Taipei, undated

Secret

Agenda Item 5.

Taiwan

1. Taiwan has long been the major factor preventing Australia from making progress towards normal relationships with the PRC. Unless there are compromises, one basic political question is likely to remain–whether to choose relations with the PRC or the ROC. The short term prospects for compromise by the PRC are bad; the possibility need not however be completely ruled out in the long term.

2. As our policies towards the PRC develop, it is desirable to minimize damage to our overall interests. This could involve, inter alia, continuous assessment of our interests in Taiwan and their inter-relationship with those of the major parties involved–mainly the US, Japan, PRC and ROC.

3. Australian interests in Taiwan are clearly definable. In trade terms, Taiwan,in the 10 months to April 1971 was our fifth biggest market for sales in Asia, apart from Japan. Take out wheat sales to mainland China and it was the fourth biggest. (Some A$40 million this year and growing at a rate of some 40% a year.) Prospects are good; we are an increasingly useful source of raw materials for rapidly growing industry. We have a formal Trade Agreement with the ROC.² There is some Australian investment (BHP). Politically, U.S. and Japanese, as well as PRC, policies towards Taiwan are significant for us. They will indicate broad trends in those countries' policies. US, Japanese and Chinese interests meet in Taiwan. How they are harmonised or conflict is of great importance; it could determine the course of events in North East Asia. The China policies of other countries, including Australia, could affect internal developments in Taiwan. Taiwan is strategically located and has significant military capacity. Regionally, it provides some technical assistance and a little capital. It is in ASPAC and other regional bodies. Other regional countries are in relations with it; their policies could be influenced by our actions. In Taiwan as elsewhere we are seen as some potentially useful balance to Japan. In human as well as political terms we have been opposed in principle to people coming under communist rule with no say in the matter. (We might be pressed to take refugees.) A consular presence is useful for the sake of Australian residents (60), tourists (12,000 a year) and of property, and the issue of visas for increasing business exchanges.

4. Basic questions emerge early. Is it in our interests that Taiwan should remain separate from the mainland? Would de facto autonomy under nominal mainland sovereignty adequately suit our interests in the long term? The third possibility is mainland rule. We can, of course, do little to affect events, apart from possibly influencing US and Japanese thinking, but these questions are relevant to how we might wish to see our relations with Taiwan and PRC develop. In practice, Taiwan and mainland China are likely to develop along separate lines for many years to come. It is hard to see how such different economies, and, to a lesser degree, political systems, can merge, particularly when there is no near prospect of mutual trust.

5. American and Japanese interests are similar to ours, but much greater.

6. The US is deeply involved, particularly through its Mutual Defence Treaty with the ROC (indefinite in duration), but also in many other ways as a result of its long alliance, continuing military presence and financial stake. The credibility of the US treaty commitment remains an important factor in stability in and around Taiwan. Despite changes in US policies, any US administration would have great difficulty in 'abandoning' Taiwan unless the PRC made major concessions or the PRC and ROC reached some settlement, which is unlikely for some time at least. For the Australian Government, which is to some degree committed to Taiwan's continued separate existence by past policies and statements (and as a result of having a Mission there), one consequence could be that the US would not want to be isolated in support of the ROC. In particular, it would oppose Australia, or any other regional country, conceding Peking's claim to Taiwan.

7. Japan also has more direct political and strategic, and greater and more profitable economic, interests in Taiwan than Australia. Particularly when Sato steps down as Prime Minister, the China question could become even more controversial domestically and lead to changes in emphasis in Japan's relations with the PRC and ROC, if not to full diplomatic relations with the PRC. Foreseeable Japanese governments would however probably not want to see Taiwan under PRC control. We might do better in dealing with the PRC (and ROC) if we seek to act in loose concert with Japan, than singly. We could hardly hope for more than loose consultations on general policy lines. This course might be best for overall Japanese/Australian relations.

8. The PRC basically seeks to have its claim to Taiwan accepted, the further discrediting and eventual downfall of the ROC, and the removal of the US military presence. In the longer term, acquisition of Taiwan could be a considerable strategic and economic gain for it. The PRC is unlikely to risk war so long as it believes the US will stand by its treaty commitment. However, threats of force if Peking were in the UN (and on the SC) while Taiwan was outside, could cause difficulties for the US and others. One Australian interest is presumably to help sustain credible US treaty commitments in Asia for as long as possible. If we seek to do this we can hardly concede the PRC's claim to Taiwan. Unless we do concede it, we may get nowhere in dealings with the PRC. Dual representation in the UN would help to justify the US treaty, but would not help our prospects with Peking.

9. The ROC basically seeks to maintain its internal and international status, to develop its overall strength (particularly economic) and to await the internal collapse it predicts in the PRC. It will not, and hardly could, change its overall governmental structure in the near future. It affects to believe that US and PRC interests are such that they will inevitably clash again, and that right (ROC version) will triumph in the end. It realises, at times resentfully, its essential dependence on the US political and military will. It is making some adjustments to today's realities; its Hallstein doctrine³ is being modified as is its attitude towards dual
representation in the United Nations. (But the Security Council seat is at present its sticking point.) The ROC's purpose still seems to be more to keep the PRC out of the UN and to deny it greater international standing than to keep itself in.

10. Many in Taiwan, including rich and influential Taiwanese industrialists, want to see the ROC stay on in the UN, virtually at any cost. But Chiang Kai-shek makes the big decisions and is backed by powerful hard-liners; he will not accept humiliation. The Government is nervous about the effects of a change in Taiwan's international status on the internal scene (the Taiwanese/mainlander question). A vicious circle of political strains causing economic uncertainty, which would in tum aggravate strains, could develop. The ROC can, however, keep the situation physically well under control, unless it acts very unwisely. There are practical considerations which make the ROC go carefully, including the desirability of maintaining stability next year when elections will be held, including a Presidential election. Major contenders for power (no matter whether Chiang Kai-shek stands again or not) would find the going easier if they had the acquiescence, if not active support, of prominent Taiwanese. And some 94% of the enlisted men in the Army are Taiwanese.

11. The importance of voting on Chinese representation in the UN lies in the fact that on it could depend (i) the ease with which the US's treaty commitment can be maintained in future, (ii) arguments that Taiwan has sufficient international status to justify other countries retaining ties with it, (iii) assessments of the PRC's and ROC's future attitudes in international affairs and (iv) to some degree, internal stability, economic progress and markets in Taiwan. The UN question will influence, if not determine, the long term possibility of the ROC surviving as a separate entity.

12. The following propositions are put forward in regard to Taiwan in particular. Some have reference to the China question as a whole:

(a) Preservation of a UN seat for Taiwan, if possible, is important for many practical reasons.

(b) If the ROC is expelled from the UN, or walks out, some way (e.g. a declaratory resolution or statement) should be found to ensure that Taiwan is accepted as having some international status so as to counter the PRC's claim to it, and to justify internationally the US's continuing defence commitment and any ties we would wish to retain with Taiwan.

(c) Explicitly conceding the PRC's claim to Taiwan would be contrary to our interests.

(d) While we should seek to sound the PRC out on its willingness to respond on practical matters of immediate importance to Australia, the result of the UN vote will be of such importance that any major political initiative, particularly any which might affect the UN vote, might best take place after the PRC's (and ROC's) reactions to that vote are fully assessed.

(e) Despite obvious difficulties, efforts should be made to protect our interests in Taiwan while building relations with the PRC.

(f) Unless the PRC compromises, development of formal relations with it will require a formal break with the ROC. If such a break is made at some point, efforts should be made to minimise its harmful consequences for our interests in the ROC and regional bodies such as ASPAC.

(g) Australia's interests in Taiwan justify continuation of representation there, if at all possible. Its economy, standard of living and so on, and our interests, are, and are likely to remain, quite different from those on the mainland.

(h) No matter what our assessment of the likely outcome, Australia should in the first instance make genuine efforts to establish or maintain some form of official representation in both the PRC and Taiwan. If that proves impossible, the possibility and utility of semi-official, or 'unofficial' (e.g. Wheat or Wool Board) representation on the mainland should be thoroughly explored as should initial gestures such as leaving the Embassy in Taipei under an experienced chargé d'affaires.

(i) Such gestures might well produce no PRC concessions. If Ministers decided that our overall interests required us to make major concessions to the PRC over Taiwan in the absence of any reciprocation, study should be made of the way in which the Embassy in Taipei might be converted to some other form of representation. If a change were made, some method of continuing political reporting and consular activity would still be desirable.

(j) Excessive haste or too apparent eagerness to reach an agreement would weaken our bargaining position with the PRC. (We could of course reach quick agreement if we conceded the PRC's claim to Taiwan.) Press and other public controversy in Australia would do likewise and should, if possible, be played down. The continuation of 'talks' with the PRC would in itself be a form of official relations.

(k) ROC agreement would be necessary for any change in representation in Taiwan such as that suggested above. It would be hard to secure. We would
have to emphasise the benefits the ROC would derive as compared with our taking some more drastic course. Close examination of the ROC's evolving
position on dual representation and its Hallstein doctrine is necessary (cf. its continued trade with Canada, Italy and Belgium).

(l) The longer we can sustain reasonable goodwill, the greater would be the possibility of securing ROC agreement to some change in representation. (The change itself would dissipate such goodwill and affect our interests– e.g. trade–at least temporarily.) For these reasons, and because we are not a party principal in the matter, we should seek to avoid excessive contention with the ROC over such matters as whether the SC seat should go to Peking. We should become involved in such questions, if at all, only in concert with
the US, Japan and preferably other countries, and then only if it seemed reasonably likely that our intervention could help to swing a balance. At the UN we should vote as our interests dictate, without great argument with the ROC, but have reasonably persuasive (face-saving) explanations ready to put to it, or publicly, when asked about our votes.

(m) We should also avoid expressing public opinions on whether Taiwan is or is not a part of China, whether we favour a 'two-Chinas' solution or 'self- determination' for Taiwan, on the ROC's internal affairs and so on. (Legal argumentation in the UN is a somewhat different matter.) Our general line on such questions might be that these are matters deriving from history which are not susceptible to quick and easy solutions, or to oversimplified answers. We are not a party principal. We are willing to deal with the facts as they are,
i.e. with the authorities in the PRC and ROC on matters within their respective effective jurisdiction. For the good of the people principally concerned, and for the sake of the stability and economic progress of the region as a whole, we would obviously want to see peace maintained and the question settled in accordance with UN principles. Discussions between the parties concerned could be a useful step towards a settlement. To go beyond public generalities seems gratuitous, and would invite problems with both the PRC and ROC.

(n) Present trade with Taiwan is profitable for Australia and there are good prospects for future development, provided political developments do not affect it. Particular care should be taken to sustain and develop our trade as policies develop. Apart from monetary gains, the existence of such trade is growing justification for maintaining connections with Taiwan. However, the greater the volume of trade that is developed, the more we have at risk if a change is made.

(o) The best timing for post-UN moves would need close study. For example, if the ROC is expelled or leaves the UN, the PRC would gain confidence and be harder to deal with. On the other hand, if the ROC retains a seat comfortably, it could be advantageous to make an early new approach to the PRC. In the case of the ROC, the period immediately after the vote–whatever the outcome–would not be a propitious time to seek any modification in our relationship. The ROC could be more receptive later, when we would obviously have had time to study the outcome and its implications.

(p) The above considerations would apply whether or not the ROC retains a seat in the UN, is expelled or walks out. Pressures to move faster because of an adverse result in the UN should be resisted as far as possible.

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

1 A heads of mission conference was held in Singapore in early July.

2 See footnote 5, Document 135.

3 Under the Hallstein doctrine of 1955–named after Walter Hallstein, the Secretary of State of the West German Foreign Office–West Germany refused to establish or maintain diplomatic relations with any country (bar the Soviet Union) that recognised East Germany.