CONFIDENTIAL
ripe to push harder; a similar view will be taken by many of the "Taiwan lobby". Many businessmen will be disillusioned by the, as they see it, declining prospects of doing business in China (we already have evidence of this with BA's renewed enthusiasm for airlinks with Taiwan). Many people will simply see improved links with Taiwan as a way of "punishing" China. However, I believe that we should resist this pressure.
9.
Many of the arguments deployed by the Taiwan lobby in the past have been at best disingenuous, concealing their political agenda behind commercial arguments, and remain so
now.
There is no evidence that a more relaxed attitude towards contact with the authorities in Taiwan by HMG will lead to British companies gaining extra contracts, (with the obvious exception of defence sales on which we have a self-denying ordinance anyway). Nor is there any evidence that British companies suffer because HMG's approach is more restrictive than that of our European partners. If this were the case one would expect British firms to do significantly worse in comparison with their European rivals in Taiwan than they do in mainland China, but in fact they do not. The tendency in Taiwan is to award contracts on purely commercial grounds. The one area in which political considerations do figure is when the US decides to use strongarm tactics to ensure that US firms get major contracts, including blatant threats of protectionist measures against Taiwan. We are never likely to be in a position to compete with the US in such tactics whatever our policy on Taiwan, and indeed are more likely to assist the prospects of British firms by refraining from doing so.
10.
Taiwan's tariff regime is a complex method of protecting its own industries. US and Japanese dominance of the market for imported goods and in the field of contracts awarded overseas reflects not only their economic dominance in the Far East, but the cultural orientation of the Taiwanese first a Japanese, then (effectively) a US colony- and their consequent willingness to pay the price. The US, of course, have frequent arguments about tariffs with Taiwan. They use threats to win concessions, but not such as will fully open the market to UK or other EC countries.
11. In short, the Taiwan authorities have been adept in the past in using the "Taiwan lobbies" in different countries to play one country off against another, claiming that the government of one country is less friendly to them than others, and if only it would change its ways great commercial benefit could come its way. In fact this commercial benefit is largely a chimera. If a British firm is going to do well in Taiwan (with once again the exception of defence sales), it will do so regardless of whether we further relax our policy or not.
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/12.