Taiwan faces multiple difficulties in developing foreign relations due to various obstacles in international politics.  In the diplomatic field, Taiwan's relations with Russia are no exception.

However, from the perspective of international trade, the industrial structure of Taiwan and Russia deserves a closer look.  Due to a relative lack of natural resources, Taiwan has developed a highly competitive manufacturing industry, whereas resource-rich Russia lags behind in manufacturing daily necessities. Since both sides seem to have strongly complementary markets, further development of bilateral economic and trade ties would certainly be worthwhile.

From the stance of international politics, Russia carried out an aggressive “Turn to the East” policy after the Ukrainian incident in 2014, planning a stronger strategic presence in the Asia-Pacific region under which leveraging Taiwan’s geographical position is worthwhile.

Aside from that, even though Russia and China have been strengthening their strategic cooperation against the backdrop of the current international situation, voices warning of a "Chinese threat” have never quieted down in Russia. Taiwan can take advantage of the contradictory sentiment in the relationship between Russia and China to explore opportunities for further cooperation with Russia.

A Record of Taiwan-Russia Relations

Interaction between Taiwan and what was then the Soviet Union began in early 1990 when Soviet President Mikhail Gorbachev proposed his policy of “Perestroika and Glasnost" (restructuring and openness). Gorbachev’s program fit well with Taiwan’s pragmatic foreign policy, and both sides subsequently engaged in interaction in many fields.

When the Soviet Union collapsed in 1991 and Russia officially inherited the rights and obligations of the Soviet Union in the international sphere, the Taiwanese government mapped out an important diplomatic strategy that aimed to “develop relations with the [former Soviet] republics as counterparts,” and spared no effort in developing relations with Russia, Ukraine, Belarus and Kazakhstan.

In 1992, then Taiwan Vice Foreign Minister John Chang (now surnamed Chiang) twice led unofficial private-sector business delegations to Russia to deliver aid. On these occasions, a protocol was reached with high-ranking Russian officials, “On the Establishment of the Taipei-Moscow Coordination Commission and Moscow-Taipei Coordination Commission.”

In 1993, the Moscow-Taipei Coordination Commission on Economic and Cultural Cooperation (MTC) was unveiled in Moscow, while the Taipei-Moscow Economic and Cultural Coordination Committee (TMECCC) formally began operations in Taipei in 1996.

After the Democratic Progressive Party (DPP) came to power in 2000, the government strongly promoted bilateral cooperation with Russia in many fields, hoping to strengthen Taiwan’s links with the global market. Against this backdrop, the Taiwan-Russia Association was established [in 2002] with the goal of fostering economic development, technical cooperation and cultural exchanges between Taiwan and the Commonwealth of Independent States [of the former Soviet Union].

In September of the same year, the Association’s president, [former Premier] Chang Chun-hsiung participated in the 3^rd Investment Mart of the Asia-Pacific Economic Cooperation forum in Vladivostok together with Minister of Transportation and Communications Lin Ling-san, Council of Labor Affairs Chairperson Chen Chu, and corporate executives representing Yang Ming Marine Transport, TransAsia Airways, and China Airlines, among others. On another visit to Russia by Chang the following year, bilateral agreements were signed including a re-lending project, a currency exchange program, and crude oil and fertilizer raw material purchase deals

After the Kuomintang took power in 2008, Taiwan-Russia relations benefited from the warming of cross-strait ties. Russia became an important target country under the New Zheng He Plan for export diversification launched by the government in 2008. In the wake of the global financial crisis and the Ukrainian incident, Russia undertook a multilateral strategy for its global presence, beginning to strengthen its links with the Asia-Pacific markets in 2014, creating new opportunities for bilateral ties – with the total amount of bilateral trade reaching a new high that year. (see Graph)

Taiwan-Russia Bilateral Trade (Source:  Compiled by the author from data from the Customs Administration, Ministry of Finance, R.O.C.)

As shown in the graph, Taiwan has run a trade deficit with Russia over the past 15 years or so. However, the total volume of bilateral trade has grown steadily or maintained its level over the years, except for short dips due to the global financial crisis in 2009 and the deprecation of the Russian currency against the Taiwan dollar in 2015, resulting in an economic slump in Russia.  This indicates that bilateral relations and trade between Taiwan and Russia have been deepening with time.

The Special Characteristics of Taiwan-Russia Ties

A closer look at the structure of bilateral trade shows that Taiwanese exports to Russia are mainly manufactured goods, whereas Taiwan mostly imports raw materials from Russia, which suits both sides’ industrial development. This also shows that Taiwan and Russia strongly complement each other in bilateral trade.

Since there is limited demand for Taiwan’s major export goods in the Russian market, whereas Taiwan lacks the natural raw materials that constitute Russia’s main exports, Taiwan has incurred a persistent negative trade balance with Russia, with the surplus/deficit accounting for a negligible share of each country’s overall trade volume.

Therefore, it is not possible for Taiwan to make trade and investment a strategic tool in promoting a substantive bilateral relationship with Russia. The China factor also leaves Russia with little space to further develop dialogue with Taiwan.

Given this trend, and due to the fact that many manufacturing bases for Taiwanese exports to Russia have meanwhile been relocated to China, Taiwanese manufacturing is following the pattern of “receiving orders in Taiwan and shipping goods from China.” These “shipments from third locations” means the purchased goods are actually calculated as part of “China-Russia trade” and not as “Taiwan-Russia trade,” resulting in the actual trade volume between Taiwan and Russia far exceeding the official statistical records.

Expanding Taiwan-Russia Ties

The example of the Taiwan-Russia Association's visit to Russia in 2002 shows that Russia is sticking to the principle of “pragmatism” when it comes to dealing with international issues:  The national interest is Russia’s most crucial consideration. Against this backdrop, Taiwan can, of course, look for room to seek closer contacts with Russia, as long as such endeavors contribute to Russia’s economic development and do not cross Russia’s “one China principle” line.

In terms of the current structure of bilateral trade, years of interaction based on “comparative advantage” and “factor endowment theory” have led to a fixed palette of import and export items.  Yet, if recent industrial development in both countries is taken into account, greater breakthroughs should be possible in bilateral trade – various fields such as agriculture, high-tech products and the aerospace industry are all waiting to be developed.

Finally, from a strategic perspective, Taiwan could take advantage of the dialogue mechanisms created in various fields by international organizations in which Taiwan and Russia both are members, such as APEC and the WTO. It should also closely watch the cooperation opportunities resulting from Russia’s massive promotion of the “Eurasian Economic Union” in recent years and ponder whether it should emulate the Vietnamese example in participating in that trading bloc.

To put it simply, the best way for Taiwan to sidestep the “China factor” and directly develop its ties with Russia is by actively using the cooperation frameworks offered by international organizations such as APEC and the WTO; the “Eurasian Economic Union” is currently the most promising choice for future development.

Translated from the Chinese article by Susanne Ganz

About the Author

Anton Tang
Graduated from the Graduate Institute of Russian Studies, National Chengchi University (NCCU), founder of the Let’s Go to Russia Facebook page with a strong research interest in Russia and Eastern Europe.

Recipient of a Ministry of Foreign Affairs scholarship, the NCCU Daonan Award and the Outstanding Youth Award, honorary member of the Phi Tai Phi Scholastic Honor Society of the Republic of China.  Writes articles for Taiwan-Russia publications and online media such as dq.yam.com, The News Lens, and the Chinese-language edition of The Moscow Times.

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Crossing features more than 200 (still increasing) Taiwanese new generation from over 110 cities around the globe. They have no fancy rhetoric and sophisticated knowledge, just genuine views and sincere narratives. They are simply our friends who happen to stay abroad, generously and naturally sharing their stories, experience and perspectives.  See also CrossingNYC.

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