Written by Grace Faerber.
Introduced as President Tsai Ing-Wen’s flagship foreign policy initiative upon entering office, the fifth anniversary of the New Southbound Policy (NSP) marks a turning point for Taiwan’s role in the Asia-Pacific region. The policy has taken steps to align Taiwan with ASEAN, South Asia, and Australasia, away from its de-facto association with East Asia. This paradigm shift for Taiwan as a potential regional leader in a new “NSP community” aligns with the U.S. Free and Open Indo-Pacific Strategy (FOIP) and a renewed focus under the Biden administration on multilateral engagement. The success of the NSP at its fifth anniversary and its growing synergy with the Biden administration’s foreign policy strategy suggests a bright future for Taiwan’s international role.
The New Southbound Policy
Taiwan’s New Southbound Policy engages with 18 countries: 10 ASEAN nations, 6 South Asian nations, Australia, and New Zealand. The NSP is rooted in four pillars: resource-sharing, institutional links, economic and trade collaboration, and people-to-people exchanges. The policy was introduced after years of rapidly rising trade dependence on China, as China’s own trade dependence on Taiwan was falling. The NSP aimed to shift Taiwan’s economic interests southward and invest in the nation’s soft power through cultural, educational, and linguistic exchanges with NSP target countries. Circumventing Taiwan’s limited number of formal diplomatic partners, Taiwanese and NSP countries’ business communities, social associations, NGO’s and universities all play significant roles in facilitating the execution of the policy.
At its five-year anniversary this past August, the Taiwan-Asia Exchange Foundation stated the NSP has not only improved but enabled Taiwan’s relations with Southeast Asia to flourish. Between 2016 and 2020, trade volume between Taiwan and Southeast Asia grew by about 13.6%. In 2021 alone, Taiwan’s exports to ASEAN reached US$45.78 billion, an increase of 35.5% from 2020. Taiwanese companies’ investment in NSP-target countries has also grown, particularly in the electronics, steel, food production, and financial sectors. Minister of Economic Affairs Wang Mei-hua on September 8th announced, “Taiwanese companies have doubled down on their strategic investments in ASEAN member states.” In addition, Minister without Portfolio John Deng reported that Taiwanese companies plan to widen future investments to other sectors, including skilled workers and medical resources.
In a survey of 44 Taiwanese companies in April 2021, 95% of the firms expected revenue to grow in ASEAN member states, with most firms predicting growth of 10 to 20 per cent over the next year. Nearly all of the companies anticipate their annual production in ASEAN member-nations to increase, while 91% state plans to increase their investment by at least 25% over the next three to five years. The majority of the companies cite government support as the primary reason for their optimism. In one prominent case of investment in ASEAN, Taiwan ranks fourth among all foreign-funded companies in Vietnam, indicating Taiwanese companies have engaged in extensive and rich investment in the country. For example, leading Taiwanese textile manufacturer Far Eastern New Century Corp allocated over US$700 million to monopolize a supply chain for fabrics and garments in Southeast Asia and created a capacity expansion project in 2020, making Vietnam the company’s third-largest production base.
Under the New Southbound Policy, Taiwan has established 12 Science and Technology Innovation Centres in 10 NSP-target countries and promotes Taiwan’s market and resources to its neighbours’ governments and industries. In September and October, the “Taiwan Expo” will be held in Thailand, India, and Indonesia to highlight Taiwanese firms’ strengths and encourage collaboration and investment. These examples of the growing economic and financial success of the NSP at its five-year anniversary shed light on the policy’s ongoing potential to strengthen Taiwan’s ties with its neighbours and create a new socio-economic community in the Asia-Pacific.
The NSP’s Synergies with Biden’s Indo-Pacific Strategy
Another major reason for optimism about the continual success of the NSP and Taiwan’s future role in the Asia-Pacific is the policy’s harmony with the U.S. Free and Open Indo-Pacific Strategy. The FOIP recognizes the strategic importance of the Indo-Pacific to U.S. economic and security interests and works to promote a free market system, open investment, fair trade, good governance, and national sovereignty in the region.
The Biden administration is strengthening its recognition of the strategic importance of Taiwan to the FOIP, the greatest indicator being the appointment of Sandra Oudkirk as Director of the American Institute in Taiwan (AIT), the de-facto U.S. embassy in Taipei. Director Oudkirk previously served as a Senior Official for APEC at the Bureau of East Asian and Pacific Affairs (APEC’s member countries include the nations of Australasia and ASEAN). She also notably served as Deputy Assistant Secretary for Australia, New Zealand, and the Pacific Islands in 2019. In addition, director Oudkirk co-hosted the inaugural AIT-Ministry of Foreign Affairs Pacific Islands Dialogue, stating in her remarks, “…we firmly support Taiwan’s relationships with Pacific Island nations. We have a shared vision for the region…we want to explore how we can join Taiwan in advancing this vision for an Indo-Pacific that is free, open, and thriving.”
In April 2021, Director Oudkirk engaged with Taiwan’s Deputy Minister of Foreign Affairs in a virtual discussion hosted by the Heritage Foundation. She highlighted U.S.-Taiwan joint frameworks with Pacific Island countries, including initiatives under the Global Cooperation and Training Framework (GCTF). Established in 2015, the GCTF serves as a platform for the U.S. and Taiwan to enhance multilateral cooperation in the Indo-Pacific. The GCTF’s stated efforts to embolden Taiwan in developing partnerships with regional countries and further expand its international presence align with Taiwan’s New Southbound Policy goals.
The new AIT Director’s background contrasts with that of previous AIT Director Brent Christensen and reveals the shifting foreign policy focus of the Biden administration. Christensen served three assignments at the U.S. Embassy in Beijing before transitioning to the State Department’s Office of Taiwan Coordination and eventually serving as AIT Director – he can be regarded more so as a “China hand” than an Indo-Pacific strategist. The appointment of Oudkirk denotes a paradigm shift in U.S. foreign policy, recognizing Taiwan’s growing membership in a new community in the Asia-Pacific and disassociation from its traditional grouping with China and East Asia.
Other Biden administration officials have also taken steps to denote the concentration of U.S. foreign policy focus in the Indo-Pacific. Deputy Secretary of State Wendy Sherman visited Indonesia, Cambodia, and Thailand in May and June. Defense Secretary Lloyd Austin visited Singapore, Vietnam, and the Philippines in late July. In mid-July, Secretary of State Blinken held a summit with the 10 ASEAN member nations and met with them individually in August. Vice President Kamala Harris visited Singapore and Vietnam in late August. The U.S. Mission to ASEAN commented in a statement that these official visits play an “essential role” in the U.S. FOIP strategy.
The Biden administration has repeatedly stressed the importance of multilateralism and enhanced direct engagement with Indo-Pacific nations, satisfying economic, cultural, and diplomatic interests in addition to Indo-Pacific security goals. President Biden’s meetings with the “Quad” – the Quadrilateral Security Dialogue between the U.S., India, Australia, and Japan – reveal his administration’s plan for an Indo-Pacific region that is “free, open, inclusive … [and] anchored by democratic values.” The U.S. under President Biden also led the G7 in announcing a global infrastructure initiative, building upon a 2019 U.S.-Japan-Australia collaboration called the “Blue Dot Network.” The initiative can benefit and support Taiwan’s NSP efforts in Asia-Pacific. In addition, it encourages G7 member countries to work with Australia, India, and other democracies to coordinate their development projects and investments.
Biden has promised to renew America’s commitment to global development and international cooperation and is fulfilling that promise through the Quad, visits to strategic partners in the Asia-Pacific, and the Blue Dot Network. In the “Interim National Security Strategic Guidance” report released in March, President Biden’s foreign policy strategy clearly mirrors that of that of Taiwan’s. Similar to the NSP’s people-to-people approach pulling heavily from Taiwan’s unique strengths, Biden’s strategy aims to underline America’s strengths and lead with diplomacy, employing “creative approaches that draw on…our diversity, vibrant economy, dynamic civil society and innovative technological base, enduring democratic values, broad and deep network of partnerships and alliances…”
Biden’s foreign policy strategy highlights America’s interest in “expanding economic prosperity and opportunity” and specifically underscores partnerships with India, New Zealand, Singapore, Vietnam, ASEAN member states and Pacific Island states. The March report also promises to support Taiwan, calling it “a leading democracy and a critical economic and security partner.” In addition, Biden’s goal to align Taiwan in its Indo-Pacific strategy was made clear by the appointment of seasoned Indo-Pacific diplomat Sandra Oudkirk as AIT Director. With President Biden just getting started and (at least) three years left in office for both him and President Tsai, the opportunities for collaboration between Taiwan’s New Southbound Policy and the U.S. Free and Open Indo-Pacific Strategy are vast and promising.
Grace Faerber (馮思思) is a Research Assistant at Academia Sinicia, a second-year Master’s student at the Hopkins-Nanjing Center, a Visiting Student studying Political Science at National Taiwan University, and a Publications Intern at the American Chamber of Commerce in Taiwan. More of her works can be read on her LinkedIn at linkedin.com/in/gracefaerber and on Twitter @grace_faerber.