Taipei, 12 February 1970

Secret

Australian Interests in Taiwan

Washington telegram 712 outlined some of the fields in which the U.S. may be looking for new ways to make gestures to and possibly come to some sort of terms with Peking.² In any review of policy, the U.S. will no doubt have to take into account its own continuing interests in Taiwan and to seek to ensure that those interests are endangered as little as possible. Given the range of U.S. interests here–political (e.g. its overall credibility and the reliability of its support for non-communist systems of government), strategic (e.g. its defence commitment) and economic (e.g. large scale American investment)–there seem likely to be severe limitations on how far the U.S. can go in the absence of a major response by Peking. Since Taiwan is obviously the 'heart of the matter' in Sino-American relations, a major response would probably have to include some demonstration by Peking that the latter was willing to accept–tacitly if not explicitly–some compromise over Taiwan.

2. In the light of Washington's 712 and our own talks with the Americans here, it is tempting to speculate that the U.S. may see the 'Nixon doctrine' ³ as meaning not only greater military self-reliance but also greater political and diplomatic self-reliance. In regard to Taiwan, this could mean placing the burden of maintaining its own international position more firmly on the Government here, which would then have to define its international position in terms which could command majority support in the U.N. Even if this is so, however, the U.S. might well have minimum requirements which it would want fulfilled. (See para 8 below.)

3. In my memorandum 63 of 2nd February⁴ I asked for advice if you detected trends in American policies in regard to China which might prove seriously detrimental to Australian interests. That query and the above considerations lead me to draft the following tentative analysis of Australia's interests in Taiwan which, as seen from here, are also economic, political and to some degree strategic.

Economic Interests

4. We have a Trade Agreement with Taiwan⁵ which gives us m.f.n. treatment here and under the terms of which trade talks at Ministerial level are to be held in Australia, probably in April this year. We have a reasonable volume of trade at present–some US$30 million per annum in sales to Taiwan. There are good prospects for a steady increase–possibly to US$45 million per annum in sales to Taiwan over the next five years. Taiwan already buys more from us than does, for example, Indonesia, Thailand, Ceylon or Pakistan. B.H.P. already has a subsidiary in Taiwan and it and other Australian companies are showing interest in the possibility of further investment. We have also some economic interest in seeing Taiwan develop, as it seems capable of doing, into a significant, though minor, donor nation for technical assistance in some fields and even some capital within the region.

5. The volume of trade may be small compared with our sales to mainland China, but it is far from negligible. Growth of trade will of course depend on how we play our cards. The Chinese here would, I believe, welcome expanded trade with us–partly as some alternative to the increasing Japanese economic presence–but the prospects could depend on how reliable a friend we appear to be.

Strategic Interests

6. The strategic importance of Taiwan in the Pacific area may need closer examination than it has received in the recent past. The island was put to strategic use by the Japanese in World War ll. It is close to shipping lanes of importance to us now. If the island passed into unfriendly hands, the Philippines–and possibly other South East Asian countries–could feel more directly threatened. Our SEATO obligations might be relevant in some cases. Moreover, the military potential of Taiwan–whether measured in manpower terms or in terms of industrial capacity–is considerable. During the Korean War and for some time thereafter, it was assessed that Taiwan had strategic significance in that its existence tied down, near the Fukien coast, large numbers of Chinese Communist forces which might otherwise have been used to apply pressures elsewhere; the present validity of this assessment no doubt needs close examination.

7. Of possibly more immediate politico-strategic importance to Australia is the U.S./Taiwan defence commitment. U.S. Ambassador McConaughy⁶ has told me that the U.S. will not alter its commitment to defend Taiwan and the Pescadores for at least the duration of the Nixon Administration. (The area of U.S. doubt and greatest worry in regard to this commitment is over the offshore islands.) The Acting Head of the U.S. Military Assistance Group here recently told me that the MAAG's role is to assist the Government in Taipei to develop sufficient military capacity to withstand the first shock of any attack and thus give the U.S. time to put its 'political pressures' to work on deciding what response the U.S. should make. He commented that the U.S. sought to ensure that the R.O.C. did not have a significant offensive capability against the mainland.

8. I find it difficult to envisage the U.S. readily putting itself in the position where it would be committed to defending a territorial entity which was outside the United Nations Organization, and to which a member of that Organization–and possibly of the Security Council–had an active territorial claim. Even if the U.S. becomes less active in opposing Peking's entry to the U.N., it would seem necessary for the Americans to ensure that they had widespread international support if they were ever called on to honour their defence commitment to Taiwan. To enable the U.S. to muster international and Congressional support in case of need, the U.S. Government would presumably need continuing U.N. Membership for Taiwan, or at the very least some form of international declaration that Taiwan has the right to independent existence–if the people on Taiwan so chose–and the right to call for international assistance if attacked. Given our defence ties, we presumably have an interest in seeing that the U.S.'s task in honouring its commitment is not made harder, even if Taiwan is not in the area in which our specific defence obligations to the Americans exist. In more general terms, we have an interest in not contributing to loss of confidence in American commitments in the region as a whole.

9. In regard to the question of U.N. membership, I might perhaps record that the British Consul here recently mentioned to me–whether on instructions or otherwise–an idea floated by the Nepalese Ambassador to the U.N. that Peking might be seated in the U.N. on the understanding that 'after a decent interval', Taiwan would be admitted separately. He commented that the difficulty was that presumably neither Peking nor Taipei would agree to this. I said it seemed axiomatic that one could not rely on 'understandings' that Taiwan would be readmitted. If one wanted her to be a member, it seemed necessary to avoid expulsion in the first place.

Political Interests

10. Our political interests here also seem reasonably clear-cut in several regards. It is morally justifiable to take the position that the people on Taiwan should have a choice of their political future. (Such a position is also in parallel with what we say about South Korea and South Vietnam.) In other terms it can be argued that, until we are more certain about the degree of militancy there will be in Peking's foreign policies in future, our interests are best served by not giving her a political victory by having her claims to sovereignty over Taiwan accepted (and possibly in the longer term by seeking to avoid having the manpower and industrial resources on Taiwan added to the mainland's potential strength). The effect on other friendly Asian countries of accepting, even implicitly, Peking's claim to sovereignty over Taiwan–thus conceding its right to regain physical possession of claimed territory by any means at any time–would be adverse to our interests.

11. Moreover, apart from any other effects, a radical alteration in our attitude towards Taiwan could make it much more difficult for us to assist in developing a greater degree of regional cooperation through some reasonably promising bodies such as A.S.P.A.C.

12. Given the size and influence of the overseas Chinese communities in SouthEast Asia, we probably also have an interest in preserving some alternative to Peking as a focus for their affiliations. Although Taipei's influence on those communities is limited, and although Nationalist activities within them are seldom welcomed by host governments, a decline in Taipei's position could lead to stronger influence from Peking, with some consequent possibility of greater friction between the communities and the host government.

13. The consequence of Peking's entry into the U.N. at Taiwan's expense would not only be profound internationally and within that organization; they could also precipitate a major political crisis here. One strong prop of the so-called 'national' government in Taipei would be greatly weakened; this government might in these circumstances be hard put to keep the lid on the political pot and might well be harsh in its methods. Economic development would be slowed, if for no other reason than that foreign investment would be likely to slow down. Repression, or even economic recession, would aggravate the differences between the mainlanders and the Taiwanese, whereas our interests would be best served by seeing the gradual elimination of those differences– very slow process. (The above comment is not meant to suggest that we should support the indefinite continuance of a 'national' Chinese government in Taiwan. There are many reasons why it would be advantageous to encourage the development of a 'Government of Taiwan' as such. All I am suggesting is that the consequences of too-rapid movement in that direction could produce very disturbing effects here.)

14. The above consideration seem to me to add up to the thesis that our interests are served by seeing Taiwan develop economically (and, one hopes, in time politically), as an independent entity until, by free choice and peacefully, the people on this island–both Taiwanese and mainlanders–opt for or against union with the mainland. Given the widening differences between Taiwan and the mainland, particularly in regard to the economic systems (extensive foreign investment in Taiwan versus none on the mainland and so on) and standards of living, the possibility of a genuinely free choice being made in favour of union seems remote. Even if some peculiarly Chinese Peking/Taipei compromise was reached our interests here could be considerable and significantly different from our interests on the mainland; we might well need separate representation here. Our pragmatic trade relationship with Peking has been profitable to us; we would presumably look very hard at what concrete benefits would be certain to flow from a changed relationship which might affect our present and prospective interests in Taiwan.

15. Better relations and an eventual accommodation with Peking, and some change in status for Taiwan, are desirable and indeed, in the longer term, essential for regional stability. But in weighing this point against Australia's overall interests, it would seem desirable to seek to avoid such a rapid and drastic change of status for Taiwan as to contribute to:

(a) other regional countries which regard themselves as under China's Communist pressures losing confidence in external guarantees of security made by the U.S. in particular and also by other allied nations; and

(b) political instability and economic deterioration within Taiwan, which could inter alia affect our trade and trade prospects.

16. I think the Japanese would see the problem of Taiwan in much the same light as Australia. In view of the reference to the importance of Taiwan to Japan's security in the Nixon/Sato communiqué,⁷ the Japanese may in fact have made a more precise assessment of Taiwan's strategic importance in the Pacific than that sketched out above. Close consultation with the Japanese on the China question, possibly with a view to taking a parallel line in U.N. debates and other public statements might be desirable.

17. Despite the fact that the Canadians and Italians at present seem to have been brought up short, largely by the Taiwan problem, in their attempts to develop more meaningful relations with Peking, there could be major developments in the China question this year. In addition to comments on the early part of this memorandum, I should of course welcome early advice if references to the China problem are to be made in Australian public statements. If Taiwan is mentioned other than in passing, the above considerations suggest that general points such as the following might be made in such statements:

(a) quite warm tributes could be paid to the remarkable economic success of Taiwan and to its economic cooperation with countries both within and outside the Asian and Pacific region;

(b) the principle that disputes should be settled peacefully and in accord with the freely expressed will of the people could be touched on;

(c) the hope could be expressed that the China problem can be resolved in such a way as to assure the stability, security and continued economic development of the whole region;

(d) the fact that Taiwan is now a valuable trading partner could be brought to greater public attention in Australia.

Comments along these lines would probably be welcomed by the pragmatists here-many of whom keep their pragmatism on matters of the 'national policy' of 'recovery of the mainland' very much to themselves. And an assurance of continued friendship–even if highly qualified–might be quite well received by the 'hard liners' themselves at a time when Taiwan is uncertain about the future.

Copies of this memorandum are being sent to Washington and Hong Kong for information.

[NAA: A1838, 3107/38/18, i]

1 H.A. Dunn replaced Cooper as Australian Ambassador to the ROC on 6 October 1969.

2 7 February. Written by Waller, it stressed that there was 'little doubt that the tide is running strongly in favour of a new look in United States China policy, including a readiness to take initiatives even in the face of Peking's failure to date to respond'. Waller related a number of initiatives that had been mooted, including a less active position on Chinese representation in the United Nations; non-opposition to moves to seat China in various other international bodies (such as WMO); the withdrawal of US forces from the Offshore Islands; and the establishment of a 'more normal' trade relationship with the PRC

3 First announced during a visit to Guam in 1969, the basic elements of the doctrine were that the United States would keep all its treaty commitments; it would provide a shield if a nuclear power threatened a country allied with the United States, or a nation judged vital to US security and to the security of the region as a whole; and in instances involving other types of aggression the United States would give military and economic assistance as appropriate–but here the United States would look to the country threatened to provide most of the manpower for its own defence. See Current Notes, vol. 41, 1970, p. 98.

4 Not found.

5 Signed on 22 April 1968. See Australian Treaty Series, 1968, no. 8.

6 Ambassador to the ROC from 1966.

7 On 21 November 1969 the President of the United States, Richard Nixon, and the Prime Minister of Japan, Sato Eisaku, issued a joint communiqué in Washington. It referred to the PRC and Taiwan as follows: 'The President and the Prime Minister shared the hope that Communist China would adopt a more co-operative and constructive attitude in its external relations. The President referred to the treaty obligations of his country to the Republic of China which the United States would uphold. The Prime Minister said that the maintenance of peace and security in the Taiwan area was also a most important factor for the security of Japan'. See Current Notes, vol.40, 1969,p. 665.