Asia-Pacific Economic Cooperation, or APEC, is an economic forum comprising 21 economies on both sides of the Pacific. Its members are home to around to 2.8 billion people and account for nearly 60% of global GDP and half of world trade.
But for Taiwan, APEC is much more than a regional forum; it is the most important international organization in which Taiwan is allowed to participate. As Taiwan is barred from the United Nations and has official diplomatic relations with only 21 countries, APEC provides a valuable platform for Taiwanese officials to interact directly with governments of important developed and developing countries, including China.
For Taiwan, the benefits of inclusion in the organization are clear, says Jeffrey Wang, a counselor at the Ministry of Foreign Affairs’ Department of International Organizations who oversees Taiwan’s participation in APEC. “It’s important for enhancing Taiwan’s international image and status,” he stresses.
APEC was founded in 1989, with Taiwan joining the group alongside China and Hong Kong in 1991 after difficult negotiations with China in which it was ultimately agreed that Taiwan would enter under the name it uses in the Olympic movement: Chinese Taipei. Twenty-six years later, it is still referred to by this name within APEC.
Although all of the economies in APEC (members are referred to not as countries or customs regions but as economies) are in theory considered to be equal to one another, Taiwan has one other major condition tethered to its membership. In 1993, when attendance at the annual APEC Economic Leaders Meeting (AELM) was raised from the ministerial level to that of head of state, China insisted that Taiwan president Lee Tung-hui not take part in the gathering in Seattle. Taiwan therefore appointed Vincent Siew to attend in his capacity as chairman of the Council for Economic Planning and Development, and each year since then Taiwan has been represented by a lower-level or former government official or prominent private citizen.
Last fall, former presidential candidate James Soong served as the representative at the AELM in Lima, Peru. He met with APEC heads of state including President Obama and Vladimir Putin, which was beneficial to Taiwan’s diplomacy, Wang says.
Aside from the Chinese Taipei label, “the only restriction is that until now, our president cannot participate in APEC meetings or mechanisms,” Wang notes. “That is something that we think is not fair. Taiwan is supposedly an equal member within APEC, but this kind of treatment does not suggest an equal status.”
Nevertheless, Wang and others view the restriction as an acceptable cost for participation in APEC. “By participating in APEC, even with these limitations, we are safeguarding our national interests and doing the right thing for Taiwan’s role in international society,” he says. “This is a good thing for the people of Taiwan, and they should view our participation in APEC positively.”
Taiwan’s role in APEC
It should not be surprising, considering Taiwan’s inability to take part in most global forums, that it views membership in APEC as a major opportunity and makes an effort to take advantage of that opportunity. “I’d say Taiwan is quite active in APEC,” observes Robert S. Wang, a senior associate in the Asia Program at the Center for Strategic and International Studies in Washington D.C.
Wang (no relation to Jeffrey Wang) is highly familiar with Taiwan’s role in APEC. He served as the Deputy Director of the American Institute of Taiwan from 2006 though 2009, the Deputy Chief of Mission at the U.S. embassy in Beijing from 2013 through 2015, and the United States ambassador to APEC from 2013 through 2015.
One example of Taiwan’s active leadership within APEC took place in 2014, Robert Wang notes. “Taiwan was really instrumental in helping us launch a scholarship program to bring students from mainly developing economies to Taiwan and other places for education and vocational training,” he says. “Taiwan was the first to really step up and support this initiative, which was a U.S. initiative focused on inclusive growth and promoting connectivity within APEC. After Taiwan stepped up, a lot of other developed economies followed and offered their own scholarships.”
Wang also cites such other initiatives promoted by Taiwan as the APEC Digital Opportunity Center, a project in which teams of experts on the digital economy or digital development are sent to rural areas of developing economies to train farmers and others in how to use digital technology to improve agricultural production or the marketing of farm products. He says the project has been very successful in helping bridge the digital divide in APEC’s developing economies.
Taiwan’s abundance of highly educated people is a major asset vis-à-vis APEC’s developing economies, which are in need of vocational training and capacity building. “They can transfer knowledge, and of course it increases Taiwan’s outreach to different economies, which is very important to Taiwan – Southeast Asia in particular, but also economies such as Peru and other places,” says Robert Wang.
Taiwan participates in the full spectrum of events under the APEC umbrella, notes Jeffrey Wang. Senior official meetings focus on topics such as anti-terrorism, financial restructuring, energy, emergency preparedness, food security, fisheries, and visa issues, he says.
In addition to these high-level sessions, there are more than 300 other official APEC events comprise meetings a year, including a wide range of workshops, task forces, forums, and seminars. Taiwan annually participates in at least 200 of these meetings.
“Most of these meetings are related to finance, the digital economy, food security, gender equality and women’s economic empowerment, energy resources, emergency preparedness, and so on,” says Jeffrey Wang. “Collaboration between industry and education is another area in which Taiwan contributes within the APEC framework, as are SMEs and best practices for startups.”
Over time, more and more of Taiwan’s agencies, officials and specialists have been participating in these meetings, Wang says. Previously only 50-60 Taiwanese representatives participated each year, but that number has now reached more than 500, widening Taiwan’s involvement in international cooperation.
In the early years of its involvement in APEC, Taiwan refrained from hosting any seminars, forums, workshops, or other meetings, but in the past decade around 30 meetings per year have been held in Taiwan. So far, these have been only been low-level, semi-official meetings, but Jeffrey Wang expressed hope that this would change, given what Taiwan has to share with other APEC economies.
“Taiwan is a small country, but because of its human resources and hard-working attitude, it is a major economy, the 22nd largest on the planet, with the fifth-largest forex reserves,” Jeffrey Wang says. “It has a lot to offer in terms of its experiences in economic development and international trade that it can share with developing countries.”
Taiwan tailors its approach to APEC each year to the needs of the host country. In 2015, Taiwan cooperated with host country the Philippines to promote the empowerment of women in the economy through ICT and the internet economy.
“Each year we have a different focus,” Jeffrey Wang explains. “We cooperate according to the priorities of the host economy. For example, in 2016, we worked with Peru on several forums and hosted events on O2O [the online to offline business model] initiatives and best practices. We also worked with them to host an event on food loss.”
This year, Vietnam is the APEC host country, and priorities include sustainable and inclusive regional economic integration, or IEI, as well as the development of micro SMEs, food security, and climate change. Taiwan is still working with Vietnam to identify areas of possible cooperation, Jeffrey Wang says. Likely areas include SME empowerment, the digital economy, and women in the economy.
Participation in international activities through APEC also has the benefit of helping to groom Taiwanese officials for more important roles in the future. In the late 1990s, for example, Tsai Ing-wen chaired APEC’S group on trade in services.
A related channel is the APEC Business Advisory Council, which brings together business and government leaders through its annual CEO Summit held in conjunction with the AELM. Attending the most recent meeting in Lima gave James Soong the opportunity to meet and chat with Facebook’s Mark Zuckerberg and other global business leaders.
Expanding Taiwan’s footprint
Given Taiwan’s exclusion from the UN, are there ways for Taiwan to use its APEC membership to expand its international footprint? Robert Wang suggests some possibilities, particularly regarding investment in social enterprises that focus on IEI.
Because Taiwan is business savvy and has a vibrant civil society, he says, it could take a leadership role within APEC with “corporate social responsibility-style programs that produce positive outcomes with regard to the environment, labor, the handicapped, farmers, and rural areas.”
“If you look at the election we had recently in the United States, even in developed economies you’re beginning to see the frustration of people who are being left behind by the digital age or by international trade or globalization,” he notes. “If APEC can do more within the APEC region to mitigate that trend – and often times this comes from expanded trade and economic growth – that would be very helpful.”
He urges Taiwan and other APEC economies to encourage impact investing, which is the creation and development of social enterprises that help disadvantaged people make money by using their local conditions and resources.
As a good example of the potential of impact investing in this region, Robert Wang refers to a project of the U.S. private equity firm KKR, which won the 2015 State Department Award for Excellence for its work with East Bali Cashews in Indonesia. KKR helped the small enterprise develop a business plan, investment structure, and marketing program that enabled it to expand significantly, raising employment and living standards.
“APEC could do a lot more in this area, and Taiwan has a lot of companies with international experience that could contribute to impact investing and social enterprises,” he says. “It’s not philanthropy, it’s nurturing small- and medium-sized enterprises and those that haven’t yet started up, and that promotes inclusive growth.”
Inclusive growth – growth to benefit every section of society – is a major goal for APEC.
For Taiwanese companies, which have occasionally had trouble in other markets – such as Formosa Plastics’ steel mill subsidiary in Vietnam being found culpable for mass fish deaths last year – impact investment has obvious benefits.
“Impact investing can burnish the image of Taiwanese companies, showing that they care about the environment and societies that they work in and invest in,” Robert Wang says.
Participation in APEC also provides a valuable platform for interaction between Taiwan and China. Even though Beijing has increased pressure on Taiwan since the Tsai administration took office last May, blocking its participation in organizations such as Interpol and the International Civil Aviation Organization, even as observers, it is still business as usual in APEC.
“You can feel a change in the atmosphere,” Jeffrey Wang says of China’s moves to block Taiwan from international organizations. “But these organisations are not APEC.”
Robert Wang describes APEC as “one area in which China and Taiwan can interact in a legitimate way and work with each other, as long as they adhere to certain protocols, on an economy-to-economy basis.” Even China’s president, Xi Jinping, meets with Taiwanese representatives at the AELMs.
“The Chinese have been willing – and maybe even find it good – to be able to interact directly with Taiwan officials” through APEC, notes Robert Wang.
Given the current cross-Strait climate, these interactions, and by extension Taiwan’s role in APEC, are arguably more important than ever.
(Taiwan Business TOPICS is published monthly by the American Chamber of Commerce in Taipei.)
TNL Editor: Edward White