Following are excerpts from the State Department's official document
"Country Notes," about Taiwan, which was released in November 1995.
THE U.S. AND TAIWAN On January 1, 1979, the United States changed
its diplomatic recognition from Taipei to Beijing. In the United
States-People's Republic of China Joint Communique that announced
the change, the United States recognized the Government of the
People's Republic of China (P.R.C.) as the sole legal government of
China and acknowledged the Chinese position that there is but one
China, and Taiwan is part of China. The Joint Communique also stated
that within this context, the people of the United States will
maintain cultural, commercial, and other unofficial relations with
the people of Taiwan.
On April 10, 1979, President Carter signed into law the Taiwan
Relations Act (TRA), which created domestic legal authority for the
conduct of unofficial relations with Taiwan. U.S. commercial and
cultural interaction with the people of Taiwan is facilitated
through the American Institute in Taiwan (AIT), a nongovernmental
entity. The Institute has its headquarters in the Washington, DC,
area and field offices in Taipei and Kaohsiung. It is authorized to
accept visa and passport applications and to provide assistance to
U.S. citizens in Taiwan. A counterpart organization, the Taipei
Economic and Cultural Representative Office (TECRO), has been
created by Taiwan. It has its headquarters in Taipei and field
offices in Washington, DC, 11 other U.S. cities, and Guam.
Following derecognition, the United States terminated its Mutual
Defense Treaty with Taiwan but has continued the sale of defensive
military equipment to Taiwan in keeping both with the Taiwan
Relations Act and with the 1982 U.S.-P.R.C. Joint Communique. The
Taiwan Relations Act requires the United States to "make available
to Taiwan such defense articles and defense services in such
quantity as may be necessary to enable Taiwan to maintain a
sufficient self-defense capability." In the 1982 Communique, the
United States stated that "it does not seek to carry out a long-term
policy of arms sales to Taiwan;" that U.S. arms sales would "not
exceed, either in qualitative or in quantitative terms, the level of
those supplied in recent years;" and that the U.S. intends
"gradually to reduce its sale of arms to Taiwan." The P.R.C., in the
1982 communique, reiterated its policy of striving for a peaceful
solution to the Taiwan question.
Maintaining diplomatic relations with the P.R.C. has been recognized
to be in the long-term interest of the United States by six
consecutive administrations; however, maintaining strong, unofficial
relations with Taiwan is also in the U.S. interest. The United
States is committed to these efforts because they are important for
America's global position and for peace and stability in Asia. Trade
and Investment Over four decades, Taiwan transformed itself from an
underdeveloped, agricultural island to an economic power that is a
leading producer of high-technology goods. Taiwan has moved from
being a recipient of U.S. aid in the 1950s and early 1960s to an aid
donor and major foreign investor, especially in Asia.
U.S. commercial ties with Taiwan have been maintained and expanded
since derecognition. Taiwan continues to enjoy Export-Import Bank
financing, Overseas Private Investment Corporation guarantees,
most-favored-nation (MFN) status, and ready access to U.S. markets.
In recent years, U.S. economic dealings with Taiwan have focused on
expanded market access for American goods and services. AIT has been
engaged in a series of trade negotiations which have focused on
protection of intellectual property rights, and issues relating to
Taiwan's accession to the World Trade Organization (WTO), as well as
other market access issues. Taiwan's bid to join the WTO and its
desire to become an Asia-Pacific "regional operations center" are
spurring economic liberalization moves. In 1991 Taiwan, under the
name "Chinese Taipei," became a member of the Asia-Pacific Economic
Cooperation (APEC) forum, of which the U.S. is also a member.
The United States is Taiwan's largest trading partner, taking 26% of
Taiwan's exports and supplying 21% of its imports. Taiwan is the
U.S.' seventh-largest trading partner and seventh-largest export
market. In 1994, Taiwan's two-way trade with the U.S. was about $43
billion. Imports from the U.S. consisted mostly of agricultural and
industrial raw materials. Exports to the U.S. were mainly
electronics and consumer goods. Electronics is Taiwan's most
important industrial export sector and is the largest recipient of
U.S. investment.
As Taiwan's income level has risen, demand for imported,
high-quality consumer goods has increased. In recent years, Taiwan
has successfully diversified its trade markets, cutting its share of
exports to the U.S. from 49% in 1984 to 26% in 1994. Taiwan's 1994
total trade surplus with the United States was some $9 billion, a
significant amount, but a decline from a high of $17 billion in
1987. Taiwan's dependence on the U.S. market should continue to
decrease as its exports to Southeast Asia and the P.R.C. grow and
its efforts to develop European markets produce results.
ADMINISTRATION In December 1949--and following a civil war between
the Communists and the ruling Nationalists--the P.R.C. was founded
on the mainland by the victorious communists. Chiang Kai-shek--the
leader of the Nationalist Chinese regime--fled to the island of
Taiwan, which the Nationalists already administered, and established
a "provisional" capital in Taipei.
From 1949 until 1991, the authorities on Taiwan claimed to be the
sole legitimate government of all of China, including the mainland.
In keeping with that claim, when the Nationalists fled to Taiwan in
1949, they re-established the full array of central political bodies
they had originally established on the mainland. Taiwan Province
and, later, the Special Municipalities of Taipei and Kaohsiung were
local bodies governed separately from the central administration.
While this structure remains largely the same, the authorities on
Taiwan have abandoned the claim of governing mainland China, stating
that they do not "dispute the fact that the P.R.C. controls mainland
China."
The authorities in Taipei exercise control over the islands of
Taiwan, Kinmen, Matsu, and the Penghu Islands (Pescadores). Taiwan's
two major cities, Taipei and Kaohsiung, are administered as
provincial-level municipalities. The rest of Taiwan and the Penghu
Islands are administered together as the Province of Taiwan. Kinmen
and Matsu are administered by Taiwan authorities but they are
considered in principle to be part of the mainland province of
Fujian.
National Assembly. Under the constitution adopted by the KMT in
1947, the sovereignty of the people was to be exercised by the
National Assembly. The first National Assembly was elected on the
mainland in 1947 and was re-established on Taiwan when the KMT fled
mainland China. The second National Assembly, elected in 1991, is
composed of 325 members serving four-year terms.
The National Assembly's main functions prior to August 1994 were to
elect the president and vice president and to amend the
constitution. Amendments passed by the National Assembly in July
1994 paved the way for direct election of the president and vice
president; Taiwan's first presidential election is scheduled for
March 1996. The National Assembly's powers now are to amend the
constitution, recall the president, impeach the president, and
ratify certain presidential appointments in other branches of the
government.
President. The president is leader of Taiwan and commander-in-chief
of its armed forces. With the consent of the Legislative Yuan, the
president appoints the premier, who is the head of the Executive
Yuan.
Executive Yuan. The Executive Yuan is roughly analogous to the U.S.
executive branch of government in that it constitutes the cabinet
and is responsible for policy and administration.
Legislative Yuan. The main lawmaking body is the Legislative Yuan
(LY). It dates from the late 1940's and originally was viewed as a
"rubber stamp" institution. The LY has greatly enhanced its standing
in relation to the executive branch and has established itself as an
important player on the central level.
The LY elected in 1992 has 161 members serving three-year terms, all
of whom are up for election in December 1995. The LY has begun to
reflect the recently liberalized political system; in the 1992
elections, the main opposition party--the Democratic Progressive
Party (DPP)-- challenged the KMT monopoly on control of the
legislature. In 1994, the LY passed legislation to allow for the
direct election of certain local officials.
Control Yuan. The Control Yuan monitors the efficiency of the public
service and investigates instances of corruption. The 29 Control
Yuan members are appointed by the president and approved by the
National Assembly, and they serve six-year terms. Recently, the
Control Yuan has become more activist and has conducted several
major investigations and impeachments.
Judicial Yuan. The Judicial Yuan administers Taiwan's court system.
It includes a 17-member Council of Grand Justices that interprets
the constitution. Grand justices are appointed by the
president--with the consent of the National Assembly--to nine-year
terms.
Examination Yuan. The Examination Yuan functions as a civil service
commission.
Military. Taiwan maintains a large military establishment. Its
primary mission is defense of Taiwan, predominately from the P.R.C.,
which has refused to renounce the use of force against Taiwan should
Taiwan declare independence or in case of involvement by a foreign
military power. Principal Leaders President--Lee Teng-hui Vice
President--Li Yuan-Zu Premier--Lien Chan Vice-Premier--Hsu Li-teh
POLITICAL CONDITIONS Lee Teng-hui succeeded Chiang Ching-kuo as
President when Chiang died on January 13, 1988. Lee was elected by
the National Assembly to a six- year term in 1990, marking the final
time a president was elected by the National Assembly. As noted,
starting in 1996, the president and vice president will be directly
elected to four-year terms by Taiwan's voters.
This change in the political process is the result of the
liberalizing trend that began in the late 1980s when President
Chiang Ching-kuo lifted the emergency decree which had been in place
since 1948. This decree had granted virtually unlimited powers to
the president for use in the anti-communist campaign, and it
provided the basis for nearly four decades of martial law. Until
martial law was ended in 1987, individuals and groups expressing
dissenting views were treated harshly.
Since ending martial law, Taiwan has dramatically improved respect
for human rights and has worked to create a democratic political
system. Restrictions on the press have greatly diminished,
restrictions on personal freedoms have been relaxed, and the
prohibition against organizing new political parties has been
lifted.
Taiwan's political system has been dominated by the KMT; until 1986,
the party's chairman was also Taiwan's president. Many top political
officials are members of the party's Central Standing Committee,
which is the chief policy-making organ within the party. As the
ruling party, the KMT has been able to fill appointed positions with
its members and maintain control of the island.
Since 1986, emerging political parties have challenged the KMT's
dominance. Before then, candidates opposing the KMT ran in elections
as independents or "nonpartisans." Many "nonpartisans" grouped
together illegally to create Taiwan's first new political party in
over four decades, the DPP. Despite the official ban on forming new
political parties, Taiwan authorities did not prohibit the DPP from
operating. In 1989, the DPP and other new political parties were
legalized, and the DPP's support and influence increased.
The DPP's voice has been an important factor in legislative
decisions since 1992, and winning the Taipei mayoral election in
December 1994 significantly enhanced the DPP's image. Its platform
includes outspoken positions on some of the most sensitive issues in
Taiwan politics. The DPP maintains that Taiwan is an entity separate
from mainland China, in contrast to the KMT position that Taiwan and
the mainland are both part of "one China." A number of ranking DPP
officials, in sharp contrast to tenets of both KMT and P.R.C.
policy, openly advocate independence for Taiwan.
The second major opposition party, the Chinese New Party (CNP)
established in 1993, has a conservative platform. The CNP emphasizes
"clean government" and the original KMT focus on reunification with
the mainland. Although CNP membership remains small, its influence
is considerable, especially in its ability to draw support away from
the KMT.