PARTNER ATLAS
TAIWAN
as a partner for the security and stability of Europe, its neighbourhood, and other regions of the world
01 — The key questions for the Partner-Atlas
RELEVANCE: What is Taiwan’s relevance to Germany in terms of achieving our interest in safeguarding our prosperity via free trade and innovation?
Taiwan has developed into a leading market-economy power for prosperity and innovation in the Indo-Pacific region. Taiwan’s semiconductor manufacturers, led by global market leader Taiwan Semiconductor Manufacturing Company (TSMC), have a global market share in the foundry market of and are irreplaceable as chip suppliers for German industry in the medium term. Taiwan’s added value, like Germany’s, is driven by foreign trade. It therefore very strongly advocates for free trade, regional economic integration, and the bolstering of a rules-based world order. Taiwan’s expertise in biotechnology, healthcare, agricultural sciences and artificial intelligence sets standards worldwide, and is an important support for German developments in these areas. It is encouraging substantial improvements in international standards in the form of a transparent, open source-based digital policy. It is in this connection that Taiwan’s government is focusing on general industry policy conditions that will support the market and directly benefit public service providers, science and enterprise, even if it is through the rigorous promotion of developments in the area of Industrie 4.0 (known in Taiwan as Smart Machinery) and the creation of an agile public administration. In many respects, Taiwan can serve as a role model for the transformation processes that are also needed in Germany. The industries of both countries, which are predominantly SME-driven, offer technological benefits that . And in the context of the geopolitical distortions caused by Russia’s invasion of Ukraine, the shared regulatory convictions advocated by Taiwan and Germany in their respective regions, and worldwide, form an important basis for taking their relations to a deeper level.
WILLINGNESS: To what extent is Taiwan willing to work with Germany in realising this interest?
Taiwan is on the search for partners worldwide, and in recent years has offered incentives for Taiwanese companies to further diversify the focus of their supply and value chains. With its New Southbound Policy, Taiwan introduced a re-calibration of its foreign policy in 2016, which made collaboration with partners in the Indo-Pacific region a key consideration. The principal intention here is to bolster trading relationships, encourage cooperation between different societies, share expertise and resources, and create a broad foundation for Taiwan’s regional integration. Taiwan’s global perspective is, above all, an urgent response to the strong economic dependence of many Taiwanese businesses on the Chinese market. In 2020, 43.9 percent of Taiwanese exports (mainly electronics) went to China and the . Taiwan is also seeking close cooperation with European partners, among which Germany is considered a key player. Negotiations regarding a bilateral investment agreement (BIA) with the EU are right at the top of the agenda of the Taiwanese government.
STATUS QUO: How close is Germany and Taiwan’s current cooperation in this area?
Taiwan is Germany’s fifth-largest trading partner in Asia, and Germany is Taiwan’s most important trading . In 2021, the bilateral trade volume between Germany and Taiwan exceeded the for the first time. Forming the core of this trading relationship is the supply of valuable technologies and machines, and the consolidation of their innovation partnership in the areas of biotechnology, artificial intelligence and Industrie 4.0.
In 2016, the then newly elected government under President Tsai Ing-wen introduced a transformation of the energy industry, including an exit from nuclear power. German expertise in the areas of energy and environmental technology, and also policy implementation, is particularly strongly sought after in this regard. The establishment of wind farms and the expansion of other renewable energy sources have led to an increase in German investment in Taiwan. The strong orientation toward UN sustainability targets and the establishment and expansion of a “green economy” underline Taiwan’s interest in putting its relations with Germany and other European partners on a permanent footing.
POTENTIAL: What is the potential for strengthening the partnership between Germany and Taiwan in this area?
Taiwan takes a much more urgent view compared to Germany of the challenge to diversify its supply and value chains and become less dependent on individual procurement markets. There is major potential in this area to develop shared positions and implement joint cooperation projects, including those in third-party markets. This applies in particular to the high-tech and healthcare sectors. In the high-tech field, there is a close relationship between Taiwanese and German wafer and chip manufacturers. Taiwan welcomes the announcement of the European Chips Act and the undertaking by the EU to invest more strongly in its own . A stronger presence by Taiwanese semiconductor manufacturers on the German and European market is also being considered because Covid-19 and global political tensions have revealed the extreme vulnerability of the supply chains in the semiconductor industry.
There is also strong potential for more in-depth collaboration between Taiwan and Germany in the context of Germany’s Indo-Pacific Guidelines and Taiwan’s own commitment in the region, which it is already exercising more strongly in the form of its New Southbound Policy. The areas of action under both strategies are aimed at a closer foreign economic and foreign policy orientation toward partners in the region, a broader trading and development commitment in neighbouring states and bolstering multilateral forums. In this connection, Taiwan is calling on international partners to commit collectively to third-party markets, and regularly issues invitations to its own formats with a focus on professional interaction to build up skills in areas such as global healthcare, cyber security, .
POLICY RECOMMENDATION: What in German foreign policy has to change in order to fully exploit this potential?
On account of the complex political conditions arising from the One-China Policy, which is accepted by Germany, as well as the majority of the international community of nations, bilateral relations between Germany and Taiwan are characterised mainly by exchanges and cooperation in the areas of science, culture, education and trade. Taiwan’s economic and innovation model is based on the rule of law, democratic values and the consolidation of global trade structures based on market economic principles. Its interests are thus formulated very clearly, and form the cornerstones of Taiwan’s global activity. Relations with Taiwan should therefore follow the example of a strategic partnership on the basis of clearly formulated shared interests, and in particular should encourage formats that allow for building on close coordination with other European partners.
- In the context of the One-China Policy, Germany should not hold back from assertively maintaining its political relations with Taiwan. At a national level, this may include closer coordination on questions of aligning trade policy commitment on both sides, including on third-party markets, and should make the themes of trade and innovation partnerships the object of regular exchange formats between the economic and trade ministries and practitioners in both countries. German companies benefit from a growth-oriented, robust investment climate in Taiwan, and should go to greater lengths to include Taiwan in the context of Germany’s Indo-Pacific Guidelines.
- Taiwan, in the form of an economic area, is a member of the WTO. Germany should actively engage in the negotiations regarding a bilateral investment agreement between the EU and Taiwan, and in its dealings with partners should also support Taiwan’s wishes to become a member of regional trade initiatives such as the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive Agreement for Trans-Pacific Partnership (CPTPP).
- Taiwan and Germany share the conviction that social innovations and long-term competitiveness are the foundation for establishing a basic democratic, liberal order in both countries, and that this can form the basis on which to help bolster the international order. That’s why it’s particularly important to encourage initiatives that will create a more powerful link between the start-up ecosystems in both countries. In the context of the Indo-Pacific Guidelines and research initiatives at a federal state level and by municipal partnerships, Germany’s federal government, federal states and municipalities should initiate exchange and investment programmes that will sponsor R&D cooperation projects by young businesses. Connections must also be established with players from other countries in Europe and in the Indo-Pacific region in order to test and anchor the scope of development of technology products and services and their applications.
- Especially in the field of semiconductor and chip manufacture, and also in other future-oriented areas (such as data-based development of artificial intelligence, technologies to bolster cyber security and protect critical infrastructures, innovations in life sciences and in healthcare), Taiwan sets standards that are also central to Germany’s competitiveness. Taiwan and Germany should therefore enter into a comprehensive dialogue to establish technological and industrial standards to overcome technical barriers to trade, maintain the high quality of products and services, and pursue the strengthening of the WTO-based global trading system.
David Merkle is policy advisor for China at the Department of European and International Cooperation.
02 — Foreign Office
Contact:
Auslandsbüro China
Office C 813, Beijing Lufthansa Center No. 50, Liangmaqiao Road, Chaoyang District
100125 Peking
China
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