Moreover, both the US and China could leverage Taiwanese economic dependence as way of gaining support, thereby placng an ill-equipped Taiwan in the middle of a potential superpower crossfire. 

With a disproportionately small arsenal, and military that will soon move to volunteer-based involvement, rather than its current year-long mandatory service, Taiwan's military is no match to mainland China or the US. 

Taiwan needs both the US and China in order to repair its economic wounds. 

An op-ed in the Taiwanese Common Wealth magazine noted that Taiwan will be helpless if China and the US do not continue on a path of cooperation, as decisions made by the two nations are acutely linked to Taiwan's future. 

"Any single policy implemented by either Obama of Xi Jinping will affect Taiwan's economy and the welfare of its citizens," it declared.

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