Chairman Izzo,
Founding Chairman Brinsden, Distinguished guests,
Ladies and gentlemen:
Good afternoon!
I am very honored to be able to participate in the celebration of the 25th anniversary of the European Chamber of Commerce Taipei (ECCT). I wish you a belated happy new year, and I hope you will have good health and prosperity in the Year of the Little Dragon, not the Year of the Snake.
The ECCT, established in 1988, has made great contributions to the promotion of trade, investment, and other business relationships between the Republic of China and Europe. 1988 was actually a very important year in the history of this country. Barely a year before that, Taiwan lifted martial law, which had lasted for 38 years, and started to accelerate the process of democratization on this island. And in November that year Taiwan initiated a new policy toward the mainland by allowing citizens to have family reunions with their relatives on the Chinese mainland. So, on two fronts, Taiwan entered a new era. In the beginning of 1988, our former President Chiang Ching-kuo (蔣經國) passed away. And in the middle of that year, we established a new organization within the government to formulate policy toward the Chinese mainland. So this is really a very important part of our history. And the ECCT made great contributions in the process.
Actually, last year the Position Papers of the ECCT were published under the title Unleashing the Taiwan Tiger─A Path to Economic Prosperity, which is a very good description of our position. Certainly, we want to try our best to overtake the other three Asian tigers, or dragons─Hong Kong, Singapore, and Korea. Unfortunately, our economy last year didn't fare very well. We only had 1.26% growth. Actually, we are trying to do much better this year, as the outlook of our economy started to change in the fourth quarter of last year. So the economic forecast for this year, according to the government, is 3.59%. And some of our cabinet members would like to work harder and get this figure even higher.
According to a report by UNCTAD, the United Nations Conference on Trade and Development, in many of our competitive rivals, foreign direct investment fell last year. For instance, in mainland China, it was down 3.4%. In Korea, it was down 11.9%. And in Hong Kong, it was down 24%. But fortunately, in Taiwan, it was up 3.9 billion US dollars, which was almost more than twice the year before that. So we have been emerging from the doldrums, and are now on the path of recovery.
According to the Business Environment Risk Intelligence report, Taiwan's investment climate is ranked number four in the world, after that of Singapore, Switzerland, and Norway. So we hope this year will be another good year for us as far as foreign investment is concerned.
According to our statistics, Europe as a whole has been the largest investor in Taiwan over the last sixty years, from 1952 to 2012. We have a very close economic relationship with Europe, but certainly, we want to have more. As you know, before I took office in 2008, Taiwan was almost left out of the regional economic integration which started in the early part of this century. We understand the danger of being left out. Actually, in the last ten years or so, almost every trading partner of Taiwan has joined the global trend of regional economic integration. The only exceptions in this part of the world are Taiwan and North Korea. Certainly, we don't want to be left out, so we try our best to change the relatively unfavorable situation that results from our diplomatic isolation. We were very eager to negotiate first with mainland China. So we did it three years ago, concluding the Economic Cooperation Framework Agreement (ECFA) with mainland China. However, that covers only about 20% of our export items to mainland China, so we are working on a full economic cooperation agreement, and we hope to complete the "trade in services" part in the next couple of months, and before the end of the year we will be able to finish the "trade in goods" part. This will be a very important step. This is in addition to the economic cooperation agreements with Singapore and New Zealand, on which we hope we will see some positive results in the next couple of months.
Another important milestone of our relationship with Europe is the granting of visa-free status to visitors from Taiwan. In January of 2011, we got that status. In the last two years, you have seen very clear growth of visitors from Taiwan to the members of the European Union─almost 40% growth. I can assure you that all the visitors appreciate the culture, history, and art of Europe, but they are at the same time very serious shoppers.
So this is a very important time for Taiwan because we have not only concluded the ECFA with the Chinese mainland, we have also concluded another 17 agreements. Before I took office, there were no scheduled commercial flights between Taiwan and the mainland. But beginning next month, March 2013, the number of commercial scheduled flights between Taiwan and the mainland per week will be 616─quite a change. But our plans will never catch up with the changes of the time─in Mandarin Chinese: "計畫趕不上變化." Why? Because before I took office, because of the difficulties of travel─direct air travel between the two sides─many Taiwanese businessmen working on the Chinese mainland went back to Taiwan roughly once every two months. Now they come back twice a month. So the demand far exceeds supply, and makes the price of air travel relatively expensive. We have tried very hard. We even politely advised the airline companies to actually reduce the price. Even though they agreed to do so, in a month all the prices went back to the original level because there is so much demand.
Another thing we want to do is, when we are negotiating free trade agreements or economic cooperation agreements with mainland China, Singapore, New Zealand, and other countries─which we are making some preliminary plans to do─we certainly want to have a similar arrangement with the European Union, because the European Union, as a whole, is a very important trading partner of this country. We understand the difficulties─because you have not concluded such agreements with mainland China. But, why don't we start doing separate economic research first? And when the time comes, we could begin with the Trade Enhancement Measures─the TEM─and gradually go to economic cooperation agreements. We certainly want to make the relationship much closer than in the past. In fact, in other areas, for instance, for young people, we have already concluded eight working holiday agreements with various countries. Now there are three European countries─Germany, Great Britain, and Ireland─and a fourth one is emerging. We are certain you could have more.
Personally, Europe has been a source of inspiration to myself in the last 25-30 years. I am a little bit unusual in having traveled to Europe more than 16 times in the last 30 years. In quite a few ways, the ideas coming from Europe have helped shape our policy. For instance, the relationship between the two Germanies before 1990 gave us a lot of inspiration in planning our relationship with the Chinese mainland. Although we can't really emulate everything the two Germanies did, we did learn from their very treasured experiences in planning the establishment of our Mainland Affairs Council, and in drafting the mainland relations act. On the other hand, the actions taken by the Europeans right after World War II─particularly between France and Germany in trying to build up a new friendship by allowing their students to have very comprehensive across-the-board exchanges─are very touching, and important for us as an inspiration to initiate the policy to let mainland students come to Taiwan. Beginning this year, we hope we will have at least three thousand. This is a very important step to let our young people get to know each other. This is an effective way to formulate a more sustainable peace framework between the two sides. France and Germany were at war for many decades, but right after World War II, they started a massive plan to exchange students, including home stays, and that effectively made these two major European countries a cornerstone for peace and prosperity. Now, even today, in the very devastating European debt crisis, the two countries are also united. And I still remember reading the famous short story by the French writer, Daudet─The Last Class, La Derniere Classe. I think this is a very educational and touching story. And I do believe that by letting more young people make friendship at an early stage of their lives certainly will have a very important effect in the future. This is actually what I want to do─make peace between the two sides of the Taiwan Strait. And peace has to be achieved through a variety of plans and programs that will stimulate people's inclination for peace. In other words, in the future, when the leaders of the mainland deal with issues between the mainland and Taiwan, we want to ensure that they will never think about using non-peaceful means in resolving these issues. This is even more important than our national defense, than military force. In terms of our relations with the mainland, Europe can also play a very important role.
I remember just four years after the establishment of the ECCT, I had an opportunity to go to Munich, Germany to attend a conference on European security. There I delivered a speech on how Taiwan and Europe can work together to have a strategic alliance and jointly develop the market on the Chinese mainland. At the time, it was just wishful thinking, because it was 1992, before the two sides had really concluded an important agreement. But, you see, in the last 20 years, this has, in some way, become a reality. Quite a few European companies come to Taiwan to set up a regional headquarters and use this as a gateway to mainland China. When we make transportation and communication between the two sides of the Taiwan Strait so convenient and so relatively inexpensive, I think this goal can be achieved.
Interestingly enough, eventually, after my visit to Munich, I went to Brussels and met with people there. They invited me to contribute an article to the NATO Review. I did it. In 1993, my article appeared in that magazine. I think it's called Atlantic Assembly. And interestingly enough, at that time, I was no longer the vice chairman of the Mainland Affairs Council. I had become the justice minister. It is interesting to see a justice minister having an article in the NATO Review calling for Europe and Taiwan to forge strategic alliances. But, looking back, I think my association with the ECCT and Europe has contributed greatly to the shaping of our policy toward the mainland, and to many other issues. So I want to express my appreciation for the existence of such an organization, and for the efforts you have made to improve our relations with each other.
Once again, happy birthday, ECCT. Thank you very much.