THE BLOG

Fix US-Taiwan Dysfunction

I had the enjoyable opportunity of leading a delegation of academics to Taiwan last week, courtesy of the ROC government. During my stay in Taipei, I noticed an autographed picture of former President Ford among the notables decorating the wall in the Landis hotel restaurant. Ford, like a lot of other top U.S. leaders visited the island-nation on business after his term as president. It was a poignant reminder of what was missing from President Obama's pre-Thanksgiving Asian tour. The decision to take that trip with the fiscal cliff looming and Israel on the brink of a ground war dramatically underscored this administration's commitment to an Asia focused geopolitical strategy. Obama's historic visit Burma (Myanmar) was indeed in its own way, but the trip failed to acknowledge the actual fulcrum on which Asian geopolitics actually "pivot" -- namely Taiwan.

Why does Taiwan matter? Firstly, Taiwan is one of America's top trading partners. Somewhere between 9th and 12th, depending on how you slice things. At $67billion our Taiwan trade is about three times more significant that our exchange with Spain ($22billion) and 8x more important than Egypt ($8.2billion).

Actually, the importance of Taiwan is substantially understated when you consider that Taiwanese firms also control a large percentage of the production of Mainland China's exports. Just a single Taiwanese firm, Hon Hai Precision (Foxconn), manufactures every Apple product (in China) and also produces a lot of what HP, Motorola, Sony and others sell in the U.S. I'd make a hipshot estimate that this production accounts for at least $60billion a year in American imports. Including these Taiwan managed Chinese imports would push the ROC past the UK in our trade ranking and into the #5 slot, just behind Japan.

However, since we run a nasty trade deficit with Taiwan (not to mention those
Foxconn Chinese imports) let's drop the imports and restrict our consideration to just foreign consumption of Made in USA goods. Taiwan consumes $26 billion of U.S. product each year, nearly twice as much as Israel ($14 billion) and three times what Russia buys ($8.3 billion). Our economic relationship with the ROC is basically infinitely more important than Burma ($49 million). Clearly, Taiwan is buying a lot more of our Kool-Aid than a number of nations that receive a lot more of our diplomatic attention.

Taiwan also has our back militarily. Along with South Korea, it has manned the front line against the Chinese communists for fifty years and been a reliable consumer of U.S. military hardware including M-16 assault rifles, C-130 transport planes, and F-16 fighters. They'd have purchased a lot more if U.S. hardware if America had not been cowed into embargoing higher tech weapons by our high-maintenance relationship with Mainland China. While the ROC Air Force would be wise to delay the purchase of any F-35s (Joint Strike Fighter) until the bugs and budgets are worked out, the fact that we will sell the new plane to Japan but not Taiwan is slap to the face of this proven U.S. ally. Meanwhile Taiwan still faces down thousands of ground based Chinese missiles, a growing fleet of destroyers and a new Chinese aircraft carrier. What they would do for a half dozen modern submarines (are you listening India?).

So why is it that the last sitting American president to set foot on the island was Dwight Eisenhower? Why is it that the best they can hope for is to get an occasional quick fly in from some Undersecretary of Commerce or Assistant Secretary of State? The fact is, that while more and more of our diplomatic efforts and military expenditures are aimed at countering China, paranoid Chinese sensibilities still direct the public face of American Foreign policy.

What is particularly annoying is, that like everything in our China relationship, the Chinese face saving charade is not reciprocal. Hu Jintao has no problem visiting America's #1 state-enemy, North Korea or meeting with our nemesis in Iranian, Mahmoud Ahmadinejad. He even hosts Zimbabwe's dictator, Robert Mugabe in the Great Hall of the People. Meanwhile, Taiwan gets no high-level attention and the Dali Lama is told to sneak out the backdoor of the White House.

To continue to ignore Taiwan plays into the hands of the communists and will leave the ROC with little choice than to further integrate their economy with China's. Also, America's tacit support of the mainland's world-wide campaign to isolate the Taiwan pushes ROC politics toward cutting a deal with Beijing, undermining the island's developing democracy and potentially kicking the fulcrum out from under our Asia pivot strategy.

Enough is enough. China needs to grow up and it is time that we tell Beijing that we will manage our own foreign relations as we see fit. Let's be honest and make it clear that we will give Taiwan the attention they deserve as a critical trading partner for us both and as an important U.S. military ally. This will empower Taiwan's efforts to determine its own national status through a domestic, democratic process, free of Chinese intimidation.

I'd like to see President Obama land in Taipei next year and tell Taiwanese President Ma, that he supports a strong, democratic Taiwan and that he'd like to see the next Foxconn factory built in California rather than Sichuan. That would be monumentally more important and valuable than last week's trip.

Greg Autry is the author of Death by China and serves as Senior Economist for the American Jobs Alliance. You can find him on Facebook.

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