EU-Taiwan Relations: Small Nations, Big Ideas

A. Importance of Taiwan

As noted previously, Taiwan is in a very delicate geopolitical position. It is clear that under Xi’s leadership, the PRC views Taiwan as a threat. Economically, Taiwan is important for the world as it is a major producer of semiconductors, is involved in the production of future technologies such as AI, plays a crucial role in global economic supply chains, and serves as an example of a successful Chinese-speaking democracy. There are speculations about when an invasion might occur, whether it will be through physical means or via hybrid warfare. Hybrid warfare seems to be the more promising strategy that the PRC will gradually execute through cyberattacks, military patrols, assertive diplomacy, and disinformation campaigns (Frisch, 2024). Regardless of which route Xi chooses, Taiwan is not willing to participate in PRC’s plans. Any acts of aggression and sabotage towards Taiwan are against the interests of the global community and should be prevented. The EU can play an important role in mitigating tensions in the Taiwan Strait through strategic means. Taiwanese President Lai has emphasised Taiwan’s willingness to cooperate with the EU, stating that “Taiwan and Europe may be far apart geographically, but we both share common values such as democracy, freedom, and human rights” (Lau, 2024).”

The Taiwanese semiconductor industry is a very powerful one and most associated with being Taiwan’s biggest shield against invasion. Semiconductors are used for modern technology such as smartphones, cars, and industrial machinery. The Taiwanese firm, TSMC, produces 60% of all common semiconductors and over 90% of the most advanced semiconductors, dominating the global market (Hmaidi & Chang, 2023). Despite the EU’s goal of strategic autonomy (being less reliant on importing critical raw materials) Europe needs Taiwan’s advanced semiconductors to keep up in the tech field, as building a single microchip plant can cost around 12 billion dollars, 6,000 workers, and three years (Hmaidi & Chang, 2023). Moreover, the AI industry in Taiwan is flourishing – the government has encouraged companies by offering 25% tax deductions for research and development on AI chips, with a goal of increasing the market share from 20% to 40% by 2023 (Ferenczy, 2024). Likewise, Taiwan is centred on developing AI that promotes data governance and AI ethics, tapping into smart services across industries that are essential for future technological progress. Therefore it can be said; the Taiwan Strait is not just a strait, but a focal point of trading routes in which around 40% of the EU’s annual trade volume passes through, making it critical for global supply chains and unimpeded sea lanes of communication (Swanstrom et al., 2024). 

Moreover, Taiwan holds a unique position in understanding Mainland China and the CCP. As countries grapple to understand the PRC and its growing hostile actions aimed at undermining the current global order in favour of an authoritarian-friendly global arrangement, Taiwan, due to its proximity and historical ties, can offer valuable insights to like-minded partners seeking to understand the PRC. Lastly, Taiwan is one of the most successful democracies around the world and the most democratic nation in Asia. Taiwanese democracy was hard-won as the nation went through an arduous process to achieve democratic rule. In this, democracy is central to modern Taiwanese identity and its status as the 10th most democratic nation in the world is an achievement that Taiwan values greatly (Swanstrom et al., 2024). Democracies may foster a more open, stable, and a more peaceful global synergy however recently this is in decline (Karpova, 2024). Yet still the EU’s core values of democracy, the rule of law, and human rights make Taiwan a natural partner in global affairs. 

B. EU-Taiwan Policy

The EU’s policy toward Taiwan is usually overshadowed by EU-China policy. It was not until recently that Taiwan began to be seen as separate from the PRC in the view of the EU. In 1971, when the UN seat was passed to the PRC to represent China in the world, European states broke relations with Taipei and exchanged ambassadors with Beijing in 1975 (Damm & Lim, 2012). At that time, the EU was still in its infancy with fewer member states (MS) under the European Economic Community (EEC). Mostly concerned on economic development and in the middle of its development, the EEC was grappling with its own intricacies on the continent and coming to peace with previous wars while also dealing with their counterparts across the Iron Curtain. With the EEC’s intentions concerning most economic matters, there was no desire to be involved in the Indo-Pacific Region in political or military affairs. Therefore, money talked, and the PRC took precedence over Taiwan. As the EEC developed, going beyond economic cooperation but tapping into foreign policy and a greater vision, it officially became the EU in 1993. However, in the 1990s and early 2000s, the EU was optimistic about the PRC’s inclusion in the world, particularly when the PRC joined the World Trade Organisation (WTO) in 2001 (Brinza et al., 2024). Similarly to the US, the EU hoped that as the PRC engaged in international trade, it would democratise and pursue a market economy that was open to foreign trade and investment. 

The EU subscribes to the One China Principle, meaning it has official ties with the PRC and unofficial ties with Taiwan, recognising that the PRC represents the Chinese people. As the EU has strived to keep away from the issue of Taiwan’s sovereignty and as its relations kindled with the PRC, the EU avoided discussing Taiwan. However, the EU would publicly condemn the PRC on other issues, such as human rights violations. The first time the EU criticised the PRC over Taiwan was in 1996 when the PRC tested missiles in the Taiwan Strait in protest of statements made by then Taiwan president Lee Tenghui, but in recent years it has been largely passive (Damm & Lim, 2012, p. 180). Although abiding by the One China Principle, the EU cooperates with Taiwan mainly in economic and other limited forms of cooperation. Moreover in 2022, Josep Borell, the EU’s foreign policy chief, stated that “the One China Policy does not prevent us – the European Union – from persisting and intensifying our cooperation with Taiwan” (EEAS, 2022). Provided that this kind of cooperation violates the CCP’s definition of the One China Principle, viewing Taiwan as part of China and, therefore, an internal affair, the PRC has been diligently trying to undermine Taiwan’s cooperation with the EU. Nevertheless, the EU and the EU’s public opinion favours and sympathises with Taiwan as it is a like-minded democracy and is being threatened by a large autocratic state (Damm & Lim, 2012, p. 186). This is particularly relevant in the last few years, as Russia continues to wage war against Ukraine and undermine its sovereignty. The European public opinion, represented through the European Parliament, leans in favour of Taiwan, and certain parties have formed parliamentary friendship groups with Taiwan in a consequence. 

It was not until 2017 that the EU began reevaluating its relationship with the PRC. The EU’s slow deterioration and dissolution with the PRC coincided with US President Donald Trump’s rousing trade war with China. Paired with China’s ‘Wolf Warrior diplomacy,’ which espoused a confrontational and punitive style of diplomacy toward states that were perceived to violate PRC’s global objectives, exposed the EU’s wariness; however, the EU was too economically entangled with China to jeopardise its relations. The EU has always taken a softer approach to dealing with the PRC, displaying dissatisfaction through public statements, usually taking the route of a passive global player, prioritising economic relations. Yet the COVID-19 pandemic exposed EU vulnerabilities, marking 2019 as the start of deteriorating relations. For the first time, a 2019 report on EU-China declared China a “partner for cooperation and negotiations on major global issues such as climate change, a technological and economic competitor as well as a systemic rival with its own set of values” (Brinza et al., 2024). 

Exacerbated by the pandemic; economic discrepancies and lack of reciprocity; human rights violations in Xinjiang, Hong Kong, and Tibet; military threats toward Taiwan; 5G security issues; and China’s support for Russia’s war in Ukraine has placed the EU on a de-risking and a defensive trajectory toward the PRC. In recent years, the EU has employed various defensive strategies to protect itself from China dominating the European single market. In 2023, the EU adopted a foreign direct investment screening mechanism, an anti-coercion instrument, the 5G toolbox, and anti-foreign subsidy regulations (Brintza et al., 2024). In 2024, armed with the set instruments, the EU was able to crack down on suspicious Chinese subsidiaries across Europe that posed national security risks (Williams, 2024). The EU also imposed tariffs on Chinese Electric Vehicles (EVs) at 38.1%, following the US decision to impose a 100% rate tariff on Chinese EVs in order to protect itself from China’s unfair trading practices (Blenkinsop, 2024). 

As it further reevaluated its relationship with the increasingly assertive PRC, the EU has taken a more proactive role toward Taiwan and reformulated its policy. In 2021, the European Parliament published the EU-Taiwan political relations and cooperation report for the first time, identifying Taiwan as an essential player in the global economy, key for security in the Indo-Pacific, and a like-minded democratic partner (Ferenczy, 2024). The EU was also considering implementing the Bilateral Investment Agreement with Taiwan which would have increased economic cooperation and political cooperation, although officials have since rejected the agreement, stating that it is unnecessary. Numerous EU lawmakers have spoken in support of the agreement, however the main driving force behind the rejection is due to fears of the PRC retaliating (Malinconi, 2023). However, in 2023, the EU publicly encouraged its members “to intensify cooperation and pursue a comprehensive enhanced partnership with Taiwan” within the EU’s One China Principle (Delman, 2024, p. 54). At the end of 2023, the European Parliament took a supporting position toward Taiwan by establishing the European Parliament resolution on EU-Taiwan trade and investment relations, which are aimed at MS improving economic and political engagement with Taipei, followed in 2024 by two more resolutions in relation to the CFSP (Swanstrom et al., 2024). This report upgraded the EU’s definition of the One China Principle by stating that “neither Taiwan nor China are subordinate to the other and that it is only the democratically elected government in Taiwan that has the right to represent the Taiwanese population on the international stage”, and it further went to clarify that it opposed China’s unilateral actions to change the status quo (Stanicek, 2024). This was the EU’s strongest position ever taken regarding Taiwan. However, the EU has not adopted any long-term directions that could deter Beijing from taking over Taiwan, and Member States’ varying entanglements and relations with the PRC make it hard for the EU to implement a joint concrete action plan. 

C. Member States’ Individual Approaches to Taiwan

The EU has initiated much progress on cooperation with Taiwan. However, tangible policies and actions are difficult to achieve when unanimity amongst all MS is required before a CFSP decision can be made. Hence, the prolonged time it took for the EU to recognise Beijing’s actions compromised the EU and the EU’s hesitancy in making bolder decisions in accordance with its core values and Taiwan. Nevertheless, individual MS do cooperate with Taiwan to varying degrees. Notable cooperation can be observed in Central Europe, the Baltic region, and other smaller MS. Russia’s war in Ukraine, especially, triggered former communist states that have had the threat of Russia in its eastern neighbourhood and reawakening fears of authoritarian threats to sympathise with Taiwan. However, Hungary is a significant outlier regarding close relations with Russia and China. At the same time, larger states such as France and Germany carry mixed messages. A considerable factor is determined by how much trade and dependency a state has with China. 

Germany’s automobile industry is heavily dependent on and intertwined with the Chinese market. Germany opposed the EU tariffs on electric vehicles, primarily driven by fears of Chinese retaliation on German industry (Barkin, 2024). Taiwanese Vice President Hsiao Bi-khim toured several European countries this year in March but was denied a pass through Germany by Chancellor Olaf Scholz. Germany’s heavy economic dependency on the Chinese market obstructs Germany from practicing a value-based foreign policy and, with the opposition of the new tariffs, has shown to impede the EU’s retaliation on China’s unfair trading practices and the EU’s efforts to be more proactive in deterring a conflict in the Taiwan Strait. On the other hand, French President Emmanuel Macron is a stark supporter of the EU’s ‘Strategic Autonomy’, meaning that he does not want the EU to follow the US in global affairs but rather be its own global player. This also means that his stance toward the PRC is less hawkish and more cooperative. In his last year’s visit, in a failed attempt to steer Xi away from supporting Russia’s war in Ukraine, he also stated that the “EU should avoid following the United States into a conflict over Taiwan” (Reid, 2023). In contrast, the business delegation that accompanied him during the visit was very successful. 

Unlike France and Germany, Central European and Baltic countries have been taking the lead on the EU’s value-based foreign policy. While Taiwanese Vice President Hsiao could not visit Germany, she made productive visits to Lithuania, Czechia, Poland, and Belgium. The central European and Baltic states have led the EU’s value-based diplomacy in the bloc and have shown exemplary EU-Taiwan relations within the EU’s One China Principle. As a consequence, Lithuania, for example, was a victim of Chinese economic coercion in 2021. After its intelligence agency labelled China a national security risk due to its close ties with Russia, Lithuania was the first to drop out of the 17+1 Initiative. The 17+1, now 14+1 Initiative, is the PRC’s strategy to deepen cooperation with Central and Eastern European (CEE) states. However, all the Baltic states have withdrawn, and most others remain inactive. This has led many to view the Initiative as a failed attempt to influence CEE states toward China, with some closer to China than others. 

When Lithuania initiated dropping out of the 17+1 Initiative, China was already brewing to retaliate economically by preventing its market access. However, Beijing was seriously offended when Lithuania decided to open the Taiwanese Economic and Cultural Office (TECRO) under the name ‘Taiwan’ instead of ‘Taipei’ as is customary (Andrijauskas, 2022). In an effort to isolate Lithuania, distorting its trade and therefore impacting the rest of the bloc, the PRC hoped the EU would pressure Lithuania to retract its actions. However, the EU responded in support of its MS. Moreover, Lithuania gained economic support from the US, EU, and Taiwan. Czechia is another proactive MS that cooperates with Taiwan. Since 2021, the Czech government has realised the value of cooperating with Taiwan on multi-pronged fronts. Taiwan has been a significant investor in Czechia by opening the electronic manufacturing company Foxconn and planned cooperation with Taiwan’s semiconductor industry (Sebok, 2023). Moreover, apart from economic, educational, and cultural exchanges, Czech policymakers have vied for the EU to progress the EU Bilateral Investment Treaty (BIT) with Taiwan. Although to no avail in Brussels, Czechia and Lithuania are taking steps to engage with Taiwan on a deeper level. Taiwan has likewise reciprocated by implementing an investment fund of $82.58 billion for CEE and other economic and cultural exchange agreements (Yang, 2024). 

Russia’s war in Ukraine strikes the CEE MS on a personal level, making it easier for them to understand the comparable struggle that Taiwan faces regarding the PRC. Having dealt with breaking away from the Russia in the 1990s, knowing what authoritarian governance entails, and going through the democratisation process themselves to become fully integrated EU members, CEE MS can understand Taiwan better. China could be seen to have attempted to sway CEE in the past in an effort to relate to their communist pasts. However, Taiwan represents what the CEE has become: democratic and free.