Twenty-five years ago this spring, the Congress passed the Taiwan Relations Act (TRA). Members acted because they believed that President Carter struck a bad bargain in establishing relations with the People’s Republic of China. They felt that by giving into Chinese demands that he terminate diplomatic relations with Taiwan and end the mutual defense treaty, Carter had left the island profoundly vulnerable. They also were angry that the administration had pursued its China initiative without proper consultation with the Congress. They therefore used the TRA to shore up Taiwan’s position and demonstrate their desire to play their proper role in the making of foreign policy.
A lot has changed in a quarter-century. China was relatively weak militarily at the time that Congress worked to fortify Taiwan through the TRA. Now it is steadily modernizing its armed forces and acquiring the ability to project power on its periphery. Several hundred PRC missiles are just one way that the Chinese threaten Taiwan’s security.
Twenty-five years ago, Taiwan and China had no economic interaction whatsoever. But as labor costs on Taiwan escalated and China realized that it had to join the global economy to create prosperity and stability at home, Taiwan companies found the mainland to be a good place to re-locate their production facilities. China has received almost $100 billion in Taiwan investment and has replaced the United States as the island’s leading trading partner.
In 1979, Taiwan had an authoritarian system where it was a crime, for example, to advocate the total independence of Taiwan from China. Now Taiwan is a full, and sometimes rambunctious, democracy. The political spectrum is divided among those who favor some accommodation with China, some who are cautious, and others who want outright independence. For Beijing, this democracy creates a fear that Taiwan will slip away and turn its dream of unification into a nightmare.
Does the Taiwan Relations Act have any relevance in 2004, twenty-five years after it was written? I think it does. Although circumstances have changed, the law still reflects a strong political and legal commitment to Taiwan. Because China’s military power is growing, the U.S. security role is far more important today than it was in 1979. Because Taiwan is a democracy, Washington’s task of balancing political values and security interests is more complex. And because Taiwan is more complicated, its own actions can shape how America fulfills its TRA commitment. But the TRA still provides sound policy direction to the executive branch.
The U.S. still has some leverage over China, because China clearly wants a deal. ... U.S. financial markets also seem to have been boosted by the prospects of a U.S.-China trade deal, so I think it could have a negative effect on both financial markets and economic activity in both countries if a deal is not struck