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The Taiwan Relations Act at 30: Enduring Framework or Accidental Success?

“U.S. Navy aircraft carrier USS Independence was positioned east of Taiwan in 1996 in response to saber rattling by Beijing” (Photo courtesy of US Navy/FelixGarza)

Despite its pragmatic origin, ambiguous nature and transitory design, a unique piece of legislation has guided US-Taiwan relations for longer than many ever anticipated. By Vincent Wei-cheng Wang*

On December 15, 1978, former United States President Jimmy Carter announced that the US government would terminate diplomatic relations with the Republic of China (ROC) in favor of recognizing mainland China. In Taiwan, many found the news deeply unsettling, with the mood on campuses turning gloomy and pessimism permeating throughout society. There was a widespread sense of betrayal, of worry about an increasingly uncertain future. While its “economic miracle” had taken off by 1978 and per capita gross national product (GNP) had reached US$1,958 (in current prices), Taiwan’s democratic transition was still in its infancy.

However, some 30 years later, Taiwan has evolved into a full-fledged democracy, one of the freest in Asia and the sole democracy in all ethnic Chinese societies, and per capita gross domestic product (GDP) has risen to US$17,000, or more than $30,000 in purchasing power parity.

The hardworking people of Taiwan and sound politico-economic management deserve most of the credit. However, their accomplishments were also assisted by the peace and security arguably engendered by an extraordinary framework—the Taiwan Relations Act (TRA). Enacted in 1979 by the US Congress as a result of its dissatisfaction with the way the Carter administration handled the issue of normalizing relations with mainland China, the TRA has guided US-Taiwan relations for three decades—a feat few could have anticipated. The 30th anniversary of the TRA thus provides a good opportunity for reflecting upon the past and an evaluation of the future of Taiwan-US relations.

Unique Legislation

To analyze the roles played by the TRA, it is useful to consider the pragmatic quandary faced by the United States in 1979. Jacob K. Javits, who served as a US senator from 1957 to 1981, might have spoken for many Americans when he said: “We could no longer operate under the fiction that the government in Taipei was the government of all China, but neither could we ignore the fact that the people of Taiwan had been our friends and allies for decades and that we had assisted in protecting them from domination by the communist regime on the mainland.” According to Stephen Solarz, the former Chairman of the Subcommittee on Asian and Pacific Affairs of the US House of Representatives, the TRA was thus enacted “to solve an unprecedented diplomatic problem: how to continue US substantive relations with the people on Taiwan even though the US government terminated diplomatic relations with the government in Taipei, as a precondition for normalization of relations with Beijing.”

Under conventional international law, an unrecognized state is severely handicapped. Typically it cannot have access to the courts of the state refusing recognition. But the TRA created an important exception to this rule, as Section 4 of the act states that “Whenever the laws of the United States refer or relate to foreign countries, nations, states, governments, or similar entities, such terms shall include and such laws shall apply with respect to Taiwan.” In Law Among Nations: An Introduction to Public International Law, this exception led legal scholar Gerhard von Glahn to argue that the TRA caused the United States to treat Taiwan as a state and its governing authorities as a government, despite the formal derecognition of both by Washington. Indeed, as pointed out by Columbia University Law School professor Lori Fisler Damrosch, who served in the US Department of State’s Legal Advisor’s Office and participated in the preparation of the TRA, despite the US government’s acknowledgement of Beijing’s position that Taiwan was a part of mainland China, the United States continued granting Taiwan such trade benefits as most-favored nation status and inclusion in the Generalized System of Preferences (unilateral tariff reduction for manufactured exports from developing nations), while mainland China, with a socialist economy at the time, received neither.

Furthermore, US courts applied the Foreign Sovereign Immunities Act (FSIA) to Taiwan. Under FSIA, a foreign state is immune from lawsuits in the United States for acts it undertakes in an official capacity. Meanwhile, the nominally “unofficial” American Institute in Taiwan (AIT)—the US body that represents US interests in Taiwan—is accorded with a similar sovereign immunity by the US government and courts. The TRA is thus a unique piece of legislation.

However, the United States’ concern for a former ally’s fate cannot fully explain these innovative exceptions. Real US economic and security interests were also involved. In the first half of 1978, the United States was Taiwan’s largest trading partner, accounting for 32.3 percent of Taiwan’s foreign trade, and Taiwan was the eighth largest trading partner of the United States during the same time period. Furthermore, the US was aware that a secure Taiwan was a key contributor to peace and stability in the Western Pacific, and that Washington’s reputation among its allies in the region was also on the line.

The TRA was a unique piece of legislation in a second way. Politically, the TRA resulted from a rare kind of “equilibrium”—albeit with intrinsic ambiguities—between the US Congress, which had an unusual coalition that wanted to “do something” for Taiwan and was reasserting itself in the aftermath of the Vietnam War, and the executive branch, which typically enjoyed the upper hand in the area of foreign policy. To the extent the TRA mandates an executive-legislative joint responsibility for Taiwan’s security, the US Congress has shown a keen interest in Taiwan that is rare compared with other countries. Taiwan was thus able to compensate somewhat for its loss of access to the US executive branch that occurred after derecognition with its work to tap into the goodwill expressed by the legislative branch.

The TRA is also unique in a third way, as it was designed conceptually as a transitory piece of legislation. In effect, it was a pragmatic but exceptional arrangement made for Taiwan during a period of diplomatic limbo caused by US derecognition in 1979, an arrangement that could come to a plausible end in two different ways. Theoretically, if Taiwan were to declare de jure independence and establish itself as an independent, sovereign state, the TRA would become unnecessary, because the US president has ample authority to recognize such a state and to establish diplomatic relations with it. On the other hand, if Taiwan were to decide to peacefully unify with mainland China when the latter became freer and more prosperous, the TRA would also become obsolete. The TRA was thus enacted in tandem with a “status quo” constructed by the United States, which essentially ruled out both mainland China’s goal of unification as well as Taiwan’s goal of recognition. The TRA is studiously neutral on the resolution of Taiwan’s ultimate status, as long as it is achieved through peaceful means. It neither endorses nor precludes the eventual unification of Taiwan with mainland China, nor their separation.

Despite its pragmatic origin, ambiguous nature and transitory design, the TRA has guided US-Taiwan relations for 30 years—longer than many had anticipated. In the words of Avery Goldstein, a professor of Political Science at the University of Pennsylvania, this begs the question of whether the TRA is a “durable agreement or a fraying framework.” The answer to this question is not cut-and-dried. While it is implausible that Taiwan’s progress or US-Taiwan relations could have been better without the TRA, it is equally far-fetched to attribute all the credit to the TRA.

Successes

The TRA’s resilience stems from its combination of the protection of Taiwan’s core economic, security and democratic interests with the alignment of US interests in these areas. In the economic sphere, Taiwan’s development strategy has been described as export-led growth (ELG), which requires maintaining an outward-oriented economy. Historically, the United States was crucial to Taiwan’s ELG strategy as a large market for finished manufactured products and as an important source of technological know-how and capital. Taiwan’s information technology industry, an export mainstay, exemplifies this close relationship. According to figures from the US International Trade Commission and the US Department of State, two-way trade between the United States and Taiwan rose from US$12.1 billion in 1981 to US$65 billion in 2007—a five-fold increase. The United States remained Taiwan’s largest trading partner until 2004, when it was surpassed by mainland China, but in 2007, trade with the US still accounted for 12.6 percent of Taiwan’s exports and 12 percent of its imports. Taiwan is currently the United States’ ninth-largest trading partner. On average, each person in Taiwan imported US$1,243 worth of goods and services from the United States in 2007.

From 1980 to 2007, Taiwan’s GNP increased 9.3 times (from US$42.3 billion to $393.8 billion, in current prices), while its GNP per capita rose 7.2 times (from US$2,394 to $17,252, in current prices), according to figures from the ROC’s Council for Economic Planning and Development. Rapid growth based on ELG enabled Taiwan to transform quickly from a former recipient of US aid to an international creditor. In 1979, Taiwan had US$2 billion in foreign exchange reserves, US Department of State figures show. As of July 2008, it had the world’s fifth largest foreign exchange reserves at US$291 billion.

Could these impressive results have happened without the TRA? Conceivably. However, considering that the TRA provided a legal framework that allowed commercial relations between the United States and Taiwan to develop without adverse effects from the derecognition of Taiwan, the law most likely contributed to the growth in US-Taiwan commercial ties, Taiwan’s foreign trade and Taiwan’s ELG-based prosperity. Among other reasons, because the TRA treats Taiwan as an entity different from mainland China, Taiwanese firms enjoy better access to US-developed technologies than their mainland counterparts .

In the area of security, to bring about the normalization of ties with mainland China, Carter abrogated the 1954 US-ROC Mutual Defense Treaty without providing a clear commitment to Taiwan’s security. Nor was he able to extract from mainland China a renunciation of the use of force against Taiwan. Therefore, the US Congress went to work to fill the gap and, with the TRA, significantly enhanced the country’s commitment to Taiwan’s security after derecognition.

The TRA strongly affirms US concerns for Taiwan’s security. Of the six policy statements contained in Section 2(b) of the act, four stress the US interest in the peace, stability, and security of the western Pacific, as well as in ensuring that Taiwan’s future is determined by peaceful means. The TRA also declares that the United States will “make available to Taiwan such defense articles and defense services in such quantity as may be necessary to enable Taiwan to maintain a sufficient self-defense capability.” A further passage states that the United States will maintain “the capacity to resist any resort to force … that would jeopardize the security, or the social or economic system, of the people on Taiwan.”

Despite such affirmations, scholars have debated about the essence of the security provisions. Some say that since the “strategic ambiguity” inherent in the TRA is intended to deter both Beijing’s use of force and Taipei’s provocation, as long as this “dual deterrence” works, the TRA is nothing more than a piece of paper. Others contend that the TRA can be implemented in a manner similar to a defense treaty. Still others argue that the act goes further, saying that while the typical defense treaty covers only an “armed attack” on a partner’s soil, the TRA’s objective is a secure Taiwan capable of self-defense. This perspective also works to Washington’s advantage, as Taiwan’s security and defense capability complements the US military alliance structure in the western Pacific.

Although the TRA mandates that the United States bases its arms sales to Taiwan only on Taiwan’s defensive needs, Washington often carefully calibrates such decisions in line with other diplomatic considerations such as diplomatic engagement with mainland China. Nonetheless, the United States has remained Taiwan’s main weapons supplier. According to Stockholm International Peace Research Institute (SIPRI) data, between 1977 and 2006, Taiwan imported US$28.4 billion worth of arms, mostly from the United States, making it the seventh largest importer of arms in the world. In addition, US military actions such as positioning aircraft carrier groups near Taiwan in 1996 to deter Beijing’s saber rattling, as well as revising the US-Japan alliance, were also consistent with the TRA.

In the area of human rights and democracy, in 1979, Taiwan was still a “soft authoritarian” polity. Thus, the United States sought to use the TRA to impress upon the ROC’s ruling party, the Kuomintang, that benefits such as commercial ties and a commitment to security were to be bestowed with an expectation of greater freedom in Taiwan. Section 2(c) of the act affirms “the preservation and enhancement of the human rights of all the people on Taiwan” as an objective of the United States. In other words, a freer Taiwan that respects human rights would make a stronger case for continued, and possibly enhanced, US support.

Thus, and somewhat counter-intuitively, the diplomatic setback wrought by derecognition provided one of the catalysts for Taiwan’s ensuing rapid democratization, although the main impetuses for the transition came from Taiwan itself, as the TRA conditioned continued US support upon Taiwan’s progress in human rights and democracy. Some 30 years later, Taiwan has become a vibrant democracy where the expression of all viewpoints about possible future political directions, including de jure independence, is protected. An increasing number of Americans, including former US Congressman Henry Hyde, consider Taiwan’s democracy of great political and strategic importance to the United States, because Taiwan’s political progress serves as a beacon for mainland China. This point of view holds that only when the mainland becomes free will the Taiwan issue be resolved, and only then will the United States and mainland China enjoy truly friendly relations.

Shortcomings

While the TRA has contributed to Taiwan’s security, prosperity, and freedom, it has not had the effect of increasing Taiwan’s dignity. Section 4(d) of the act takes a passive approach to Taiwan’s international space: “Nothing in this Act may be construed as a basis for supporting the exclusion or expulsion of Taiwan from continued membership in any international financial institution or any international organization.” In 1979, the ROC retained membership in the International Monetary Fund and the World Bank, even though it had withdrawn from the UN in 1971. However, following the enactment of the TRA, the US did nothing to prevent the ROC from being expelled from all remaining UN-affiliated organizations, such as the IMF and the World Bank. In his “three noes” statement in 1998, former US President Bill Clinton said the United States did not support Taiwan’s membership in international organizations that require statehood. As the world’s 17th largest economy, 16th largest trading nation, fifth largest foreign exchange holder, and in light of its geographical location at an international crossroads for commerce and epidemics, the ROC’s exclusion from international government organizations due to the non-recognition of its statehood is most unfortunate. The United States could have done more.

Another of the act’s shortcomings pertains to the outdated restrictions it imposes on the US government in terms of its conduct of “unofficial relations” with Taiwan. High-ranking officials from Taiwan are still barred from visiting the United States in an official capacity. The Taipei-based director of the American Institute in Taiwan can easily arrange a meeting with Taiwan’s president, whereas Taiwan’s chief representative in the United States does not enjoy the same executive access. The lack of direct high-level communication channels between Taiwan and United States undermines the quality of communication between the two sides. In other words, although the TRA functions under an “unofficial” model, there is still room to improve the quantity and quality of governmental exchanges.

Whither?

Looking into the future, the TRA is unlikely to undergo significant changes for three reasons. The first is resilience or inertia. To mitigate the impact of the 1982 issuance of the Joint Communiqué of the United States of America and the People’s Republic of China, which placed limitations on arms sales to Taiwan, former US President Ronald Reagan also issued the so-called “six assurances.” Crucially, one of the assurances stipulated that the United States would not alter the terms of the TRA. Thus, over the years, attempts to recast the TRA—either in a way that would benefit Taiwan further, or, conversely, reduce benefits to Taiwan—have not succeeded. The unusual US legislative-executive equilibrium present at the TRA’s inception has remained, making it hard to change course. When it comes to the TRA, while the implementation by the US president is key, the Congress nonetheless ensures a baseline, with the result that the two balance each other.

The second reason for the likely endurance of the TRA is personnel and continuity. Those individuals assuming or expected to assume key positions that deal with Taiwan in the administration of US President Barack Obama—including Kurt Campbell, a former Pentagon official and candidate for the position of assistant secretary of state for East Asian and Pacific affairs; Jeff Bader, who led negotiations on Taiwan’s accession to the World Trade Organization and has been named as the Asia director of the US National Security Council; and Richard Bush, the former chairman of AIT in Washington who may become the next AIT Taipei director—are familiar with the scope and nuance of US policy regarding mainland China and Taiwan.

The third reason for the TRA’s continuity is current US policy priorities. At present, revitalizing the US economy is the Obama administration’s biggest challenge. Thus, the US executive branch may handle foreign policy challenges, such as North Korea, Iran and the Middle East in a reactive mode, which makes changes in policy regarding the Taiwan Strait appear doubtful. There is no urgency for action by the new administration, as there are few major shifts in relations between Taipei and Beijing to react to at present. Thus, the likely course of action for the United States will be to cautiously observe the cross-strait détente pursued by ROC President Ma Ying-jeou’s administration and fine-tune its policy toward Taiwan and mainland China.

That is not to say that the TRA will not face challenges, especially in the form of two long-term, opposing forces: that of an increasingly powerful and nationalistic mainland China possibly seeking to force unification, and a democratic Taiwan someday aspiring to upgrade its de facto independence to de jure independence. In view of these enduring dynamics, will the TRA, which was enacted in tandem with the US-constructed “status quo” and is agnostic about Taiwan’s final status, continue its practical usefulness? Some 30 years after the promulgation of the TRA, the answer is still not entirely clear.

* Dr. Vincent Wei-cheng Wang is Chairman of the Department of Political Science at the University of Richmond in the United States.