On the eve of President Ma Ying-jeou’s (馬英九) departure for an eight-day visit to three of Taiwan’s diplomatic allies in Latin America and the Caribbean, China’s increasing engagement in the region threatens Taiwan’s international space and undermines its influence on the world stage.
In January, at least nine of Taiwan’s 12 diplomatic partners in the region attended the China-Community of Latin American and Caribbean States (CELAC) summit in Beijing. Although the Ministry of Foreign Affairs said that the China-CELAC summit would have no effect on Taiwan’s relationship with its diplomatic allies, there is cause for concern as to whether this will really be the case.
Former vice president Annette Lu (呂秀蓮) voiced this concern on Tuesday last week, warning of a domino effect.
The forum established the goals of raising bilateral trade to US$500 billion and Chinese investment in Latin America to US$250 billion over 10 years. While much of this is limited to economics, with China securing primary materials and a market for its manufactured goods, there is the possibility of a political agenda to obtain formal diplomatic recognition from those countries that still recognize the Republic of China.
Moreover, Costa Rica — the only Central American country to recognize Beijing — signed a strategic partnership with China. The increasing benefits of formal diplomatic relations with Beijing are difficult for other Central American states to ignore.
Additionally, China’s ability to engage in checkbook diplomacy, giving aid and investing to an extent far greater than what Taiwan is capable, is an enticing factor for the small developing countries in this region.
Even Washington is struggling to compete with Beijing in its own “backyard,” particularly over the past six years under US President Barack Obama’s administration, which has seen a “pivot” or “rebalancing” to Asia. Washington has been accused of ignoring its own region.
Additionally, growing anti-US sentiment has bolstered China’s influence in the region. On July 1, Washington announced that it would resume formal diplomatic relations with Cuba, the lack of which had been a long-standing irritant with its southern neighbors. This might be construed as the US recognizing it has alienated important economic, political and strategic partners, a situation it is trying to correct.
China’s rising demand for natural resources and its production and export of low-cost consumer products are changing global trade flows. China has been slowly building more than trading links with the region; they have negotiated on collaborations for technological innovation and other investment. As most countries in the region count China as their main trading partner, what chance is there for Taiwan?
While Taiwan has free-trade agreements with its allies in Central America, Costa Rica remains Taiwan’s largest Central American trading partner. In 2013, trade with Costa Rica totaled US$664 million, which was primarily coffee imported into Taiwan. However, for Costa Rica, trade with Taiwan is relatively insignificant. This suggests that Taiwan is being pushed out of the region in terms of trade partnerships.
Beijing and Washington had representatives at the Pacific Alliance summit in Paracas, Peru, on July 1 and July 2. Taiwan’s ally Panama aspires to join the trade liberalizing and Asia-oriented Pacific Alliance, but Taiwan has been locked out of emerging regional arrangements.
During Chinese Premier Li Keqiang’s (李克強) visit in May to the region, he announced a new railway from Brazil to Peru’s Pacific coast. Chinese companies are also keen to be involved in building a canal in Nicaragua that would allow the world’s biggest vessels to transit between the Caribbean and the Pacific Ocean.
This is particularly significant, as Nicaragua is one of the allies that Ma is visiting.
While there has been a slowdown in trade, Li’s visit led to a trade agreement between China and Brazil worth US$27 billion, as well as a range of other agreements of further cooperation.
Taiwan’s diplomatic allies will also be aware of China’s US$465 million commitment to renovating the highway connecting Costa Rica’s capital, San Jose, to Puerto Limon, the country’s main Caribbean port city.
Additionally, Taiwan’s shrinking aid budget is unable to compete with China’s deep pockets. The tiny Caribbean nation of Dominica, with just 70,000 people, switched allegiance to China in 2004. Taipei’s meager offer of US$9 million stood little chance against Beijing’s reportedly US$112 million aid package. This caused Taiwan to evacuate its embassy and seek to recover US$1 million in outstanding loans.
Beijing is financing infrastructure and natural resource development projects, assisting in the execution of such projects and backing Chinese state enterprise ventures in many developing countries. Yet, these are limited to commercial and concession loans, as well as technical assistance and state-sponsored or subsidized investment, all of which are mainly beneficial to the Chinese agenda.
The ultimate question now is: What can Taiwan hope for as the outcome of Ma’s visit to the region, and is there any chance of preserving relations as Beijing continues to entice allies with its deep pockets?
Jecinta Newmann is an intern at the Taiwan Brain Trust.
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