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The EU and Taiwan Relationship


Prof. Dr. Paul Joseph Lim

Prof. Dr. Chong-ko Peter Tzou

In 2012, the book European Perspectives of Taiwan, an edited volume of chapters
covering different aspects of Taiwan was published and co-edited by Paul Lim and Jens
Damm in which Paul Lim contributed a chapter with Sigrid Winkler on the European
Unions relations with Taiwan. That chapter was based upon archival research. It was
evident that, in an edited volume, it was not possible to present all that could be drawn
from the archives. Hence, the idea of this book based largely on archival material with
the encouragement of Emeritus Prof. Dr. Michael Y.M. Kau, then Head of the Taipei
Representative Office in Brussels, Belgium. Paul started working on this book on his
own initiative.
In 2013, Paul arrived in Taipei on a MOFA Fellowship administered by the Centre
for Chinese Studies of the Central Library on behalf of the Republic of China (ROC)s
Ministry of Foreign Affairs and hosted by the European Union Centre in Taiwan situated
at the National Taiwan University.
He then turned to his old friend Prof. Dr. Chong-ko Peter Tzou of Tamkang University to co-author with him the Taiwanese side of the story. It was important to have a
Taiwanese viewpoint of the relationship with the then European Economic Communities
(EEC) written by a Taiwanese. Having the Taiwanese side of the story will give a more
objective picture of the time. Hence, there are actually two volumes, one from the perspective of the EEC and the second from the Taiwanese perspective. This volume is
from the EECs perspective.
As stated this history book is based upon archival material. The authors thereby hope
to give other researchers and interested parties and individuals access to archival material of this relationship so as to come to know what was actually going on in those days.
What is absent from this book are the recollections of the actors and observers of the
time on the European side of the story as Paul had not the time and money to do so as
this was a personal project and he did not look for funding at all. However, on the Taiwanese side of the story, the authors have to thank the Ministry of Foreign Affairs for
giving access to its archives. There were no interviews with ofcials of the time. Having
no interviews are a limitation, the authors acknowledge.
The authors realized that going through the archival material was itself a major task.
Historians, political scientists, international relations specialists and sinologists writing
this subject, having read this book, can judge for themselves whether these archival



Preface  i
Acknowledgement  iii
Introduction  1
1 The European Communities relations with the ROC (Taiwan) in the 1950s and
1960s  15
2 The PRC looms over the EECs relations with the ROC and the impact of the
ROCs departure from the UN in 1971 on this relationship with the EEC to the
end of 1975  47
3 The beginnings and establishment of relations between EECs Member States
and the PRC culminating with EEC itself and the PRC in 1975  143
4 From diplomatic relation to a trade agreement in 1978 while Taiwan fades away
politically and faces further import restrictions and anti-dumping  209
5 From EEC-PRC Trade Agreement to the EEC-PRC Textile Trade Agreement in
1979 and continued imports restrictions on Taiwanese products  303
Conclusion  353

The focus of this rst volume is the EECs relations with the Republic of China located in Taiwan covering the period of the 1950s to the 1970s but particularly the 1960s1970s in the context of the Peoples Republic of China coming onto the world stage
based on archival materials collected from the Archives of the European Commission
and the Council of Ministers. The authors let the archives speak, so to speak; hence, the
extensive archival references at the end of each chapter.
In setting this time period, the authors in this volume have chosen to relate the story
in a chronological order as far as possible. The advantage of this approach is that it gives
a kind of daily life, dynamism of the relations between both sides as issues and events
Gaps in re-counting what happened required the use of two secondary sources on
trade ties especially for the early years of the 1950s and 1960s. During this time period
with its economic and political dimensions, the crux is state recognition, diplomatic relations and trade relations.
Starting with off perhaps is the Montevideo Convention on the Rights and Duties of
States of 1933 a State is dened as follows: The State as a person of international law
should possess the following qualications: a) a permanent population; b) a dened territory; c) government; and d) capacity to enter into relations with other states.1 However, fullling all the criteria for statehood does not automatically mean that other states
will grant recognition. Granting state recognition is at the discretion of states affected by
political considerations and vested interests.
Until 25 October 1971 when the ROC was expelled from the United Nations by the
United Nations General Assembly Resolution 2758, the ROC fullled all the criteria of
statehood. It had since the 1950s trade relations with the European Economic Communitys (EEC) Member States like any other country. It decided to approach the EEC to establish diplomatic relations. Yet, this rst attempt in 1962 failed with the polite excuse
that the situation was not ripe. The reason was that the Netherlands had made the political choice to grant recognition to the PRC and hence could not recognize the ROC and

For fuller explanation, see Lin, Paul and Winkler, Sigrid, The European Unions Relations with the Republic of China (Taiwan) in European Perspectives on Taiwan (eds Jens Damm & Paul Lim), Springer
VS, 2012.


The EU and Taiwan Relationship (1950s-1970s)

have diplomatic relations with it. Several other EEC Member State chose to recognize
the ROC. If a Member State of the EEC objected to any policy or position that policy or
position was dead. It was a time when decisions had to be based on unanimity. The EEC
was a child of the six original Member States that formed the EEC. In a second attempt
in 1963, the ROC succeeded in obtaining the approval of all six Member States to establish diplomatic relations. Why? The Netherlands withdrew its objection. However, in
January 1964 France switched recognition to the PRC and made a political choice to objected the appointment of the rst Head of Mission of the ROC to the EEC which offended the other Member States. France assumed the position that the Netherlands held
in 1962.
As that time, it was the political understanding that the EEC was an international organization, it had a life of its own. The Community as such possessed international legal
personality and could maintain diplomatic relations with third countries which did not
necessarily have diplomatic relations with all Member States [eg. diplomatic relations
had been established with Israel, the Congo (Lopoldville) and Nigeria during a period
when neither Belgium nor France maintained relations with these countries]. France did
not have to block relations with the ROC. A distinction and separation was made between state recognition and diplomatic relations. The EEC could establish any relationship with any country without implying state recognition. State recognition involves
only States as dened in the Montevideo Convention. The EEC was not a State.
With this blockage from France, the only formal relation that existed between the
EEC and ROC was the Long Term Agreement (LTA) on the Cotton Textiles Trade that
the EEC and the ROC both signed under the auspices of GATT together with other cotton textiles producing countries. The bilateral agreement under the LTA between both
sides lasted from the 1st October 1970 to 30 September 1973. This the EEC could do as
an international organization.
This issue of state recognition and diplomatic relations came up again when the EEC
sought diplomatic relations with the PRC. The PRC did not accept the EECs insistence
that it was an international organization, not a state, that it can have diplomatic relations
with the PRC, without state recognition, that state recognition was only between states.
The PRCs conditions for diplomatic relations with the EEC were recognition of the
PRC as the sole legal government of China; that Taiwan was a part of China; and that the
EEC would have no ofcial relations with Taiwan. These conditions were recognized by
the EEC Member States. No question of two Chinas.
The EEC gave in to the demands of the PRC. Since the nine Member States of the



EEC including the UK and Ireland recognized the PRC, the EEC followed the Member
Having no official relations with Taiwan impired that there were no trade agreements. The EEC thus argued in 1975 that it had no trade agreement with Taiwan as the
bilateral cotton textile trade agreement had terminated in 1973. The EEC stated to the
PRC that whatever trade it had with Taiwan was based on its own autonomous decisions
and not negotiations i.e. it simply informed Taiwan how much of a product it could export to the EEC without negotiations.
The PRC also insisted that only with state recognition and diplomatic relations could
it consider a trade agreement with the EEC. This was contrary to the position of the EEC
that, as an international organization, it could sign trade agreements with third countries
regardless of state recognition. Pursuing a trade agreement with the PRC was motivating
the EEC.
State recognition and diplomatic relations was the nub of the whole period from the
1960s-1970s. Meanwhile trade between the ROC and the EEC rose from year to year regardless of whether there were diplomatic relations with the EEC and despite all the restrictions placed on the ROCs exports to the EEC. The ROC ended up with a trade surplus and was even seen as threatening industry and employment inside the borders of the
EEC. The following chapters will probe into the story of the bilateral agreement under
the Long Term Agreement on Cotton Textiles trade. Trade relations between the PRC
and the EEC took off only in the second half of the 1970s after signing a trade agreement
and a textile agreement. The negotiations will be detailed along with a discussion of how
the EEC sought to optimize its trade with the PRC, while protecting itself from the
PRCs excessive exports threatening its industry. From the 1960s to the rst half of the
1970s there was little trade between the PRC and the EEC instead very much centred on
buying wheat from France. This is another focus of the book.
The chapters of this volume unfold and expand this gist of the period over time
chronologically intertwining political and economic dimensions.
These are the following chapters:
1. Chapter 1: The EECs relations with the ROC and the PRC in the 1950s and
2. Chapter 2: The PRC looms over the EECs economic and trade relations with the
ROC and the impact of the ROCs departure from the UN in 1971 on this relationship with the EEC to the end of 1975.
3: The beginning and establishment of relations between the EECs



The EU and Taiwan Relationship (1950s-1970s)

Member States and the PRC culminating with EEC itself and the PRC in 1975.
4. Chapter 4: From diplomatic relation to a trade agreement in 1978 while Taiwan
fades away politically and faces further import restrictions and anti-dumping.
5. Chapter 5: From EEC-PRC Trade Agreement to the EEC-PRC Textile Trade
Agreement in 1979 and continued imports restrictions on Taiwanese products.
6. Conclusion
We lay out here some highlights of each book chapter to give the reader a rst grasp
of what will be found in the chapters that follow in unfolding the nub of the book. Chapter 1 tells the story from the 1950s to the 1960s in the context of developments between
the EEC and the ROC on the island of Taiwan. It describes how trade relations were initiated between Taiwan and the then ECSC and EEC countries already in the 1950s. The
imports of canned vegetables and fruits became an issue over pricing and its restricted
imports had effects on famers, workers and their families. We will see a long history
from the 1950s onwards of restrictions on Taiwans exports to the EEC.
The ROC attempted to enhance its relations with Europe including those countries
of the EEC as with the rest of the world. In 1962-63, the ROC made two attempts to establish diplomatic relations with the EEC and on the second succeeded but this was
thwarted by the refusal of France, after agreeing to diplomatic relations, refused to accredit the rst ROCs Ambassador to the EEC when it switched recognition to the PRC
in January 1964. Both EUs and Taiwanese archives spoke of the appointment of an interim Charg daffaires but the archives went cold as to the follow-up.
The chapter ends with the parallel development of the PRCs relations with the
ECSC and EEC that was mainly in the trade eld, the import of wheat from France, and
noted is the critical stance of the PRC to European integration that we will see completely changed in the 1970s.
Chapter 2 opens with the state of trade marked by successes in exports to the EEC
market resulting in a trade surplus for Taiwan contrary to the 1950s and 1960s and increasing attempts to restrict Taiwans imports into the EEC market detrimental to industry and employment. We see also foreign investments including European ones owing
into Taiwan.
We begin to see the weight of the PRC entering into the decision-making of international organisations notably the UN, the switch of Belgium to recognize the PRC when
its support for a two-China policy fell through, the closure of the ROCs Embassy in
Brussels and its replacement by a company set up to handle economic matters with the



EEC and succeeding entities replacing the embassy for other matters and then the expulsion of ROC from the UN in October 1971. Through this period, food aid to Taiwan in
the form of butter oil and cream powdered milk were objected by France and ROCs application to benefit from the EECs Generalised System of Preference (GSP) had the
hesitation of the EEC and its Member States. This was before the expulsion. After the
expulsion, the attendance of the ROC in the Cotton Textiles Committee meeting of January 1972 was in jeopardy. ROC was a member of the Long Term Textiles Agreement
(LTA) of the Cotton Textiles Trade. She withdrew her participation from the Cotton Textiles Committee. Finally, her attendance at a meeting of the General Agreement on Tariffs and Trade (GATT) was in jeopardy and she was expelled in November 1971.
However, when it came to the EECs interest, there was the willingness to meet the
ROCs representatives to ensure continuation of the cotton textile trade agreement even
after the expulsion of the ROCs withdrawal from the LTA and the Cotton Textiles Committee. This agreement expired in 1973 but it seems that the ROC continued to observe
this agreement beyond 1973.
The PRCs diplomats, now based in Brussels, were suspicious and anxious that the
EEC was still negotiating with ROCs representatives over textile matters. For the PRC,
this was unacceptable as it had now established diplomatic relations with the EECs
Member States. The EEC had to assure the PRCs diplomats there were no negotiations
for a textile agreement with the ROC as there was recognition of the PRC by the Member States.
The rest of the chapter deals with the restrictions on the imports of goods from ROC,
apart from textiles although the textiles story continued, under what is called autonomous decision of the EEC. Quantities of imports were not the result of negotiations
with the ROC. This came to be case for cotton textiles that was the only good that had an
agreement between both sides. What is interesting to note is the kind of goods that Taiwan produced in the value-chain in the 1970s largely labour-intensive. They are associated to wearing i.e. stockings, hose, socks, coats, vests, robes, skirts, garments and undergarments, outer-garments, trousers, jeans, jumpers, blouses, gloves, jerseys,
pullovers, slip-overs, twinsets, cardigans, synthetic bres, cotton fabrics, synthetic yarns
then consumer goods like bed-jackets, toys, radio receivers, tape recorders, umbrellas
and sunshades and to agricultural goods like mushrooms, asparagus and dehydrated garlic. There is a diversication if even the goods were of a labour-intensive nature.
Chapter 3 opens with information on the EEC Six and statehood recognition and
relations with the PRC and of the prospects of trade and investment. This is



The EU and Taiwan Relationship (1950s-1970s)

the chapter where we see the start of the route of the EEC (when it became nine in 1973)
in 1972 and PRC establishing diplomatic relations with one another culminating in Sir
Christopher Soames, Commissioner responsible for External Relations, visiting Peking
in May 1975.
The suspicion and anxiety of the PRCs ofcials over the EEC negotiating with the
ROC went all the way to Peking requiring reassurances to the contrary. For the PRC a
trade agreement indicated diplomatic relations and statehood recognition of the ROC.
On the table for both sides to meet up, was the EECs offer of a trade agreement to
the PRC and the background to this was extending to certain Asian state-trading countries the benet of the EECs trade policy towards state-trading countries in Europe and
secondly, a community/EEC-based trade agreement with these countries rather than individual country-to-country trade agreement from 1975 when the European Commission
began the practice of its full competence in trade.
However, for the PRC, establishing diplomatic relations came rst before any agreement. For the EEC, a trade agreement could precede diplomatic relations and having a
trade agreement did not mean diplomatic relations and statehood recognition.
These issues of statehood recognition and diplomatic relations were nally discussed
between Sir Christopher Soames and Chinese leaders in Peking. Chinese leaders were
clear that diplomatic relations hinged on the recognition of the PRC as the sole legal
government of China, that Taiwan was a part of China and that there would be no ofcial
relations with Taiwan. There was no question of two Chinas.
The reply was that the EEC (represented in concrete terms by the European Commission) had no relations with Taiwan in view of the position taken by its Member
States. The EEC followed the Member States. It was explained that the EEC was not a
state. State recognition was between states. Statehood recognition did not come within
the responsibility of the EEC. Hence, statehood recognition did not arise. The EEC was
an international (not political) trade entity.
There was no trade agreement with Taiwan. Trade between the EEC and Taiwan was
entirely in the hands of private operators and all actions in trade policy were autonomously decided.
Following this visit to Peking came the accreditation of the Chinese Ambassador to
the EEC in September 1975 but this did not stop PRCs ofcials questioning the Commission on Taiwan and the EECs GSP with the reply that Taiwan was not a country but
a part of China. For this reason, the EEC did not give Taiwan preferential treatment because it did not exist for the EEC.



Chapter 4 covers the period 1976 to 1978, year by year. The main focus is obviously
the continued saga of negotiations for a trade agreement in 1978 and, in parallel, we see
Taiwan, the irritant, and how the ROC/Taiwan relations are reduced to trade and the import restrictions imposed.
The Chinese in January 1976 indicated that they were now prepared to enter into negotiations for such an agreement but we see that the push actually came from the EEC
side starting in March 1976 centering on the Chinese concept of balanced expansion of
trade and the other, the Communitys wish for certain safeguard procedures, two issues
raised in exploratory talks so far pursued from a high level meeting between Sir Christopher Soames and the Chinese Charg dAffaires, Mr. Yu Hui-min to a lower level team
meeting between ofcials of both sides. Before long, it was discovered that the reason
for the Chinese delay or lull in responding to negotiations was the gang of four sabotaging Chinas international trade. Only in February 1977 do we see serious steps to start
negotiations with key persons appointed, Mr. Li Shu-te, the First Secretary, and Mr. de
Kergorlay, the Deputy Director General for External Relations.
Exploratory talks re-started and the Chinese even presented a draft trade agreement
of 11 articles from their side. These exploratory talks ended in July 1977 with the position that the envisaged agreement could in fact be concluded. In September 1977, the
European Commission asked the Council for a mandate to open negotiations on a nonpreferential 5-year trade agreement trade agreement with China with automatic renewal
from year to year unless notice of termination was given. The aim was to start negotiations in November.
1978 was the year of serious and formal negotiations and clinching the agreement
starting on 30 January to 4 February. Both sides had begun analysing the draft agreement
on article-by-article basis adopting preliminary positions. The initialling of the agreement took place on 3 February 1978 with compromises made.
The EEC gave in to the Chinese on their insistence on balancing trade and on the
friendly consultation clause without the possibility of emergency measures entirely
excluded in a very cautious form. Both sides agreed on a prices clause i.e. at market-related prices. The Chinese dropped their insistence on extending the MFN clause to cover
not only custom duties and other taxes but also the kind of trade restrictions afforded to
GATT countries as regards liberalisation. The liberalisation list for her would be extended and would not be identical with that applied to other state-trading countries that
had no contractual relations with the EEC as a quid pro quo for favourable consideration
to EEC imports.



The EU and Taiwan Relationship (1950s-1970s)

We have the impression that the EEC was in a kind of desperation for an agreement
to give in to what the PRC demanded and hoping for special treatment given to its exports and the only concern was that there was a safeguard clause that allowed it to impose restrictions on the PRCs exports that severely threatened its own industries without
consultation with her.
The content of the agreement included the setting up of a Joint EEC-China Committee to ensure satisfactory functioning of the agreement and making recommendations
notably to eliminate difculties hindering the development and diversication of trade.
Provisions for trade development, promotion of visits and meetings, incentives and facilities for the organisation of fairs and exhibitions and a clause relating to access to Chinese raw materials and regularity of supplies.
In the EEC mind for such an agreement were EEC exports of machines, industrial
equipment, means of transport, other manufactured goods and chemical products and
imports of raw materials and food products. The Chinese market was huge and large
with enormous sales to be traded, the last frontier to be conquered for capitalism, to recover from economic difculties at home, the Chinese market was a saviour.
For the Chinese, they wanted European technology, equipment to modernize, to
catch up by the end of the 20th century but not at any price. In the 1970s purchases were
made only when it was in a position to pay back. Imports paid for by exports. China
could not run into debts and there must be a balanced trade. China also held the principle
of self-reliance i.e. relying on itself, on its own efforts without excluding the use of foreign technologies.
One issue of contention between the Commission and the Council was maritime
transport that was not part of the agreement regretting the position of the Member States.
The merchant eet of China occupied already in the world an important position and a
programme of huge construction was on its way of realisation. This would lead one day
to the Chinese authorities to adopt a protectionist policy to the detriment of European
builders. A clause on maritime transport agreed with the Chinese on the occasion of future negotiations would allow the Community to better react if such a situation appeared.
A press Release of the Council dated 25 May 1978 stated that the exchange of instruments of notication, provided for in Article 11 of the agreement signed on 2 April
1978, having taken place on 25 May 1978, this agreement would enter into force conforming to Article 11 on 1 June 1978.
In passing, the European Parliament came in on the trade agreement, the deaths of
Chou En Lai and Mr. Chu Teh, thanks to the Chinese Foreign Minister, Mr. Huang



Hua on Mr. Jenkins as President of the European Commission, the PRC and GATT, circus of visits including Mr. Li Chiang, Chinese Minister for Foreign Trade and Mr. Mr.
Gu Mu, Deputy Prime Minister and Vice-President Haferkamp.
Turning to Taiwan, politically, it came onto the agenda in 1976 twice. The Chinese
Ambassador complained to the UK Permanent Representative, of being discriminated
against over commodities while the South Koreans and Taiwanese were getting better
deals. Then the Chinese Night organized by the Recreative International Centre in
which a Taiwanese correspondent, a Mr. C.K. Wang, was giving a concert of Chinese
music. This Centre had invoked that the night was under the auspices of the EEC as well
as the Belgian Foreign Ministry and the City of Brussels. This brought about a Chinese
protest. This incident showed the sensitivity of the PRC to anything that had to do with
Taiwan and the willingness of the EEC, the Commission here, to give in to the Chinese
just to maintain good future relations.
Economically, trade was the area where the EEC wanted to demonstrate that it did
not have anything to do with the ROC, with Taiwan. It stressed time and again that its
restrictive imports of Taiwanese goods were based on autonomous decision in the form
of Commission/Council Decisions and Regulations in the non-application of community
treatment. This was especially so with the negotiations going on with the PRC on a trade
agreement. In addition, anti-dumping measures to protect industry as dumping at lower
prices meant that they could not compete with Taiwanese products. However, such restrictions and anti-dumping measures also testied to the success of its export strategy.
In 1977, it was revealed that Taiwan was the 4th major supplier to the EEC. In September 1978, on the interdependence between Europe and the world, Taiwan was among
seven developing countries, the others were Hong Kong, South Korea, Singapore, Brazil,
India and Mexico that together accounted for 70% of manufactured exports.
In this period, we see under Certain textile products, quotas of yarn of synthetic
textile bres were increased as needed in 1976, allocating quantitative quotas of 1977
that were maintained in 1978 and extended to 1982.
Past specic products and new ones were targeted like undergarments and outer garments for men and boys, mens and boys shirts, mens woven shirts of mixed synthetic
textile fibres, mens pyjamas, suits (including coordinate suits) for men and boys, of
wool, cotton, or man-made textile bres, stockings of acrylic bres, synthetic socks, woven cotton fabrics, woven fabrics of synthetic bres, cotton and synthetic bres, woven
fabrics of man-made bres, womens, girls and infants shirts and blouses, womens,
girls and infants coats, jackets, dresses and shirts, woven and knitted dresses, crocheted



The EU and Taiwan Relationship (1950s-1970s)

dresses, womens, girls and infants undergarments, womens, girls and infants (other
than babies) dresses of woven fabric or knitted or crocheted, knitted or crocheted trousers, mittens and mitts, jerseys, pullovers, slip-overs, twinsets, cardigans, bed-jackets
and jumpers, parkas, anoraks, windcheaters, gloves, radio receivers, umbrellas, parasols,
sunshades, footwear, toys, television sets, malleable cast-iron tube and pipes ttings.
Cycle chains were subjected anti-dumping duty. The Commission had opened antidumping procedure on tyres and inner tubes in 1977 and monitored extended in 1978.
Anti-dumping procedure remained open for steel screws. Monitoring was extended to
threaded or tapped steel nuts.
The only agricultural product subjected to safeguard measures continously was
canned mushrooms.
In all these Commission/Council decisions and regulations to protect European industry, European importers and producers did not always see eye-to-eye exemplied by
the warning of protectionism in textile eld given by the Committee of EEC Commercial
Organisations (COCCEE) violating international law to reduce the exports of supplier
countries granted by previous agreements. It pleaded the cause of Formosa to the Community and the Member States, as a safe supplier of textile products.
Examining these products, they were products of the labour-intensive phase of production especially textiles and garments and could be included mushrooms that were
produced by cheap labour making them competitive and behind this labour exploitation.
Of the other products, there seemed to be growing sophistication in going up the value
chain. This showed also a diversication of products manufactured.
Chapter 5s mainly focuses on the negotiations for a EEC-PRC Textile Agreement
in 1979, a sectoral agreement within the framework of the EEC-PRC Trade Agreement.
It isdiscuessed in a separate chapter because there are more details, intense negotiations,
twists and turns requiring greater attention. It shows the toughness of Chinese negotiators putting the EEC side in a disadvantaged position to the point of intimidation, subtle
coercion. Coupled to negotiating this textile agreement was the issue of including the
PRC in the 1981 GSP scheme. It could not be separated from the negotiations for a textile agreement and the implementation of the trade agreement in force.
Exploratory talks towards this textile agreement took place on 22-23 January 1979,
Following the months of February, April and July 1979 an agreement was concluded on
18 July 1979. It was short but not so easy.
It hit a hitch at the 19-20 April 1979 second phase of negotiations where we saw a
or hot moment of the Chinese position. A preliminary report that reflected the


The EU and Taiwan Relationship (1950s-1970s)

Paul Joseph Lim

Chong-ko Peter Tzou