The Great Free Trade Myth: British Foreign Policy And East Asia Since 1980 [1st Edition] 9811585571, 9789811585579, 9789811585586

Table of contents :
Acknowledgements......Page 7
A Note on Romanisation and Names......Page 9
Contents......Page 11
About the Author......Page 12
Abbreviations......Page 13
List of Figures......Page 15
1 Introduction......Page 16
The Origins of Free Trade......Page 29
Imperial Preference and East Asia......Page 33
The Impact of the Suez Crisis on East Asian Policy......Page 35
The Ties that Bind......Page 38
From Free Trade to Protectionism......Page 40
3 Protests and Power Turbines—Korea, 1980......Page 47
Funeral Diplomacy......Page 49
Formal Demarches or ‘Quiet Diplomacy’?......Page 52
Divide and Rule......Page 55
4 Whisky, Drugs and Bonds—Korea, 1987–1997......Page 65
Limits to Co-operation......Page 68
Hubris Gives Rise to an Opportunity......Page 70
Britain’s Relations with Taiwan Before 1980......Page 80
Railway Diplomacy......Page 83
The Anglo-Taiwan Trade Committee......Page 87
The Rise of Quasi-governmental Relations......Page 90
Ambitions in the Sky......Page 99
The Inward Investment Dream......Page 102
Mutual Mistrust and the Arms Embargo......Page 104
The EU and Abolition of Visas for Taiwanese Visitors......Page 110
7 The Reluctant Multilateralist—South East Asia, 1980–2000......Page 117
The Khmer Rouge and Cambodian Genocide......Page 119
‘Buy British Last’ and the Pergau Dam Scandal......Page 121
From ‘Boat People’ to ‘Economic Migrants’......Page 124
The Rise of Multilateral Diplomacy......Page 127
How to Solve a Problem like Myanmar?......Page 132
8 A Tarnished Era: China Since 2010......Page 139
Trade and Politics in China......Page 140
GEC and Daya Bay......Page 145
‘Divide and Rule’ and European Competitive Nationalism......Page 148
British Diplomacy and China......Page 149
From ‘Golden Era’ to ‘Project Defend’......Page 153
9 The United Kingdom and East Asia Towards 2050......Page 165
The China Syndrome......Page 167
Isolationism or Co-operation?......Page 171
A Leadership Role for Japan?......Page 174
Bibliography......Page 183
Index......Page 188

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The Great Free Trade Myth British Foreign Policy and East Asia Since 1980 Michael Reilly

The Great Free Trade Myth

Michael Reilly

The Great Free Trade Myth British Foreign Policy and East Asia Since 1980

Michael Reilly Taiwan Studies Programme School of Politics and International Relations University of Nottingham Nottingham, UK

ISBN 978-981-15-8557-9 ISBN 978-981-15-8558-6 (eBook) https://doi.org/10.1007/978-981-15-8558-6 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover illustration: Marina Lohrbach_shutterstock.com This Palgrave Macmillan imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

It has justly been observed, that the interests and pursuits of so active and opulent a portion of the community as is engaged in trade throughout the British dominions, occupy, at all times, much of the attention, and, in the proper spirit of a commercial nation, influence many of the measures of the government. Sir George Staunton: An Authentic Account of an Embassy from the King of Great Britain to the Emperor of China, London 1797

To Won Kyong

Acknowledgements

This book is the product of innumerable meetings, interviews, discussions, and engagement, both formal and informal, over the course of four decades. It would be impossible to list all the friends, colleagues, and interlocutors whose contributions, often unwitting or subconscious, through information, advice, encouragement, penetrating questions, constructive criticism, or casual remarks did so much to advance my own knowledge and understanding. Among the many former FCO colleagues who have contributed, I owe a special debt to Rodric Braithwaite, whose patience, kindness, sound advice and, in the words of another colleague, puckish sense of humour, were inspirational and motivating in equal measure to an inexperienced and hesitant junior officer. His own pellucid prose—stimulating, thoughtprovoking, humorous but never dull—also provides a model to aspire to but one to which I fall badly short. My first and last postings in Asia were in countries under authoritarian governments which often went to considerable lengths to control and manipulate the flow of information, and to suppress the views of those to whom they took exception. Opposition politicians and dissidents fighting for human rights did much to advance my own knowledge in these circumstances, often at great personal risk. Choi Hyuk Bae and Phee Jung Sun in Korea both deserve special mention in this regard, but I am grateful to them all.

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ACKNOWLEDGEMENTS

Despite the peripatetic nature of a diplomatic life, I have been fortunate in making friendships that have endured the tests of time, distance, and culture, among them David Huang, Michael Hsiao, and David Lin in Taiwan. All of them have in one way or another contributed to this book. I was also privileged to work with a tremendous group of colleagues in BAE Systems, especially Tony Ennis, a casual remark of whose was an inspiration for this book. They helped provide an important counter to the somewhat rarefied views of diplomats. Colleagues in other missions also helped with deeper insights and to see matters in a different perspective, none more so than Bob Wang, Brent Christensen, and Guy Wittich. I am most grateful to the Ministry of Foreign Affairs in Taiwan for the generous award of a Taiwan Fellowship, and to colleagues in the Institute of European and American Studies at Academia Sinica in Taipei, Chien-yi Lu especially, for hosting me for its duration. The fellowship gave me the opportunity and wherewithal to write much of this, the superb facilities of Academia Sinica, especially its libraries and beautiful campus, the space and stimulus to do so. But my biggest thanks by far go to my wife Won Kyong, who has been with me from the very beginning of this adventure. Quite simply, without her support, her tolerance, understanding, and patience, it would not have been possible. My debt to her is beyond price.

A Note on Romanisation and Names

Both the People’s Republic of China and Republic of Korea have standard authorised systems for the romanisation of their scripts, hanyu pinyin in the former and the revised romanisation system in the latter. Although widely used, pinyin is not standard in Taiwan and the older WadeGiles system is still commonly used for place names and more—one of Taiwan’s two main political parties still writes its name in Roman script as Kuomintang, not Guomindang, for example. In both Taiwan and Korea, individuals are free to romanise their names as they see fit. Both the Wade-Giles system (in Taiwan) and the McCuneReischauer system in Korea are frequently used for this, together with other forms of the individual’s own choice. For example, the Korean family name Lee can also be written as Rhee, Li, Yi, or variants thereof, and the Chinese family name Xu as Hsu. I have sought throughout to follow the accepted current form for place names and the personal preferences of individuals. Although China’s capital is now generally known as Beijing, official practice in the FCO until 1995 was to refer to it as Peking (one of China’s pre-eminent universities is still known in English today as Peking University, not Beijing University, while another is Tsinghua University, the Wade-Giles form, not Qinghua, which it would be in pinyin). Rather than attempting to standardise, I have therefore used whichever form was in use in correspondence at the time.

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A NOTE ON ROMANISATION AND NAMES

Until 1991, when North and South Korea both joined the United Nations, the British government recognised the government in Seoul as the sole legitimate government of Korea. It was common practice in reports and correspondence therefore to refer simply to ‘Korea’ or the ‘Korean authorities’ when discussing the Republic of Korea (South Korea). All references to ‘Korea’ or ‘Korean’ in this book similarly refer specifically to the Republic of Korea and the authorities therein, not the peninsula as a whole.

Contents

1

1

Introduction

2

Imperial Ties and Free Trade

15

3

Protests and Power Turbines—Korea, 1980

33

4

Whisky, Drugs and Bonds—Korea, 1987–1997

51

5

Gratuitously Disagreeable—Taiwan, 1980–1990

67

6

Planes, Trains and Visas—Taiwan, 1995–2010

87

7

The Reluctant Multilateralist—South East Asia, 1980–2000

105

8

A Tarnished Era: China Since 2010

127

9

The United Kingdom and East Asia Towards 2050

153

Bibliography

171

Index

177 xiii

About the Author

Michael Reilly is a non-resident senior fellow of the Taiwan Studies Programme in the School of Politics and International Relations at the University of Nottingham. A former British diplomat, he studied and worked for eighteen years in East Asia. His final diplomatic appointment was as the British representative in Taiwan, after which he spent four years in China with a major British aerospace company. He is co-editor with David W. F. Huang of The Implications of Brexit for East Asia (2018) and with Chun-yi Lee of A new beginning or more of the same?—The European Union and East Asia after Brexit (forthcoming).

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Abbreviations

AIIB ARF ASEAN ASEM ATP ATTC BNFL BREL CAL CBI CCP CEGB CFSP CLP COCOM CPTPP DfID DMZ DPP DPRK DTI EC EEC EU

Asian Infrastructure Investment Bank ASEAN Regional Forum Association of South East Asian Nations Asia Europe Meeting Aid for Trade Provision Anglo-Taiwan Trade Committee British Nuclear Fuels Ltd. British Rail Engineering Ltd. China Airlines Confederation of British Industry Chinese Communist Party Central Electricity Generating Board Common Foreign and Security Policy China Light and Power Coordinating Committee for Multilateral Export Controls Comprehensive and Progressive Agreement for Trans-Pacific Partnership (see TPP) Department for International Development Demilitarised Zone Democratic Progressive Party Democratic People’s Republic of Korea (North Korea) Department for Trade and Industry European Community European Economic Community European Union

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ABBREVIATIONS

FCO FDI FPDA FTA GATT GE GEC GDP GSP HSBC IAEA ICG ICI ICT IPR KCIA KEDO KMT MAC NAAFI NATO NDRC NPT ODA ODP OIE PLA PRC RoC RoK RAF SOE TAC TGV THAAD TPP TRA UK UN UNHCR UNSC USA USSR WTO

Foreign & Commonwealth Office (also referred to as Foreign Office) Foreign Direct Investment Five Power Defence Arrangements Free Trade Agreement General Agreement on Tariffs and Trade General Electric Company (USA) General Electric Company (UK) Gross Domestic Product Generalised System of Preferences Hong Kong and Shanghai Banking Corporation International Atomic Energy Agency Intergovernmental Consultative Group (on Indo-Chinese refugees) Imperial Chemical Industries Information and Communications Technology Intellectual Property Rights Korean Central Intelligence Agency Korean Peninsula Energy Development Organisation Kuomintang (Chinese Nationalist Party) Military Armistice Commission Navy, Army and Air Force Institutes North Atlantic Treaty Organisation National Development and Reform Commission (China) Non-Proliferation Treaty Overseas Development Administration (predecessor to DfID) Orderly Departure Programme World Organisation for Animal Health (previously Office International des Epizooties ) People’s Liberation Army People’s Republic of China Republic of China (Taiwan) Republic of Korea (South Korea) Royal Air Force State-Owned Enterprises Taiwan Aerospace Corporation High-Speed Train (Train à Grande Vitesse) Terminal High Altitude Air Defence Trans-Pacific Partnership (see CPTPP ) Taiwan Railways Administration United Kingdom United Nations United Nations High Commission for Refugees UN Security Council United States of America Union of Soviet Socialist Republics (Soviet Union) World Trade Organization

List of Figures

Fig. 2.1

Fig.2.2

Fig. 8.1

Exports of goods and services as a percentage of GDP for the UK and EU, 1980-2018 EU = EU member states as at mid-2020 (Source World Bank National Accounts data, and OECD National Accounts data files, https:// data.worldbank.org/indicator/NE.EXP.GNFS.ZS?contex tual=region&end=2018&locations=EU&name_desc=true& start=1980&view=chart, retrieved 20 July 2020) Net inflows of FDI as a percentage of GDP, UK and EU, 1990–2019 (Source World Bank Data Bank series on Foreign Direct Investment) China’s imports from France, Germany, Italy and the UK, 2000–2015 (Note Figures are US dollars. Source International Monetary Fund, Direction of Trade Statistics)

16

29

130

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CHAPTER 1

Introduction

I set foot in East Asia for the first time in September 1979. A young and wholly inexperienced diplomat, I had been in the Foreign & Commonwealth Office (FCO) for scarcely nine months before being posted to Seoul, initially to learn Korean before taking up a position in the British embassy as the junior political officer. It was a posting for which I was singularly unprepared. Although I had travelled in remote areas of the world as a student, to travel even for weeks at a time with friends of a similar cultural background and speaking the same language was no preparation for the impact of being suddenly confronted by an alien language and script, very different food and even different implements with which to eat it. And the individualistic self-confidence, even arrogance, of a young westerner came quickly into conflict with the collective and hierarchical nature of Asian society. Nor did I go without reservations. Not only did South Korea seem to me in my ignorance to be something of a backwater as a diplomatic posting, but the country was also under the authoritarian rule of Park Chung Hee, who had governed since seizing power in a military coup in 1961, and concerns about repression and human rights abuses were widespread. Not that this seemed to worry the government in London unduly. South Korea was one of the four Asian ‘economic tigers,’ along with Hong Kong, Singapore and Taiwan, all of them growing at a seemingly breakneck pace, and the principal objective of the embassy was to

© The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_1

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help British exporters win business, not to persuade the Korean government to treat its citizens properly. As one of my predecessors in the embassy explained to a British journalist: ‘We’re a commercial embassy actually. South Korea is a land of golden opportunities for the British businessman.’ He went on to complain about the British press focussing on ‘ depressing aspects like the mass arrests,’ or torture and the suppression of human rights, worried that such reports would discourage businessmen.1 But my reservations were soon balanced, if not overcome, by the excitement I quickly felt at the sheer pace of change that embraced not just Seoul and South Korea but almost all East Asia. This was to be a recurring theme throughout my career. Physically, Seoul could hardly be considered an attractive city. Extensive damage in the Korean war combined with widespread poverty in the 1950s, followed by rapid economic growth since the early 1960s, had bequeathed a legacy of gimcrack buildings best described as ‘shoebox vernacular,’ although a surprising number of traditional one-storey buildings with their distinctive tiled roofs remained, even in central parts of the city. The country was still very isolated and largely inward-looking. The few westerners were almost invariably assumed to be Americans, either military or missionaries. This isolation was in part historic, in part a consequence of the post 2nd World War settlement in East Asia. Neither North nor South Korea were then members of the United Nations. Reflecting the Cold War divide, only three of the five permanent members of the UN Security Council—the USA, United Kingdom and France—recognised South Korea. Not even all the members of the then nine-strong European Economic Community (EEC) had diplomatic relations with South Korea, and fewer than fifty countries had embassies in Seoul.2 Most of these were modest presences in downtown office blocks or houses adapted to meet diplomatic requirements. Only a handful of countries had a more substantial presence. As befitted the main security guarantor, which at the time had more than 30,000 troops in the country, the largest embassy was that of the USA, which occupied a large but functional office block, built with aid money in the early 1960s, and just across the road from the main government building, then a large Japanese era complex, since demolished. In a sign of the uneasy relationship with the former colonial occupier, the Japanese embassy was close to the American one but tucked away down a side street, behind a high wall and in a decidedly utilitarian building.

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Taiwan and Korea were then close allies, the strength of the relationship apparent in the large Taiwanese embassy (formally that of the Republic of China). This was a grand building, albeit of fading elegance, a combination of western and neo-classical Chinese architecture, which occupied an enormous compound in a prime part of the city, close to the city hall. Only two other embassies were of any note. Reflecting the United Kingdom’s imperial past, the British embassy compound occupied another prime location in the centre of the city, adjacent to a former royal palace. At that time there was still a gate in the wall between the two compounds, a legacy of the turbulent era when the embassy first opened, and the king wanted an escape route to a safe refuge in case he should be attacked. The ambassador’s residence was one of the oldest and most imposing western style buildings in the city. Only later did I learn that it was of a generic design originating with the British Indian government and adapted for use in consulates in China. At one time, near-identical buildings could be seen in many of the treaty ports along the Chinese coast, and the design is still apparent today in the former British consulate in Tamsui in Taiwan, now a museum. Like its British counterpart, the French embassy occupied a sizeable compound close to the city centre. But its buildings were much newer. Designed by a Korean student of Le Corbusier, these bore all the hallmarks and shortcomings of the maestro’s designs, a large concrete flying saucer-like rooftop swimming pool being reportedly unusable as the building could not support the additional weight of water therein. At the time, the only direct flights between Korea and Europe were to and from Paris. Due to the Cold War, these went via Anchorage in Alaska rather than across the then Soviet Union; in 1978 one of them strayed badly off course and was forced to land by Soviet fighter aircraft near Murmansk, the pilot managing to do so on a frozen lake. The British empire was almost a thing of the past, with the government in London around this time persuading most of the remaining colonies in the South Pacific into a sometimes reluctant independence, but residual trappings remained and being a British diplomat, even a very junior one, brought a degree of status. In part this was cultural—in East Asia generally, civil servants are regarded with greater respect and deference than are most of their European counterparts—and in part historic, not least due to recollection and appreciation of the UK’s contribution to the United Nations forces fighting in the Korean War from 1950 to 1953.

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This brought with it, on paper at least, a vestigial commitment to the defence of Korea through a continuing contribution to the UN Honour Guard. Most of the time the degree of obligation this might or might not incur was diplomatically not raised, although one incautious colleague was rash enough to tell a visiting journalist ‘If there’s a showdown it’s up to the South Koreans and Americans. Can you see us sending in a division?’3 Although this contribution was minimal, never more than one platoon at a time, it was served by a regular RAF VC10 flight every other month. From a personal point of view this presence brought the benefit of regular supplies of familiar foods, ordered from the NAAFI4 in Hong Kong, and regular and speedy mail contact with home via the British Forces Post Office service. About the time that I arrived in Korea, Robert Shaplen, the New Yorker’s Far Eastern correspondent for most of 1960s and 1970s, published a book based on his experience in Asia going back to the Leyte landings by US Forces in 1944. In his introduction, Shaplen compared the welcome US forces received in the Philippines then with the looks of contempt and hatred on the faces of locals as he fled Saigon on its fall to North Vietnamese forces in 1975. ‘What had happened over those thirty-odd years… to cause love to turn to hate?’ he asked.5 He went on to describe a period of upheaval and change, of violence and unrest in Asia. But he concluded on an optimistic note: China and the US had normalised relations, China and Japan had drawn closer and he thought China seemed determined to pursue a moderate and modernising course. In September 1979 and indeed in the years afterwards, it seemed hard to reconcile this optimism with events on the ground. January 1979 had seen the downfall of the Shah of Iran and the founding of the Islamic Republic, followed a month later by the Chinese invasion of Vietnam, while the year-end would see the Soviet invasion of Afghanistan. The Cold War was at its height, not least in East Asia. Seoul had the atmosphere of a city under threat: a huge US Army base dominated the centre of the city (it is still there today but smaller, while the growth of the city over the subsequent forty years makes its modern presence far less apparent) and a nightly curfew was in place, supplemented by monthly air raid drills. A couple of days after my arrival I watched from the window of my high-rise hotel as a convoy of tanks rolled along the city’s main thoroughfare during the curfew. To my young and cynical mind these were tools to oppress the population but the threat they were a reaction to was real: in 1968 a North Korean commando squad had got within a few

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hundred metres of the presidential Blue House and in 1974 the president’s wife was killed at the National Theatre in an assassination attempt on her husband. Barely more than a month after my own arrival the president himself, Park Chung Hee, was assassinated, not by a North Korean infiltrator but by the head of his own intelligence service. This heralded the onset of a decade of turmoil for much of East Asia, culminating in the Tiananmen Square massacre in Beijing in June 1989. In Korea, Park’s assassination was followed by a military coup less than two months later, then the Gwangju massacre of May 1980, in which at least 165 civilians, probably more, were brutally killed by paratroopers sent in to quell the protests, and the murder of several members of the government by a North Korean bomb in Rangoon (Yangon) in 1983. The Rangoon bomb came barely a month after a Korean airliner had been shot down after straying into Soviet Union airspace, with the death of all 269 people on board. Four years later another 115 people were killed when North Korean agents detonated a bomb aboard another Korean Air flight. At the time, a Chinese general used to sit with North Korean counterparts across the table from American, South Korean and British representatives in Military Armistice Commission talks at Panmunjom in the Korean Demilitarised Zone (DMZ). In the spring of 1983, a Chinese civilian airliner on an internal flight was hijacked and forced to land at a small military airstrip near Seoul. The subsequent negotiations over the return to China of plane and passengers was the first substantive contact between the governments of the People’s Republic of China (PRC) and the Republic of Korea (RoK), which until then refused to recognise one another. My first posting to Seoul ended in 1984; two years later and back in London I was on the Indo-China desk as it was then called in the FCO, dealing not only with the fallout from the end of the Vietnam war, in the form of the exodus of ‘boat-people,’ but also with the ongoing fighting in Cambodia. An almost un-noticed sideshow of this was the simmering conflict between China and Vietnam, in which the former was shelling the latter on a near-daily basis. Thirty years on, the upheaval and change has continued but overwhelmingly for the better. In 2012, my wife and I were strolling around the town of Yichang on the Yangtse river in China when we met an old woman in her 80s. Her family had moved to Yichang from Wuhan further downstream when she was a young girl to escape the Japanese advance

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early in the 2nd World War. She had subsequently lived through the Chinese civil war, then the horrors of the Great Leap Forward and mass starvation, then those of the Cultural Revolution. For her, the 30 years since the start of Deng Xiaoping’s reforms and opening had brought peace, stability and relative prosperity. She was far from alone—her story is widespread throughout East Asia. It is a story I have been privileged to witness, albeit at a distance and from the semi-detached perspective of a western diplomat. Despite this progress, forty years on signs of Shaplen’s optimism remain hard to come by. Nationalism is on the rise again; China has developed beyond all recognition but the moderation in its policies that was assumed prior to 1989 is hard to reconcile with its territorial expansionism in the South China Sea, or its increasing assertiveness towards Taiwan, whose young people are fearful as to whether their country will survive against the relentless squeeze of Chinese pressure under Xi Jinping. Japan, widely predicted in the 1980s to overtake America economically by the end of the century, instead suffered the ‘lost decade’ of economic stagnation. Globalisation is bringing losers as well as winners to East Asia—competition from cheap labour in China has meant that real wages have stagnated in Taiwan for the better part of two decades. And while Pax Americana has provided a degree of security and reassurance to much of the region, will it continue? While American foreign policy helped mould countries such as Japan, South Korea and Taiwan in ways to America’s liking, and brought them firmly within its security ambit, many in America now see China as a strategic rival. Just as importantly, North Korea apart, almost all the region has also benefited from the US designed post-war trading system, a system that at the time of writing is under threat, with potentially huge consequences for a part of the world that has built its prosperity on trade. Not all is gloom. There have been encouraging moves from authoritarianism to democracy. China’s economic rise has been fuelled in no small measure by Taiwanese investment, something unthinkable in the 1980s. The leaders of the USA and North Korea have met face to face although inter-Korean dialogue has waxed and waned, seemingly in accordance with the prevailing mood in Pyongyang. But all this has gone hand in hand with another upheaval. On 1 January 1973, the United Kingdom (UK) joined the then European Economic Community (EEC) as one of three new members. Eleven

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months earlier, Sir Alec Douglas-Home, the then British foreign secretary, had visited Seoul. His briefing notes on the impending accession to the EEC were full of confidence and optimism: We believe that our entry… will increase Europe’s economic strength…As a member of the Community we shall seek to reinforce its outward looking policies and the enlarged Community will be a considerable force for the maintenance of liberal trade…It is inevitable that the scope of the Community’s external policies will broaden as member countries become harmonised. We shall be joining the Community at a moment when we shall be able to influence the process of development in these fields.6

Forty-four years later I was in Taipei when the UK electorate voted 52% to 48% to leave the—by now 28 strong—European Union. Tempting though it is to ask Shaplen’s question about love turning to hate about the UK’s exit from the EU, or even more, to see in it the same ideological factionalism and absence of cohesive leadership that he described in Asia, that is not the purpose of this book. Many others have already written at length about the decision and the reasons behind it. But over the same interval I witnessed at first-hand how rivalry between European countries, driven by their trading interests, gradually gave way to increasing co-operation and engagement with the countries of East Asia as they both grew economically and, in some cases, changed politically. The influence of Europe on this trend is the subject of considerable debate: the EU’s approach is sometimes portrayed as a ‘values-based diplomacy’ that attempts to impose European norms on countries with very different traditions through missionary style preaching or exhortation, an approach that is not well received in the region.7 I do not intend to debate this here. What I do consider to be incontrovertible is that increased engagement by the EU with the countries of East Asia over the last forty years has been mutually beneficial. It has contributed to increased stability and security in East Asia. This has both aided the rise of China but has also been a constraining factor, making China a more predictable and reliable neighbour than would have been the case otherwise. The United Kingdom was a major influence on this engagement, helping shape European involvement, and thereby offsetting the decline in influence that it would have otherwise experienced in East Asia, especially following the handover of Hong Kong and the rise of new actors. And the UK was in turn a major beneficiary, above all, of

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inward investment from East Asia as businesses there sought to develop opportunities in the European single market. By 2016, Japanese companies alone were employing close to 5% of the entire labour force in the UK’s manufacturing sector.8 The UK’s withdrawal from the EU inevitably raises questions over the future direction and depth of engagement with the region, both by the United Kingdom itself and by the EU without the UK as a member. The British government has spoken of increased bilateral engagement with the countries of East Asia after Brexit, even to the extent of opening a new military base in the region. But the basic question of whether it has the resources to do so, even if it has the political will to commit to this long-term, remains unanswered. While domestic critics have dismissed visions of new military bases as mere ‘grandstanding,’9 during and since the 2016 Brexit referendum, the idea that Britain has always been a great trading nation has increasingly taken hold, and with it the notion that by leaving the EU the country can recapture its trading destiny. In practice, as I will seek to explain, this is something of a myth. But it is a powerful and seductive myth that has influenced—and not infrequently misdirected—British policy towards East Asia over the last forty years. The growth of British influence since has come despite this, not because of it. After the 2nd World War, the British government was driven by economic necessity to increase exports to help repay debts incurred in fighting the war and rebuild the country. In the late 1970s too, increasing exports was an essential aspect of emerging from a humiliating IMF structural adjustment programme. But to do this, the country relied heavily on former colonial links, and as a result was slow to adapt to a changing global economic environment, the rise of the new Asian economic powerhouses especially. Meanwhile, the domestic market remained protected from the full force of Asian competition as successive governments in London anxiously sought to protect industry and jobs. Far from being a great free trading nation, as some politicians would like to believe, for most of the last seventy-five years, and in common with the policy of many of its European partners, Britain’s approach to East Asia has been essentially neo-mercantilist. The British government was not alone in this: trade is the driving force behind European engagement with East Asia, and in trade the member states of the EU remain fierce competitors. It was possibly one reason why Margaret Thatcher was so keen to see the European Commission retain responsibility for setting and

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managing European trade policy, although she was also vocal in her desire to see the EU try to speak with a single voice on the global stage (both positions contrary to what many Brexiters would like to believe).10 In Britain’s case, this neo-mercantilism inhibited its willingness to co-operate with partners almost from the very start of its membership of the EEC. This intra-European competition and reluctance to co-operate provided repeated opportunities for the countries of East Asia to use it to their own advantage, as I will try to show. In part, British reluctance was due to somewhat patronising and outdated assumptions about the country’s influence and standing. Apart from France, no other EU member state has had the same history or depth of connections with East Asia as the UK. This could be an advantage for them almost as much as the reverse, especially in dealings with China, which has never been slow to dredge up perceived past humiliations by imperial Britain, or to accuse it of duplicity over Tibet, for example, accusations from which other member states are largely exempt. By the 1980s too, the UK was increasingly anxious to extricate itself from potential security commitments which it could no longer afford, while clinging on to the same links for the trade benefits they brought. In East Asia, this policy was becoming steadily more untenable as governments increasingly started to question the UK’s commitment to the region or grated at outdated attitudes. In the short term, accession to the EEC gave the British government valuable breathing space in its trade objectives. In common with other European governments, it faced pressure from domestic manufacturers and unions to offer some protection from new and aggressive Asian competition. This affected a range of manufacturing sectors: textiles, electronics, footwear, cutlery and more. With the European Commission responsible for Community trade policy, the British government could, and did, push in Brussels for high levels of protection for its own key sectors, while claiming to Asian governments that the responsibility for the quotas, tariffs and ‘voluntary restraint agreements’ lay with the Commission, not itself. But it was in the longer term that the real benefits of accession to the EEC were to accrue, following the creation of the European single market in 1993, itself very much a major British policy objective and achievement. This was to bring significant economic benefits, especially in terms of foreign direct investment. As early as 1990, the then trade secretary was telling the prime minister that the UK had managed to double its share of exports to Japan as a proportion of Japanese gross domestic product

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(GDP) and that 130 Japanese companies had established factories in the UK.11 The UK was able successfully to build on both this and its historical links, on the one hand to persuade the countries of East Asia to see it as their ‘natural partner of choice’ within the EU, or ‘gateway to Europe,’ and on the other to influence the formulation of European policy towards the region. By examining the history of the UK’s engagement with the region over the last forty years through a series of case studies, I aim to show that while Britain’s overall policy remained neo-mercantilist in nature, British diplomacy evolved over that time from being primarily bilateral, to working with partners in the EU to achieve national objectives, and how in East Asia this brought significant benefits for the country; benefits that would have been much harder, if not impossible, to achieve had Britain sought to act unilaterally. Furthermore, by acting in this way, British diplomacy was able to more than offset what would otherwise have been a near certain decline in the country’s influence and standing in the region. Not surprisingly, most academic studies of the EU’s relations with the region focus on relations with China or Japan. As the world’s second and third largest economies respectively, they are of major significance for the trade-based interests of the EU. I examine the region, however, primarily through my own involvement in the course of my diplomatic career, from the very junior level first of attaché then 2nd Secretary in Seoul, through participation in multinational summit preparations, to my final appointment as the UK’s representative in Taiwan. Through this, I have been able to observe at first hand the way EU influence has grown over time but also experienced the way British diplomacy has adapted to this influence, and been able to lever it successfully to counter any loss of influence stemming from changes in our wider relations with the region. I include, too, consideration of recent policy towards China, not from a diplomatic perspective but that of a business representative, a role in which I spent four years at the end of my career. There is, therefore, a strong personal flavour to the account, which has a heavy focus on South Korea and Taiwan. I make no apology for this. For much of the period under consideration, levels of awareness in Europe about both of them were modest (I still recall the astonishment in 1995 of the senior FCO official responsible for relations with Asia on being told that the South Korean economy was bigger than that of all the ASEAN economies combined).12 Critics might object that I focus too

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heavily on a few major contracts, or even on a single firm, GEC, and that these were far from representative of British diplomacy to the region as a whole,. To try to mitigate such criticism, South East Asia features primarily in the context of multilateral diplomacy, principally in efforts to end the conflict in Cambodia and the problems surrounding ‘boat people’ fleeing Vietnam. This is not intended as a slight on other countries in the region, more a matter of pragmatism. I could have chosen more recent conflicts in the region, such as Timor Leste’s struggle for independence from Indonesia, resolution of the unrest in Aceh following the disastrous Indian Ocean tsunami of Christmas 2004, or the long drawn out political struggle in Myanmar, all ones in which I was also involved in the diplomatic efforts to find solutions. Although this is very much an account formed by personal experience, however, I have no wish to be accused of breach of privilege and have therefore sought to draw on the official records in support of my argument or analysis as far as possible. In these more recent cases, any account must therefore await the release of the files for public scrutiny. For the same reason, my three years in the Philippines from 1997 to 2000, where British personnel played a disproportionate role in the EU’s development aid programme, are not covered. In looking at Vietnam and Cambodia, I have gone beyond my original involvement to consider the rise of broader multilateralism in EU-Asia relations, principally dialogue in the ASEAN Regional Forum (ARF) and the Asia Europe Meetings (ASEM). Japan, whose own relations with the UK were the catalyst for so much of the inward investment that helped transform the British economy in the 1990s, is overlooked not through any personal animus or bias but ignorance—I have never been sufficiently involved in policy with Japan to be able to offer a meaningful perspective. Others have covered it in far more detail and with far greater expertise than I would be able to. The same is true of Hong Kong. So much has been written about China, on the other hand, that I almost hesitate to mention it separately at all. But China’s rise has been, and will continue to be, a major influence on its neighbours and I have sought to cover this, albeit inadequately, in looking at those neighbours. In each case that I consider, I have looked primarily at periods when I was directly involved but have supplemented this with reference to both the public records and other published work to provide a broader context and longer perspective as appropriate. In some cases, principally more

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recent policy towards Taiwan, the files are not yet open and in these cases I have sought recourse to contemporary media accounts, rather than rely on my own, inevitably selective and less than fully reliable, memory. Looking back over the last four decades, a circularity and interdependence can be seen between the broad themes I have mentioned. The rise of China has not happened in isolation but has been part of the broader changes within East Asia, which in turn have driven greater European interest in the region, initially in response to the new trade opportunities created. As trade has grown, so it has stimulated wider interest: people to people exchanges in the form of tourism, studying and more; exchanges on human rights; co-operation on climate change, environmental protection and more. The final chapter therefore considers briefly what the future is likely to hold in store now that the UK has left the EU. Questions must be asked about the extent to which both will focus on relations with East Asia with the UK no longer a member. China’s Global Times newspaper voiced the doubts of many in the region in describing the outcome of the 2016 referendum as a ‘lose-lose’ situation for both the UK and EU, and a reflection of the ‘general decline’ of Europe.13 Faced with many challenges closer to home, in the Middle East, in North Africa and grappling with new challenges on home soil, particularly the rise of an angry populism, will the EU scale down its engagement with the countries of North East Asia? As importantly, how will those same countries respond? Will China, for example, faced with a more antagonistic and less accommodating USA than it has been accustomed to, see in Brexit an opportunity to strengthen its relationship with the EU as a counter to American pressure? How would its neighbours react to such moves? Will Taiwan and Korea seek to follow suit, or will they place more emphasis on their relations with the USA at the expense of those with the EU or UK? Will such a significant split in the EU act as a deterrent to further regional co-operation in East Asia or might it, perhaps paradoxically, be a spur? I end by trying to assess what withdrawal from the EU will therefore mean for the UK’s long-term interests in East Asia and, as importantly, what the consequences are likely to be for the region itself. For example, one author has described relations between China and Taiwan as a ‘cold peace,’ to which the EU’s carefully calibrated approach has until now contributed.14 Will Brexit put this at risk?

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Notes 1. Robert Whymant: British silence on Seoul repression condemned, The Guardian, 27 August 1974. 2. Ireland, one of the nine members of the EEC, did not establish diplomatic relations until 1983. 3. Robert Whymant, The Guardian, 22 May 1975. 4. NAAFI—Navy, Army and Air Force Institutes, the official trading organisation for British forces. 5. Robert Shaplen: A Turning Wheel, Thirty Years of the Asian Revolution, London 1979. 6. Briefing note for foreign secretary’s visit to South Korea, February 1972, UK National Archives (hereafter TNA), FCO 30/1315. 7. For a brief overview of this debate see Wai Ting: EU-China Relations After Brexit, in David W.F. Huang and Michael Reilly eds.: The Implications of Brexit for East Asia, Singapore 2018. 8. Michael Reilly: The Burial of Thatcherism? The Impact of Brexit on the UK’s Relations with North East Asia in Huang and Reilly, op. cit. 9. Michel Peel: UK Grapples with Post-Brexit Asian Ambition, Financial Times, 4 January 2019, https://www.ft.com/content/1816b5f6-0f7111e9-a3aa-118c761d2745, retrieved 12 February 2019. 10. Margaret Thatcher: Speech to the College of Europe, Bruges, 20 September 1988, http://www.margaretthatcher.org/document/107332, retrieved 10 February 2019. 11. Minute from secretary of state for trade and industry (Nicholas Ridley) to prime minister, 8 June 1990, TNA, PREM 19/354. 12. ASEAN—Association of South East Asian Nations. At the time, the member states were Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam. 13. Britain Steps Backward as EU Faces Decline, Global Times , 25 June 2016, http://www.globaltimes.cn/content/990440.shtml, retrieved 12 February 2019. 14. Maaike Okano-Heijmans: EU Trade Diplomacy and the Cold Peace in Cross-Strait Relations , Clingendael, 2016, https://www.clingendael. nl/publication/eu-trade-diplomacy-and-cold-peace-cross-strait-relations? utm_source=New+Policy+Brief+EU+trade+diplomacy+towards+China+ and+Taiwan&utm_campaign=8e268496ba-NEW_POLICY_BRIEF_ 2016_11_10_EU_TRADE_CHINA_TAIWAN&utm_medium=email& utm_term=0_fccd1f7a2c-8e268496ba-79888485, retrieved 20 February 2019.

CHAPTER 2

Imperial Ties and Free Trade

The Origins of Free Trade One of the most persistent arguments of those in theUnited Kingdom (UK) arguing for leaving the EU has been that doing so would free the country to negotiate its own trade deals with other countries around the world. Underlying this is a frequently expressed notion that EU bureaucracy and the differing objectives of some other member states were somehow hampering Britain’s global trading ambitions. This was stated clearly by then prime minister Theresa May in her Lancaster House speech of January 2017, in which she set out her vision for the future relationship between the UK and the EU after Brexit. In it, she asserted that ‘Many in Britain have always felt that the United Kingdom’s place in the European Union came at the expense of our global ties, and of a bolder embrace of free trade with the wider world.’1 Somewhat inconveniently, UK trade statistics overall do little to support this free-trade vision, or the notion that membership of the EU is somehow holding it back. As Liam Fox, the UK’s international trade secretary from 2016–2019 admitted, trade is considerably less important to the UK than to its former fellow EU member states, with an export to GDP (Gross Domestic Product) ratio of 27.3% compared to an EU average of 47.3%.2 It was not always the case. As Fig. 2.1 shows, in 1985 the ratio was almost the same for both the UK and EU. But since 1990, the rate of growth of exports has been proportionately faster and greater for the EU than for Britain. Yet this has largely coincided with the impact © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_2

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50 45 40 35 30 25 20 15 10 5 0

M. REILLY

Exports of goods and services as percentage of GDP, 1980 2018

1985

1990

1995

2000 EU

2005

2010

2015

2018

UK

Fig. 2.1 Exports of goods and services as a percentage of GDP for the UK and EU, 1980–2018 EU = EU member states as at mid-2020 (Source World Bank National Accounts data, and OECD National Accounts data files, https://data.worldbank.org/indicator/NE.EXP.GNFS.ZS?contextual=region& end=2018&locations=EU&name_desc=true&start=1980&view=chart, retrieved 20 July 2020)

of structural reforms that were meant to liberalise the British economy. (The figures are for exports of goods and services, further suggesting that the oft-heralded shift in the economy towards services has not made a material difference to export performance.) But it is a powerful narrative nonetheless and one reason (although there were others) why the withdrawal agreement Mrs May negotiated with the EU provoked so much opposition from the government’s own Brexiter parliamentarians. They feared that the proposal for continuing, albeit temporary, membership of a Customs Union with the EU would prove long-lasting, possibly permanent, preventing the full achievement of their objective. Behind this view is a conviction that prior to joining the European Community, the UK had a long and glorious history as a nation committed to free trade. By contrast, some other EU member states, especially ‘Mediterranean members,’ are supposedly inherently protectionist and this protectionism affects British interests and places its economy at a disadvantage.3 Hence the government’s official position paper on the proposed future relationship with the EU post-Brexit,

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published in August 2017, included the establishment of an independent international trade policy as one of three key objectives.4 The same paper highlighted the importance of China in international trade, with a strong inference that negotiation of a free trade agreement with China would be a priority for the UK once it left the EU. This was consistent with a wider Brexiter narrative, that the UK needed to be building stronger trade ties with the fastest growing economies in the world, many of which were in East Asia, and not be hampered from doing so by its links with the supposedly much more sclerotic economies of the EU. This perception of the UK as a free-trading country is usually placed as dating back over 150 years to the abolition of the Corn Laws in 1846 by Robert Peel, the Conservative prime minister of the day. But it overlooks a fundamental feature of the UK’s trading history. For in contrast especially to Germany, the primary interest of British businesses overseas was less in exporting goods and more in investing: in utilities, especially, notably railways, but also in natural resources—agriculture in Australia and Argentina, rubber plantations in Malaya, mines everywhere. The remittances from these investments were returned to the UK and the export of goods from the country—of railway locomotives, for example, was frequently to supply these investments. This is such an important but often overlooked point that it merits a short digression into economic history following the repeal of the Corn Laws. The laws had served the interests of the land-owning classes very effectively by keeping the price of imported grain high and the immediate outcome of their abolition was a split in the Conservative Party, whose land-owning members not surprisingly opposed Peel’s move. Abolition of the laws was a unilateral move; there was no quid pro quo demanded from countries exporting their grain to the UK, such as reducing or abolishing tariffs they might impose on British exports. At the time the laws were repealed this did not matter, for two reasons. Firstly, the initial economic impact of the repeal was limited—over twenty years later, over 80% of grain, meat, dairy produce, and wool consumed in the UK was still produced domestically. Secondly, at least until 1870, the country could legitimately claim to be the ‘workshop of the world,’ with its two biggest foreign markets being the United States of America and Germany, the two next largest industrial economies. But over the ten years between 1870 and 1880 the UK was faced first with an influx of wheat from the American prairies and Russia at prices with which domestic growers could not compete, secondly with an abrupt fall-off in

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exports to the USA and stagnation in those to Germany as competition from domestic producers in each took off, and finally, increased competition from American, German, French and Belgian manufacturers in third country markets the UK had hitherto dominated if not monopolised.5 The dominance of British manufactured exports in world markets up to this point was due not to superior quality or lower prices, however, but to London’s unrivalled position as the pre-eminent global financial centre. This remained unchallenged up to the outbreak of the 1st World War in 1914. Foreign governments and enterprises raised money for their projects on the London capital market while domestic manufacturers, in new industries especially, complained about the difficulty of raising capital because preference was given to financing foreign bonds. More than onethird of all the overseas finance out of London prior to the 1st World War went to North America and much went to Europe too. But after 1875 especially, as the competition from other exporters grew, significant amounts were going into the colonies and dominions overseas, or countries such as Argentina, whose economies were also heavily dependent on that of the UK. Most of this went into financing new railways, built to open up major new agricultural areas.6 Finance from London was followed by rails, locomotives and rolling stock from elsewhere in the UK, the capital used to finance the infrastructure helping create a privileged market for British goods, frequently reinforced by British management of the enterprise. (Many of the infrastructure projects being pursued by China under its Belt and Road Initiative make for interesting contemporary comparisons.) The scale of this is rarely appreciated today. Railways throughout Latin America, for example, were not only predominantly British owned but staffed by Britons, down to the lowest managerial levels. Nationality, not competence, was frequently the primary criterion for selection.7 (Even in the 1980s, a company like the Hong Kong and Shanghai Bank—at the time registered in Hong Kong, not in London—recruited its managerial level staff almost exclusively in the UK. They were also overwhelmingly if not universally male, forbidden from marrying until they had served with the bank for a set period of years and even then, only with their managers’ express permission. British companies were also still prominent in international shipping, again sending young recruits from the UK to serve overseas in managerial positions. Today, British-owned companies have all but disappeared from international shipping, while a largely overlooked aspect of globalisation has been the extent to which

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hitherto expatriate managerial positions are now occupied by nationals of the country concerned, often more highly educated as well). This meant that Great Britain was able to sustain a strong export base of manufactured goods, even while losing out to competitors in many of its previous established markets. In short, the political commitment to free trade worked firstly because it kept the domestic price of food low, secondly because British investment overseas, especially in countries where management decisions were usually taken by Britons, ensured ready markets for British manufactured exports even as foreign competition grew, and thirdly because the same investment saw a steady export of people in support, acting as a safety valve against limited opportunities at home.

Imperial Preference and East Asia This was driven and sustained by a powerful imperial mind set, exemplified by the views of Joseph Chamberlain, colonial secretary from 1895 to 1903, who saw the ‘Anglo-Saxon race’ as ‘infallibly …the predominant force of future history and universal civilisation’ with a national mission to bring civilisation to the world.8 While such a view was common at the time and far from confined to the ‘Anglo-Saxon race’—it differs little, if at all, from the French mission civilisatrice—it has also brought with it long term baggage that has been difficult to shake off, not least in Asia. The UK features at the top of China’s list of the overseas imperialists responsible for its ‘century of humiliation’ for example, and suffered from then Malaysian prime minister Mahathir Mohamad’s’ ‘Buy British Last policy’ of 1981. To underpin his imperialist vision, Chamberlain advocated replacing free trade with the rest of the world by a system of ‘Imperial preference,’ which would see lower or zero tariffs on goods from the empire and dominions than on those from the rest of the world. At the time, his arguments were rejected by others within the Conservative Party who recognised this would mean higher prices on food imported from the USA or Europe. But they would be successful in 1932 when the chancellor of the exchequer, Chamberlain’s son Neville, introduced a general system of tariffs, goods from the empire being admitted tariff free. Admittedly, this was against the background of worldwide moves to protectionism, notably the introduction of the Smoot-Hawley tariff in the USA in 1930.

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The changed economic circumstances for the UK after the 2nd World War had a dramatic impact on the country’s wider economic interests. Britain was still an imperial power, with worldwide obligations. But for the USA, under the Roosevelt administration’s support for Britain prior to formal entry into the war after Pearl Harbor, ‘eliminating imperial preference had become a neoreligious quest’ and it sought to make free trade on American terms a key pillar of the post-war global economy.9 By 1945, Britain’s exports were barely half what they had been in 1938 and its overseas capital assets fell 45% between 1938 and 1948, through a combination of nationalisation in the countries concerned and the expiry of concessions, or their exchange or forced sale as part of wider deals to settle post-war debts.10 More than half of the remaining stock of £1960 million was in Commonwealth countries. In East Asia, the biggest share by far was in Malaya and Singapore, where the total nominal capital in 1948 was £64 million. But this was still less than the amount invested in New Zealand or in British Central Africa. The figure for China, at £36 million, was dwarfed by the £260 million invested in South America, still more the £397 million in Australia.11 Post-war British governments were not unnaturally anxious to protect what overseas investments did remain, and the government’s early move to recognise the new People’s Republic of China (PRC) in 1950, one of the very first western countries to do so, was driven by an ultimately futile attempt to protect this investment.12 The immediate post-war policy objective in respect of the region was to ‘re-establish our commercial position in China and Japan and …to try to exercise such influence as was possible upon the post-surrender policies for Japan.’ But after Indian independence in 1947 and the advent of the PRC, Malaya remained as ‘one of the great jewels in the British imperial crown,’ the significant investments there being both markets for British exports and major earners of all-important foreign exchange. By 1964 they would also be among the most profitable of all the UK’s overseas investments, earning more than twice the average level and exceeded only by those in Germany. (Interestingly, investments in Italy were the next most profitable—even before Britain had joined the EEC, the opportunities within it were clearly attractive.)13 Retaining Malaya, or at least preventing it from falling to a communist insurgency, therefore became a major priority and 25 battalions were committed to its defence, the largest deployment of British land forces in East Asia. (The Royal Navy retained

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a significant presence in Asian waters, its strength in the Far East in 1950 being roughly the same as that of the US Navy).14 From a trade perspective, other than Hong Kong, the rest of East Asia barely featured in the British mind set in the 1950s. Japan was still re-building its economy (although the stock of British investments here was higher than it had been in China in 1948) while Korea and Taiwan were both poor, predominantly agricultural economies. In 1950, 90% of Taiwan’s exports were agricultural, mainly sugar, or timber. Around 40% of imports were financed by US aid and for most of the decade the USA and Japan together accounted for around 70% of all Taiwan’s imports and 50% of its exports. In 1955, just 0.04% of British bilateral trade was with Taiwan. The figures for Korea were similar.15 In short, in the wider context of Britain’s worldwide interests, East Asia on its own was of peripheral importance. The lack of impact was not helped by a strong tinge of racism in national attitudes, Rana Mitter noting Churchill’s ‘clear contempt for the Chinese in general’ prior to the 1943 Cairo conference at which Churchill, Roosevelt and Chiang Kai-shek met to discuss the post-war future of Asia.16

The Impact of the Suez Crisis on East Asian Policy That East Asia featured in policy considerations at all was mainly due to the post-war security environment, particularly in the context of the Cold War, which in the region was far from ‘cold.’ The Chinese civil war of 1945–1949 was followed by the Korean War of 1950–1953, to which the UK committed significant forces, and recurrent crises between China and Taiwan. The UK’s primary concern was to try to ensure such conflicts remained limited and thereby minimise the diversion of US attention and resources from Europe. Although the country no longer carried global economic weight, its leaders nevertheless felt confident enough ‘to strive to apply their ‘superior wisdom’ gained from long experience of leadership in East Asia to guide their US ally towards making sound decisions.’17 As Steve Tsang so cogently explains, the Suez debacle of 1956 brought a sharp end to such pretensions, at least in public. Thereafter, British foreign policy would be defined first and foremost by ensuring the maintenance of the ‘special relationship’ with the USA. So, two years later during the Quemoy Crisis of 1958, when China embarked on an intensive shelling of the island of Quemoy (Kinmen), held by the Nationalist forces of Chiang Kai-shek in Taiwan but at the

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entrance to the harbour of the mainland port city of Xiamen, prime minister Harold Macmillan instructed the Foreign Office: ‘The important thing now was to stand by the Americans both in the interests of interdependence and in order not to give comfort and encouragement to our enemies and we should not appear even in private discussion to be sniping at the Americans over the rights and wrongs of the situation.’18 The primacy of the ‘special relationship’ has endured to this day in British foreign policy, at least so far as the politicians are concerned, if not necessarily the officials who implement it. In 1986, as the desk officer responsible, I was firmly put in my place when daring to suggest that the first priority for a prime ministerial bilateral tête-à-tête with a counterpart at the forthcoming Tokyo economic summit should be the Japanese prime minister as host, rather than the American president. More recently, it was expressed rather more crudely and bluntly by Jonathan Powell, prime minister Tony Blair’s chief of staff, when he instructed the British ambassador in Washington in 1997 that ‘We want you to get up the arse of the White House and stay there.’19 A combination of decolonisation, a changing global security environment and harsh economic realities, however, have seen a steady reduction in the UK’s security presence in East Asia, which today is purely vestigial. A battalion of Gurkhas continues to be stationed in Brunei, paid for in full by the sultan, and the country remains a member of the Five Power Defence Arrangements (FPDA), created in 1971, under which the UK, Australia and New Zealand jointly agreed to consult on assisting in the defence of Singapore or Malaysia should they be threatened by another power. The threat had been very real, due to Konfrontasi, the policy of then Indonesian president Sukarno, aimed at preventing the creation of Malaysia through the combination of already independent Malaya with British North Borneo (now the Malaysian states of Sarawak and Sabah). British troops remained in Malaysia throughout the emergency, which ended in 1966 with the coming to power in Indonesia of Suharto and the signing of a peace agreement between Indonesia and Malaysia in August of that year. Publicly, the FPDA was presented as an interim measure pending the creation of a ‘South East Asia Zone of Peace, Freedom and Neutrality,’ a concept the Singaporeans reportedly considered ‘hogwash.’ Privately, officials recognised that the withdrawal of British forces from the region would have only a marginal effect in relation to any wider threat from outside, and the real aim of the FPDA was thought to be in helping

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improve co-operation between Singapore and Malaysia.20 Following the 1973 oil price crisis, Britain faced major economic difficulties and Denis Healey, the then chancellor of the exchequer (finance minister) was anxious to make major savings in the defence budget as part of efforts to address this. The commitment to the FPDA was estimated to cost around £13million, out of total non-NATO overseas defence costs of £150 million. In July 1974, the British press was told of the government’s intention to announce the complete withdrawal on cost grounds of all British troops from Malaysia and Singapore the following October, although withdrawal had been considered as early as 1968. Nor was there much enthusiasm in London for keeping the Gurkha battalion in Brunei, even though it was already paid for wholly by the sultan. It was thought that ‘our responsibility for Brunei’s external affairs brings us into undesirable conflict with Malaysia’ and that ‘protection of an ‘undemocratic regime’ is embarrassing internationally and in the UK.’21 It would be another ten years before the Sultan of Brunei could be persuaded to accept full independence from the UK, while a compromise agreement saw the retention of a token Royal Navy presence in Singapore as well as five RAF personnel at the Butterworth radar station in Malaysia. In what may have been a reflection of the continuing importance in British eyes of the relationship with the USA, the token commitment of a platoon to the UN Honour Guard in Korea survived unscathed until 1993, when it was finally withdrawn against the background of a steady run-down of the Hong Kong garrison, from where it was drawn, in the run-up to the handover of Hong Kong in 1997. If the United Kingdom felt compelled to maintain such security commitments as a way of sustaining its ‘special relationship’ with the USA, no such obligations applied in respect of its partners in the European Community (EC). It enjoyed, and continues to enjoy, a close and co-operative security dialogue with France, a fellow nuclear power, former colonial power and permanent member of the UN Security Council, with the accompanying shared experience and baggage that this entails. With other EC members, however, its historic links and continuing security presence in East Asia, however vestigial, may have encouraged a lingering belief in the ‘superior wisdom’ that it had applied in respect of the USA prior to Suez. If so, it is a notion deriving directly from the Chamberlain view that remains remarkably enduring among some Brexiters, as shown by

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the one who asked in 2016: ‘Why should we allow accident of geography to trump ties of language and law, habit and history, culture and kinship?’22 Subsumed within this appears to be a conviction that somehow the country’s rightful trading partners are its former dominions, who would welcome British exports without question, had exporters not been distracted by the lures of trading with Europe. It ignores the extent to which trading patterns were already changing after the 2nd World War and continued to change up to and in the years after the UK joined the EC, especially in respect of Australia and New Zealand, about which such views are probably strongest, notwithstanding that for both trade with China is now far more important than that with the UK.23 It is, presumably, a reflection in part of the large scale emigration from the UK to both, Australia especially, which continued into the mid-1960s. It also ignores the history of British export performance more generally following the 2nd World War, as the advantages for exports of captive markets through British owned companies overseas started slowly to disappear. Of 24 economies surveyed in 1964-5, only in four—Kenya, Iraq, Belgium and Sweden—had the country’s share of imports increased since 1958. Elsewhere, the story was one of decline—alarmingly so in the case of the USA, Canada and Australia.24 Far from espousing free trade, from 1945 the priority for successive governments became protecting existing overseas investments and markets, with the emphasis increasingly on the latter, despite a study showing that ‘the ownership of manufacturing facilities abroad increases enormously the sales in overseas markets by British -owned companies.’25

The Ties that Bind In short, it is hard to see the conviction as other than the reflection of a lingering imperial mind set, reinforced perhaps by residual security commitments. This was most obvious and most recent in the case of Hong Kong, but the fight against the communist insurgency in Malaya in the 1950s, followed by Sukarno’s Konfrontasi, gave significant numbers of young Britons on national service direct experience of the region. And even as the withdrawal of troops from Singapore and Malaysia was considered, other factors helped to sustain colonial perceptions. Brunei remained a British colony until 1984, largely because the sultan feared being absorbed into Malaysia. Although tiny, the country was of considerable economic importance to the UK, its large oil reserves

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being controlled and exploited by Shell. Students from Malaysia and Hong Kong continued to come in large numbers to the UK to study, while British trading houses such as Jardine Matheson and Swire and the Hong Kong and Shanghai and Standard Chartered banks were prominent throughout the region, both helping maintain a high profile for the UK and continuing to recruit new managers predominantly, if not exclusively, from Britain. All this served to encourage and sustain a nostalgic attitude towards parts of the region and with it, perhaps, a sense of entitlement in terms of preferential access to the markets for British exporters. As Table 2.1 shows, East Asia continues to be relatively more important for British exporters than for those from the rest of Europe, accounting for a consistently higher proportion of total British exports than it does for total EU exports. But during the 1970s and 1980s, the fastest growing markets in the region were those of Japan, Korea and Taiwan. British exports to all three grew much more slowly than did those of France and Germany, as the country remained focused on its former colonial ties with South East Asia. Furthermore, the overall economic size of these countries was but a fraction that of the North East Asian tiger economies.26 A country genuinely committed to free trade would have been far quicker to seize the new opportunities, as the following chapters will show. It also placed the UK at a disadvantage compared to its European neighbours (and trade rivals) and does not bode well for adaptation to the country’s global business interests post-Brexit. The attitude was apparent in the views of the then trade secretary, John Nott, following a visit to East Asia in 1980, when he wrote to the foreign secretary complaining that ‘more traditional markets like Hong Kong and Table 2.1 Exports of goods and services from the UK and EU to East Asia as a percentage of total exports, 1980–2019

EU UK

1980

1990

2000

2010

2018

2.92 5.0

5.3 7.5

5.97 7.5

7.1 9.4

8.1 13.9

EU = EU member states as at mid-2020 East Asia = 5 original ASEAN members (Indonesia, Malaysia, Philippines, Singapore, Thailand) plus PRC, Hong Kong, Japan, S. Korea and Taiwan Source International Monetary Fund, Direction of Trade Statistics

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Singapore have, of course, been neglected in the years since our entry in the EEC…For the time being the Germans and French are doing better than us in China and we must wait and see if our ‘link’ with Hong Kong pays off.’27 He would wait in vain. By 2008, both France and Italy were exporting more goods to China than was the UK, while German exports were greater by a large margin than those of the other three countries combined. Despite the supposed advantages offered by traditional ‘links,’ Nott complained that many more German and French businesspeople were on the ground than British counterparts, even in Hong Kong. 33 years later little had changed with 50% more French nationals and 36% more German nationals resident in Shanghai than British ones.28

From Free Trade to Protectionism These trends were just as apparent in British trade with Korea. In 1978 both France and Germany accounted for more than twice as much of Korea’s imports as did the UK, and both had a much stronger presence on the ground in Korea in the form of resident expatriates there. Both also placed more emphasis in their relationship on education and training, France having signed an Economic Co-operation Agreement and Germany sponsoring several thousand Korean students on training programmes. By contrast, in Korea n eyes, far from being a free trader, the UK was ‘the most protectionist of all [its] major customers.’29 This view was not without merit. Then, as now, Korea was a major exporting country but was heavily dependent for access to the EC market on preferential treatment under the Generalised System of Preferences (GSP) of the GATT (General Agreement on Tariffs and Trade—forerunner of the World Trade Organisation). In 1977 it was the fifth largest user of the scheme, 8% of all imports into the EC under the GSP coming from Korea. The EC planned to make major adjustments from 1981, targeting the preferences much more towards poorer countries, to Korean consternation. Many of Korea’s exports—notably in textiles, televisions and cutlery—were in areas where the UK was then anxious to protect its domestic industry and it was clear from internal briefing that while in meetings with third countries UK officials took the line that trade policy was a matter for the European Commission, the British government was more than happy to see ‘voluntary restraint’ agreements and other restrictive trade measures applied.30 This practice of sheltering behind the

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Commission or ‘the EU’ when unpalatable or unpopular measures were taken was to become more common over the years. Korea was far from alone in seeing the UK as protectionist. Also in 1978, Taiwan had cause to complain about new quotas for textile imports that the European Commission was introducing. It felt particularly aggrieved, for while it was the fourth largest source of such imports into the EC after Hong Kong, India and Korea, its quota was being reduced by a larger amount than theirs were, and it was also being denied access to the EC’s preferential tariffs. Internal exchanges between Whitehall officials shed an interesting light on British attitudes, for in this area the Commission did little more than co-ordinate national positions, deeming quotas to be autonomous matters, the management of which was for member states to decide. In this, the UK was one of the most restrictive. Other member states were happy to allow the Taiwanese to manage the quotas, whereas the UK insisted on managing them itself, a process known as import administration. As one official noted at the end of the year, ‘A gesture towards the Taiwan Textile Federation might help to offset the hurt they feel…It will also ensure that we do not appear to be too far out of line with Germany, Italy and Belgium,’ all of which had a less restrictive attitude towards Taiwanese textile imports than did the UK.31 Not only was this procedure time-consuming for UK civil servants, more seriously, the system hindered competition by favouring established importers at the expense of new entrants to the market. Ministers finally agreed to come into line with the rest of the EC and allow the Taiwanese to administer the quotas from early 1979.32 To the politicians with their ostensible free trade convictions, the fault for this relative under-performance lay with British business. In 1980, Nott complained that ‘there is the oft-repeated criticism that our exporters use Hong Kong as a watering hole rather than treating it as a market in its own right,’ a complaint repeated in similar form forty six years later when his then successor Liam Fox accused business executives of being ‘fat and lazy,’ saying they would rather play golf than try to win export deals. (Despite Nott’s complaint, Hong Kong at the time was second only to Japan as a market for British goods in East Asia, exports by value being almost 50% greater than to China, South Korea and Taiwan combined.)33 In part, such comments simply reflect the frustration of politicians whose interest in exports lies primarily in their usefulness in delivering

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positive media headlines, rather than profits for shareholders, but they also reflect a deeper failure to understand the nature of British trade overseas, especially in Asia. For on the one hand, names redolent of Britain’s colonial past continued to be prominent in trade with and within the region, not just in trading houses but in banks, shipping companies, airlines (Cathay Pacific, majority owned by the Swire group) natural resources and more. On the other hand, much of the country’s supposed export success was down to the activities of these trading houses actively sourcing the necessary goods from the UK. Prior to the 2nd World War this was not a problem: the combination of extensive overseas investments, powerful British trading houses and colonial governments ensured a steady supply of orders. But it was far from axiomatic, as the politicians may have assumed, that by the 1980s British companies in the region were sourcing most of their purchases from the UK in the way they might have done a century earlier. Companies might still be ‘British’ by registration and share ownership, and profits continued to be remitted to and managers recruited from the UK, but purchases were less and less sourced there. Some may argue that this is of purely historical interest and increasingly irrelevant as the British economy has become steadily more focused on services. In 2018 these accounted for 71% of GDP, compared to just 17.5% from manufacturing. But this overlooks several important points. First, exports of manufactured goods remain more important than those of services, which are just 80% those of the former. And as Fig. 2.1 shows, the rise of the service sector has not had a dramatic effect on exports as a proportion of overall GDP. Secondly, it should not be assumed that trade in services is unrelated to trade in goods. Exports of the latter are often closely linked to the former: two of the largest contributions to services growth in the economy in 2019, for example, came from the Information and Communications Technology (ICT) sector and the motor trade.34 This is especially so in the case of East Asia, where export success in the services sector has often been through the importance of established banks (HSBC, Standard Chartered) and trading houses (Swire, or Jardine Matheson, a diversified holding group with over 450,000 employees) which have also been responsible in the past for major manufacturing export orders for British companies. Finally, the growth of the surplus in trade in services has taken place in parallel with another major change in the British economy, the huge rise

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in inward investment from overseas following the creation of the European single market, much of this emanating from East Asia. This also reflects the impact of globalisation more generally, with the rise of global value chains, ‘just in time delivery’ and more. In short, it is simplistic and misleading to see trade in services as somehow unrelated to trade in goods, or as the contribution of just one or two sectors, such as financial services. As Fig. 2.2 shows, for more than a decade after the advent of the single market in the early 1990s, inward investment was consistently more important for the UK than for the EU as a whole. Its contribution to GDP was even more significant for the UK than for other large European economies such as France and Italy. Only in much smaller economies has the impact been greater, most notably the Netherlands, reflecting its key position as an entrepot and transport hub for much of the Single Market. In one important respect only, the old pattern remained unchanged. In Hong Kong, by the mid-1980s imports from the UK were dominated by capital goods and public procurement contracts, with captains of local business and a British controlled civil service continuing to have close ties of language, habit, culture and kinship to suppliers. In other areas, consumer goods especially, British labels were rapidly being supplanted 14

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Fig. 2.2 Net inflows of FDI as a percentage of GDP, UK and EU, 1990–2019 (Source World Bank Data Bank series on Foreign Direct Investment)

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by those from elsewhere. Throughout East Asia more generally at this time, imports from Europe were dominated by requirements for local infrastructure projects. In part this reflected the needs of the countries concerned, but also import barriers the same countries imposed as they sought to modernise their economies and build up their domestic industries as part of the process. With the ultimate decisions on so many purchases taken by governments not businesses, political lobbying became an integral aspect of sales bids. British companies and politicians were at least as active in this as any other European countries—indeed, the evidence suggests that the UK and France probably led other EC member states in this regard reflecting, perhaps, long experience from working with compliant colonial administrations. As we shall see, this was to lead to strong, at times intense, rivalry between European countries to win specific contracts, a competition that was to hinder the ability of the EC as a whole to create a more unified approach in its dealings with East Asia. Over time the nature of this rivalry would change as the patterns of trade itself changed, but the underlying competitive nationalism remains. By 2017, at least one influential European think-tank was bemoaning the lack of European unity in the handling of relations with China, complaining about the opportunistic behaviour of many member states. Or, as others have put it, intense competition between member states of the EU, especially the larger ones, has inhibited the implementation of a common external economic policy, partly for fear that this might require making concessions in areas of national importance to them. In short, they want policies focused on their own access to the Chinese market.35 The United Kingdom has been as guilty of this as any other EU member state and professions of commitments to free-trade on the part of British politicians should be seen in this context, and taken less at face value and more as a convenient cloak in which to wrap economic nationalism. The next chapter, which considers experience in Korea in the early 1980s, will show this in more detail, arguing that the combination of a lingering sense of ‘superior wisdom’ and dependence on government lobbying made the UK reluctant to work more closely with its European partners, ultimately to its own disadvantage. It also provides some important historical context for contemporary European concerns about ‘divide and rule’ behaviour on the part of China, showing that such behaviour has more to do with the Europeans themselves and long pre-dates the current China-related concerns.

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Notes 1. Cited in Kevin O’Rourke: A Short History of Brexit : From Brentry to Backstop, 2019. 2. Liam Fox: Free Trade Speech, Manchester, 29 September 2016, https:// www.gov.uk/government/speeches/liam-foxs-free-trade-speech, retrieved 30 January 2020. 3. The Brexit Inflection Point: The Pathway to Prosperity, Legatum Institute, 2017, cited in M. Wolf: Six Impossible Notions About ‘Brexit Britain’, Financial Times, 30 November 2017, https://www.ft.com/content/06e fe986-d52b-11e7-a303-9060cb1e5f44?emailId=5a20a69b8b77210004 f7916a&segmentId=2f40f9e8-c8d5-af4c-ecdd-78ad0b93926b, retrieved 21 July 2020. 4. Future Customs Arrangements —A Future Partnership Paper, https:// www.gov.uk/government/publications/future-customs-arrangements-afuture-partnership-paper, retrieved 21 August 2017. 5. Leland H. Jenks: The Migration of British Capital to 1875, New York 1927. 6. A. R. Hall: The Export of Capital from Britain 1870–1914, London 1968. 7. Brian Fawcett: Ruins in the Sky, London 1958, includes a fascinating autobiographical account of working on Peruvian railways, which were owned by a London based company. Key decisions on equipment were often taken in London, while all managerial staff in country, many of them alcoholics and of limited competence, were expatriates. 8. Cited in O’Rourke: op. cit. 9. Warren Kimball, cited in Jonathan Fenby: Alliance, London 2006, p. 57. 10. Bank of England: United Kingdom Overseas Investments, 1938–1948, London 1950, https://www.bankofengland.co.uk/-/media/boe/files/ archive/uk-overseas-investments/1938-1948, retrieved 30 January 2020. 11. Ibid. 12. Steve Tsang: The Cold War’s Odd Couple, London 2006, p. 19. 13. Tsang, op. cit., pp. 11, 13; W. B. Reddaway: Effects of UK Direct Investment Overseas, Final Report, Cambridge 1968, p. 358. 14. As late as 1964 there were 38 ships in the Royal Navy’s Far East Fleet, based in Singapore, including 3 aircraft carriers and five submarines. The fleet was disbanded in 1971. Eric Grove: Vanguard to Trident: British Naval Policy Since World War II. 1987. 15. Tsang: op. cit., p. 152. 16. Rana Mitter: China’s War with Japan, 1937–1945, London 2013, p. 308. 17. Tsang, op. cit., p. xvi. 18. Cited in Tsang, ibid., p. 144. 19. Christopher Meyer: DC Confidential, 2005. 20. Letter from Westbrook, FCO to Hawtin, MoD, 9 September 1974, FCO 24/1876, TNA.

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21. 1974 review of FPDA, FCO 24/1876, TNA. 22. Daniel Hannan: Free Britain to Trade with the World, Financial Times, 21 June 2016, https://www.ft.com/content/6d4a444a-36f5-11e6-a780b48ed7b6126f, retrieved 9 November 2016. 23. In 2018 China accounted for roughly 20% of all New Zealand’s exports and the UK just 3%—StatsNZ, https://www.stats.govt.nz/news/newzealands-exports-to-china-trump-sales-to-australia-and-the-united-states, retrieved 16 April 2019. 24. W. B. Reddaway, op. cit., p. 292. 25. Ibid., p. 210. 26. In 1994 the Korean economy was larger than that of all the then six ASEAN economies combined but the UK’s bilateral trade with Malaysia exceeded that with China, Korea or Taiwan: IMF Direction of Trade Statistics, data.imf.org/regular.aspx?key=61013712, retrieved 15 July 2019. 27. Letter from Nott to Lord Carrington, 19 February 1980, FCO 21/1881, TNA. 28. Bureau of Exit-Entry Administration, Shanghai Municipal Public Security Bureau: Resident Foreigners in Shanghai in Main Years (via Wikipedia). 29. DTI briefing note, January 1980, letter from HM Ambassador Seoul to Foreign Secretary, 1 February 1980, FCO 21/1881, TNA. 30. DTI briefing note, FCO 21/1881, TNA. 31. Letter from Mann, DTI to McCluney, FCO, 31 December 1978, FCO 21/1672, TNA. 32. Submission, Greenwood, DTI to Parliamentary Under Secretary of State, 19 July 1978, BT230/484, TNA. 33. Letter from Nott to Lord Carrington, 19 February 1980, op. cit., ‘Fat and lazy’ Britain Is Ill-Prepared to Secure Future Outside EU, Says Fox, The Guardian, 9 September 2016, https://www.theguardian.com/pol itics/2016/sep/09/fat-and-lazy-britain-is-ill-prepared-to-secure-futureoutside-eu-says-fox, retrieved 14 April 2019. 34. Distribution of GDP Across Economic Sectors in the United Kingdom 2018, https://www.statista.com/statistics/270372/distribution-of-gdpacross-economic-sectors-in-the-united-kingdom/; Index of Services, UK : December 2019, https://www.ons.gov.uk/economy/economicoutputa ndproductivity/output/bulletins/indexofservices/december2019; M. Ward: UK Trade: A Deficit in Goods but a Surplus in Services, House of Commons Library, 2017, https://commonslibrary.parliament.uk/eco nomy-business/economy-economy/uk-trade-a-deficit-in-goods-but-a-sur plus-in-services/, all retrieved 19 February 2020. 35. European Council on Foreign Relations: China at the Gates, 2017; J. Farnell and P. Irwin Crookes: Politics of EU -China Economic Relations: An Uneasy Partnership, 2016.

CHAPTER 3

Protests and Power Turbines—Korea, 1980

On 26th October 1979, South Korea’s president, Park Chung Hee, was assassinated. Given that he had survived two previous attempts on his life within the previous nine years, the fact of his death was perhaps less of a shock than the circumstances. For he died not at the hands of a North Korean assassin but those of the head of his own intelligence agency. His death was the climax to a short but significant period of political and economic unrest in the country. Barely two months earlier, a junior officer in the British embassy had written to London warning, presciently, of ‘more trouble, possibly with wider implications, in the months ahead.’1 The root cause of the unrest was economic: in the late 1970s South Korea had experienced almost two decades of double-digit growth and the country was booming. But by 1978 the economy was over-heating and inflation was close to 30%. This was even before the oil crisis of 1979 following the downfall of the Shah of Iran, and policymakers in Seoul responded with a sharp tightening of liquidity. The subsequent squeeze on wages fuelled labour discontent from the summer of 1978 onwards. Park was re-inaugurated as president on 27th December 1978 but on a 77% turnout in National Assembly elections in the same month, his ruling party failed to secure even one-third of the total votes. Although the constitution at the time guaranteed him power through an additional unelected caucus, the Yujong Hoe, the result was a shock to the ruling party and a blow to Park.

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Park was no democrat—in his 1979 New Year press conference he described ‘western democracy’ as ‘an alien system’—and human rights abuses during his rule were far from uncommon. Nor, however, was his quite the authoritarian regime it was often portrayed as in western media. At the time, Korea’s closest diplomatic allies after the USA were Taiwan, formally the Republic of China, and the Philippines, not only neighbours but like South Korea sheltering under American security guarantees, staunchly anti-communist and ruled by right wing strongmen. Unlike Korea, both were under martial law. In Taiwan it had been imposed by Chiang Kai-shek in 1949 and would not be lifted until 1987, while Ferdinand Marcos in Manila had imposed it in 1972. By contrast, the 1978 elections in Korea emboldened the opposition, which in May 1979 delivered a further shock to the government by electing an energetic new leader, Kim Young Sam. Kim had long been a vocal critic of the government, which quickly took steps to try to remove him, or at least reduce his influence.2 Following a court ruling, he was dismissed as opposition party leader just 100 days after being elected, then in October he was expelled from the National Assembly altogether. The American reaction was swift, their ambassador being recalled to Washington in a mark of protest at what was seen as a ‘fundamentally anti-democratic step.’ The British deputy ambassador saw it in very different terms, blaming the trouble in part on a ‘recent relaxation of press controls and towards dissidents generally.’3 Following Kim’s expulsion from the National Assembly, the entire opposition resigned on 13th October and the nights of 16th and 17th saw protests in Busan, the main town in his home region. These were portrayed by the government and media as ‘violent demonstrations’ but by the standards of the time they were modest, involving ‘about 300 students and a few hundred hoodlums’ with some 50 injuries and six police cars burnt.4 But they were enough for the government to justify declaring martial law in Busan and nearby towns from midnight on 17th October and to arrest more than 4000 individuals in a subsequent nationwide crackdown. Matters appeared to be returning to normal when Park was assassinated on 26th. Considerations of multilateral diplomacy or working with partners were scarcely an issue for the UK in its dealings with Korea in 1979. The country was one of the four ‘Asian tigers’ and two-way trade was growing. Beyond helping British exporters win a share of this, the main British interest was in the country’s stability in the face of the ongoing

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threat from the north. The USA was the principal guarantor of this, with more than 30,000 troops on the ground, including in front line positions along the DMZ (de-militarised zone), so when a second opinion on the Korean government line was required, the obvious first port of call was the US embassy. In practice, the British embassy was often happy to accept the American line without even seeking the Korean one. Quite simply, the USA had influence and importance far surpassing that of any other country.

Funeral Diplomacy The assassination, more particularly its aftermath and subsequent events, posed two major policy concerns for the British government. The first was one it shared with the US government and other allies and dated back to 1950: fears for the stability of the Korean peninsula and wider region, with an underlying anxiety that North Korea might seek to exploit the uncertainty that had been created. The British ambassador Bill Bates, in common with most of his colleagues, therefore turned first to his American counterpart William Gleysteen for information, the latter having quickly returned to the country following the assassination. Gleysteen briefed Bates together with his Australian, Canadian, New Zealand and Japanese counterparts on 29th October. This reliance on the USA for information was to become even more marked as events developed. The second concern was specific to the British government. GEC, at the time one of the country’s leading companies, was hoping to secure a contract for turbines for a new nuclear power station then being planned, with an estimated value of US$200 million (roughly $750 million at 2019 prices). France was already well advanced in securing the contract for the reactor, but Korea had apparently ruled out the use of turbines from Alsthom, the only possible French supplier. GEC hoped that the British government might persuade Korea to agree to negotiate a joint contract for both reactor and turbines with Framatome of France and GEC. Without this, GEC thought it stood little chance against American interests in any open competitive tendering.5 The desire to win this contract was to have a remarkable bearing on UK policy making, including how it interacted with colleagues in the European Community, over the following eighteen months. The co-ordination of foreign policy among European partners that was to become the norm by the turn of the century was still in its infancy.

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But in a sign of how it was already growing, an exchange of telegrams between European capitals quickly led to agreement that they should all be represented at the same level at Park’s funeral. Europe’s relations with South Korea were limited and Park’s rule had been tainted by human rights abuses, so it was also agreed that this representation would be by resident ambassadors, only for France to break ranks at a late stage and inform partners that it would, after all, send a junior minister for foreign affairs to the funeral. Germany quickly announced that it would follow suit. This created a dilemma for the UK. Chinese premier Hua Guofeng was about to visit London as the most senior representative of the People’s Republic of China (PRC) ever to do so, and immediately after visiting Paris and Bonn. His visit was both politically and commercially important and the British government was anxious not to appear any less welcoming or engaged than the French and Germans. No British minister, even a junior one from the Foreign Office, wanted to miss such an important visit and the upshot was that at a very late stage a former British ambassador to Korea was asked to represent the government at the funeral.6 In the end, among European countries only France was represented at Park’s funeral by a minister. The designated German representative, von Dohnanyi, had been on an official visit to Togo and was unable to get from Lomé to Seoul in the time available. But the incident demonstrated as early as 1979 both the defining features and the limitations of European policy towards North East Asia for the next four decades, features that were also to permeate the debate in the UK surrounding Brexit. For there was an ill-concealed view, even conviction, in London that the lateness of the French announcement and change in position was not accidental but was designed to enhance French influence in Korea at the expense of that of its partners, not least with commercial advantage in mind. Developments in the following months and years only reinforced these suspicions. With the funeral out of the way, British officials were keen to get back to business as usual, even though the political situation in Seoul remained in a state of flux. For politicians anxious to demonstrate that they could make a difference and help exporters succeed, helping British companies win some of the major infrastructure projects then being planned in Korea, for which the main competition was usually from Japanese, American, French and German companies, was an attractive way of doing so. That Korea’s own import licensing regime applied to a wide range

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of potential British exports only reinforced the arguments in support of political lobbying. With this in mind, in early 1980 while Koreans were still debating their political future in the aftermath of Park’s death, the UK trade secretary John Nott visited Seoul. His brief for the visit could not have been clearer about the objectives: ‘we believe …there may be a real opportunity for UK involvement in the next phase of the Korean nuclear programme but that, without political intervention at high level, the chances of success are very slim.’7 The timing of Nott’s visit was all the more extraordinary for it came less than two months after a military putsch in December 1979 in which three soldiers were killed in two separate gunfights and the martial law commander was arrested. In his reporting to London, Bates was trenchant in his criticism, accusing the soldiers responsible for the takeover of ‘indiscipline and insubordination…little short of mutiny.’ It gradually became clear that the coup was a grab for power by a younger generation of officers and that the arrest of the martial law commander was simply a handy pretext. The lack of any British influence or even insight on matters was made abundantly clear by the ambassador: ‘we are constrained [in reporting] by the inescapable fact that the Americans are our sole source of informed comment…we have to take our turn in the queue with other missions’ [to gain access to them for information]. The FCO under-secretary for Asia had made the same point a fortnight earlier in an internal message: ‘the Americans have a special position in Korea; we don’t.’8 The reporting highlighted a dilemma not just for the UK but also for France and Germany, as both partners but also trade rivals in the Korean market: on the one hand, the political situation in the country was worrying, on the other hand they were anxious to ensure their companies won the lucrative contracts that were on offer. Events over the next few months were to heighten this dilemma. While the UK may have been unwilling to co-operate politically with its EC partners, it remained keen to be a ‘good partner’ when its interests justified it. Nott was lobbied by the Koreans for British support in getting the Commission to continue to provide preferential access under the Generalised System of Preferences (GSP) to the European market for Korea’s key exports. The UK, facing high unemployment and factory closures, was reluctant to agree but as the report of the meeting stated somewhat disingenuously [Nott] ‘explained the difficulty of reaching a consensus within the EEC’ [on agreeing to this].9

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In the days and weeks immediately following the putsch the political liberalisation continued, but as winter turned into the spring of 1980, so protests about the slow pace of this increased, especially on the university campuses. In April 1960, student protests following election fraud had led to the downfall of the corrupt Syngman Rhee government, since when students had assumed for themselves the role of the nation’s conscience. Mindful of this, the universities had been closed immediately following Park’s assassination to pre-empt the risk of students organising demonstrations and protests, re-opening in the new year following the traditional long winter break. As April 1980 approached and with it the anniversary of the 1960 protests, so the demonstrations grew in both scale and frequency. But so too did labour protests and minor clashes between rival political factions. Also in April, the mastermind of the December coup, Chun Doo Hwan, took control of the Korean Central Intelligence Agency (KCIA), a move that strengthened his power base but also encouraged stronger student protests. Eventually on 17th May, using the protests and demonstrations as justification, he extended martial law over the whole country and instigated a major clampdown, including the arrest of leading politicians, Kim Young Sam and Kim Dae Jung among them. This is not the place to go over those events in detail, nor the subsequent ones in Gwangju, in which over 200 people were killed after the Martial Law Command sent in paratroopers to quell student protests that started on 18th May, in defiance of the martial law regulations. They have been covered at length elsewhere, including in both novels and film.10 The massacre in Gwangju was to haunt Chun Doo Hwan throughout his subsequent presidency and became a defining moment on South Korea’s road to democracy.

Formal Demarches or ‘Quiet Diplomacy’? Barely one month after the horrific events, however, the British government was making preparations for another ministerial visit to Seoul. In London, if not in Paris or Bonn, any outrage or unease over the massacre was tempered by the desire for commercial success, and British officials were keen to follow-up the Nott visit with one by a junior foreign office minister, Sir Ian Gilmour. Planning for this was already well advanced before the events in Gwangju, with the ambassador in Seoul arguing to use the timing of the visit as ‘bait’ to try ‘if possible to extract a concession on nuclear power stations from the Koreans.’11

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While Bates in Seoul argued for pressing on with the visit regardless of the events in Gwangju, claiming that doing so would be ‘an excellent opportunity to demonstrate our support for the Koreans in their time of trouble’ and stand the UK in good stead both politically and commercially, officials in London saw the need to re-consider. After doing so, however, the visit went ahead at the beginning of July, despite recognition of the risk of domestic criticism. In a reflection of the relative importance London attached to its respective relationships, the views of the American government, but not those of European colleagues, were sought before agreeing to go ahead.12 Even before Sir Ian Gilmour set foot in Seoul, however, and reinforcing perceptions that the events in Gwangju should not be allowed to hinder commercial business, London was preparing to receive the Korean deputy prime minister on an official visit at the end of June. (He was also visiting Paris, which gave a convenient justification for not cancelling the visit. There is no evidence that discussing a joint stance over the visit with the French government was ever considered.) In preparation for this, the trade secretary asked prime minister Margaret Thatcher to write to Choi Kyu-Hah, the interim Korean president (while power was in the hands of Chun Doo Hwan, he had not yet formally assumed the presidency), lobbying on behalf of GEC for a negotiated contract for the nuclear power station turbines. His justification for doing so was that Framatome was expected to be awarded the reactor contract on a negotiated basis, ‘as a result mainly of significant political pressure exerted by the French’, and as noted, GEC was thought to stand little chance against American competition in an open contest. Thatcher agreed to write in support, even though her private secretary knew that she found doing so distasteful.13 Although commercial considerations remained uppermost in British minds, developments in Korea were causing increasing disquiet among other European governments. At German request, the subject was placed on the agenda of the EC’s Political Committee in mid-July, against British wishes, whose objective for the meeting was ‘to avoid any joint approach by the Nine’ in response to the situation. The head of the Far Eastern department in the Foreign Office, Robin McLaren, was robust in his views about resisting joint action by members of the EC, arguing variously over the early summer of 1980 that ‘to offer gratuitous advice [to the Koreans] could prejudice our commercial prospects, in particular GEC’s current efforts; it is best left to individual governments to decide what if any representations to make;’ and perhaps gratuitously but

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no doubt reflecting wider views in London: ‘the Nine should beware of making too many public declarations about situations outside their influence. This only serves to weaken their image as an effective and serious political grouping.’14 This opposition is unlikely to have come as a surprise to other EC members as the UK had established a precedent not long after joining the Community. In 1974, the embassy in Seoul had rejected a proposal by the Belgian ambassador that the EC ambassadors should prepare a joint report for sending to EC capitals on political repression and the human rights situation in Korea. While other embassies voiced their concerns over the situation to the Korean government, in the words of one European ambassador, ‘Britain has remained as mute as a carp.’15 The ensuing discussion in the Political Committee saw ‘a deep exchange of views’ between partners. It was eventually agreed that the presidency, at the time held by the Netherlands, would make a ‘discreet and balanced’ demarche to the Korean foreign minister, expressing concern about developments. Then, as now, Germany’s bilateral trade with Korea was greater than that of any of its partners but in contrast to British reticence, driven by commercial considerations, Germany led calls for a firmer line by the EC, supported by the Netherlands and Italy. The pattern would be repeated in other cases in Asia in the following years, raising the question of whether, as the UK has so often claimed, taking a firmer stance on human rights abuses and political repression really does threaten business interests. The UK was not alone, however, France supporting it in arguing for a ‘lesser’ line. Perhaps disappointed by the cautious response of the EC, the German chancellor, Helmut Schmidt, subsequently wrote to the acting Korean prime minister expressing disquiet at developments and calling for the release of those arrested in the crackdown.16 Chun Doo Hwan had already seized power in all but name, but he did not formally assume the position of president until August. Meanwhile, after arresting Kim Dae Jung in the aftermath of the events in Gwangju, Chun had him put on trial on charges of sedition and conspiracy, further underlining foreign concerns about the deteriorating political environment. The British government was under few illusions about Chun, or about its ability to influence him. Some officials at least were worried that in its anxiety not to jeopardise trading opportunities, Britain’s position left it ‘some long way behind the rest of the field (eg the US, Japan, West

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Germany and the Nordics)’ to which the response was that nothing must be done to prejudice the power station contract.17 Ahead of Chun becoming president, the foreign secretary advised the prime minister that ‘However distasteful … General Chun’s treatment of political opponents…we are not well placed to exert influence…In the circumstances we must accept [he] is the man we have to deal with…Given our commercial interests [the foreign secretary] recommends a message upon his inauguration.’18 Margaret Thatcher accepted the advice but the message was carefully worded to avoid any suggestion of congratulations, instead expressing the wish ‘of the British Government and people that under your Presidency the people of Korea will enjoy continued prosperity in conditions of social justice and peace.’19 In response to Kim being placed on trial and Chun’s assumption of the presidency, and spurred on by Germany, whose foreign minister and vice-chancellor, Hans-Dietrich Genscher, took a close interest in the case and pressed hard for a collective response, EC countries stepped up their discussions of a common policy line. The UK remained focused on helping GEC secure the power turbine contract, however, and far from being cautious, remained active in its engagement with the Korean government. In August, the FCO agreed to send a senior official, Sir Edward Youde, to Seoul for high level policy consultations with Chun’s government in the autumn, provided there was no ‘drastic deterioration’ in the situation in the interim. It did so even while acknowledging that other European governments had been publicly critical of the Korean government. The British position—one that was to be repeated over the years with regard to similar events in other countries—was that concerns would have more impact if expressed in private, something the record of the meeting shows that Sir Edward Youde did. Barely one month after his visit, however, Kim was sentenced to death.20

Divide and Rule Nor did Britain’s approach of ‘quiet, bilateral diplomacy’ have any more success in achieving commercial objectives. One of Chun’s earliest acts on assuming the presidency in the summer of 1980 was to reply to Thatcher’s letter to his predecessor lobbying on behalf of GEC, to rule it out of consideration for the supply of nuclear turbines. All the lobbying, the visits and the opposition to collective European action of the last year had been in vain.

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Chun and his advisers were astute enough to realise, however, that after the UK had been so supportive in the face of wider concerns, a flat rejection risked being counter-productive, so his reply also artfully dangled the carrot of ‘the supply of materials and equipment for other suitable project’ (sic) instead.21 British officials took the hint. The death sentence on Kim Dae Jung sparked protests and appeals for clemency from around the world, including from the Pope.22 Then, at the beginning of 1981, the Korean government announced that there would be a formal inauguration ceremony in March for Chun as president and made clear that it expected the UK to send a high-level representative. This placed the British government in a quandary. On the one hand, encouraged by Genscher, the EC—now ten strong with the accession of Greece on 1 January 1981— was pressing the Koreans to show clemency to Kim. The Germans were reported also to be doing so bilaterally, as were the USA and Japan. On the other hand, the UK was anxious not to jeopardise prospects of winning important commercial contracts. The prospect of nuclear turbine sales had gone but in their place were possible sales of Hawk jet trainer aircraft and contracts for new metro lines in Seoul, in which GEC once again was showing a strong interest.23 In public, therefore, the UK took the position that it was taking action ‘in conjunction with Community partners’ including considering ‘what further action might be taken should the Supreme Court confirm the death sentence.’ In private, however, it had already made clear to partners how far it was prepared to go. Genscher hoped as a minimum for a joint representation to the Korean government, appealing for clemency in the name of all the heads of state or government of EC members, but with a readiness to agree joint sanctions, such as the recall of European ambassadors or the discouraging of high-level visits to or from Korea, should Kim be executed. Lord Carrington, the foreign secretary, opposed sanctions, which in the view of the Foreign Office ‘would damage our commercial interests in Korea without achieving any useful purpose.’ (No-one in the FCO appears to have asked why the Germans, whose commercial interests were considerably larger, felt differently.) But he thought it wrong to oppose a discreet joint demarche asking for clemency, provided there was general support for it within the EC. Thatcher agreed.24 On 23 January 1981, the Korean Supreme Court upheld the death sentence against Kim Dae Jung. The British government was quickly

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spared further agonising over whether to send a representative to Chun’s inauguration, however, for the sentence was immediately commuted to life imprisonment. The following day it was announced that Chun would visit Washington, where he would be the first foreign head of state to meet Ronald Reagan, newly installed as the US president, a deal arranged direct between the Koreans and Reagan’s advisers without the involvement of the US State Department.25 With Kim’s life spared, any qualms the UK government might have had about representation at Chun’s inauguration disappeared, with lip service at most given to attempts at agreeing a common European line. The way in which France and Germany had allegedly broken ranks at the last minute over the level of attendance at Park’s funeral was still fresh in officials’ minds and any doubts were further eased when the Belgians, as well as the Germans, admitted that like the UK, they too had been urged to send a ‘special representative’ to Chun’s inauguration.26 Commutation of the death penalty against Kim Dae Jung did not herald any change in the wider political atmosphere in Korea. To most Koreans, Chun’s rule was more authoritarian than that of his predecessor. Some of the old restrictions, notably the nightly curfew, were abolished but press restrictions were tightened, surveillance of dissidents stepped up and harassment of the labour movement increased. And despite new exam procedures designed to deter students from demonstrating, student protests grew. Protesters, dissidents and activists were regularly arrested and frequently given long prison sentences. For a little over two years from January 1982, I was reporting on these developments to London, my own movements and contacts regularly monitored by the Korean internal security services. Colleagues in London were under no illusions about the nature of the regime. As one said in a letter to John Morgan, who succeeded Bates as ambassador in mid-1980: ‘the more the Korean government can rule by consent, the more they will be assured of international support’.27 Uppermost in many minds was anxiety about stability on the Korean peninsula and fears that North Korea would seek to undermine the administration. The fears were far from groundless as the attack in Rangoon (Yangon) on Chun Doo Hwan’s entourage by North Korea n agents in October 1983 was to show. Chun escaped unscathed but 21 people died, including his deputy prime minister, foreign minister and two other ministers. But the quest for commercial advantage continued to be a major driver of relations and with Kim Dae Jung no longer facing the death penalty,

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public attitudes towards Chun and his administration went through a dramatic change. As early as January 1981, within days of the reprieve for Kim Dae Jung, the FCO was arguing that ‘President Chun is no worse and possibly a good deal better than a number of other leaders of countries with which we maintain good relations.’28 What limited co-operation there was between EC members over policy towards the Chun administration was replaced by open competition for lucrative business contracts, which meant courting Chun, however distasteful his administration. GEC were awarded a major contract for equipment for the second line of the Seoul metro system and British officials and politicians were quick to try to repay the favour.29 In 1982 it was agreed to invite Chun to pay an official visit to the UK the following year, to mark the centenary of diplomatic relations between Britain and Korea. Not only was Kim Dae Jung still in prison when the invitation was issued but Kim Young Sam, the other main opposition leader, whose expulsion from the National Assembly had sparked the unrest in Autumn 1979, had been placed under house arrest in 1981 and remained there. The invitation was not taken up and the centenary was marked in a lower key by the visit of a junior member of the Royal Family, the Duke of Gloucester, to Seoul. By this time the political atmosphere in Korea had improved somewhat: Kim Dae Jung had been released from prison to go into exile in the USA in December 1982 and Kim Young Sam was released from house arrest the following year, although he remained barred from political activity. The commercial importance of a visit to the UK by Chun had not gone away, however, and eventually this took place in April 1986. Showing the leverage they exercised over the award of major contracts, the dates were set by the Koreans, who planned it as part of a wider visit to Europe, including France, Germany and Belgium, thereby helping ensure all would agree, so as not to lose out in the scramble for business. (As with the pressure on it to send a representative to Chun’s inauguration, this inclusion of Belgium in the tour appears to have been down to a misunderstanding or ignorance on the part of the Koreans as to status of the European Commission and the EC more generally, confusing their presence in Brussels with that of the Belgian government.) Other European countries were similarly active. France was considering a visit to Seoul by president Mitterrand in April 1983, following a visit to Beijing. Mitterrand had made a one-day visit to North Korea in February 1981 before becoming president, fuelling speculation that if he won the

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presidential election later that year, he would move to recognise North Korea, so Seoul might have been expected to welcome a visit by him, either for reassurance or to persuade him not to recognise the North.30 But it would be another ten years before he finally visited Seoul, while France still does not formally recognise North Korea as a state, the only member of the EU not to do so. The 1986 visit was therefore something of a grand tour by Chun, taking in the UK, France and Germany, as well as Brussels. British objectives for the visit were set out clearly in a Foreign Office letter to No. 10 which explained that: ‘we are anxious to gain the maximum benefit to British commercial interests from the visit, the more so as European trading rivals for the Korean market will also be visited by President Chun during the same tour.’ The importance of not upsetting Chun was also high in officials’ minds, the briefing note for the prime minister advising her that ‘[the Koreans] are fearful that President Chun will be embarrassed by attempts to raise human rights and other internal issues…I suggest you touch on human rights…in the most delicate possible way.’ Thatcher did not raise human rights, even in a delicate way, and the key outcome for the UK was the ‘gift’ of a £30 m. defence contract for Ferranti.31 Whether British politicians felt this was a sufficient return for their efforts is not recorded although subsequent defence contracts, for missiles and perhaps most significantly in value terms, 20 Hawk jet trainer aircraft, ensured their continued interest in Korea. But by this time views within both the UK and EC more widely towards both Korea and the Chun administration were changing. On the one hand, by 1986, ambassadors in Seoul felt that the human rights image of the Chun regime was ‘worse than it actually deserves to be,’ while recognising a deterioration in the second half of 1985. On the other hand, the British ambassador in Seoul, Nick Spreckley, said that the prime objective for Chun of his visit to Europe had simply been to bolster his image at home. It was Spreckley’s comments on business opportunities in Korea, however, that heralded a more profound change in the way the UK looked at both Korea and worked with its EC counterparts. ‘I know that many of our companies feel that this is a difficult market to tackle, that cooperation with the Koreans is a complex business, that there is a danger of losing our technology without proper compensation…It has been a matter of regret to me over the last three years that British companies

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have ignored or been slow to respond to apparently attractive opportunities in this market.’32 The comments resonated with similar ones being expressed in London at the same time (and would be repeated many times over in respect of doing business in China three decades later). Gone, in other words, or going, was the view that political lobbying was the key to export success. Business itself had to try harder although supporting it in its efforts to do so would remain a driver of the relationship with Korea for the United Kingdom and its European partners. Trade statistics give an interesting indication of the apparent slowness of British companies to respond to the opportunities in Korea. In 1984, British exports to Malaysia were almost 30% higher than those to Korea. A change in the following years was not sustained and in 1994 exports to Malaysia remained almost 30% higher than those to Korea. Yet this was not only despite the ‘Buy British Last’ policy introduced by prime minister Mahathir in Malaysia in 1981, by 1994 the Korea n economy was bigger than those of all six then members of ASEAN, of which Malaysia was one, combined.33 Perhaps it is not surprising that some politicians should be so keen to revive trading links from the country’s imperial past but the slowness of British companies to respond to the opportunities in Korea can only cast doubt on the oft-stated notion that British membership of the EU hindered the country’s ability to win more business in countries like China. Experience in Korea suggests that there are far deeper, domestic structural and cultural reasons involved and that leaving the EU is not going to change these. If the UK could have been considered to have had two main objectives in its relations with Korea at the end of the 1970s and after Park’s assassination, the first, stability on the peninsula, was achieved. But the UK can take no credit for this. It was entirely dependent on the USA and as reporting from both Seoul and Washington made clear, the UK had no influence over the outcome or direction of US policy or responses. It remained committed to supporting the USA as it had since after the Suez crisis for wider reasons of cold-war security; and it shared the American interest in ensuring that a period of uncertainty in South Korea did not become one of wider or more prolonged instability. But, like its European colleagues and despite its token security presence on the ground, which it used with some success to derive benefit from the USA in terms of access to information, it was a bystander with no influence in shaping events. On its second objective, of export success, by the yardstick of winning the nuclear turbine contract, it failed completely. British companies did

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win other orders in Korea and with the help of political intervention, but without having looked at Korean records, it is not possible to know the reasons behind these successes. It may have been price, technology, a strategic decision to try to avoid total dependence on the USA, or simply a ‘gift’ to the British government from a grateful Korean president. But such successes need to be placed in context. Not only were German exports to Korea 60% larger than those from the UK in 1974, at $135 million and $84.5 million respectively, but over the next ten years they grew much more too: over 360% compared to the 245% growth in British exports. It is impossible to say whether a firmer line on human rights and against political repression, like that of Germany, would have been counter-productive but the statistics suggest not. From the broader perspective of the European Community, experience with Korea in the 1980s was of only limited co-operation, with countries ready to hide behind a common position when it suited them but ready to break ranks if they saw advantage in doing so. While this enabled them to claim commercial success from time to time, as Chun’s reply to Margaret Thatcher in response to her lobbying on behalf of GEC indicates, it is far from certain that this approach ultimately yielded greater success than a more co-operative political stance would have done. Instead, the Koreans were quick to spot the divisions and extracted considerable political benefit by successfully playing off the different member states against one another. Not only was the UK as guilty of this as any other member state but throughout this period it probably had the largest representation in Korea of any European country—at this time many of the smaller members did not even have a resident presence in Seoul—meaning it should have been better informed about events on the ground and better able to influence the EC generally, had it so wished. As an example, given the strong European interest in Kim Dae Jung’s trial in 1980, European embassies were given a pass to attend the full proceedings and among some member states there was a desire for a permanent European presence at the trial. As well as having the largest embassy in Seoul amongst the EC states, the UK also had the only Korean speaking diplomat (as opposed to local staff) but nevertheless felt unable (or unwilling) to provide more than an occasional presence at the trial.34 It is impossible to say whether greater co-operation with other EC partners would have made any difference. But the UK’s willingness to hide behind the EC when it suited it, against accusations of protectionism

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for example, suggests it would have done no harm and may even have been to its benefit. Perhaps, as Bates had admitted to London, the reality was that the UK relied heavily on the Americans for information and was therefore not in a strong position to influence the rest of the EC. Some thirty years later, a common theme in analyses of relations between the EU and China has been China’s alleged adoption of ‘divide and rule’ tactics in its dealings with EU member states, playing them off against one another and thereby confounding attempts to formulate a common European position.35 In practice, as events in Korea in the 1980s showed, this was at least as much a consequence of European politicians preferring to pursue their own national interests, a practice that pre-dated the rise of China, or the existence of a 28-strong European Union. In this regard, the UK was certainly no better, and perhaps at times worse, than its main partners and principal trade rivals. As Nick Spreckley’s comments in May 1986 show, however, concerns and attitudes were changing and the decade after 1986 was to see a major change in the way both the EU and UK saw Korea and with it, greater willingness among partners to co-operate, born from growing recognition of shared interests. This is the subject of the next chapter.

Notes 1. Morris, Seoul to Whiteway, FCO, letter of 17 August 1979, FCO 21/1755, TNA. 2. In his annual report to London in January 1980, Bates predicted that Kim Young Sam could well be the next democratically elected president of Korea. He was to be the next but one, but it would be another thirteen years before he took office. 1979 annual review, FCO 21/1865, TNA. 3. Seoul to FCO, 10 September 1979, Washington to FCO, 12 September 1979, FCO 21/1755, TNA. 4. FCO 21/1755. To put this into some context, less than three years later, a lone policeman killed 56 people and wounded another 35 in what became known as the Uiryeong massacre. 5. Ibid. 6. Seoul telegram 265 of 29 October 1979, internal minute FED, FCO same date, FCO 21/1755, TNA. 7. Steering brief for visit of secretary of state for trade to Korea, January 1980, FCO 21/1881, TNA. 8. Seoul telegram 330 of 14 December 1979, Washington telegram 4210 of 14 December 1979, minute, McLaren to Cortazzi of 12 November 1979, FCO 21/1755, TNA.

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9. Record of visit of secretary of state for trade to Korea, January 1980, FCO 21/1881, TNA. 10. Novels include Han Kang: Human Acts, 2016, films A Taxi Driver, 2017, and first-hand accounts John A. Whickham: Korea on the Brink, A Memoir of Political Intrigue and Military Crisis, 2000. 11. Seoul telegram 115 of 25 April 1980, FCO 21/1884, TNA. 12. Seoul telegram 141 of 20 May, FCO telegram 91 to Seoul of 2 June and policy submission from McLaren to ministers, 10 June 1980, FCO 21/1884, TNA. 13. Private secretary (PS)/secretary of state for trade and industry to PS/prime minister, 26 June 1980, PREM 19/1971, TNA. 14. Minute, McLaren to Donald, FCO, 30 May 1980, FCO briefing for Political Committee meeting, 13 July 1980, FCO 21/1866, TNA. 15. Robert Whymant: British Silence on Seoul Repression Condemned, The Guardian, 27 August 1974. It is not clear whether this represented wider policy or was an example of ‘free-lancing’ by the embassy. A manuscript comment above illegible initials (probably those of the head of the Far Eastern Department) on a letter on another matter of 12 September 1975 records melancholy confirmation of my own misgivings about our Embassy at Seoul, FCO 21/1411, TNA. 16. COREU, 17 July 1980, Seoul telegram 226 of 28 July, FCO 21/1867, TNA. 17. Minute, McDermott to McLaren, 15 July 1980, FCO 21/1867, TNA. 18. Minute PS/foreign secretary to PS/prime minister, 26 August 1980, PREM 19/1971, TNA. 19. PREM 19/1971, TNA. 20. FCO 21/1867, TNA. 21. Letter, Chun Doo Hwan to Margaret Thatcher, 8 October 1980, PREM 19/1971, TNA. 22. John Paul II’s Appeal Saved Future Korean President from Death Sentence, Catholic News Agency, 21 May 2009, https://www.catholicnewsagency. com/news/john_paul_iis_appeal_saved_future_korean_president_from_d eath_sentence, retrieved 21 March 2019. 23. FCO internal submission, 30 January 1981, FCO 21/1976 (Part A), TNA. 24. Reply to letter from member of the public, 12 January 1981, FCO 21/1976 (Part A); PS/foreign secretary to PS/prime minister, 20 November 1980, PREM 19/1971, TNA. 25. Minute, McLaren to Donald, FCO, 21 January 1981, FCO 21/1976 (Part A), TNA. 26. FCO internal submission, 30 January 1981, op. cit, Lockton, Seoul to McDermott, FCO, 21 January 1981, FCO 21/1976 (Part A), TNA.

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27. Elliott, FCO to Morgan, ambassador Seoul, 11 February 1982, FCO 21/2305 (Part A), TNA. 28. FCO internal submission, 30 January 1981, FCO 21/1976 (Part A), TNA. 29. Their success was given little coverage in Korea, where banners around Seoul proclaimed the new metro line to be 우리 기술, 우리 자본, 우리 지하철 (uri kisul, uri chabon, uri jihacheol—our technology, our capital, our metro). 30. Mitterrand Visiting North Korea, New York Times, 15 February 1981, https://www.nytimes.com/1981/02/15/world/mitterrand-visitingnorth-korea.html, retrieved 5 June 2019. 31. Letter, Ricketts, FCO to Powell, No. 10 Downing St., 18 November 1985, Powell to Thatcher, 26 March 1986, PREM 19/1971, TNA. 32. EC Heads of Mission, Seoul, report on Human Rights in Korea, COREU, 5 February 1986; Spreckley to foreign secretary, 14 May 1986, both in FCO 21/3628, TNA. 33. The ‘Buy British Last’ policy lasted from 1981–1983; the six members of ASEAN in 1994 were Brunei, Indonesia, Malaysia, Philippines, Thailand and Singapore. In 1994 Korea’s economy was more than six times larger than that of Malaysia: data.imf.org/regular.aspx?key=61545850. 34. COREU 17 July 1980, FCO 21/1867, TNA. 35. As but two examples of the many articles on this, see Michael Reilly: Competitive Nationalism and the EU’s China Strategy, Lau China Institute policy paper, vol. 1 (5), London 2017; European Council on Foreign Relations: China at the Gates —A New Power Audit of EU -China Relations, 2017.

CHAPTER 4

Whisky, Drugs and Bonds—Korea, 1987–1997

On seizing office in 1981, Chun Doo Hwan had originally intended to hand over the reins of government to his chosen successor, Roh Tae Woo, after a single seven-year term in power. But major protests in the country forced Roh to agree to hold open elections in 1987, which he then won, the opposition vote being split between Kim Dae Jung and Kim Young Sam. With the advent of a democratically elected government, much of the remaining wariness in Europe towards Korea disappeared. European politicians no longer needed to have qualms about dealing with an authoritarian regime, or deal with domestic complaints about human rights abuses in Korea. The EU itself grew to 12 states the same year with the accession of Spain and Portugal. But these positive changes went hand in hand with growing frustration in Europe over Korea’s trade policies. Two decades of sustained, high economic growth had seen living standards in Korea rise significantly, but as with Japan before it, Taiwan at the same time and China today, this was achieved primarily through a model of export-led growth. Until the mid-1980s, the import of energy plus the capital goods needed to develop the export sectors meant the country ran an overall trade deficit but from 1986 this changed to become large and growing trade surpluses, adding to growing friction with major trading partners in the USA and Europe. As a developing country, Korea had benefited from preferential access to both markets for many of its exports under the Generalised System of Preferences (GSP). But its own domestic market remained © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_4

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heavily protected behind extensive barriers. These included complete bans on the import of certain items (colour TVs, for example), restrictive quotas (on foreign cars and other items), licensing requirements or specific technical standards, and punitive import duties (up to 300% on some alcoholic drinks). For Europeans and Americans alike, this was fast becoming unacceptable. By 1986, the Uruguay Round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT—predecessor of the World Trade Organisation, or WTO) was also reaching a conclusion. This would set the overall framework for international trade policy for the foreseeable future, with participants pledging to develop ‘a more open, viable and durable multilateral trading system.’1 In the negotiations, Korea hoped to preserve its access to the GSP largely unchanged, on the other hand, it also sought to use the negotiations as a delaying tactic in opening its markets, claiming that as part of the overall agreement it was committed to carrying through a major liberalisation programme by 1988. British officials were sceptical, fearing this would simply see the replacement of quantitative restrictions on imports by high tariffs and administrative barriers.2 Meanwhile, the frustration that Nick Spreckley in Seoul had expressed about the lack of response by British companies to the opportunities on offer in Korea was widely shared by his colleagues in London. Over the ten years from 1975 to 1984, South Korea enjoyed an annual average rate of growth of 9.0%, yet by 1985 as a senior official in the Department for Trade and Industry complained, the only countries around the world where the UK’s share of imports was lower than in Korea were Argentina, Mexico, Taiwan ‘and a number of small third world countries which are commercially insignificant.’3 The low market share in Argentina can be explained by its war with the UK over the Falkland Islands only three years earlier, following which the two countries had yet to re-establish diplomatic relations, while that in Mexico may have reflected its close proximity to the USA and exports being routed accordingly. Taiwan’s inclusion, however, suggests there were issues surrounding British export performance in East Asian markets that went wider than the Korean market alone, but frustration over the seeming reluctance on the part of British companies to seek business there was only amplified by the unwillingness of the Koreans to dismantle their trade barriers.

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As one Whitehall report explained: ‘Like Japan, Korea has done well out of the liberal trading system, maintaining her own barriers while benefiting from relatively open access to the developed European and US markets. But unlike Japan, Korea has also sought to retain the benefits of developing country status, such as GSP treatment for a range of her exports. Her substantial investment in the electronics sector…is…likely to pose an increasingly serious challenge to sensitive sectors of European industry.’4 The concerns and frustrations will resonate with any student of contemporary trade policy in respect of China. Perhaps the only significant difference is that in 2018 the UK had an even smaller share of China’s total imports (1.4%) than it had of Korea’s in 1984 (1.7%). As in China thirty years later, the lack of effective protection of copyright and intellectual property rights (IPR) was a major concern and one of three areas that was to be the focus of British attention for some years to come. It was of especial concern to the pharmaceutical industry, which saw drugs which had taken years of expensive research and testing to bring to market pirated in Korea almost as soon as becoming available. The other two issues were barriers to alcohol exports, either in the form of an outright ban on imports or very high tariffs, and the near total lack of access to the financial market by foreign companies. Foreign banks were able to operate on a very limited basis but faced difficult and discriminatory operating conditions compared to local rivals, while the securities market was so tightly regulated as to make the Korean insurance market, at the time the ninth largest in the world, effectively closed to foreign companies. These issues would preoccupy British trade officials and policy makers for several years to come. As prime minister, Margaret Thatcher raised copyright and Scotch whisky imports during her visit to Seoul in May 1986. Six years later, after she had ceased to be prime minister, she visited Seoul again and complained about the import duty on Scotch whisky which, at 150%, was higher than that on cognac.5 The issue would not be resolved finally until 1999, when a WTO appeals report confirmed an earlier ruling that Korea’s taxation policy discriminated against foreign alcohol, whisky especially.6 In early 1986 there were some grounds for optimism that the other two issues would be resolved much more quickly. The USA also objected to Korea’s lack of copyright and patent protection, as well as the lack of access to its financial sector. Frustrated by the lack of progress, it launched Section 301 proceedings against Korea.7 In January, US officials assured

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the British embassy in Washington that ‘any concessions the US achieved in either the intellectual property or the insurance negotiations with the Koreans would of course be available to all Korea’s trading partners.’8 By year end, however, to the undisguised dismay and frustration of British officials, the Americans had concluded agreements on both access to the insurance market and copyright protection that applied only to US firms. The copyright case was particularly significant as Korea agreed to improve domestic protection from mid-1987. The improved measures would also apply retrospectively to existing patents and copyright from up to ten years previously—but only for the USA. For European companies, protection would apply to new patents and copyrights only. In the case of the pharmaceutical industry this would mean that any drugs which had been patented before mid-1987 would continue to risk being pirated in Korea with no legal remedy, and put European companies at a significant competitive disadvantage to American rivals.

Limits to Co-operation In London this settlement was seen as running counter to the spirit, if not the letter, of the Uruguay Round agreement, the secretary of state for trade and industry describing it as ‘yet another example of unacceptable bilateralism by the USA.’9 British officials quickly concluded that the USA would only be willing to act in concert with others when it could see clear self-interest in doing so. They were almost as quick to conclude that only by working through the EC would they be able to achieve comparable outcomes. The UK simply lacked the leverage of the USA to achieve anything on its own. Not only was the USA a much larger market for Korea than the UK was, it also provided Korea with hard security guarantees that the UK simply could not match. At the time, this was not as obvious an approach as it would be thirty years later. While the European Commission already had overall responsibility for negotiating trade agreements on behalf of the Community, this was mainly confined to trade in goods. Its responsibility did not extend to financial services or all copyright cases, which were more usually matters for bilateral investment protection agreements. Nevertheless, the UK lobbied partners to push for stronger action against Korea, including using the threat of suspending GSP concessions if necessary. Initial reaction from partners, however, seems to have been lukewarm. London sought to overcome this by trying to persuade them of the

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impact on the Koreans of joint representations and of the importance of keeping up pressure and momentum. It also emphasised the British view that there were legal grounds for objecting to Korea’s separate agreement on copyright protection with the USA as this ran counter to its commitments under the GATT agreement.10 The apparent reluctance of partners for stronger joint action may have reflected in part the limits at the time of Commission competence. This affected the overall British approach too, for while ministers complained about American bilateralism, they were keen to play down wider concerns about the bilateral agreement between the USA and Korea over access to the latter’s insurance market, as financial services at the time were a matter for national governments, not the Commission, and the UK did not want to surrender its own competence in this area.11 But there was a wider reluctance which had its roots in the competition for trade advantage that dogged efforts to increase European co-operation. British frustration at high levels of duty on Scotch whisky were of lesser concern to other European countries, for although the tariffs affected all alcoholic imports, the Koreans saw Scotch whisky as a competitive threat to their own soju and imposed additional duties and levies on Scotch in consequence. Korea may also have been considering following the Japanese in trying to establish a domestic whiskey industry (at one stage Korea even appears to have been considering a bilateral deal with the USA which would have treated bourbon imports more favourably than those of Scotch whisky).12 Similarly, the impact of the different arrangements for patent protection for US companies compared to European ones was of greater concern to Britain’s ICI than to many other European drug manufacturers. Those in the UK opposed to the country’s membership of the EU have often cited Margaret Thatcher’s own supposed opposition to it, referring especially to the speech she gave in Bruges in September 1988. This was the inspiration for the formation of the ‘Bruges Group’ of antiEC Conservatives. But they overlook the strong support she gave in that speech for having the Commission take the lead in setting European trade policy, a position that may have been reinforced by the perceived difficulty of getting support from partners in instances such as the issues with Korea.13 The Koreans most likely recognised these divisions within the EC and reacted accordingly, awarding just enough major contracts to individual

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countries, while dangling the prospect of more, to blunt collective pressure for market opening. So, around the same time that the trade secretary was complaining about American bilateralism, the foreign secretary was telling the prime minister of a major defence contract from Korea for Ferranti and another for Javelin missiles, while reminding her that ‘there are of course some unattractive features about the Korean government’ (although in this case he was referring to its human rights performance rather than its trade policy).14 The trade frustrations of 1986 would soon be overshadowed by the much bigger geo-strategic developments of the period. In 1988 Seoul hosted the Olympic Games, the first time in twelve years that there had been full participation in them from both Soviet bloc and Western countries after boycotts of the previous games in Los Angeles and Moscow, and just five years after a Korean airliner had been shot down after entering Soviet airspace. In the aftermath of the Olympics, which had helped put an economically successful and now democratic Korea in the global spotlight, European countries vied to increase their influence in Seoul, first and foremost in the pursuit of contracts, secondly to try to level the playing field for their products and services in the Korean market compared with their American rivals. They hastened accordingly to invite Roh Tae Woo to visit. He duly obliged, travelling to the UK, France, Germany and Hungary in late 1989, briefing for his visit to London noting that there were ‘strong reasons for making a fuss of President Roh.’ These included IPR, on which the US continued to benefit from more favourable treatment, but also defence sales.15 Following the precedent set by Chun Doo Hwan on his visit, Britain won a contract to provide jet trainer aircraft to the Korean Air Force but the three issues of whisky tariffs, copyright and financial market access continued to vex British officials.

Hubris Gives Rise to an Opportunity The same year saw the fall of the Berlin Wall and the Iron Curtain. In North East Asia as in Europe, the certainties that had underpinned diplomatic activity since the 2nd World War changed almost overnight. The impact on Korea, the post-war division of which had been a precursor to the erection of the Iron Curtain, was to be especially marked, fuelling hopes in the south that it might also signal the reunification of the peninsula. After the fall, the Soviet Union was quick to establish diplomatic

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relations and in 1990 it opened an embassy in Seoul, accompanied by most of the former Warsaw Pact countries. Until then, apart from Japanese diplomats, few if any foreign ambassadors or even diplomats based in Seoul spoke any Korean. But the first representatives of the central and eastern European countries had served previously in Pyongyang and many spoke excellent Korean. After years of relative isolation and introspection, Korea suddenly found itself the centre of attention. In 1992 a further step change occurred when it established diplomatic relations with the People’s Republic of China (PRC), severing ties with its hitherto staunch ally in Taiwan with almost no warning, the latter losing its prestigious embassy site in Seoul in the process, which was handed by the Koreans to the PRC. For Korea, these changes combined with its economic success story helped cement a new-found and at times over-bearing self-confidence. Diplomatic priorities were rapidly re-assessed. In order of importance, these would now be the USA, Japan, Russia and China, followed by the United Nations. European countries, the UK included, came much lower down the pecking order. With the post-Soviet world rushing to Seoul, Korea appeared even less willing to concede to Western demands for greater market access, reflected in a hubristic perception that the same countries needed Korea as much as the other way around.16 In the circumstances, the Koreans could perhaps be forgiven for overlooking the changes that were taking place in Europe too, even if this apparent fascination with ‘the new glamour countries of their own new world order’ led the British ambassador in Seoul to complain that ‘The infant RoK could well be on the verge of becoming a troublesome adolescent.’17 Although it would be another fifteen years before the EU was expanded to include the former Soviet bloc countries, since 1986 it had been twelve strong with the accession of Spain and Portugal. Of much greater significance, however, was the passing of the Single European Act of 1986, under which the whole of the European Community, henceforth to be the European Union, would become a single market from 1993, with uniform standards, mutual recognition of qualifications and the free movement of capital and services as well as goods and people. Nearly thirty years later, the fact that this was very much the initiative of Margaret Thatcher passed almost unremarked in the debate in the UK over whether to stay in the EU. But there was early recognition amongst businesses, both inside and outside the EU, of the changes

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this would bring. The British government was quicker than most others to realise the implications, not only for inward investment into the EU, as will be explained below, but also the opportunities brought by other changes under the act, notably the enhancement of diplomatic cooperation through the new Common Foreign and Security Policy (CFSP) and with it the ability to increase influence on European foreign policy decision making. Interestingly, the Chinese too seem to have been quick to realise the implications. After a visit to Beijing and Seoul in early 1989, Martin Bangemann, the European Commissioner responsible for the internal market and industrial affairs, remarked on the ‘political desire of the PRC leadership to see Europe strong and united.’ Tellingly, and by contrast, he found a ‘fear of 1992’ and the implications that this would herald the advent of ‘Fortress Europe’ prevalent among his interlocutors in Seoul.18 The following year the British trade secretary also felt that the Koreans were ‘underinformed about what is going on in Europe.’ For British officials, this offered an important opportunity: persuade Korea to see the UK as its main ally in Europe and by doing so help to persuade the Koreans to open their markets to British goods and services. As the trade secretary explained, while the Korean market was liberalising rapidly, it would need ‘active intervention from us if our interests are not to be sacrificed to those of the US.’19 A 1991 memo from the FCO to Downing St. put the objective succinctly: ‘There is a pressing need to encourage Korea to see Britain as its national (sic) interlocutor in the EC.’ A few months earlier, after the Korean unification minister, Lee Hong Koo, had visited London, FCO officials recorded that ‘the Koreans would know that we had used whatever influence we had with the 12 (ie EC) to further their case’ (in lobbying China to agree to Korean accession to the United Nations).20 But progress was slow and frustration amongst British officials over perceived Korean stubbornness or intransigence was becoming more marked. In 1991, the Korean embassy simply declined to arrange a meeting for the visiting finance minister with a British counterpart to enable the latter to raise the now familiar concerns, a position which would have been unthinkable a few years earlier. For its part, the British embassy in Seoul complained that while the UK had traditionally taken a very positive stance in Brussels over liberalising trade with Korea, being in the forefront of resisting anti-dumping cases (notwithstanding recent Korean

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perceptions to the contrary, as explained in the previous chapter), ‘there is little tangible evidence that the RoK is addressing our concerns.’21 Wider developments arising from the creation of the Single Market, however, were to lead quickly to a re-ordering of priorities. The tenyear period starting in 1986, when Japan’s Nissan opened a car factory in Sunderland in North-East England, was to see a near tidal wave of investment into the EC from East Asia. For Japanese companies, the appreciation of the yen following the 1985 Plaza Accord had raised significantly the cost of domestic production, making overseas investment more attractive. The advent of the Single Market reinforced this. Korean and Taiwanese companies were initially more cautious. Their domestic costs of production were lower than those of their Japanese competitors but fears about a possible ‘Fortress Europe,’ protected by tariffs and other barriers from imports from the rest of the world, together with a growing realisation of the new opportunities offered by the huge new single European market and, for Korean companies, an overvalued exchange rate that made overseas borrowing costs low, combined to persuade many of them to follow the Japanese lead. In addition to seeking major contracts for their national champions in the Korean market, European politicians were now competing to lure Korean investment to their countries with the benefit of the jobs and other economic benefits this would bring. The market access problems had not gone away. But for politicians they were a second order priority compared to luring new investments to their countries, especially in the case of the UK. Korean leaders and policy makers were cultivated enthusiastically as part of the persuasion effort. A 1994 letter from the Foreign Office to 10 Downing Street, making the case for inviting Korean president Kim Young Sam to visit the UK, encapsulated both the new approach and the continuing competition between EU member states: ‘we have sought to convince South Korea to see us as its ‘gateway to Europe’…British companies are in contention for major contracts, often in competition with France & Germany …It would undermine their efforts if the President now visited France & Germany without coming here.’22 Kim duly came to Europe in early 1995 although in messaging terms it was not the success the British government had hoped for. It was anxious to promote British industrial prowess, but the Koreans decided that the theme for this leg of the trip should be parliamentary tradition and democracy. To British chagrin, the theme for the French leg would

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be advanced technology, reflecting both a Korean perception that Airbus aircraft were French, rather than European, and their decision to buy French TGV technology for their own high-speed railway. But British disappointment was short-lived, for in October 1995 the Queen formally opened the first element of a new electronics complex on Teesside for Samsung, which was heralded for being ‘as significant as the early wave of large-scale Japanese investments.’23 For a while it seemed that would indeed be the case, as ahead of the opening of the Samsung plant other Korean investments had also been announced for Yorkshire, Northern Ireland and Wales, in some cases regional development agencies using central government funding to outbid one another in the incentives they offered to induce investors to choose their area.24 In contrast to most of the concurrent Japanese investments, however, many of the projects were opportunistic, responding to the lure of investment grants rather than long term objectives, poorly conceived and not fully thought-through. It was not just the Korean government that was under-informed about Europe but much of its business too. Too many of the decisions reflected the euphoria and hubris that had been so apparent in Korea since the 1988 Olympics, and that subsequent geo-political developments had only reinforced, fuelled further by access to low cost credit and an overvalued exchange rate. They bore all the hallmarks of a bubble economy, exemplified by the plans of Haitai, a large Korean food company, to dominate the British chewing-gum market. These were based on almost no prior research, just an assumption that British tastes in this respect would be like American ones. Few of the investments and none of the longer-term plans survived the Asian financial crisis of 1997.25 It should be no surprise that market access barriers were put to one side by national politicians in their desire to lure inward investment projects to their countries or regions. The promise of jobs would always generate more media headlines and positive attention than export success and by the time the investors pulled out amidst recriminations, the politicians involved had invariably moved on to new positions. And while EU rules limited the amount of state aid that could be offered as an incentive to inward investors, for the time being investment policy remained a purely national matter, outside the scope of wider European competence. So, politicians could claim the credit for inward investment decisions while

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deflecting any criticism about the lack of progress on easing trade restrictions onto the Commission, which bore overall responsibility for trade policy. As already noted, the Scotch whisky dispute and the accompanying discriminatory taxes and duties on alcohol imports would not be resolved until 1999. But much of the British frustration was finally overcome in 1996 when a Framework Agreement between Korea and the EU was signed by both the Commission and the member states. An accompanying political declaration underlined the shared commitment to democracy and respect for human rights, while the main document committed both sides to work towards the elimination of barriers to trade ‘in particular through the timely removal of non-tariff barriers ’ (emphasis added) and to improve market access and protect IPR. The agreement was signed for the Commission by Leon Brittan, a former British trade secretary and at the time vice chairman and commissioner for trade and external affairs in the Commission. The impact of British influence within the EU could hardly have been clearer.26 A new copyright law was introduced in Korea in 1997, although patent protection had been improving piecemeal over the years. Financial market liberalisation had also been improving gradually but the market would only be fully opened to foreign firms after the 1997 Asian financial crisis. Korea was especially badly hit by this, and most of the early investments by Korean companies in the UK closed as companies retrenched or went into administration. The hubris that had been so apparent in Korean negotiators earlier in the decade also disappeared and inevitably trade volumes also fell sharply. Fifteen years later, Korea and the EU—by now 28 countries strong— signed a bilateral free trade agreement (FTA). At the time it was acclaimed as the most comprehensive such deal ever and included extensive provisions on services, to the benefit of British financial and professional companies. It was far from coincidental that bilateral UK-Korea trade, historically showing a surplus for Korea, swung the other way following signature of the FTA. The Framework Agreement of 1996 had been the foundation stone on which were built the contacts, co-operation and further negotiations which would lead to the FTA. It may have lacked the immediacy or the impact of the much-hyped investment projects but the long-term benefit to the British economy from the influence slowly built up by working with and through the Commission and partners has been immeasurably greater.

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Looking back over twenty-five years, it is striking how little has changed in broad approaches to foreign policy. Bangemann’s 1992 observation of the Chinese wish to see Europe ‘strong and united’ was reiterated by Chinese Premier Li Keqiang during a press conference in London in 2014, when he said that China welcomed a strong and prosperous EU. And Korea’s 1992 fears of ‘Fortress Europe’ found an echo in the Korean government’s post 2016 Brexit referendum plans for a $17bn stimulus package to mitigate the potential impact on trade.27 For all the contemporary concerns about Donald Trump’s foreign and trade policy, the Section 301 negotiations with Korea—and other countries—in the 1980s are a reminder that unilateralism has always featured prominently in America’s dealings with other countries. It reared its head again in the context of EU-Korea relations even before the 1996 Framework Agreement was signed. In 1994, in return for North Korea ending its own nuclear development programme, the USA agreed to finance the construction, under its supervision, of a nuclear power station to help North Korea meet its civil energy needs. The initial European welcome for the deal quickly turned to surprise when it was found that the USA expected the EU to help pay for the programme, even though it had not been party to the discussions, or even warned beforehand. The EU eventually agreed to join programme in 1997 but only in return for a seat on the executive board (the project ended without meaningful progress in 2006).28 For Seoul, the threat from North Korea remains as potent as ever and for as long as it does so, hard security guarantees will continue to be a prominent driver of its foreign policy. The USA provides these and in turn they give the USA leverage in trade negotiations that the EU lacks. That is less of an issue in 2020 than it was in 1986. The WTO’s rules are stronger and more wide-ranging than those of GATT were and remedies more effective, even if at the time of writing the Trump administration seems determined to undermine them. Thirty years ago, the UK was no more able to provide meaningful security guarantees to Korea than it is today. Without these, it had little option but to work with its partners in the EU to achieve its aims. It is no accident that successive agreements between the EU and Korea have been so beneficial to British interests. In her 1988 speech in Bruges, Margaret Thatcher set out her vision of Britain’s destiny, not of ‘some cosy, isolated existence on the fringes of the European Community but in Europe, as part of the Community.’29 For the next three decades,

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British officials worked both with and within the European Commission to further that aim, leveraging the country’s membership of the EC, then the EU, to achieve objectives that would have been far more difficult, if not impossible, to achieve bilaterally. The frustrations that British policy makers felt over trade with Korea had their origins in the very low market share that British exports were securing. As we have seen, in only three other countries of any significance was the share as small. One of those was Taiwan. In the case of Korea, there was at least a conventional diplomatic framework in which negotiations could take place. Taiwan, by contrast, was an economy whose government the UK did not recognise and the status of which was, in the UK’s eyes, undetermined. Yet by the turn of the millennium, Taiwan was producing approximately 12% of the entire global output of semiconductor chips and had an economy and population comparable in size to those of Australia.30 Although British diplomats tried hard to ignore Taiwan, in trade terms it was simply too important to do so. How the conundrum was resolved is the focus of the next chapter.

Notes 1. Punta del Este declaration, 20 September 1986, http://www.sice.oas. org/trade/punta_e.asp, retrieved 16 October 2019. 2. Hutton, DTI to private secretary/minister for trade, 26 February 1986, FCO 98/2839, TNA. 3. Roberts DTI to Harding, FCO, 31 December 1985, FCO 21/3628, TNA; The growth figures are those of the World Bank. 4. Ibid. Market share figures for China are from IMF, Direction of Trade Statistics. 5. Margaret Thatcher: Speech in Korea (the Economy), https://www.margar etthatcher.org/document/108303, retrieved 15 October 2019. 6. World Trade Organisation: Korea—Taxes on Alcoholic Beverages, Report of the Appellate Body, 18 January 1999. 7. ‘Section 301’ is the relevant section of the 1974 US Trade Act (still in force) and authorizes the president to take all appropriate action, including retaliation, to obtain the removal of any act, policy, or practice of a foreign government that violates an international trade agreement or is unjustified, unreasonable, or discriminatory, and that burdens or restricts U.S. commerce. Section 301 cases can be self-initiated by the United States Trade Representative (USTR) or as the result of a petition filed by a firm or industry group. https://www.govinfo.gov/content/pkg/STATUTE88/pdf/STATUTE-88-Pg1978-2.pdf, retrieved 24 June 2020.

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8. Plumbly, Washington, to Abercrombie, DTI, 8 January 1986, FCO 98/2839, TNA. 9. Channon, secretary of state DTI, to Howe, foreign secretary, 19 December 1986, FCO 98/2839, TNA. 10. FCO telegram 440 to Seoul, December 1986, FCO 98/2839, TNA. 11. DTI briefing note, 10 December 1986, FCO 98/2839, TNA. 12. Jackson, Seoul to FCO, 29 March 1989, FCO 98/3496, TNA. 13. Margaret Thatcher: Speech to the College of Europe, 20 September 1988, https://www.margaretthatcher.org/document/107332, retrieved 15 October 2019. 14. Howe (foreign secretary) to prime minister, 18 November 1986, PREM 19/354, TNA. 15. Submission, March 1989, PREM 19/354, TNA. 16. Reilly, Seoul, to Davies, FCO, 4 September 1992, FCO 21/5237, TNA. 17. Seoul telegram 420 of 24 August 1992, FCO 21/5237, TNA. 18. Jackson, Seoul to FCO, teleletter of 29 March 1989, FCO 98/3496, TNA. 19. Ridley, secretary of state DTI, to prime minister, 8 June 1990, PREM 19/354, TNA. 20. Gass, FCO to Wall (private secretary/prime minister), 3 June 1991, PREM 19/354, TNA; FCO 235 to Seoul of 6 June 1990, PREM 19/354, TNA. 21. Seoul telegram 182 of 11 April 1991, FO 21/4981; Seoul to FCO, teleletter of 31 May 1991, PREM 19/354, TNA. 22. Smith, FCO to Leslie-Jones, 10 Downing St., 31 March 1994, PREM 19/4800, TNA. 23. Michael Heseltine, President of Board of Trade, quoted in Samsung Abandons Pounds 450 m Microchip Investment in the North-East, The Independent, 29 November 1997, https://www.independent.co.uk/ news/business/samsung-abandons-pounds-450m-microchip-investmentin-the-north-east-1296996.html, retrieved 18 October 2019. 24. Seoul telegram 336 of 18 September 1995, BD 41/443, TNA. 25. Samsung Abandons Pounds 450 m Microchip Investment in the NorthEast, op. cit.; Haitai went bankrupt in 1997 and was reconstituted in 2001, then taken over by Crown Confectionery in 2004. 26. Framework Agreement between European Commission and member states and the Republic of Korea, 28 October 1996, FO 974/1267, TNA. The agreement was signed for the UK by David Davis, who twenty years later would have responsibility for negotiating the UK’s departure from the EU. 27. David Cameron and Li Keqiang press conference, 17 June 2014, https:// www.gov.uk/government/speeches/david-cameron-and-li-keqiang-pressconference-june-2014, retrieved 10 February 2017; South Korea—When

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Brexit Is Worth $17bn, Financial Times, 28 June 2016, http://www. ft.com/fastft/2016/06/28/south-korea-when-brexit-is-worth-17bn/, retrieved 10 November 2016. 28. KEDO: About Us: Our History, http://www.kedo.org/au_history.asp, retrieved 20 October 2019. 29. Margaret Thatcher: Speech to the College of Europe, op. cit. 30. Bor-shiuan Cheng and Terence Tsai: The Silicon Dragon: High-Tech Industry in Taiwan, Cheltenham 2006, p. 14.

CHAPTER 5

Gratuitously Disagreeable—Taiwan, 1980–1990

Britain’s Relations with Taiwan Before 1980 Korea was not the only East Asian country to enter the 1980s facing internal turmoil. On 10th December 1979, just two days before the military coup in Seoul, a demonstration was held by opposition politicians in Kaohsiung, Taiwan’s second city, to mark International Human Rights Day. Although Taiwan was under martial law at the time and would remain so for another seven years, the president, by now Chiang Kai-shek’s son Chiang Ching-kuo, gave orders that troops were not to be used to prevent the demonstration, nor were police to retaliate if attacked. Government agents provocateurs in the crowd instigated violence, however, leading to some injuries, including of several policemen, and a major crackdown on the opposition movement followed. The incident was a major landmark on Taiwan’s road to democracy. Several of those put on trial were defended by a young lawyer, Chen Shui-bian. Twenty years later he would be elected president, the first not to come from the Kuomintang (Chinese Nationalist Party, KMT) which had ruled Taiwan since 1945, representing instead the Democratic Progressive Party (DPP) which traces its origins to the incident.1 The putsch in Seoul the same month had prompted a flurry of exchanges between London, Seoul, and Washington about the implications. By contrast, the events in Kaohsiung went un-noticed and unremarked in London. Not until late March 1980 was any interest shown in the FCO, and then only in response to public concern. Many © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_5

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of those arrested were members of the Presbyterian Church, the largest Christian group on the island, whose congregation was drawn largely from local Taiwanese and aborigines, rather than mainlanders who had fled to the island in 1950 after the defeat of the nationalists in the Chinese civil war. Both Amnesty International and the United Reformed Church campaigned on their behalf, lobbying the British government to take action. A Foreign Office researcher was hastily detailed to trawl through the press to try to find out more.2 In response to the campaign, FCO ministers took the line that ‘We have to rely generally on published sources for information about the situation…there are really no channels open to the Government to make our views known to the Taiwanese authorities.’ This was more than a little disingenuous. The previous May, a British cargo vessel, the MV Roachbank, had rescued 290 Vietnamese refugees from a stricken vessel and was proceeding to its next port of call in Taiwan. Under international convention, Taiwan had an obligation to take the refugees but, in common with other countries in the region, was refusing to do so. (The broader issue of Vietnamese refugees is covered in more detail in Chapter 7). In a cabinet discussion that month, while accepting that the refugees should be resettled in the UK if absolutely necessary, prime minister Margaret Thatcher ruled that ‘The greatest possible pressure should be maintained on the Taiwan Government (sic) to persuade them to accept the refugees from the MV Roach Bank (sic).’3 This was subsequently confirmed by the home secretary, William Whitelaw, who told Parliament the following month that ‘the Government have been using their best endeavours to persuade the Taiwan authorities to accept their responsibilities, and we hope that some [refugees] at least will be granted refuge there,’ while also stating that those not accepted by Taiwan would be brought to the UK as soon as possible. At the end of June 1979, a charter flight was duly arranged to bring the refugees from Kaohsiung to the UK for resettlement. Presumably, the British government had found channels through which to deal with the Taiwanese administration over this. Furthermore, despite the claimed lack of channels, ministers were content to allow the supply of riot control equipment to the Taiwanese police. Officials admitted that this was a grey area—it included rubber bullets and armoured personnel carriers, for example. As in Korea, human rights concerns were not to get in the way of business.4

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In most other respects, however, the UK’s attitude towards, and relations with, Korea and Taiwan could hardly have been more different. It had committed significant forces to the US-led United Nations forces in the Korean War from 1950 to 1953, with over 1100 killed, more than the combined deaths of British forces in Iraq, Afghanistan and the Falklands conflict and almost twice the number of casualties in the Malaya emergency from 1948 to 1960.5 Following the signing of a truce between the opposing sides in 1953, a Military Armistice Commission (MAC) was established to monitor violations of the cease-fire and for many years this was to be the only means of contact between the two sides. The UK was represented on the UN forces’ delegation at the MAC at least into the 1990s, by a senior (brigadier-level) military officer. Together with the modest troop contribution to the UN Honour Guard, this was a visible, if token, manifestation of the UK’s commitment to the security of Korea. By contrast, the UK was the first major western country to switch recognition from the Republic of China (RoC) under Chiang Kai-shek to the People’s Republic of China (PRC), doing so in January 1950. A strong motivation for this was a desire to protect its commercial interests in the country following the communist takeover. From that perspective it was a failure, as almost all such interests were expropriated by the new government and Mao Zedong refused to establish diplomatic relations. This led to the highly unusual situation in which British diplomats were based in Beijing but without any formal status, even while the armed forces of the two countries were fighting one another on the Korean peninsula.6 Almost as unusual was that Chiang Kai-shek in Taipei tolerated this and, uniquely, allowed the UK to maintain a consulate in Tamsui, north of Taipei, even while it no longer recognized the state of which he was head. This situation continued even after the PRC and UK finally established diplomatic relations in 1954. Although these were at the level of chargé d’affaires rather than ambassador, a level to which they were not raised until 1972, after China had joined the United Nations and Britain had agreed to close its Tamsui consulate, relations between the two countries at the time were so poor that this hardly mattered. Although the UK no longer recognized the RoC as a state, nor did it recognize the PRC’s claim to Taiwan. Its formal legal position was that the RoC government was the de facto government of the territories over which it exercised control but that de jure sovereignty over Taiwan remained undetermined, a position the British government continues to

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hold to this day, although in deference to Chinese sensitivities it is almost never stated. British officials instead refer to the country following ‘a one China policy’ as opposed to ‘the one China policy’ of the PRC.7 In the 1950s and 1960s this did not matter greatly from a commercial perspective. On the one hand, the British struggled in their relations with China, not least because of the ‘usually arrogant and insulting’ attitude of Chinese diplomats towards them, with ‘scant regard for courtesy and none for truth.’8 On the other hand, as one writer has put it, FCO officials were able to construct a relationship that enabled them to maintain as much contact with RoC government officials as they required for their own purposes, yet without breaching formal diplomatic protocol.9 And British trade with both was minimal. But by 1972 when the Tamsui consulate closed, this was changing. China was still a desperately poor and poorly run country, but it was buying Trident jet aircraft from the UK, generating excitement among politicians and FCO officials alike about broader potential in the market. Meanwhile, in Taiwan the switch from being a primarily agricultural economy to an industrial one was well under way. Economic growth was taking off and the island was becoming one of the four Asian ‘tiger economies’ (the others were Korea, Singapore and Hong Kong). Barely had the Tamsui consulate closed, therefore, than officials in London were puzzling over how to help British exporters win business on the ground in the absence of any official presence. This led to something of a triangular negotiation. The RoC government was keen to have a trade office in London but since 1950 British officials had adopted a ‘legalistic and cautious’ approach in their dealings with officials representing the RoC, and feared this was a back-door attempt to establish a diplomatic presence by other means.10 For good measure, Sir John Addis, the ambassador in Beijing (newly elevated from chargé d’affaires ) feared that any agreement risked damaging the UK’s trade with China: ‘The reality of our £85m. exports to China last year and the prospect of such business as the Spey deal [aero-engines made by Rolls-Royce] must be weighed against the expectations of trade with Taiwan.’ The compromise eventually agreed was the establishment of the Majestic Trading Company in London as a notionally private company handling trade promotion in the UK on behalf of Taiwan.11

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Railway Diplomacy Of greater significance, however, was the reality of the UK’s trade with Taiwan. In 1971, the Taiwan Railways Administration (TRA) announced plans to electrify its west coast main line between Taipei and Kaohsiung. GEC, at the time a major supplier of railway equipment as well as power turbines, showed keen interest and put together a British consortium to bid for a turnkey contract, to electrify the route, upgrade the signalling and provide electric locomotives and multiple units for the trains. By early 1974, ‘the position [was] that the British group have beaten the competition on specification and all other aspects of the customer’s requirements, save only that a price has yet to be finally determined.’12 The contract at this time was said to be an estimated £28 million but unlike many such contracts, this was steadily revised upwards. By April it had risen to £65 million and would eventually reach £80 million by the time of signature in February 1975.13 As much, in other words, as the value of all the UK’s exports to China the previous year. Considerable effort (and financial support) together with publicity went into the Trident contract for China but both the value and overall benefit to British industry of the Taiwanese railway contract was far greater. It was also achieved with minimal government involvement. Officials even agonised over whether Lord Limerick, then a junior trade minister, should meet any Taiwanese representatives, before reluctantly agreeing to a brief and carefully stage-managed contact.14 Somewhat ironically, the only government involvement of any significance was over an internecine difficulty that turned out to be almost the only sour note of the whole contract. Under the original proposal, the electric locomotives and multiple units to be delivered as part of the overall package were to be supplied by British Rail Engineering Limited (BREL), the engineering and manufacturing arm of the nationalised railway network. But BREL was slow in providing firm price quotations for the multiple units and eventually pulled out of supplying the locomotives, despite pressure from government officials, anxious for the foreign exchange the contract would bring. GEC was unable to find another British manufacturer willing to quote, so turned to a South African company for this part of the contract.15

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Over the next two decades the same South African company would win further rolling stock orders from the TRA, in each case using GEC traction motors. Many of them remain in service in Taiwan today. It is likely that these repeat orders were rewards to South Africa for its continued diplomatic support for the RoC, it being the last major country to switch recognition to the PRC, doing so in January 1998. Had not a South African company supplied the original order, however, it is very likely that the repeat business would also have gone to British firms. While the UK had closed its consulate in 1971, with the exception of the USA (whose namesake GE company also won a contract as part of the electrification project), by this time other countries whose industries might have bid, including Japan, France and Germany, also recognised the government in Beijing rather than that in Taipei. Thus, the contract may have been fought for on a genuinely level playing field. If so, it was to prove exceptional, for the 1990s were to be characterised by strong competition between European countries for business in and from Taiwan, as we will shortly see. This success with railway electrification, despite the absence of any political lobbying or official support on the ground, would be in marked contrast to GEC’s failure to win the nuclear-power station turbine contract in Korea covered in Chapter 3. It was also far from being the only success in Taiwan for British business despite the absence of formal relations. Britain was also quietly helping Taiwan develop its civil nuclear power facilities. Lord Hinton, the former chairman of the Central Electricity Generating Board (CEGB), who had been responsible for the design and construction of the UK’s first generation of nuclear plants, visited Taiwan in 1966 at RoC government invitation to advise on nuclear power generation. He subsequently arranged for Taiwanese nuclear engineers to come to the UK for training from the CEGB, a proposal to which the Foreign Office raised no objection other than that ‘they would not want to see Government officials coming under this pretext.’ British Nuclear Fuels Ltd. (BNFL) subsequently won a contract worth £20 million for fuel re-processing and opened negotiations over contracts to provide both know-how and equipment for the manufacture of a mixed-fuel nuclear fabrication plant.16 Far from trade with Taiwan being dwarfed by that with the PRC, as the Beijing embassy (and probably most officials in Whitehall) had assumed would be the case, the opposite happened. By 1984, Britain’s bilateral trade with Taiwan was 22% greater than that with China, despite

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the absence of any diplomatic relations. The relative position would not change for a decade, until China’s own export-led growth model started to have a real impact from the mid-1990s. The performance of British exports as opposed to total trade was even stronger. Between 1974 and 1994, exports to China grew 7.5 times in nominal terms but those to Taiwan 12 times, so that by 1994 the UK was exporting as much to Taiwan as it did to China.17 Clearly, the potential was considerable but British officials found themselves in a quandary. On the one hand, they were keen to be seen to be supporting British exporters, on the other they were anxious to abide by their own legalistic interpretations of what assistance was permissible without implying diplomatic recognition, and even more anxious not to upset the Chinese. This latter concern was frequently the decisive factor, amplified as it was by frequent representations from the British embassy in Beijing for a position more amenable to the Chinese. In March 1974, in response to such representations, the FCO felt compelled to tell the embassy that: ‘We know of no case in the past of discrimination by the Chinese against firms trading with Taiwan (What irritates the Chinese more than trade is visits [to Taiwan, for example by MPs] …the French have told us in the past that this is also their experience).’18 Nor did the Chinese raise any difficulty over GEC’s chairman, Lord Nelson, also being president of the Sino-British Trade Council, despite the company’s business interests in Taiwan. Other factors contributed to the caution. The first was China’s ability to make matters difficult for the UK in Hong Kong. Major riots there in 1967, instigated and fomented by pro-Beijing groups, would still be fresh in the minds of many of the FCO’s Sinologists. Another one, kept secret at the time but surely serving to reinforce caution, was a fear in the British government that Chiang Kai-shek was seeking to develop an independent nuclear weapons capability. The RoC had been a signatory of the Non-Proliferation Treaty (NPT) under which it had agreed not to develop nuclear weapons, but after China joined the UN, it was expelled from the International Atomic Energy Agency (IAEA), the body responsible for overseeing the safeguards set out in the treaty, in December 1971. As officials in London admitted, it could hardly be expected to abide by the rules of an organization from which it had been expelled. Information available suggested that the French were helping with the construction of a laboratory scale re-processing plant and plutonium handling facility. The prime minister, Harold Wilson, agreed to raise the concerns with both the Americans

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and the French and duly spoke to Henry Kissinger on 8th July 1974. The position with France was complicated as the UK was competing with France for nuclear contracts around the world, not just in Taiwan, and in the end it appears that Wilson did not raise the matter with the French president, Valéry Giscard d’Estaing.19 Not only was this revelation to diminish further any—already limited sympathy that might have existed in British government circles towards the government on Taiwan, but concerns were to grow over the following years as further evidence emerged of Taiwanese efforts to develop a nuclear weapons capability. In April 1976, a blanket ban on all nuclearrelated exports to Taiwan was agreed. Two years later, after the global Nuclear Suppliers Group, including France, Germany, Canada and the USA as well as the UK, had agreed a ‘trigger list’ of sensitive items that should not be supplied to Taiwan, the FCO was expressing concerns over concerted Taiwanese attempts to buy depleted uranium—what it described as a ‘sensitive situation.’20

The Anglo-Taiwan Trade Committee Before matters reached this stage, the quandary over how to help legitimate exporters was eventually resolved through a very British compromise. Based on what was already happening in other European capitals, officials in Whitehall agreed to allow the Taiwanese to set up a trade office in London, provided this was not staffed by government officials. Their preference, reflecting the caution of the ambassador in Beijing, was that this should be as an ‘Anglo/Taiwan trade association’ to make clear its purely private nature and absence of any government links. To support British exporters to Taiwan, the Confederation of British Industry (CBI), which had acted as intermediary between the British government and Taiwan over the London office, initially planned to set up an export promotion office under its own name in Taipei. In addition to the—perhaps inevitable—objections from the embassy in Beijing, however, these plans foundered after press reports of them led to strong Chinese objections. The upshot was a more modest approach. The CBI already engaged the head of the Taipei office of the trading company Jardine Matheson on its behalf on an ‘honorary’ basis and two former Taiwanese staff of the Tamsui consulate were employed under him to provide the necessary support to visiting exporters. This would continue but with an additional expatriate recruited to provide the all-important

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advice and assistance to exporters, while nominally being on the Jardine Matheson staff.21 The new procedures were set in place in 1974 but modified in 1976 so that the pretence of British interests being handled by Jardine Matheson was dropped and the office officially called the Anglo-Taiwan Trade Committee (ATTC). Funding and administrative support were provided by the British Overseas Trade Board in London (part of the Department for Trade and Industry) but these aspects were not publicised, so that the FCO could insist in response to any Chinese complaints that the office was purely private, with no connection either to the government or to the Confederation of British Industry (CBI).22 The arrangements may have suited officials in Whitehall and the CBI, but it is debatable what else they achieved. The remit of Peter Gorst, the first ATTC representative, remained narrowly restricted, so the FCO was ignorant of political developments in the country, such as the Kaohsiung protests. The office was established too late and was in any case too low-level to have had any influence on the railway electrification contract, or bidding for the other big projects under consideration. In addition to railway electrification and nuclear fuel processing, in the mid-1970s British companies were pursuing contracts for a petro-chemical complex, a steel works, an alloy steel plant and more.23 In any other country, these were exactly the sort of contracts on behalf of which British ministers would have been all too ready to lobby, or to look for ways of providing official support. And to begin with at least, the office was so low profile and hard to find that potential exporters visiting Taipei may have been ignorant of its existence.24 Nor was the ATTC to be involved in any way in trade policy matters. Yet these were far from negligible, despite the absence of relations. There were quotas on imports of Taiwanese textiles and footwear, ‘voluntary restraint agreements’ on other imports, such as televisions, and growing concerns about counterfeiting. In 1978, for example, AEI complained to the government about counterfeiting by Taiwanese companies. British officials agreed to ask the Americans to raise their concerns with the Taiwanese government on their behalf, but this was not conveyed to the company, which was simply told to raise the matter through the ATTC.25 In normal circumstances these would have been issues for the European Commission to pursue on behalf of member states, but Taiwan was far from normal. Reflecting the position of most member states at the time, the Commission’s own dealings with Taiwan were also very

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limited. Taiwan had signed a textile agreement with the then European Economic Community (EEC) in 1970 but this was not renewed when it expired in 1973. Its bid to join the EEC’s Generalised System of Preferences (GSP), which was to be so important to Korea (see Chapter 3) was rebuffed. Perhaps because of this apparently unforthcoming attitude of the Commission, Taiwan closed its office in Brussels.26 Then in 1975, the European Commission established diplomatic relations with the PRC. By this time all but one of the member states had already done so, so the Commission was hardly in the vanguard. Its move has been described as driven by a combination of institutional jockeying for power, personal beliefs and ambition, and geopolitical considerations.27 Trade considerations appear to have been secondary at best and it would be another three years before the first trade agreement was signed with the PRC and ten years before the first legal agreement between the two was signed.28 Once the trade agreement with China was signed, the Commission appeared to adopt an even more cautious policy towards Taiwan than did member states. When necessary, Commission staff would meet the Taiwanese for ‘meagre meals in third rate Brussels hotels’ to discuss essential issues. Other than for discussions strictly limited to anti-dumping negotiations, no Commission officials visited Taiwan. By the mid-1980s, the policy was described by the then director-general for external relations in the Commission, Leslie Fielding, as ‘more Catholic than the Pope.’29 (Fielding was a former British diplomat and also former Commission ambassador to Japan). Arrangements for Taiwanese to obtain visas to visit the UK also seemed intentionally designed to be as discouraging as possible. Applications had to be lodged with an airline or shipping company which referred them to the Immigration Department in Hong Kong, which in turn referred potentially sensitive ones to the Home Office in the UK. The process could take up to 3 months. Although officials claimed this was exceptional, France, by contrast, issued visas within a week, or in pressing cases as little as 36 hours.30 Despite this, the demand for visas from Taiwanese to visit the UK doubled from 1974 to 1979. As the figures showed, bilateral trade was booming in line with the growth of the Taiwanese economy. This in turn was leading to ever more ambitious plans for further development, especially to improve the country’s infrastructure. But as the number of countries which recognised the RoC as a state continued to fall, so

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the government in Taipei started to make linkages between the award of contracts and political support, or some other form of reciprocal benefit. The first indications of this for European governments came in late 1978. Airbus had high hopes of selling some of its new A-300 aircraft to China Airlines (CAL—the Taiwanese flag carrier, not to be confused with the PRC’s Air China). Although CAL was apparently in favour, the bid was blocked by the Taiwanese government because France had refused to make concessions on air traffic rights to and from Paris for CAL in return.31 At the start of the 1980s, British policy towards Taiwan can therefore best be summarised in one word—extraordinary. The government remained ignorant of domestic political developments in Taiwan, unable to bring any pressure to bear on a potential nuclear proliferator and unwilling to give its customary political backing to British exporters. It went to great lengths to ensure Taiwanese representatives in the UK did not set foot in government premises and that any meetings that were held took place, presumably at some expense and mutual inconvenience, in hotel lounges where they could be passed off as private encounters (the cost of such meetings was invariably borne by the Taiwanese). Steps were taken to ensure that any visits to London by Taiwanese officials were not only justified from a British perspective but could also be passed off as being private in nature. British officials were barred from visiting Taiwan, even purely private visits requiring prior permission.32 The only state with which Britain’s relations, or the lack of them, was comparable was North Korea, like Taiwan a country that the UK did not recognise as a state, but unlike Taiwan a country where trade and other interests were close to zero and which had yet to embark on a nuclear development programme. The British government’s attitude was perhaps best summed up by the Department of Trade and Industry (DTI) official who complained to the FCO that ‘I do not think we should be gratuitously disagreeable to the Taiwanese unless we are reasonably clear that there are sufficient counterbalancing benefits to be gained in Peking, or disbenefits foregone.’33 Influenced by the views of colleagues in Beijing, FCO officials remained sceptical and gratuitous disagreeability seemed to prevail.

The Rise of Quasi-governmental Relations But, just as the Kaohsiung protests came to be a defining moment on Taiwan’s path to democracy, so a 1980 policy decision of another

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European country was to have a major bearing on the development of broader European ties with Taiwan over the years to come. Upon establishing diplomatic relations with the PRC in 1979, the USA had given a commitment that it would end the sale of defence equipment to Taiwan, although no timetable for doing so was set. Taiwan, which until then had been dependent on the USA for its security, was sufficiently alarmed that it started to seek alternative sources of such equipment. The first government to respond positively was that of the Netherlands, which in 1980 agreed to supply two submarines. China reacted angrily, downgrading diplomatic relations with the Netherlands, and excluding Shell from bidding for some oil and gas exploration licences.34 Significantly, however, while in political terms the Chinese reaction was ‘vigorous,’ the Dutch suffered much less in commercial terms than many had expected or feared. As will be shown, this was to be characteristic of subsequent Chinese reactions to other decisions to which they took exception.35 Other European governments were quick to draw the appropriate conclusion—in Chinese eyes, politics and business were separate. There should therefore be no problem in providing more overt representation in Taiwan, provided this was in pursuit of business and not to enhance political relations. Austria was the first country to react, in 1981 opening in Taipei a formal trade delegation under the country’s Federal Economic Chamber of Commerce (at the time it was not a member of the EC, only joining in 1995). Others were quick to follow suit and a game of competitive catchup developed as European countries sought to go one step beyond their rivals in their search for competitive advantage and contract success. The status of their presence in Taipei grew correspondingly. France, for example, was the first European country to send a retired ambassador as its representative, in 1986, before upgrading its office in 1989 to a full quasi-embassy headed by a diplomat, albeit formally on secondment. Italy followed in 1989. France was also the first European country to send a serving minister to Taiwan, its industry minister visiting in 1991, at the start of what became a flurry of such visits from European countries.36 A major driver of the French enthusiasm was its pursuit of two large defence contracts, for the supply of Lafayette frigates and Mirage fighter aircraft. Seemingly undeterred by the Chinese reaction to the sale of the Dutch submarines, it pursued these vigorously, winning them in 1991 and 1992 respectively, although in a contemporary bid to win the contract

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for a nuclear power station it ultimately lost out to GE of the USA. The extent to which France was prepared to go beyond the then status quo in relations with Taiwan in its efforts to secure these contracts was remarkable. The Mirages, for example, were considerably more advanced than the level of defence equipment that the USA had hitherto been willing to provide. One consequence was subsequent American agreement to supply F-16 advanced fighters to Taiwan. Another was an angry response from China, which ordered the closure of the French consulate in Guangzhou for a while in retaliation. Although France subsequently gave an undertaking to the PRC that it would not supply any more defence equipment to Taiwan, this excluded spare parts for the Mirages and frigates. As these remain in service with the Taiwanese armed forces almost thirty years later, successive French governments may well feel that the long-term commercial benefits more than outweighed the short-term diplomatic row, especially as a French company was also awarded a contract to build a new metro line in Taipei shortly afterwards. On the other hand, the contract for the frigates subsequently became mired in controversy as the Taiwan navy sued French manufacturer Thales for the return of $590 million allegedly paid in kickbacks to secure the deal.37 The UK initially stood aloof from this scrambling for influence and contracts. The head of the FCO’s Far Eastern Department, responsible for policy towards both China and Taiwan, accepted business arguments that the Taiwan market was more attractive than the Chinese one, and that claims that the long-term prospects in China were more promising were ‘ringing increasingly hollow.’ He also recognised that ‘the Dutch have suffered less in commercial terms from the submarine imbroglio than had been feared.’ With some justification, he argued that the UK had more at stake than the Dutch, and presumably other European countries too, because of Hong Kong. But in an example of what can only be described as British exceptionalism, he also argued that the ‘downgrading of Sino-UK relations would be more significant in global terms than the effect of downgrading Sino-Dutch relations.’38 To put this into longer–term perspective, by 2010 Dutch exports to Taiwan were more than double those of the UK by value, and by 2018 the total bilateral trade of the Netherlands with Taiwan was almost twice that of the latter’s trade with the UK. This conviction that the UK’s relations with the rest of the world were somehow uniquely important was not new. It was consistent with the

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‘superior wisdom’ that had such a major bearing on policy in the early 1950s described in Chapter 2. It would recur in policy considerations in the future. It also seems to have ignored completely the historically rather poor state of bilateral relations between the UK and China. After all, diplomatic relations at ambassadorial level were scarcely a decade old. To which British officials might point out that unlike the Netherlands, the UK was, together with China, one of the five permanent members of the UN Security Council, with a correspondingly greater influence on world affairs. Clearly, such considerations did not trouble France as it moved ahead in enhancing its contacts with Taiwan. (Nor, interestingly, those with China, for when France was forced temporarily to close its consulate in Guangzhou in 1992, the UK had yet to establish any official presence there). Meanwhile, European trade with Taiwan continued to grow, and with it, friction. By the early 1980s, high Taiwanese tariffs and its policy of favouring the USA in business, because of the latter’s ongoing security commitment, were compounding existing tensions over counterfeiting, dumping, quotas and restraint agreements. As the friction grew, so too, it appears, did differences between the DTI and FCO over policy towards Taiwan more generally. Presumably resigned to the opposition of the FCO to a less restrictive national approach, in early 1984 the DTI suggested to the Commission that the time had come for it to engage more with the Taiwanese in the interests of the EC generally.39 In the Commission, Fielding’s response was to suggest sending a junior official to Taipei for discussions. Even this modest step appears to have been too much for the FCO, however, a junior official there arguing, in what was presumably a reference to Hong Kong, that ‘if the Commission feel bound to be more Catholic than the Pope…then as the member state with most to lose we need to be positively Jesuitical.’40 Chinese objections were apparently to prove a bigger obstacle to the Commission than British ones, Fielding’s plans foundering in the face of strong opposition from the Chinese. If any visit went ahead, it was ‘almost surreptitious’ and at a very junior level.41 This was to set both a precedent and wider tone for the Commission’s dealings with Taiwan, over which it would henceforward remain very cautious. Nearly twenty years would elapse before it finally established a presence in Taipei. Over the twenty-year period after diplomatic relations between the Commission and China were established in 1975, bilateral trade between the EC and China grew seventeen-fold, no doubt justifying fully in their

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eyes the decisions of Christopher Soames and the others who implemented the policy. But as with the UK, overall Community trade with Taiwan grew even faster—more than twenty-one times, and whereas already in 1995 two-way trade with China showed a big surplus in China’s favour, with Taiwan the surplus was to Europe’s advantage. Taiwan was embarking on ambitious plans to upgrade the country’s infrastructure with nuclear power stations, metro lines, new highways, and a new highspeed railway all under consideration; all of them were attractive potential prizes for large European companies. But the opportunities to win big projects were partially offset by the growing frustrations felt by exporters in other areas, who voiced complaints about copyright theft, lack of trademark protection, opaque regulations, and other non-tariff barriers. Exporters to Korea complained of similar obstacles, as do those doing business with China twenty-five years later. In both these cases, however, the Commission was or is actively engaged in addressing the obstacles, through its delegations in Seoul and Beijing, corresponding missions in Brussels and regular meetings of experts from both sides. An institutional framework was needed in which to try to tackle the obstacles and set overall principles. In the absence of any Commission engagement, it was left to the French to suggest that member states with offices in Taipei could take collective action with the Taiwanese on behalf of the EC.42 Just as they were alive to opportunities in Korea for their companies, so the French recognised the wider benefits from having a presence in Taipei, over and above their interest in defence contracts. Weighed down by its legalistic stance on non-recognition, its worries about Hong Kong and its sense of exceptionalism, Britain remained cautious. Meanwhile, complaints continued about the time it took the UK to issue visas compared to France or Germany. That these were not trivial was demonstrated in 1987, when the Evergreen shipping group moved its European headquarters from London to Hamburg because of the difficulty of getting visas and work permits in London. Eventually, and in response to pressure from the government’s own backbench MPs at least as much as any initiative by officials, the foreign secretary agreed in 1988 to an ‘upgrading’ of contacts with Taiwanese officials, although a suggestion that the British Council establish a presence in Taiwan was turned down ‘for reasons of recognition.’43

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But another five years would pass, and nine from the French proposal for collective European action in Taipei, before the UK finally followed Austria, France, Italy and other European states in placing its representation in Taipei on a quasi-official status, appointing a serving diplomat, albeit notionally on secondment, to head an upgraded presence. By this time, the events in Tiananmen Square in 1989 had heralded a much more cautious attitude towards China while, perhaps just as significantly, its reaction to France’s high profile defence sales to Taiwan gave European countries a clear indication of China’s ‘red lines’ in their dealings with the island. But by this time too, without any framework and only limited co-ordination of policy, something of a free-for-all had developed in European countries’ dealings with Taiwan as they vied with one another for a bigger share of its market. Twenty years later, observers would highlight how EU countries would compete with one another for attention in China and how this competition made member states, especially the larger ones, reluctant to allow the development of a common external economic policy, lest it hampered their own ability to win important contracts, or forced them to make concessions on points of importance to them. Indeed, in the UK Brexiters argued that one benefit of leaving the EU would be freedom for the UK to negotiate its own agreement with China without having to take account of other EU members’ interests; a position the British government tacitly acknowledged in its reference to China in its policy paper on future trading arrangements after Brexit.44 Just as the economic model that China is pursuing today is built closely on the model previously pursued by Japan and Korea, albeit on a much larger and therefore more disruptive scale, so too the competition between EU member states for business in China that inhibits their willingness to co-operate is not new. In Taiwan, this failure to co-operate ultimately worked to their collective disadvantage, as events from the 1990s onwards would reveal and as the next chapter will show. As in Korea in the later part of the 1980s, force of circumstance would bring them to recognize the need to work together more and the UK would be central to this. Yet as experience with China today shows, the lessons have yet to be learnt.

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Notes 1. Jonathan Manthorpe: Forbidden Nation, a History of Taiwan, Basingstoke 2002, p. 209. 2. Minute, Pares to Everard, FCO, 28 March 1980, FCO21/1889, TNA. 3. Minutes of Cabinet meeting of 31 May 1979, CAB-128-66-4, TNA. 4. Hansard, vol. 968, 11 June 1979; Taiwan: Vietnamese Refugees Leave for New Life In Britain, British Pathé, https://www.britishpathe. com/video/VLVA4VDUZQMRSC9GH382P88CHU1W5-TAIWANVIETNAMESE-REFUGEES-LEAVE-FOR-NEW-LIFE-IN-BRITAIN/ query/wildcard, retrieved 10 March 2020; Minute, Elliott to Donald, FCO, 21 March 1982, FCO 21/2366 TNA. 5. https://www.gov.uk/government/fields-of-operation/afghanistan; https://www.gov.uk/government/fields-of-operation/iraq; Falkland Islands Profile, BBC, https://www.bbc.co.uk/news/world-latin-america18425572; The Lost Wars: Britain’s Malayan Campaigns, The Independent, 8 November 2007, https://www.independent.co.uk/news/ uk/home-news/the-lost-wars-britains-malayan-campaigns-5329010.html; Korean War—British Casualties, http://www.roll-of-honour.com/Databa ses/Korea/index.html, all retrieved 25 June 2020. 6. J.E. Hoare: Embassies in the East, Richmond, 1999, p. 69. 7. The formal position was set out to Parliament by the then foreign secretary, Sir Anthony Eden, on 4 February 1955: Hansard, 4 February 1955, col. 169. The full UK position is still more complex, for while it considers the formal status of Taiwan and Penghu (the Pescadores) to be undetermined, it considers the small archipelagos of Kinmen and Matsu, just off the Chinese mainland but governed by Taiwan, to be formally part of the PRC. The joint communique by the two countries of 13 March 1972 on the upgrading of relations states: The Government of the United Kingdom, acknowledging the position of the Chinese Government that Taiwan is a province of the People’s Republic of China, have decided to remove their official representation in Taiwan on March 13, 1972. The word ‘acknowledging’ was settled on after protracted discussions as it was sufficiently vague to allow the UK to maintain its stance on the legal status of Taiwan and the Chinese to claim that the ‘one-China policy’ was being upheld. The UK’s legal position is set out in more detail in FCO file LO3/1418 in the National Archives although many of the papers in both this and related files remain redacted, presumably out of sensitivity to Chinese concerns. A background document in this file on the history of the UK’s position is of significance, however, given PRC insistence that Taiwan is part of China. It states, inter alia, that in 1950 the UK regarded Taiwan as ‘Japanese territory under military occupation by China’ and that it would not recognise that the government of China yet had a right to confer their nationality on the inhabitants of Taiwan (emphasis added).

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8. 9. 10. 11. 12. 13.

14. 15. 16.

17. 18. 19. 20.

21. 22. 23. 24. 25. 26. 27.

28.

Steve Tsang: The Cold War’s odd couple, op. cit., p. 73. Letter, Evans to Darlington, op.cit; S. Tsang, op. cit., p. 45. Ibid., p. 45. Peking telegram no. 58 to FCO, 25 January 1974, FED, FCO submission to foreign secretary, 29 March 1974, FCO21/1267 TNA. Letter, Royce, BOTB, DTI to Sharp, Railways Division, Dept. of Environment, 3 January 1974, FCO 21/1352 TNA. Letter, Panton, ECGD to Rice, HM Treasury, 29 March 1974, FCO 21/1352; file note, FCO 21/1674, TNA; Contract for the erection of plant for the electrification of the Taiwan railway, National Archives Administration, Taiwan. Minute, Darlington, DTI to assistant private secretary to Lord Limerick, 7 January 1974, FCO 21/1352 TNA. Panton, ECGD to Rice, HM Treasury, 29 March 1974, op. cit. Letter, Hinton to Turner of 25 April 1966 and reply of 5 May 1966, HIN/7/24, HIN/7/25, Institution of Mechanical Engineers; ECGD file note, FCO 21/1352 TNA. IMF: Direction of Trade Statistics, data.imf.org/regular.aspx?key=610 13712. Letter, Davies, FED, FCO to Clift, Beijing, 20 March 1974, FCO 21/1352 TNA. Letter, Dales, DTI to Lord Bridges, No. 10 Downing St., 25 June 1974, PREM 16/1133 TNA. Letter, foreign secretary to prime minister, 3 March 1976, reply from prime minister to energy secretary, 20 April 1976, PREM 16/1133, FCO 21/1674 TNA. Minute, FCO 21/1352 TNA. File note, September 1975, BT 241/2657 TNA. ECGD note, April 1974, FCO 21/1352 TNA. Financial Times, 28 February 1974. Letter, parliamentary under-secretary of state, DTI to Geoffrey Robinson MP, 13 December 1978, FCO 21/1672 TNA. Letter, FED, FCO to UK Representative Office in Brussels of 31 December 1973, FCO 21/1352 TNA. Marie Julie Chenard: The European Community’s Opening to the People’s Republic of China 1969–1979: Internal Decision-Making on External Relations, PhD thesis, London School of Economics, September 2012. Agreement on Trade and Economic Cooperation Between the European Economic Community and the People’s Republic of China, ec.europa. eu/world/agreements/prepareCreateTreatiesWorkspace/treatiesGeneral Data.do?step=0&redirect=true&treatyId=341, retrieved 18 June 2019. Somewhat ironically, given attitudes in the UK towards the EU generally some forty years later, British officials were the driving force behind

5

29. 30.

31. 32.

33. 34. 35. 36. 37.

38. 39. 40. 41.

42. 43.

44.

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the move, Sir Christopher Soames, the first British vice-president and commissioner for external relations negotiating the 1975 agreement. Sir Roy Denman, director-general for external relations subsequently negotiated the 1978 trade agreement and in 1979 Roy Jenkins became the first head of the European Commission to visit China. Minute, Pryor to Sunderland, DTI, 3 April 1984, FCO 21/2938 TNA. Letter, minister of state FCO to Sir J. Rodgers MP, 15 February 1979, FCO 21/1788; letter, Thornton, CBI to March, FCO, 15 August 1975, BT 241/2657 TNA. Letter, Warrington DTI to Rogers, CAIR, DTI, 24 October 1978, FCO 21/1672 TNA. The restrictions extended to British officials based in the region and led to some absurdities. On my own first, private, visit to Taiwan in 1983, for example, my wife (who held a Korean passport) was asked to apply for our visas so that I would not have to enter the RoC embassy in Seoul. Letter, Roberts, DTI to Bentley, FCO, 20 October 1975, FCO 21/1411, TNA. F. Mengin: A Functional Relationship: Political Extensions to EuropeTaiwan Economic Ties, China Quarterly 169, 2002. Minute, Elliott to Donald, FCO, 21 March 1982, FCO 21/2366 TNA. Mengin: op. cit., p. 143. Navy Sues French Frigate Contractor, Taipei Times, 7 November 2003, http://www.taipeitimes.com/News/taiwan/archives/2003/11/07/200 3074910, retrieved 25 June 2020. Minute, Elliott to Donald, FCO, 21 March 1982, FCO 21/2366 TNA. Pryor to Sunderland, DTI, 3 April 1984, FCO 21/2938, op. cit. Ibid., Minute, Currie to Orr, FED, FCO, 17 April 1984, FCO 21/2938 TNA. Letter, Loughead, Office of UK Permanent Representative to the European Community, to Sunderland, DTI, 27 April 1984, FCO 21/2938 TNA. FCO 21/2938 TNA. Letter, Culshaw (FCO) to Powell, private secretary to prime minister, 9 February 1988; letter, Rhodes Boyson MP to Margaret Thatcher, 7 December 1987 and reply, 15 February 1988, PREM 19/5010 TNA. The British Council finally opened a centre in Taipei in the mid-1990s, by which time concerns that this somehow constituted ‘recognition’ had presumably been allayed. Mengin: op.cit.; ECFR: China at the Gates—A New Power Audit of EU-China Relations, 2017, p. 2; HM Government: Future Customs Arrangements —A Future Partnership Paper, https://assets.publishing. service.gov.uk/government/uploads/system/uploads/attachment_data/ file/637748/Future_customs_arrangements_-_a_future_partnership_ paper.pdf, retrieved 20 June 2019.

CHAPTER 6

Planes, Trains and Visas—Taiwan, 1995–2010

Ambitions in the Sky As the new millennium dawned, there was much to be optimistic about in relations between Taiwan and the EU. In 2001, Taiwan was the EU’s third largest bilateral trading partner in Asia, two -way trade surpassed in value only by the EU’s trade with Japan and China.1 In March 2000, presidential elections in Taiwan saw a peaceful transfer of power from the Kuomintang (KMT) which had governed the island since the Japanese surrender in 1945, to the opposition Democratic Progressive Party, or DPP. This consolidation of democracy in the country could only be welcome to the EU. All the larger EU member states, the UK included, had by now opened quasi-embassies, usually described as ‘trade offices’ or ‘institutes’ but staffed by career diplomats, notionally on secondment. Increasing numbers of ministers from European governments were also visiting Taipei, where they were frequently received at a senior level despite the absence of formal relations. The growth of these missions had less to do with Taiwan’s burgeoning democracy, however, and much more with a competitive frenzy between European states, eager to win a share of the big contracts on offer in Taiwan. Philip Morrice, the first British diplomat appointed to head the upgraded office in Taipei, appears to have had scant regard for the Taiwanese, holding views redolent of some of the worse nineteenth century imperial attitudes and reflecting, perhaps, a lingering sense of © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_6

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‘superior wisdom.’ His complaints about ‘[their] wiliness…their recklessness with the truth and the low priority which they give to mutual trust and commitment’ suggest that gratuitous disagreeability had now become formal policy. He was also quick to complain that ‘[the Taiwanese] also blatantly apply political levers to major government contracts and other business…to the annoyance of prospective partners.’2 But this should have come as no surprise to British officials. After all, the UK had followed a similar approach in its attempt to secure the power turbine contract in Korea for GEC, while Korean awards of contracts were also influenced by political considerations, as was shown in Chapter 3. It would have been a bigger surprise if Taiwan had not sought to do likewise, especially given its own struggle for international recognition. The willingness of European countries to ‘over-bid’ in their desire to win contracts through a steady increase in political contacts and the absence of any agreed framework in which to manage or control these simply played into Taiwan’s hands. The UK was both late in joining the game and initially more cautious than its fellow Europeans, both in its relative reticence in upgrading its presence and in the level of official visits. This was more to do with customary reserve (or inertia), and lingering concerns over recognition, than with lack of interest in the contracts up for grabs. The concerns in the mid-1970s over potential nuclear proliferation had by now been overcome, for Nuclear Electric, newly formed in 1990 following the privatisation of the UK electricity supply industry, was bidding with Westinghouse of the USA for the major contract to build a fourth nuclear power plant. This was a potentially huge prize, with the British content of a successful bid standing at an estimated US$2 billion. The British trade minister Richard Needham (not a member of the cabinet) accordingly visited Taipei in 1993 and again in 1994 to lobby in support.3 Not surprisingly for a contract of this size, the bid faced strong competition, including from both France and the USA. GEC was now GEC-Alsthom, a 50:50 Franco-British company of which the French part was also bidding for the contract. France had just agreed a major arms package for Taiwan, its diplomatic presence was at a higher level than that of the UK and it sent a cabinet minister to Taipei to lobby for support. Compared to this, British lobbying efforts were modest indeed, although it is not clear from official papers whether British officials ever considered the Nuclear Electric bid a realistic contender. (How strong Westinghouse’s commitment was is also not clear. In the mid-1990s the

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company was going through a series of mergers and divestitures as it transformed itself into a communications and broadcasting company and by 1999 it had sold all its power generating business.) Valuable though the power station contract would have been, the real prize being sought by Britain at this time went far beyond a straightforward infrastructure contract. Since 1983, British Aerospace, the country’s principal aerospace company, had been producing a civil jet aircraft, the BAe146. Designed for regional and short haul service, this had proved reasonably successful and the company developed plans for an upgraded version. Given the high cost of development, however, it was looking for a risk-sharing partner, ideally one which could also generate additional sales. By 1993, and until then without any apparent British government involvement, it was at an advanced stage of discussions with a prospective Taiwanese partner, the Taiwan Aerospace Corporation (TAC). Under the agreement envisaged, TAC would inject financial capital into a new joint venture and production of the upgraded aircraft would take place at a new factory in Taiwan. The agreement would be a major boost for the British aircraft industry, generating new investment, guaranteeing jobs, and raising its profile in East Asia. By mid-1993, however, the project was at risk. The head of the Taiwanese partner had resigned, in part due to difficulties in raising capital. A potential successor, Jeffrey Koo, a prominent and very successful banker with close political connections at the highest level, had been identified, and in recognition of the importance of the agreement for British industry, prime minister John Major agreed to meet him in July to demonstrate British government backing for the project. At first, this seemed to have been successful, for by the end of the same month the Taiwanese government had given written confirmation that it would fund almost half of the Taiwanese element of the joint venture.4 British Aerospace remained worried about the remaining portion of Taiwanese funding, however, and as these worries increased so too, it seemed, did Taiwanese expectations in terms of the political price that could be extracted from the UK for committing to the project. This led to internal agonising and discussion in Whitehall over how far the government could go in meeting Taiwanese hopes or expectations. Eventually, the FCO agreed that they could offer informally ‘the prospect of a first visit by a British Cabinet Minister once the deal is signed.’ This fell a long way short of Taiwanese aspirations of British defence sales, or support for a bid by Taiwan to join the United Nations in return. As other European

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countries, including France and Germany, were already sending cabinet ministers to Taipei, the government there was presumably unimpressed, and the deal collapsed.5 Even had stronger political backing been given, however, it is unlikely that the project would have gone ahead. Not only was there strong domestic political opposition to it within Taiwan, there were also practical obstacles to it succeeding that no amount of political intervention would have overcome.6 It was further evidence for the argument by one scholar that European companies rarely did as well in Taiwan as they or their political backers in Europe hoped or expected, often because they were too dependent on political lobbying for their success and failed sufficiently to build the local contacts and networks essential for long-term success in the market.7 Demonstrating both a remarkable arrogance and a transactional approach to building relations, Morrice concluded that while there would be limited risk in raising the level of ministerial visits to that of cabinet rank, ‘The political relationship should be held in check since we owe the Taiwanese nothing on this’ and such a visit should only happen ‘providing there was a clear and immediate reward for doing so.’8 Almost thirty years on, a British minister of cabinet rank has yet to visit Taiwan.

The Inward Investment Dream Despite the collapse of the aerospace project and Nuclear Electric’s interest in the fourth power station, British officials could afford to take a relaxed view about the need for political lobbying in Taiwan. For, in parallel with European interest in big infrastructure contracts in Taiwan, like their Korean counterparts Taiwanese manufacturers were starting to open factories in Europe in readiness for the advent of the European Single Market. Britain was an early leader in the race to attract these investments, eight of the nine such plants in Europe at the end of 1994 having been set up in the UK.9 British politicians were as keen as their counterparts elsewhere in Europe to attract them, not least for the jobs the new investments were expected to create, but this could be done through straightforward financial incentives, without having to agonise over political contacts with the government in Taipei. Access to the Single Market may have been the main driver of the investment but companies were also lured in some cases, mainly from Korea, by overvalued exchange rates which made borrowing cheap dollars

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to finance the schemes attractive; but more so by generous grants from host governments. In the absence of any effective framework at the time to govern these, EU states indulged in bidding wars to offer the biggest incentives to bring companies to their respective countries. For a time under the Major government in the UK from 1992–1997, this became almost farcical, if not scandalous, as regional development agencies, principally in Wales and Scotland, and presumably with the connivance of their respective political overlords, tried to outbid one another to secure investment decisions, the cost being paid ultimately by the same taxpayers irrespective of where the investment was located, before prime ministerial intervention brought some discipline to the process.10 This was not before the secretary of state for Scotland announced two major schemes by Taiwanese investors each of which, it was claimed, would bring jobs, skills and prosperity to Scotland. The first, hailed at one time as Britain’s biggest inward investment and the ‘jewel in the crown’ of such projects, hyperbole about them being almost as plentiful as the government grants, was a plan by Chunghwa to make TV picture tubes at a plant at Mossend. Opened by the Queen in a blaze of publicity in 1997, with a promise of 3300 jobs, when it closed five years later, each of the 600 jobs remaining was estimated to have cost £80,000 of taxpayers’ money. A smaller plant opened by Lite-On closed even more quickly, in 1998, although in this case the grant was apparently repaid.11 The Scottish experience was far from unique and across Europe many such investments barely outlasted the grants they received. Some of the projects were fanciful from the outset, reflecting the bubble-like nature of the economies in which they originated, one of the most notable being Haitai’s ambitions to dominate the British chewing gum market, described in Chapter 4. Chunghwa’s plans, by contrast, fell victim to a combination of economic downturn and changing technology, as cathode ray picture tubes were supplanted in television sets by LCD technology. Eventually, a more robust framework was created in the EU to govern state-aid to industry generally, including greater scrutiny by the Commission of such incentives. But in 2000 the disappointed expectations and factory closures were still in the future. And after the successful handover of Hong Kong to China in 1997 had removed one thorn from that particular relationship, the UK seemed willing to relax its hitherto very cautious stance on political contacts with Taiwan. In 2000, Lee Teng-hui, the first directly elected president of Taiwan but by then no longer in office, paid a private visit

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to the UK, in the course of which he went to the Houses of Parliament to meet the former prime minister Margaret Thatcher. In addition to the inevitable protest from the Chinese embassy in London, a visit to Beijing by a junior Treasury minister was cancelled, something of a symbolic gesture but a warning, nonetheless.12 Investment was by no means in one direction only. At this time, Philips of the Netherlands was the largest foreign invested company in Taiwan, with seven plants employing over 12,000 staff and ranking second overall among Taiwan’s manufacturing industries.13 Taiwan was also the Netherlands’ largest trading partner in Asia and to further support the development of trade, in 2001 it became the first European country to sign a double taxation agreement with Taiwan. One year later, the United Kingdom followed suit. In its case, the agreement required prior debate and approval by parliament, making it a high profile move and therefore impossible to hide from China. But it was a step the government was nevertheless willing to agree to, in view of the pressure from business. Like the Netherlands before it, the British government took steps to avoid the agreement implying or leading to ‘backdoor recognition’ of the government in Taiwan. It preferred to call it an ‘arrangement,’ the use of formal, diplomatic ‘treaty language’ within it was avoided, and it was signed by representatives of the trade offices in respective capitals rather than government ministers. This was, nonetheless, a further step towards the de facto recognition of Taiwan as an independent state. Meanwhile, on 1 January 2002, Taiwan had become the 144th member of the World Trade Organisation (WTO), a move which finally prompted the European Commission to open an office in Taipei the following year.

Mutual Mistrust and the Arms Embargo But after this heady start, much of the rest of the decade would see the EU- Taiwan relationship embroiled in a series of controversies, a sense of mutual mistrust replacing the spirit of co-operation that had hitherto seemed to be prevalent. The first signs came before the millennium. In 1997, France lost out to General Electric (GE) of the USA in its bid to win the contract to build the fourth nuclear power station. (Some consolation may have come over time, for the plant would be mired in controversy and delay from the outset and is unlikely ever to be operational due to growing opposition in Taiwan to nuclear power).

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Three other decisions would prove to be far more controversial from a European perspective. The first was the loss in 2000 by a FrancoGerman-British consortium of Alstom-Siemens of the contract to supply trains for the high speed railway under construction, even though it had been selected as the preferred bidder, the government deciding that the contract should go to Japanese manufacturers instead. This was almost certainly a case of political considerations and influence outweighing technical and financial ones, the new DPP administration valuing its relationship with Japan far more than that with the EU. Similar controversy surrounded a decision on new aircraft orders by the national flag-carrier, China Airlines. Initially it appeared that almost the entire order would go to Airbus for a mix of planes, many of them to be powered by Rolls-Royce engines, only for the government once again to intervene. Airbus would still receive some orders but so too would Boeing, while Rolls-Royce lost out altogether, the engine contracts, like the power station beforehand, going to GE.14 As with Japan and the high-speed trains, technical considerations or an attractive price were no match for political considerations and American influence. Subsequently, from 2004 Philips was involved in a long-drawn out legal battle over attempts to force it to accept lower royalty payments from Taiwanese companies through compulsory licensing arrangements, eventually in 2007 enlisting the help of the European Commission in taking the case to the WTO, whose Trade Barriers Regulations Committee eventually ruled in the company’s favour in 2008.15 Although it was ultimately successful in fighting its case, the dispute did little to encourage European companies to consider investing in Taiwan. For the EU, such decisions helped fuel negative perceptions of the seemingly untrustworthy nature of Taiwan and its companies in business matters. This was often reinforced by lesser disputes at national level. In the case of the UK, for example, the British Council was forced to close its profitable and popular English teaching service in 2000 after protests by local language schools (which pointed out, not unreasonably, that unlike them the Council was not paying tax on its operations, which thereby placed it at a considerable advantage). The dispute was eventually resolved through the conclusion of another bilateral agreement covering cultural matters, but the Council’s teaching operations were closed for over two years in the meantime. Matters might have been different had bilateral trade continued to grow at the same rate as in the 1990s. But from 2000 to 2010, the

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EU’s bilateral trade with Taiwan grew just 28%, while that with China grew more than fourfold. By 2011 Taiwan had dropped to the EU’s 7th largest Asian partner, accounting for a smaller share of total EU trade than both Hong Kong and Singapore, despite its much larger size.16 Ironically, much of the growth in trade with China was directly due to Taiwanese companies. After China joined the WTO in 2001, Taiwanese electronics companies especially were quick to move production to China, to take advantage of the seemingly limitless supply of low-cost labour there, much of it in coastal provinces within easy reach of Taiwan. By 2015, the top three and no fewer than eight of the top eleven exporters from China were Taiwanese owned companies. The largest, Honhai Precision (Foxconn), is also China’s largest private sector employer with one million employees, equivalent to over 9% of the entire Taiwanese labour force.17 Taiwanese companies were exporting more than ever before to the EU, just that with most of the final assembly now taking place in China, it showed as Chinese exports, not Taiwanese. With direct trade no longer growing, however, and decisions on major contracts seemingly going against Europe on political grounds, there was less incentive for European politicians to risk incurring Beijing’s wrath by engaging with Taiwan. The caution was reinforced by distrust of the motives of the DPP administration amidst fears, assiduously stoked by China, that it would take radical steps towards formal independence. Heavy pressure on the Taiwanese government from the Bush administration in the USA helped persuade it not to, albeit not without friction and controversy in the relationship.18 This background helps explain in part how the EU blundered its way into what would have been the biggest crisis in its relations with Taiwan, the proposal to lift the arms embargo on China. This had been imposed after the suppression of the Tiananmen Square protests in 1989 and from the outset was intended as a political signal of European protest at the suppression. It was not included in formal legal documents of the European Union and considerable leeway was left to individual member states over its interpretation. In the UK’s case, for example, the embargo did not apply to ‘non-lethal’ weapons and in 1996 it sold a radar system to China. Despite the embargo, arms sales to China from the EU were growing, albeit from a low base, reaching an estimated 400 million Euros in 2003. In the same year, China and the EU signed a strategic partnership and Chinese pressure on the EU to lift the embargo increased.19

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Advocates of lifting the embargo argued that it was an unnecessary irritant in the burgeoning relationship with China and that lifting it would be of symbolic importance only, as exports would continue to be circumscribed by existing export license regulations. (This was not a view shared by all defence manufacturers, at least some of whom saw opportunities arising if the embargo were lifted.)20 They suggested replacing it by a strengthened EU code of conduct providing greater clarity over what arms sales could be permitted. The driving force behind the proposal was French president Jacques Chirac, enthusiastically supported by German chancellor Gerhard Schr˝ oder. Chirac presumably saw in the move not just the prospect of increased arms sales (somewhat ironically, given France’s sale of Mirage aircraft and Lafayette frigates to Taiwan a little over a decade earlier), but an opportunity to increase French influence in China. Early discussions of the proposal at working level among European officials revealed divided views. Initially both Germany and the UK were reluctant to agree, the former being the most strongly opposed despite Schr˝ oder’s enthusiasm, but once Chirac persuaded Tony Blair in the UK to his way of thinking, any remaining opposition at official level became largely irrelevant. With hindsight, what was so striking about discussion of the proposal was the near total failure on the part of European foreign ministries generally to consider the likely reaction in other countries. No serious consideration was ever given to possible Taiwanese concerns, even though it was a democratic country facing a clear threat from its neighbour, and almost as little to Japanese concerns. It was only the very strong adverse reaction by the US Congress and the accompanying risk of real damage to trans-Atlantic relations that persuaded the EU to back down. Ratification by China’s National People’s Congress of the AntiSecession Law, under which China explicitly reserves the right to use ‘non-peaceful means’ to prevent any attempt by Taiwan at formal independence, provided the EU with a face-saving excuse not to lift the embargo. (In the circumstances this was slightly ironic as very shortly after the law’s ratification, Chirac’s prime minister Jean-Pierre Raffarin had spoken out in support of it on a visit to Beijing).21 But the real reason was the strong American pressure, reinforced by growing Japanese opposition. That matters reached this stage was widely seen as a reflection of the EU’s lack of strategic interest in or understanding of North East Asia,

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its member states seeing the region only in terms of commercial opportunities, notwithstanding the argument of some scholars that the EU has sought to pursue a more values-based diplomacy, at least in its relations with China.22 Only after this near foreign policy disaster, and to try to avoid any repeat, did the EU attempt to bring greater coherence to its East Asian strategy. In the second half of 2005, the UK, which was then holding the rotating six-month EU presidency, first proposed, then secured the agreement of all member states to common guidelines ‘designed to provide a broad orientation for the EU’s approach to East Asia, across the full range of its activities.’ (Swedish research shows that even so, in 2006, France exported e130 million of arms to China).23 Little thought was given to Taiwanese sensitivities in the drafting, which focused squarely on the importance of the trans-Atlantic relationship. Arguably, the UK was more sensitive not only to views within East Asia but also, crucially, in Washington and pushed for the guidelines as an attempt to reassure the USA, at least as much as East Asian countries, about EU behaviour and actions in the region. Last updated in 2012, the guidelines explicitly recognise the role of the USA in providing security commitments to the region and state that ‘it is important that the EU remain sensitive to this.’24 Arguably, the crisis arose primarily because of the personalities involved in advocating lifting the embargo, principally Jacques Chirac and Gerhard Schr˝ oder. It is certainly hard to conceive of Germany under the cautious Angela Merkel allowing matters to get as far as they did. And in the years since, European foreign policy making has improved with the creation of the External Action Service, making a co-ordinated position easier to achieve, while attitudes in respect of China have hardened, making it less likely that a senior European figure would again advocate lifting the embargo in the absence of any improvement in the human rights situation there. The UK was as culpable as other EU states in failing to spot the initial dangers, or in at least insisting that China agree to certain conditions in respect of its human rights obligations as a quid pro quo for lifting the embargo. Whether the UK would have shown similar leadership had it not held the EU presidency at the time is moot. Faced with a brewing crisis, UK officials took the initiative and were able to negotiate an outcome that was an essential first step towards rebuilding trans-Atlantic relations, although the original handling of the issue left a residue of mistrust in Washington about European behaviour in North East Asia that has been slow to disappear.

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Given the lack of sensitivity in some European capitals to American concerns, it is hardly surprising that so little attention was paid to Taiwanese fears. The mood in Europe generally at the time was in favour of increasing engagement with China, against which Taiwanese concerns were seen as little more than an irritant. Not only was bilateral trade no longer growing, recent political decisions on big contracts had soured the atmosphere, while exporters were growing increasingly frustrated over problems in the Taiwanese market. Complaints about the lack of intellectual property-right protection, notably the sale of counterfeit whisky and other goods, compulsory licensing and non-tariff barriers such as arcane local testing or labelling requirements, which would take on such prominence in complaints about trading with China a decade later, were growing in frequency. With disillusion about trade opportunities growing, especially as Taiwanese manufacturers themselves were rushing to invest in China, and China’s propaganda machine energetically trying to persuade western foreign ministries that Taiwan’s president Chen Shui-bian was nothing but a trouble-maker, support for Taiwan’s position was not easy to find. In Taiwan, the general perception of European attitudes did nothing to endear the EU to an already suspicious administration, whose reaction was to seek to move still closer to Japan and the USA. Had there been a better mechanism between the EU and Taiwan for discussing the growing frustrations over trade, this might have provided a means of raising broader concerns, or for messages to be disseminated more effectively. But the European Commission’s presence in Taiwan at the time was both new and modest, and possibly influenced by the new strategic partnership with China, Commission officials in Brussels appeared as reluctant as ever to engage more actively with their Taiwanese counterparts. For its part, the Taiwanese bureaucracy was highly compartmentalized (and remains so today), with little co-operation between the Ministries of Foreign Affairs and Economic Affairs, the latter being responsible for foreign trade policy. As a result, on both sides messages were not co-ordinated, not delivered, or not properly understood, adding to a sense of mutual distrust. A further example of the unremitting pressure on the part of China to deny Taiwan any international recognition or standing came in 2007 at the annual meeting of the World Organisation for Animal Health, or OIE. A specialized body handling international co-operation in veterinary science, by that date it was one of a handful of international organisations

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of which Taiwan was a member, but China was not, although it had previously been one. It was now seeking to rejoin but on the basis that Taiwan would be expelled at the same time, and a draft resolution proposing this was circulated amongst members. As Germany held the EU presidency in the first half of 2007, it fell to it to try to agree a common EU position, a task which was hampered by strong support for China not only from Cyprus, a traditional ally within the EU, but also from Spain, which was preparing for a state visit to China by King Juan Carlos in June. Despite the difficulties, the Germans were nevertheless instrumental in brokering a compromise agreement at the General Session of the OIE, which ensured that Taiwan remained a ‘non-sovereign regional member.’ While China achieved its objective of rejoining, not only did it fail to have Taiwan expelled but the resolution language on the ‘one-China principle’ fell some way short of what China presumably hoped for, merely ‘noting’ China’s view that it was also the sole legal government of Taiwan.25 Taiwan protested at the outcome but could hardly have expected a more favourable one. Significantly, the two OIE members who spoke in support of its position at the meeting, Gambia and Costa Rica, have both since switched their diplomatic recognition to China, an indication of the growing struggles Taiwan is likely to face in such situations. On the other hand, the Taiwanese government made little effort to engage with EU member states beforehand to seek support for its position, and it was left to the German presidency to negotiate an acceptable compromise with the OIE secretariat. Given the divisions within the EU, not to mention the strong support for China among the OIE members generally, it did so with skill; an example of how German diplomacy could be as effective as that of the UK or France in achieving results. As 2007 wore on, attention in Taiwan turned increasingly to the 2008 presidential election in March. From China’s perspective, the outcome was all it had hoped for, Ma Ying-jeou of the KMT winning by a comfortable margin. There was an immediate improvement in the atmospherics of cross-strait relations, one of the earliest outcomes being the start of regular direct flights between China and Taiwan. Although Ma and the KMT received the immediate credit, most of the preparatory work had been undertaken by the previous administration in working level discussions with Chinese counterparts. An agreement in principle had already been reached before the end of 2007 but China chose not to implement it at the time, not wishing to give the DPP any credit ahead of the election.26

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The EU and Abolition of Visas for Taiwanese Visitors Preparatory work for a similar ground-breaking move, but this time involving the EU, was also well under way at this stage, a move that was to signal a dramatic shift towards a more mature, supportive and stable relationship with Taiwan in the second decade of the twenty-first century. In 2006, not long after I arrived in Taipei as the British representative, I proposed to colleagues in London that we should abolish the requirement for Taiwanese passport holders to be given visas to visit the UK. The regulation had long outlived its relevance. It was a political requirement, dating from bygone years when the very stamping of a visa in a Taiwanese (or ‘RoC’) passport was considered to imply recognition—so visas were issued on a separate sheet of paper. While this absurdity had been quietly dropped, the bureaucracy surrounding the issue of visas to Taiwanese had not. The long delays in issuing them in earlier years, described both above and in the previous chapter, could be ignored when the applicants were principally Taiwanese businessmen trying to sell their products in the UK. But by the turn of the century, Taiwanese visitors were increasingly tourists and students. By this time, too, with only a few exceptions, including Taiwan, visas were no longer a political matter. They were required instead for security reasons: to control illegal immigration, more easily identify terrorists and criminals and so forth. After the attacks of 9/11 in the USA in 2001, visa procedures were becoming more onerous, with biometric passports, finger-printing and other measures being introduced. No exceptions were made for Taiwanese in this, who were increasingly being treated like common criminals or potential illegal immigrants when they travelled abroad. Yet the Home Office’s statistics showed that they were consistently among the most law-abiding foreigners in the UK, posing minimal risk of over-staying or being involved in criminal activity. Increasingly, the system was acting as a deterrent. More and more Taiwanese were visiting Europe on holiday, but the UK was not a member of the Schengen common visa area and there was ample anecdotal evidence that the additional cost and bureaucracy involved in applying for a British visa was deterring many tourists from coming. On economic grounds alone, the case for removing the visa requirement was strong, but familiar arguments were deployed in opposition, chief among them

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that the move would upset China. Both Hong Kong and Macau passport holders already enjoyed visa-free access to the EU, so granting similar access to Taiwanese passport holders did not signal any change of principle in terms of recognition of Taiwan as a state. Although Japan had recently lifted its own visa requirements for Taiwanese visitors without any adverse Chinese reaction, the old chestnut of British exceptionalism was rolled out—the Chinese would react differently if the UK were to do so (for reasons which were never explained). Eventually, after almost three years of internal discussion, opposition and negotiation, the UK lifted its visa requirement for short-term visitors from Taiwan in early 2009. The impact was dramatic. Much of the apparent growth in Chinese visitors that UK retail outlets reported in 2009 and 2010 came in reality from Taiwanese visitors, the numbers of which doubled in the twelve months after the requirement was lifted. The frequency of direct flights between Taipei and London also doubled in response to the surge in demand. But the real impact on Taiwan was a psychological one that few in Europe could grasp. For a country not considered a sovereign nation by most of the rest of the world, excluded not only from international governmental organisations but increasingly from non-governmental ones too, and more and more politically isolated, the ability to be able to travel freely to other countries was a major boost to confidence and self-esteem. At the time, the UK was spending millions of pounds on preparing its pavilion for the 2010 Shanghai Expo. Ten years later, one wonders how many Chinese even remember the pavilion or the British presence, yet the lifting of the visa requirement, which brought significant economic benefit for the UK, is still widely remembered in Taiwan. In part, this is because once the UK had taken the first step, other countries were quick to follow suit, the Schengen countries doing so collectively in 2011. From a position in early 2009 in which Taiwanese passport holders required a visa to travel to most other countries, the situation today has completely reversed. In this case, the UK demonstrated leadership not just within the EU but among western countries more generally. On the face of it, this experience supports those who argue that the UK will be better off outside the EU. As the country was not a member of the EU agreement—Schengen—governing visa procedures, it was able to act unilaterally. But this is to overlook the argument advanced for lifting the regime in the first place. As the UK was not in Schengen, it was

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losing tourist business as Taiwanese travellers to Europe were deterred from including the UK in their itinerary by the additional cost of a separate visa. And as an EU member, the UK derived further credit from the Taiwanese when Schengen members followed suit: with the UK (and Ireland, which had quickly followed the UK lead) no longer requiring visas, it made no sense for the Schengen members to insist on them. This move, more than any other, started to change Taiwanese perceptions of the EU for the better. Ten years later, trade is growing once again, engagement between Taiwan and the EU has increased and the country has signed a series of bilateral agreements with individual EU member states covering a broad range of issues. In the case of the UK alone, for example, these range from air services, through working holidaymakers to prisoner transfers. It would be good to be able to say that removing the visa requirement also signalled the start of a more mature relationship between the EU and Taiwan, more akin to that between the EU and Korea or EU and Japan, for example. If nothing else, from a European perspective, the absence of any Chinese objection to removal of the visa regime should have been confirmation of China’s ‘red-lines’ on engagement with Taiwan. These are that it does not object to countries ‘engaging in civil, economic and cultural exchanges’ with Taiwan, only to ‘official relations in any form.’27 Unfortunately, while there has been some modest increase in engagement, this remains very limited and there is little to suggest that the experience of removing the visa regime has affected attitudes in European capitals more deeply. Despite the formal PRC position, Chinese embassies continue to try to pressure European universities into not holding Taiwan-related events, for example.28 In 1974, an internal British government briefing note concluded that ‘It seems likely that China will now increase its efforts to isolate Taiwan diplomatically, politically, and economically.’ It forecast the most likely outcome as ‘some form of re-association of Taiwan with the PRC and a large degree of autonomy accorded to the island’s government…We believe therefore that the status quo will continue for the foreseeable future.’29 Forty six years on, Taiwan has changed hugely: politically, socially, and economically. Martial law has given way to a thriving democracy and but for geopolitics Taiwan would have a good claim to be a member of the G20 group of leading global economies. Cross-strait relations have also

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changed hugely. From a total embargo on bilateral trade in the mid1980s, Taiwanese have become some of the biggest investors in China, and the Chinese economy is dependent not just on Taiwanese investment but also management skills for its success. Economically, the two countries are interdependent in a way they have never been before. But far from the ‘re-association with a large degree of autonomy’ suggested by the FCO in 1974 and echoed in China’s own ‘one country two systems’ stance, politically Taiwan and China are further apart than ever. The experience of the UK and Ireland, once a single country, now separate but with interdependent economies and common residency, freedom of movement and voting rights, surely offers a better model for the future relationship between Taiwan and China than China’s bankrupt ‘one country two systems’ model. A united European effort in support of such an approach is surely worth trying. But, too frequently, European governments appear to prefer to bend to pressure from China rather than suggest another way. For the most part they remain keen to engage more with China, attracted by the supposed business and investment opportunities on offer, than to stand up for democracy and human rights in Taiwan. Economic nationalism remains the driving force in relations with East Asia, for the UK every bit as much as other EU member states. For as long as this is the case, countries will remain cautious about developing contacts with Taiwan for fear of upsetting China. Yet, as both the visa case and to a lesser extent the fall-out from the arms embargo debate show, when the EU has acted collectively, it has been able to achieve more by doing so, and its collective influence is greater than that of the individual member states. It is by no means obvious that the UK will be able to achieve more in its relations with East Asian countries by being outside the EU than it has achieved as a member of the Union.

Notes 1. IMF: Direction of Trade Statistics, data.imf.org/regular.aspx?key=610 13712. 2. P. Morrice: Annual Review for Taiwan 1993, 11 January 1994, FCO 160/328 TNA. 3. P. Morrice: Annual Review for Taiwan 1994, 16 January 1995, FCO 160/341 TNA. 4. ATTC telegram 221 of 27 July 1993, PREM 19/5010 TNA.

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5. Smith FCO to Lyne, No. 10 Downing St., letter of 8 October 1993, PREM 19/5010 TNA. 6. The rationale for TAC in pursuing the project was to use the new aircraft on the Taipei-Kaohsiung route, then a busy shuttle service, but it was eventually judged to be not large enough to meet requirements. Since 2006 high-speed trains have supplanted air services on the route and production of the BAe146 (by then re-named RJ146) ended in 2003. 7. Mengin: A Functional Relationship, China Quarterly, vol. 169, op.cit. 8. Morrice: Annual Review for Taiwan 1993, op.cit. 9. Morrice: Annual Review for Taiwan 1994, op.cit 10. Among the many articles on this, one of the most detailed is that by Leon Gooberman: Business Failure in an Age of Globalisation: Interpreting the Rise and Fall of the LG Project in Wales, 1995– 2006, http://orca.cf.ac.uk/108077/3/Business%20failure%20in%20an% 20age%20of%20globalisation%2015%2012%2017.pdf, retrieved 25 June 2020. 11. Investment Dream a Costly Nightmare, The Scotsman, 2 November 2002, https://www.scotsman.com/news-2-15012/investment-dream-acostly-nightmare-1-627553, retrieved 19 June 2019. 12. UK/China: Protest over Taiwan’s Lee Teng Hui Visit, AP archive, https://www.youtube.com/watch?v=DtAliOXuIvU, retrieved 25 June 2020. 13. Chia-wu Lin: Philips Semiconductors Kaohsiung, in Bor-shiuan Cheng and Terence Tsai eds.: The Silicon Dragon: High-tech Industry in Taiwan, Cheltenham 2006. 14. O. Bedford, K. Hwang: Taiwanese Identity and Democracy: The Social Psychology of Taiwan’s 2004 Elections, 2006, p. 34. 15. P. Ollier: Taiwan to Change Compulsory Licensing Rules, www.managi ngip.com, September 2008, https://heinonline.org/HOL/Page?handle= hein.journals/manintpr182&div=6&g_sent=1&casa_token=&collection= journals, retrieved 8 July 2019. 16. IMF: Direction of Trade Statistics, data.imf.org/regular.aspx?key=610 13712. 17. Ministry of Commerce (MOFCOM): Foreign Trade Statistics of the People’s Republic of China, Beijing; Coronavirus Freezes Return of China’s Migrant Workers, Financial Times, 1 February 2020, https://www.ft.com/content/60fad2a4-43ee-11ea-a43a-c4b328d9061c, retrieved 24 February 2020. 18. Douglas Paal, the USA’s representative in Taipei from 2002–2006 had a particularly difficult relationship with the president, Chen Shui-bian, being perceived by some of Chen’s supporters as overly sympathetic to the opposition KMT.

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19. Jerker Hellstr˝ om: The EU Arms Embargo on China: A Swedish Perspective (2010), Swedish Defence Research Agency, https://www.academia.edu/ 5475879/The_EU_Arms_Embargo_on_China_a_Swedish_Perspective_ 2010_, retrieved 9 July 2019. 20. From 2011–2014, I was the representative in China for BAE Systems, whose avionics and engine controls were on both Boeing and Airbus commercial aircraft in the country. Representatives of two other European aerospace companies, both with interests in the defence sector, had regular contact with the PLA, in one case with the knowledge and encouragement of his country’s defence ministry. 21. French PM Backs Arms Sales to China, EU Observer, 22 April 2005, https://euobserver.com/foreign/18913, retrieved 25 June 2020 22. See for example Wai Ting: EU-China Relations After Brexit, in David W.F. Huang and Michael Reilly eds.: The Implications of Brexit for East Asia, 2018. 23. Hellstr˝ om, op.cit. 24. Guidelines on the EU’s Foreign and Security Policy in East Asia, Brussels, http://www.consilium.europa.eu/ueDocs/cms_Data/docs/pre ssdata/en/misc/97842.pdf, retrieved 13 July 2016. 25. OIE, Final report of 75th General Session, May 2007, Resolution XX, http://www.oie.int/fileadmin/Home/eng/About_us/docs/ pdf/A_RF_2007_webpub.pdf, retrieved 9 July 2019. 26. Private conversation with senior official in Mainland Affairs Council, Taipei, 2008. 27. Ministry of Foreign Affairs PRC spokeswoman Hua Chunying, quoted in Wall Street Journal, 10 July 2013. 28. Beijing Accused of Pressuring Spanish University to Drop Taiwanese Cultural Event, South China Morning Post, 5 September 2018, https:// www.scmp.com/news/china/diplomacy/article/2162875/beijing-acc used-pressuring-spanish-university-drop-taiwanese, retrieved 25 February 2020. 29. Briefing note, FED FCO to ECGD, 24 April 1974, FCO 21/1352 TNA.

CHAPTER 7

The Reluctant Multilateralist—South East Asia, 1980–2000

The competitive nationalism that characterised European countries’ relations with Korea and Taiwan was similarly prevalent in their dealings with the countries of South East Asia. Here, however, the UK enjoyed advantages over its European neighbours. Historic connections established in the colonial era with Malaysia, Singapore and Brunei and continuing through Commonwealth membership meant British companies held significant investments in all three. (At the start of the 1980s, Brunei was still a British dependency, only becoming fully independent in 1984.) Britain had successfully extricated itself from any meaningful security obligations in the region, as was explained in Chapter 2, whereas in Korea it felt obliged to maintain a token presence, less out of support for Korea itself than as a commitment to its relations with the USA. But despite that commitment, it had avoided being drawn into the Vietnam War, unlike in Korea a decade earlier, and it maintained a diplomatic presence in both Saigon and Hanoi throughout the conflict. Ministers in London doubtless drew encouragement from the then Singaporean premier, Lee Kuan Yew, who even before the end of the Vietnam War, was telling the British High Commissioner that ‘no Western power will ever again intervene militarily in South East Asia to defend the countries in the area.’1 At the start of the 1980s, therefore, policy was very much a case of ‘business as usual.’ This was reflected in the trade statistics. In 1980 the South Korean economy was already larger than the Malaysian one, larger indeed than any in South East Asia, yet reflecting these historic links, © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_7

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British exports to Malaysia were greater than those to Korea, both in value and as a proportion of total imports, for most of the 1980s. But as the decade progressed, the UK would be drawn inexorably into security issues in the region and face criticism and a scandal at home arising from its mishandling of its trade and development policy. Despite its long involvement in South East Asia, or perhaps because of a complacency arising from this, by the mid-1990s it found itself on the back foot, reacting to events rather than trying to shape them. Nowhere was this more apparent than in the rise of multilateral diplomacy. It was slow to recognise the significance of this and frequently lukewarm in its attitude towards regional multilateralism. Only after the turn of the century, with the expansion of the EU, did it begin to appreciate the increased influence it could bring to bear through a multilateral approach to relations. Unencumbered either by involvement in the Vietnam War or, in contrast to France, colonial ‘baggage’ in its relations with the country, after the end of the war in 1975, the UK had moved to develop its ties with the newly re-unified country in the traditional way, by seeking to build up trade links. British exports to Vietnam briefly climbed to 3.9% of the latter’s total imports in 1980—more than double the proportion in either Korea or Taiwan at the same time. But this was down to a big increase in the bilateral aid programme after the end of the war, aid to Vietnam increasing rapidly from £114,000 in 1975 to a peak of £7.235 million four years later.2 How much of this aid was of relevance to Vietnam’s development needs is open to debate, as the bulk of it went on subsidising British exports to the country. £4.5 million of the total was allocated under what was known as the Aid for Trade Provision, or ATP, to a single contract for the Sunderland shipbuilding company Austin & Pickersgill (which was nationalised in 1977), to supply four cargo ships to Vietnam. This was equivalent to 25% of the contract price of the ships. With hindsight, it appears extraordinary that the government ever agreed to subsidise the contract in this way, for international unease about Vietnam had been growing since the end of the war. Re-unification of the country was followed by a mass exodus of former citizens of the south, mainly members of the middle classes or senior figures in the former South Vietnam government, by small boats to other countries. Significant numbers were ethnic Chinese who had been prominent as shopkeepers and small business owners in South Vietnam, as indeed they were in much

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of South East Asia. Their immediate objective was landfall in a neighbouring country or being rescued by a passing ship, such as the case of the MV Roachbank mentioned in Chapter 5. Few neighbours welcomed them, however.

The Khmer Rouge and Cambodian Genocide While Vietnam’s citizens were attempting to flee by boat, in Cambodia the Khmer Rouge regime under Pol Pot, which had close links to China, had taken power in 1975 and immediately embarked on a brutal, Maoist campaign of emptying the cities and targeting anyone who might be considered an intellectual. This was taken to extremes that Mao himself, who died in 1976, a little over one year after Pol Pot took power, would doubtless have approved, to the extent that anyone who wore spectacles fell within the definition of intellectual. Over the next four years, almost one quarter of Cambodia’s 1975 population of roughly 7.5 million would die, either from starvation or murdered by the regime.3 As word of the atrocities gradually spread to the outside world, so disquiet grew. Initially, the policy of Vietnam’s neighbours in the Association of South East Asian Nations (ASEAN) was to oppose any wider investigation, for example by the United Nations. In part this reflected its policy (shared with China, the Soviet Union and other authoritarian regimes) of not commenting on other countries’ domestic matters, however reprehensible they may be, but in part it was also because, influenced especially by Thailand, most ASEAN members saw the Pol Pot regime, however murderous it may have been, as a buffer against Vietnamese expansionism. Officials in the UK’s Foreign & Commonwealth Office (FCO), or those who dealt with South East Asia at least, seemed happy to go along with this. When, in 1978, the British government finally raised the matter at the UN Commission on Human Rights and asked for an inquiry into the situation in Cambodia, it was despite serious misgivings in the FCO’s South East Asian Department which was worried that doing so might upset Thailand and other ASEAN members.4 The Khmer Rouge regime was eventually overthrown in 1979 by one of its own former commanders, Heng Samrin, with the backing of Vietnam. But in an indication of deep-seated hegemonic Chinese attitudes towards its neighbours, China first invaded the ‘ingrate’ Vietnam

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to ‘teach it a lesson,’ and then played a highly influential role in mobilising an international diplomatic campaign to isolate the new regime in Cambodia and mobilise support for the genocidal Khmer Rouge. The invasion was an embarrassing failure for China’s People’s Liberation Army (PLA), which was forced to withdraw from Vietnam after only a matter of weeks after almost zero progress, although cross-border shelling would continue for most of the next decade. Diplomatically, however, China had more success. In a sign of the major changes flowing from President Nixon’s visit to Beijing in 1972, the USSR found itself isolated among the permanent members of the Security Council. The other four members—China, France, the United Kingdom and the USA—had a common position opposing the invasion. Although ASEAN played an important role in marshalling this opposition, under the fig leaf of supporting a broad resistance coalition in Cambodia, China successfully drew the Western powers into a shameful alliance in which they gave tacit support to the Khmer Rouge by virtue of its membership, indeed domination, of the coalition. One immediate consequence of the overthrow of the Khmer Rouge was that, notwithstanding international excoriation of the new Cambodian regime, access to the country became easier and a succession of reports was issued which highlighted the extent of both the atrocities and famine in the country. Condemnation of the former was highly selective. Early in 1979, for example, the Thai military rounded up an estimated 45,000 Cambodian refugees in the country and at gunpoint forced them back across the border at Preah Vihear. In common with most western countries, and even the UN High Commission for Refugees (UNHCR), the UK was silent on this. Later in the year, as the problems of famine in Cambodia grew, the EC announced $42 million in aid for a UN organised relief programme, the single biggest contribution.5 Up to this point, the UK’s involvement was little more than as a bit part player supporting the position of the USA. Away from the halls and committee rooms of UN headquarters in New York and Geneva, its direct role was modest and much of the Western effort in finding a solution was led by France, reflecting its own post-colonial ties to Indo China. Britain’s apparent reluctance to become more engaged in helping find a settlement seemed entirely consistent with its wider trend post-Suez of pulling back from global engagement. More than once, for example, Vietnamese officials reminded their British counterparts that the UK had been not only a signatory of the 1954 Geneva conference that agreed

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the partition of Vietnam, but had chaired the conference, the inference being that it should be more involved in helping find a settlement, a view dismissed by British officials and ministers at the time.6 But as the 1980s progressed, the UK was to find itself inexorably drawn into the aftermath and in trying to find a solution to one of the consequences. The behaviour of the Thai military in forcing back the Cambodian refugees at Preah Vihear was not exceptional but reflected a deep-seated reluctance in the ASEAN states generally to take refugees from either Vietnam or Cambodia. The boat people were to suffer terribly at the hands of pirates and from natural calamities, but neighbouring countries were far from welcoming. Singapore took the hardest line of all, physically preventing boats from landing under a policy known as ‘pushback.’ Shortly after the events at Preah Vihear, Mahathir Mohamad, a minister in the Malaysian government who would later become prime minister, threatened to shoot any boat people who tried to land on Malaysian shores. Eventually, later in 1979, agreement was reached with Vietnam on a UN-organised ‘Orderly Departure Programme’ (ODP) under which boat people already in camps around the region and who met agreed criteria would be offered resettlement overseas, principally in the USA, Canada and Australia. In return, Vietnam agreed to allow future departures under the auspices of the UN. The ODP would work reasonably well for the next six years or so, but in common with many other like-minded governments, the Conservative government under Margaret Thatcher, which had taken office in London in May 1979, suspended its bilateral aid programme to Vietnam while the latter’s troops remained in Cambodia. The Austin & Pickersgill contract went ahead only because cancelling it at that stage would have cost more than allowing it to continue, but with no aid programme to subsidise new bids thereafter British exports to Vietnam collapsed. (Although aid was halted, the British government had no compunctions about continuing to trade with Vietnam, senior officials from the Offshore Supplies Office of the Department for Trade and Industry visiting the country in 1987 to discuss participation by British companies in Vietnam’s offshore oil exploration programme.) Even if bilateral aid had not been suspended, it seems unlikely that the peak figure would have been sustained, for reflecting its free-market ideological convictions, the new government sought to reduce the overall aid programme and phase out ATP, which had only been introduced in 1977, altogether.7

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‘Buy British Last’ and the Pergau Dam Scandal Given these convictions, it was ironic that ATP would subsequently see the government involved in perhaps the biggest scandal ever in the British aid programme, one that arose directly from traditional attitudes towards winning business overseas. In July 1981, Mahathir Mohamad was appointed prime minister of Malaysia and within a matter of months announced a ‘Buy British Last’ policy. The catalyst for the announcement was two unrelated issues in Britain itself. The first was the reaction by the London Stock Exchange to a ‘dawn raid’ by Malaysian interests to acquire control of Guthrie, a British company that owned extensive rubber plantations in Malaysia; the second was the introduction by the Thatcher government of full-cost fees for overseas students at British universities, at the time the single biggest group of whom were from Malaysia.8 The ‘Buy British Last’ policy received widespread publicity in the UK, which was, no doubt, the intention. But the impact was short-lived. Although there was a short-term dip in British exports to Malaysia, by 1988 these were 54% higher than they had been in 1981. Perhaps of greater significance, in 1980 the value of Malaysian imports from the UK and Germany was the same. By 1988, the value of imports from the UK was 26% higher than that of ones from Germany.9 The issue of ‘Buy British Last’ would pre-occupy British policy makers for much of the 1980s, however, and Margaret Thatcher sought to draw a line under it by visiting Malaysia in 1985. This served unwittingly to emphasise Mahathir’s original complaint that the UK was taking its relationship with Malaysia for granted. For, notwithstanding the importance of bilateral trade and investment ties, or the numbers of Malaysian students at British universities, Thatcher was the first British prime minister to visit the country since its independence almost thirty years earlier.10 The visit was a success, however, with Thatcher enjoying a warm personal relationship with Mahathir and resolution of the dispute was due in part to the personal chemistry between them. Around the same time as her 1985 visit to Kuala Lumpur, Thatcher had reacted angrily to reports that a Japanese-led consortium had won the contract to build the second Bosphorus Bridge in Istanbul with the help

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of concessional finance. She announced that the UK would therefore reintroduce concessional financing arrangements—the ATP in other wordsinto its own bilateral aid programme, to the widespread delight of sections of British industry. By this time, defence sales were becoming an important contributor to British exports generally. In September 1985, Margaret Thatcher visited Saudi Arabia to help clinch the Al-Yamamah arms contract, described at the time as ‘the biggest sale ever, to anyone.’11 British Aerospace, as it then was, was seeking to sell its successful Hawk jet-trainer and light combat aircraft to other countries, including Malaysia and Indonesia in South East Asia. Both countries were interested but Malaysia made clear that it if it was to buy Hawks there had to be a quid pro quo. This should not have been a surprise to British officials, as such arrangements are part and parcel of most international defence contracts, but Mahathir was keen to extract the maximum possible in return. Nick Spreckley, the British High Commissioner in Kuala Lumpur, summed up matters in his annual review for 1988: From an early stage [the Malaysians] have made it clear that they risked criticism if they were to make such sizeable purchases without going to competitive tender. They needed to show that they had obtained some special consideration from Britain. They were looking for two main guarantees, over aid and air services. On aid, Dr Mahathi r appears satisfied with assurances given to him by Mrs Thatcher after her brief visit in August.12

Spreckley’s reference to the ‘assurances’ given by Mrs Thatcher almost certainly referred to another visit to Kuala Lumpur the same year, this time by the defence secretary, Sir George Younger. During his visit, Younger promised in effect to reduce the price of the Hawks by 20% by offering Malaysia aid to the corresponding amount to be spent on a suitable development project. (UK law did not allow aid to be used directly in support of arms sales.) £234 million was duly spent from the aid budget on construction of the Pergau Dam, a project dear to the heart of Mahathir but assessed by economists as not cost effective. Malaysia duly bought 18 Hawk aircraft. Malaysia Airlines also won agreement to increase flights to and from London. The full details of the agreement only came to light in the early 1990s when Tim Lankester, the permanent secretary in the Overseas Development Administration (ODA), refused to confirm that the aid for the

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Pergau Dam had been an appropriate use of funds. He later wrote about the saga in detail which does not need to be repeated here.13 Subsequently, in 1994 as a result of a legal challenge, the aid spending was declared unlawful by the High Court but it was not until the advent of a Labour government in 1997 that the abolition of ATP was announced. At the time of the original agreement with Malaysia, the ODA was part of the FCO and Lankester argued in his book that the case demonstrated the importance of separating the two, to reduce the risk of development aid being misused. But the resignation of Priti Patel as international development secretary in November 2017 after unauthorised meetings with Israeli officials suggests that meaningful independent scrutiny of aid policy is probably more important than simply separating its administration. Nor was Patel’s the only instance of possibly inappropriate behaviour by aid ministers.14 The sale of Hawks to Indonesia would also prove controversial, in this case for human rights reasons, after allegations that Hawks were used in attacks on civilians in East Timor (Timor Leste) in the late 1990s. Not only was the size of the contract much larger than that in Malaysia—44 aircraft, valued at around £700 million, compared to 18 for Malaysia— the negotiations were also less problematic. The main difficulty from a British perspective was the scale of Export Credit Guarantee cover for the contract. Although this was on commercial terms, the sums involved were large enough to affect the level of cover available for projects qualifying for concessional finance.15 Historic ties to countries brought undoubted benefits but as the two contrasting cases show, they could also bring costs. The Pergau Dam affair took place before the advent of the European Single Market and the steady development by the EU of rules to limit the use of state aid in support of business. And in 2002 the International Development Act was passed, explicitly linking the provision of aid to reducing poverty.16 But the case has similarities with the attempt to persuade South Korea to buy power turbines detailed in Chapter 3, not least in the unwillingness or inability of British companies to face open competitive tenders, and their dependence upon political support, and even government subventions, to win orders overseas.

From ‘Boat People’ to ‘Economic Migrants’ Meanwhile, due not least to its remaining colonial responsibility for Hong Kong, the UK was being inexorably drawn into the continuing,

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indeed growing, problems of Vietnamese refugees and the situation in Cambodia. The 1979 ODP agreement had initially achieved some success in stemming the tide of boat people but the programme started unravelling in 1986 when Vietnam suspended orderly departures to the USA, which until then had taken 50% of the total. It was becoming clear that the nature of the ‘boat people’ was also changing, growing numbers of them being economic migrants seeking better lives overseas, decades of war followed by Communist economic mismanagement having left the Vietnamese economy in a state that few visitors to Hanoi today could imagine.17 Many more of these new boat people came from northern Vietnam, for whom Hong Kong was a closer potential safe-haven than neighbouring countries to the south and south east. At the same time, frustration was growing in the region at the slow rate of resettling refugees already in camps in third countries, with growing numbers of them deemed ineligible for refugee status but the Vietnamese government refusing to accept them back. In 1988 Thailand introduced a policy similar to Singapore’s ‘pushback,’ following which arrivals in Hong Kong started to rise dramatically, reaching a peak for a single month of almost 9000 in May 1989. Even before this date, the increasing rate of arrivals was generating growing dissatisfaction amongst the Hong Kong public, many of whom contrasted it with the seemingly tougher line taken by the Hong Kong authorities against putative refugees from the Chinese mainland. Following establishment of the ODP, the three countries taking most refugees, the USA, Canada and Australia, plus Japan as the biggest single funder of the programme, had set up an informal consultative group through which to share thinking and co-ordinate policies. From 1986, with the programme facing collapse, this group took on added importance. In early 1987, the UK was invited to attend a forthcoming meeting of the group as an observer. As the recently appointed Indo China desk officer in the FCO, I was one of the three members of our delegation who flew to Washington in March. Our expectation was that we would face pressure both for Hong Kong to resettle more of the boat people arriving there and for the UK also to take more. At this stage, the UK had accepted just 1700 people for resettlement under the ODP, all of whom were waiting for exit visas from the Vietnamese government at the time of the meeting.18 (It had taken around 4000 refugees prior to establishment of the ODP.)19

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In the event, the situation in Hong Kong barely featured in the central discussions and there was no pressure on the UK to do more. But the meeting exposed a fundamental disagreement between the USA and the three other members. Japan, supported by both Australia and Canada, and doubtless reflecting ASEAN concerns, stressed the need to move away from promises of resettlement so as to deter the continuing flow of ‘refugees,’ who by this stage were increasingly economic migrants, including, if necessary, repatriating those who did not qualify for refugee status ‘if suitable conditions [surrounding their return] could be negotiated.’ To the USA, which had yet to come to terms with its defeat in Vietnam over a decade earlier, both repatriation and the thought of giving any aid to Vietnam to help with this were anathema.20 With hindsight, the opposing protagonists in this dispute had probably hoped that the UK would be supportive of their respective viewpoints. Instead, the UK found itself in a conflicting position. The instinct was to support the USA, largely as a matter of general policy ever since Suez (see Chapter 2) but it was under growing pressure from its own officials in the Hong Kong government to see repatriation of economic migrants to Vietnam as the only long-term solution. It certainly had no desire to take more refugees itself—when I was pressed on this point by US officials at a subsequent meeting of the group in Geneva the following October, I explained that policy on this came from the prime minister (Margaret Thatcher) herself and nothing less than a direct appeal to her by US president Ronald Reagan would have any result. Despite, or perhaps because of this, the UK saw an opportunity to position itself as an ‘honest broker’ in the group and try to build consensus for a joint diplomatic approach to Vietnam, building on ideas which had already been raised by the UNHCR. With hindsight, it missed an opportunity to propose widening involvement to include other European countries, not least France, which took more than five times as many refugees from Vietnam as did the UK. Instead, it was left to Australia to suggest inviting not just France but Germany too, to join the group.21 The cautious British approach could perhaps be justified as it had only just been invited to join the group and even then, only as an observer. But in the years ahead it would come to rely increasingly on the support of its European colleagues as it faced growing international pressure and criticism over the conditions in the camps in Hong Kong. Unable to introduce a ‘pushback’ policy like Singapore or Thailand because of British fears over the ensuing international outcry, the Hong

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Kong government introduced its own screening policy in June 1988. Those it did not consider likely to qualify as refugees were considered as economic migrants and placed in ‘closed camps,’ in reality, squalid, overcrowded prisons, from which their only escape was by agreeing to be repatriated to Vietnam.22 Conditions in the closed camps were appalling and the government in London faced growing criticism on two fronts. Lawyers and NGOs were horrified by the conditions and claimed that they were in violation of international law on the treatment of refugees; while its own administration in Hong Kong and the principal resettlement countries of Australia, Canada and the USA all felt that the UK should be doing more to resolve matters, not least by taking more migrants itself. The reluctance of the British government to take any more boat people shed an interesting light on British attitudes towards immigration more generally, something that was to be such an emotive issue in the Brexit referendum campaign in 2016. Not only was the UK taking fewer refugees than many other countries, it was reluctant even to send a signal of intent and encourage others to follow suit by taking the modest numbers suggested by its own officials in Hong Kong.23

The Rise of Multilateral Diplomacy The problem was slow to be resolved, the final camp in Hong Kong only being closed in June 2000, three years after the territory had reverted to China and nearly a decade after a peace agreement had been reached in Cambodia. On both matters, Cambodia and Vietnamese refugees, the EC had been gradually adopting a more collective approach to policy formulation. On Cambodian refugees, for example, the EC made a demarche in Bangkok in autumn 1987, urging the Thai government to give them better protection.24 In part, this shift in approach was in anticipation of the signing of the Maastricht Treaty of 1992, under which the European Community formally became the European Union, and a Common Foreign and Security Policy (CFSP) was established. But it was also influenced heavily by the rise of ASEAN as a force with diplomatic influence. Established in 1967, other than being neighbours, the five founding members had little in common beyond a shared fear of communism.25 (At the time, all five had diplomatic relations with the Republic of China [RoC] in Taipei, not the PRC in Beijing.) Over the next three decades, however, ASEAN was

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to grow to have a collective diplomatic influence that far exceeded that of its individual member states, becoming a key player in Asian diplomacy and security policy. Already by 1980, ASEAN’s influence far outweighed that of South Korea, for example, let alone Taiwan (admittedly, lack of membership of the United Nations for both Korea and Taiwan at the time did not help their efforts to gain more influence) but the real catalyst for its rise came from its response to both the problem of Vietnamese migrants and the occupation of Cambodia. With its historic ties to the region, the UK was well placed to influence the European response to the rise of ASEAN had it so wished. Instead, the caution it showed in its involvement with the consultative group was also apparent and it was left to France to adopt the leading role in the EC, hosting Cambodian peace conferences in Paris in 1989 and again in 1991. Its approach reflected not only an ability and willingness to work with and through the EC collectively, as well as on a national basis as it saw appropriate, but also a willingness to take calculated risks in its diplomatic efforts, something that seemed anathema to the more cautious British. This was demonstrated well by the 1989 Cambodian conference. Although this was described in internal FCO correspondence as ending in failure, this was only insofar as the peace agreement which the French had hoped to see signed proved elusive. The discussions brought the different factions sufficiently close together to lay the groundwork for the successful conference two years later. This willingness to take calculated risks may also have been a factor in France’s sale of defence equipment to Taiwan shortly afterwards. By contrast, British policy towards the region was hampered by its ‘ambiguity and complexity,’ leaving the country to rely on the initiatives of others, France included, for solutions.26 The 1991 Cambodian peace agreement came after the collapse of the Iron Curtain and with it the end of the Soviet bloc. With the wider security environment in the region changing for the better, in 1992, the same year that the Maastricht Treaty came into effect, ASEAN leaders agreed to establish the ASEAN Regional Forum (ARF), as a way of increasing engagement with other countries considered to have interests in the region. Seen primarily as a ‘confidence building’ step, uppermost in the leaders’ minds were the USA, China and Japan. The EU was quick to react positively too, and its bid to join the forum was accepted in time for the first formal meeting, in Bangkok in 1994.

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Reaction within the FCO to this highlighted not only the ‘ambiguity and complexity’ of its Indo China policy but more specifically divisions within it in respect of working with its European colleagues in the CFSP. There was a legitimate concern at the way in which the CFSP represented the EU at international meetings. On these occasions, it was composed of the ‘Troika’—representatives of the three member states holding the current, previous and future presidencies of the EU-plus the Commission. The UK was comfortable with this arrangement if it, or France, or another large state was one of the three. But there were risks to the EU’s credibility if the Troika was composed of small states with little or no engagement with East Asia. It was not an idle worry. At the 1997 ARF, the EU would be represented by Luxembourg as the presidency. Luxembourg’s senior official responsible for Asian policy doubled as the country’s ambassador to another European country and his knowledge of and engagement with the ASEAN members was correspondingly limited. But whereas one answer might have been to work with European partners such as France to improve the effectiveness of the CFSP and of the Troika in such meetings, the preferred approach of officials in the FCO’s Asia Directorate was to seek national representation for the UK in the ARF, citing the UK’s links with the region and claiming this would also help British exporters. The proposal met a sceptical response from the FCO’s Policy Planning staff, whose head described the UK’s supposed commitments to the region which would be used to justify the bid as ‘residual, temporary or transitory and the impression of involvement they give is an illusion. It is because we continue to strut in this way that Mahathir thinks we are responsible for Muslims being killed in Bosnia. …As for our exporters…I have yet to be convinced that the size of their order books is a function of the number of diplomatic gatherings we manage to barge our way into’. Ministers too, had doubts although the foreign secretary eventually gave a ‘cautious, conditional, go-ahead’ to seeking national membership.27 British diplomats duly approached ASEAN counterparts to take soundings about national membership, in addition to the EU’s presence, only to be rebuffed. In part, this seems to have been over concerns that Europe would have undue weight at gatherings: one of the UK’s arguments for national membership was its status as a permanent member of the UN Security Council, so if its bid was accepted, it would be hard to turn down a similar request from France, thereby giving EU members three seats at the table. But strong opposition also came from what the UK

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might have thought an unlikely country—Australia. The reasons for its opposition are not entirely clear but it should serve as a warning nonetheless to those in the UK who fondly imagine that after Brexit the country can simply rebuild historic relationships with Commonwealth partners, or that its ‘superior wisdom’ will give it preferred status.28 Initially, British worries about the effectiveness of the CFSP seemed justified as the EU’s new relationship with ASEAN did not get off to the best of starts. Partly this was down to the composition of the Troika but ASEAN members also reacted badly to what they saw as ‘preaching’ by the Europeans on values such as human rights and the rule of law, while disagreement between western countries and ASEAN over the admission of Burma, or Myanmar, into ASEAN only compounded matters.29 Part of the problem was also cultural. Europeans were comfortable enough debating policy matters or getting to know one another better over leisurely dinners accompanied by good food and fine wines. But they were much less comfortable with the more informal ASEAN approach of karaoke style singalongs and emphasis on consensus. This extended to ARF meetings, the annual meeting of foreign ministers traditionally ending with a formal dinner, which was followed by a cabaret show at which national representatives were customarily expected to perform a song and dance routine. In their approach to this, European politicians frequently behaved as if they had taken to heart Talleyrand’s exhortation Surtout, Messieurs, point de zèle (Above all, gentlemen, not the slightest zeal). This was even more so in the case of British politicians, many of whom preferred a transactional approach to diplomacy, eschewing as outdated the idea of building up or cultivating relationships in the interests of longer-term benefits. But other western countries could respond to this approach in the spirit intended, perhaps the most famous example coming at the ARF meeting in Manila in July 1998. On this occasion, the US and Russian delegations teamed up to sing a version of ‘West Side Story’ adapted to post-Cold War diplomacy, the highlight of which was a duet between American secretary of state Madeleine Albright and her Russian counterpart Yevgeni Primakov. Their singing was execrable but that was beside the point. As a confidence building measure and way of building a wider rapport, not to mention a positive atmosphere for the meeting, it was unsurpassed.30 Motivated perhaps by its exclusion from the ARF, as well as the faltering start to EU involvement in it, the UK was determined to raise its own profile and relations with the region. An early opportunity came with

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the establishment of ASEM (for Asia-Europe Meeting), in 1996. This brought together all the member states of the EU, plus the Commission, with the members of ASEAN plus China, Japan and Korea. Intended to be held at head of state or government level, unlike the ARF (attended by foreign ministers), the biennial summits were the result of a bilateral Singapore/French initiative. But British officials were determined that the first European meeting should be held in London as a way of signalling the UK’s own engagement with Asia, an objective that was achieved with the 1998 summit. Prime minister Tony Blair and foreign secretary Robin Cook duly attended the next summit in Seoul in 2000, but thereafter British enthusiasm for ASEM started to wane. Of the twelve summits held biennially from 1996 until the end of 2018, British prime ministers attended seven at most, and some of those for only part of the time. Perhaps the defining moment came with the summit in 2000, on the way to which Robin Cook announced to accompanying journalists on the plane that the UK was to establish diplomatic relations with North Korea. The merits or otherwise of doing so had already been the subject of debate within the FCO for some considerable time but the actual decision was taken seemingly on the spur of the moment, certainly before informing EU partners or the South Koreans, and in all likelihood driven by a desire to ensure the UK dominated the headlines at the summit.31 Attendance at the summit itself was seen in largely transactional terms: a way of generating positive headlines, or securing a specific benefit or agreement, rather than as a way of building a rapport with counterparts from other nations as a means to achieving bigger objectives. Meanwhile, following the settlement in Cambodia, the start of economic reform in Vietnam and their accession to ASEAN in 1999 and 1995 respectively, EU engagement with both ASEAN and North East Asia continued to grow. Reflecting the Commission’s responsibility for trade policy as well as the main interests of member states, the UK included, the main emphasis in this was on trade, an early objective being an EU free trade agreement (FTA) with ASEAN. This faced a setback when ASEAN proved reluctant to agree to negotiate a collective FTA with the EU. Undeterred, the Commission entered negotiations with individual member states over separate bilateral agreements, starting with one with Singapore. Despite regular accusations, not least from Asia, that the EU is too concerned with ‘values diplomacy,’ it showed no inhibitions about signing an FTA with Vietnam, or discussing one with Myanmar,

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despite well-founded concerns about the lack of human rights in both. (It also remains unwilling even to contemplate one with Taiwan, a fellow democracy, despite the much greater volume of trade between Taiwan and the EU than between the EU and most individual ASEAN members.)

How to Solve a Problem like Myanmar? Although the Commission led on trade negotiations, British influence in the setting of wider European policy towards Asia would often be significant, nowhere more so than in the case of Burma, or Myanmar. Like Malaysia, Singapore and Brunei, Burma was linked to the UK through its colonial history. Unlike the founding members of ASEAN, however, from the early 1960s Burma’s ruling military junta had largely closed the country off from the wider world, pursuing an isolationist policy. Although elections were held after large scale protests and demonstrations in 1988, the military moved to annul them and imprisoned many of the politicians involved. To add to the problem of ‘colonial baggage’ for the UK, the leading democratic activist in the country, Aung San Suu Kyi, daughter of the country’s independence hero Aung San, was married to a British academic, Michael Aris. This alone made it hard for the UK not to play a leading role in the international response to the crackdown. Initially this took the form of a progressive ratcheting up of sanctions, imposed at first against the country’s rulers and their families but gradually extended to organisations and individuals involved with them. Then in 1997, ASEAN ignored western representations and admitted Myanmar as a new member, together with Laos. By ASEAN standards, the entire process happened very quickly as Myanmar had only been admitted as an observer the previous year. It has been argued that the decision was hastened in part by western opposition, with ASEAN leaders determined to show that they would not be ‘bullied’ although another factor was anxiety not to allow Myanmar to fall too far under China’s influence.32 Its accession therefore had an inevitable impact on wider EU-ASEAN relations. As the EU position was broadly the same as that of other western countries, with the USA taking an even tougher line, this was, however, initially limited. A progressive tightening of sanctions on Myanmar did not affect trade with other ASEAN members, so the problem could be largely ring-fenced from the wider relationship, remaining little more than an irritant in this.

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There matters largely rested for the next few years, with Aung San Suu Kyi varyingly free or under house arrest and western frustration at the lack of progress towards political reform in the country growing. US policy was largely set by a hard line in Congress, with the UK government following suit and other EU members largely supportive, although some were growing increasingly restive and frustrated, both at the lack of results the hard line approach was producing and the impact on wider relations with ASEAN. Then in May 2004, ten new members joined the EU as it expanded to accommodate former Eastern bloc countries, plus Cyprus and Malta. The next biennial ASEM summit conference was due to take place in Hanoi the following October and the EU position was that the new members should as a matter of course be invited to join ASEM. ASEAN’s position, however, was that any enlargement should also include its own new members (those who had joined ASEAN after the first ASEM meeting): Cambodia, Laos and Myanmar. This provoked considerable debate within the meetings of the EU’s Asia Working Group, in the corridors in Brussels and on telephones between capitals. On the one hand, the former Eastern bloc countries with their own recent unhappy experiences of authoritarian rule strongly supported the UK in its upholding of the overall EU hard line policy towards Myanmar. On the other hand, they were equally firm in their wish to participate in ASEM. Their position was only strengthened as a result of a very public disagreement the year before over Iraq, when then French president Jacques Chirac had publicly chided them for their support for US President George W Bush’s approach, saying in an interview that ‘ils ont manqué une bonne occasion de se taire’, which was widely translated in the media as ‘they had missed a good opportunity to shut up.’33 This only heightened sensitivity over any suggestion that they might be anything other than fully equal members of the EU. While ASEAN was not without its own differences on the matter, the reality was that, if only because of the disparity in numbers of potential new members, it had more leverage in the stand-off. An eventual compromise was agreed under which all new members of both ASEAN and the EU, Myanmar included, would join ASEM but with the expectation that Myanmar’s participation would be at lower than Head of State or Government level.34 It is hard to describe the outcome as a success. It was more of a lowest common denominator, the British stance being buoyed by the

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equally hard line American position and a vocal British domestic lobby in favour of an even harder line. The British position caused not inconsiderable frustration among some partners, especially Germany, whose director for Asia in the Auswaertiges Amt (foreign ministry) in Berlin remained publicly supportive of the EU’s position but in private was critical of what he saw as British double standards. On the one hand, the British government opposed any engagement with Myanmar, on the other, the British Council was active in the country teaching English and projecting ‘soft power.’ But, as noted, many of the newer EU members strongly supported the British line. In this case at least, the UK’s enthusiasm for extending EU membership to include central and eastern European countries, which went back at least to the time of Margaret Thatcher’s premiership, was reaping a dividend. Similarly, the UK government pushed for an embargo on trade with Myanmar but not on investment, on which figures showed that most foreign investment into the country was coming from British Overseas Territories in the Caribbean. German officials were deeply sceptical that this was not from British companies (most of it was not), or that the government in London could not do more to stop it. Steps were subsequently taken to persuade the governments in the Cayman and British Virgin Islands to dissuade or prevent such flows, but the main reason the EU did not have a ban on investment was because French energy company Total had major investments in the oil sector in Myanmar. Economic nationalism defined the limits of what the EU could do collectively. But the case also demonstrated the impact of British influence within the enlarged EU. Had it not been for the UK’s position, in all probability the EU would have moved more towards the ASEAN position on Myanmar and sooner. ASEAN diplomats, from Singapore especially, expressed considerable frustration at the EU approach, which they argued was counterproductive. Which approach—ever tougher sanctions or engaging with the regime-was right, it is impossible to say. In 2011, under a new president, Thein Sein, the Myanmar government changed its basic policy stance rapidly and radically. The changes wrong-footed China, which until then had considered Myanmar one of its ‘few loyal friends’ and took other countries, including Myanmar’s ASEAN partners, by surprise. They almost certainly reflected a combination of the change in leadership and growing unease in Myanmar about Chinese influence,

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more than the impact of western sanctions.35 But what is surely undeniable is that had the UK not been a member of the EU, it would have found it hard, if not impossible, to persuade the EU to continue with the line it followed until 2011. And what is similarly incontrovertible is that ASEAN saw the UK as the driving force behind the EU’s policy. As the problems in Malaysia showed, and as in the case of relations with Korea, export success remained a major driver of British diplomacy. But the limits and challenges that the UK was to face in its handling of the problems in Cambodia and of Vietnamese boat people highlighted the constraints of bilateral diplomacy without adequate resources to support it. Like the creation of the Single Market, the advent of the CFSP was an opportunity that the UK was quick to grasp, and it was to achieve significant influence in the shaping of European policy towards East Asia from the turn of the millennium. The differences between what was achieved through working with others and what was achieved by going it alone are clear. And the close, even unhealthy, relationship between politicians and major businesses calls into question the notion of the UK as a great free-trading nation, suggesting instead that many British companies remained dependent on political support and patronage for their overseas success. For politicians, the ‘quick-fix,’ largely transactional, nature of commercial diplomacy will always be attractive: the positive headlines for a contract win, the buzz of witnessing or signing a major agreement, the easy soundbites in support, are all adrenalin and ego-boosting. Traditional diplomacy, by contrast, requires the building of contacts, the assiduous cultivation of relationships and careful, often prolonged and frustrating, negotiations. But in East Asia, the two often go hand in hand and cannot be easily separated.

Notes 1. Peter Tripp, British High Commissioner to Singapore, First impressions report to FCO, 1974, FCO 24/1876, TNA. 2. Minute, Reilly to Fell, FCO, 26 May 1987, FCO 15/5151, TNA. 3. Ben Kiernan: The Demography of Genocide in Southeast Asia: The Death Tolls in Cambodia, 1975–79, and East Timor, 1975–80, Critical Asian Studies, vol. 35 (4), 2003, https://www.tandfonline.com/doi/abs/10. 1080/1467271032000147041, retrieved 29 July 2019. 4. William Shawcross: The Quality of Mercy, New York, 1984, p. 65. 5. Ibid., pp. 88–92, 196.

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6. This arose regularly in my conversations at the time with Vietnamese diplomats but was dismissed by the foreign secretary as ‘positively archaelogical.’ 7. J. Toye and G. Clark: The Aid and Trade Provision: Origins, Dimensions and Possible Reforms, 1986, Wiley online library, https://onlinelibrary. wiley.com/doi/abs/10.1111/j.1467-7679.1986.tb00364.x, retrieved 12 March 2020; Hansard, 5 July 1979, col 661–662. 8. Buy British Last Policy of Mahathir, https://searchinginhistory.blogspot. com/2014/01/buy-british-last-policy-of-mahathir.html, retrieved 12 March 2020. 9. IMF: Direction of Trade Statistics. 10. British exports to Malaysia in the period peaked in 1980 at $519.4 m, falling to $368.7 m in 1982. But they never fell back to the 1978 level of $358.2 m. Furthermore, a significant but unknown proportion went via Singapore, exports to which were $762.5 m in 1980, rising to $796 m in 1985—IMF: Direction of Trade Statistics. 11. Financial Times, 9 July 1988, cited in C. Hirst: The Arabian Connection: The UK Arms Trade to Saudi Arabia, CAAT, https://www.caat.org.uk/ resources/countries/saudi-arabia/arabian-connection#section9, retrieved 25 June 2020. 12. Sir Nick Spreckley: Annual review for Malaysia, 1988, FCO 160/268, TNA. 13. Tim Lankester: The Politics and Economics of Britain’s Foreign Aid: The Pergau Dam Affair, London 2012. 14. BBC News: Priti Patel Quits Cabinet over Israel Meetings Row, 8 November 2017, https://www.bbc.co.uk/news/uk-politics-41923007, retrieved 12 March 2020. In April 1998, Clare Short, the then international development secretary, visited Manila to chair a meeting of the Human Rights Committee of Socialist International. As this was a political party activity, not government duty, her travel costs should have been met by the Labour Party or Socialist International. But the trip was paid for from the aid budget, even though the UK did not have a bilateral aid programme for the Philippines at the time. Ms Short later wrote in a newspaper article, after another paid-for trip to the country, that she had never previously visited the Philippines. See Meeting of the Socialist International Committee on Human Rights, Manila, 25–26 April 1998, https://www.google.com/search?q=socialist+international+mee ting+manila%2C+1998&oq=socialist+international+meeting+manila%2C+ 1998&aqs=chrome..69i57.17888j0j8&sourceid=chrome&ie=UTF-8, and https://www.clareshort.org/articles/undermining-justice-in-philippines, both retrieved 30 July 2019. 15. Letter, Paren, MoD to Wood, HM Treasury 26 February 1992, FCO 15/6880, TNA.

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16. International Development Act 2002, http://www.legislation.gov.uk/ ukpga/2002/1/section/1, retrieved 3 February 2020. 17. Lawyers Committee on Human Rights (USA): Inhumane Deterrence: The Treatment of Vietnamese Boat People in Hong Kong , 1989. I first visited Vietnam in 1987, arriving in Hanoi by plane from Vientiane. I was the only western passenger on the flight, all the others were Vietnamese guest workers returning home, almost all of whom were carrying fresh baguettes from Vientiane in their hand baggage, such was the scarcity of basic foodstuffs in Hanoi. 18. FCO 15/4849, TNA. 19. Minutes of Cabinet meeting of 31 May 1979, CAB-128-66-4, TNA. 20. FCO 15/4849, TNA. 21. Moss, Geneva, to Morphet, FCO, 15 April 1987; Washington telegram 1829, 29 August 1987, FCO 15/4849, TNA. 22. Lawyers Committee on Human Rights, op. cit. 23. From 1979 to 1992 between 17,000 and 22,500 Vietnamese refugees were resettled in the UK, 15,415 of them from camps in Hong Kong. This was out of a total of around 1.6 million, some 230,000 of whom passed through the camps in Hong Kong. The countries taking the most were the USA, Australia, France, and Canada, with both the USA and Canada taking more from Hong Kong than the UK. Migration statistics: How Many Asylum Seekers and Refugees Are There in the UK ?, https:// commonslibrary.parliament.uk/insights/migration-statistics-how-manyasylum-seekers-and-refugees-are-there-in-the-uk/, retrieved 30 July 2019; Human Rights Watch: Hongkong, https://www.hrw.org/reports/1997/ hngkng2/Hongkong-01.htm, retrieved 30 July 2019; Raquel Carvalho: How Europe Can Learn from the Hard Lessons of Hong Kong‘s Vietnamese Refugee Crisis, South China Morning Post, 14 September 2015, https://www.scmp.com/news/hong-kong/article/1857873/how-eur ope-can-learn-hard-lessons-hong-kongs-vietnamese-refugee, retrieved 30 July 2019. 24. File note, 13 October 1987, FCO15/4850, TNA. 25. The five original members were Indonesia, Malaysia, the Philippines, Singapore, and Thailand. 26. Minute, Colvin to McLaren, FCO 4 September 1989, FCO 15/5654, TNA. 27. Wilkinson to Hewitt, 11 November 1993, Lever to Masefield, 13 December 1993 and manuscript note thereon of 17 January 1994, FCO15/7038, TNA. 28. FCO 15/7038, TNA. 29. Joseph A. Camilleri: Regionalism in the New Asia-Pacific Order, Cheltenham 2003, p. 228.

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30. Madeleine Albright: Remembering Yevgeny Primakov, Foreign Policy, 29 June 2015, https://foreignpolicy.com/2015/06/29/remembering-yev geny-primakov-by-madeleine-albright-us-russia/, retrieved 27 February 2020. 31. Michael Reilly: The Burial of Thatcherism? The Impact of Brexit on the UK’s Relations with North East Asia, in David W.F. Huang and Michael Reilly eds.: The Implications of Brexit for East Asia, Singapore, 2018; private conversation with official accompanying foreign secretary on the trip to Seoul. 32. On the background to Myanmar’s accession to ASEAN see Robert Cribb: Burma’s Entry into ASEAN: Background and Implications, Asian Perspective, vol. 22 (3), 1998, https://www.jstor.org/stable/42704181?readnow=1&seq=4#page_scan_tab_contents, retrieved 30 July 2019. 33. Eleanor and Michel Levieux: The World; No, Chirac Didn’t Say “Shut Up”‘, New York Times, 23 February 2003, https://www.nytimes.com/ 2003/02/23/weekinreview/the-world-no-chirac-didn-t-say-shut-up. html, retrieved 31 July 2019. 34. Communiqué of 5th ASEM Summit, Hanoi, 8–9 October 2004, https:// www.aseminfoboard.org/events/5th-asem-summit-asem5, retrieved 31 July 2019. 35. Yun Sun: China’s Strategic Misjudgement on Myanmar, Journal of Current Southeast Asian Affairs, 1, 2012,https://journals.sub.uni-ham burg.de/giga/jsaa/article/download/513/511, retrieved 31 July 2019.

CHAPTER 8

A Tarnished Era: China Since 2010

I arrived in Beijing on a classic north China winter’s day in late February 2011. The sun shone brightly in a clear sky, the mountains visible in the distance. The thermometer was hovering around the zero mark, but the air felt much colder in the piercing wind. Bizarrely, despite the freezing temperatures, streets were being sprayed with water by patrolling carts, ostensibly to keep the dust down. This was the time of the ‘Arab spring’ protests in Tunisia and elsewhere in the Middle East and North Africa, and only later did I learn that the water carts were part of a tactic to prevent similar demonstrations, by spraying any demonstrators with water which would quickly freeze on them, and also by turning the streets into ice rinks if necessary, to inhibit the massing of demonstrators. It was a salutary introduction to life in China in the second decade of the twentyfirst century. It was almost thirty years since my first visit to Beijing, and in common with most cities in East Asia it had changed almost beyond recognition in the interim. Gone were the ubiquitous drab ‘Mao suits’ of 1981 and largely gone were the heavy, uniform bicycles of the same era. Of modern material comforts there was no shortage—the local supermarket stocked a wide array of European beers, including some from the UK that were not available in my local supermarket back home, and close by were an excellent Italian owned and run pizzeria and an equally good French bakery. I had visited China periodically in the intervening years, including on one occasion as a guest of the Chinese government, when I was given a VIP © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_8

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tour of some of the country’s premier cultural sites. I had also experienced at first hand the influence and impact of China on its neighbours, especially in postings to Korea and Taiwan. But this time was different. I was arriving not on a visit but at the start of a four-year posting in the country, and not as a diplomat but as a business representative.

Trade and Politics in China In this role I would be face to face with many of the complaints made by foreign companies about the difficulties of doing business in China: the red tape, the forced transfer of technology, the intellectual property theft, the vagueness of regulations and more. And I would see the effectiveness or otherwise of foreign embassies in trying to address these. But I would also enjoy greater freedom to travel around the country than diplomats, most notably to Tibet, normally off-limits to them. This gave me ample opportunity to see the darker side of life in China: the armed troops and checkpoints on the streets of Lhasa, the blatantly discriminatory treatment of Uighurs in Kashgar, and more. Collectively, these experiences provided a perspective on China’s development and the opportunities it offered foreign businesses that differed somewhat from the views of some diplomats, and even more from the convictions of their political masters. Human rights concerns aside (which were troubling enough in 2011 but at least offered some grounds for optimism—matters have deteriorated considerably since then), chief among these was the view that trade and politics in China were inextricably linked. Twenty years before my own first visit to Beijing in 1981, a British diplomat had reported that ‘[the Chinese] have said on many occasions that politics and trade are inseparable.’1 But the conviction long pre-dated that. As long ago as 1599, the first Queen Elizabeth tried to send an emissary to the Chinese emperor in an attempt to establish formal trading relations. Both this and a subsequent attempt failed, and for the next two hundred years what bilateral trade there was between Britain and China was carried on by freelance merchants, who in their general behaviour allegedly ‘exhibited such scenes of excesses and irregularities as were peculiarly disgusting and offensive to a people, whose minutest actions are controlled by specific regulations.’2 John Nott’s complaint about businessmen preferring to frequent the watering holes of Hong Kong (Chapter 2) has a long pedigree.

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In 1797, frustration at the difficulties these merchants faced, combined with the huge growth in tea consumption in Britain, all of which, at the time, came from China and was thereby contributing to a large trade deficit with it, led to another formal attempt to place trading relations on a government-to-government basis, when Lord Macartney was sent with an embassy to Peking. Unlike Elizabeth’s envoys, he reached his destination and had an audience with the emperor but was otherwise unsuccessful in his objective. Macartney’s mission did, however, establish the precedent, which has become so common today, of large trade missions led by a senior political figure. My own time in Beijing coincided with one led by then prime minister David Cameron, in December 2013. Billed as ‘the biggest trade mission in 200 years,’ like many of its predecessors this came after a difficult period in the bilateral relationship.3 Eighteen months earlier, China had reacted angrily after Cameron had met the Dalai Lama in London, refusing any ministerial contact for more than a year afterwards. Cameron’s subsequent visit was presented as an opportunity to ‘reset’ the relationship and encourage more trade between the two countries. But, contrary to what might be assumed from the way in which the mission was portrayed, far from trade suffering while diplomatic relations were in cold storage at this time, as Fig. 8.1 shows, British exports not only continued to grow but their rate of growth also increased. In 2012, British exports to China overtook those from Italy for the first time in more than a decade, somewhat undermining the argument that trade and politics are inseparable in China. The improvement was already underway but carried on regardless despite the spat. Indeed, resident in Beijing as I was at the time, outside the British embassy compound it was hard to imagine that anything was amiss in the bilateral relationship. Not only did we continue to do business as we had been doing, but the local media reported on the Olympic Games in London in positive terms, the nationalist Global Times tabloid carrying a full front page photo of a triumphant Andy Murray after he won the gold medal in tennis. Cameron’s change of approach was influenced greatly by his chancellor of the exchequer, George Osborne, an enthusiastic advocate of greater engagement with China. Under Osborne’s lead, meetings with figures subject to Chinese opprobrium, such as the Dalai Lama, would be eschewed, concerns about human rights would no longer be mentioned in public, if at all, and caution generally would be thrown to the wind.

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Fig. 8.1 China’s imports from France, Germany, Italy and the UK, 2000–2015 (Note Figures are US dollars. Source International Monetary Fund, Direction of Trade Statistics)

In the words of one academic, British policy became ‘zealously transactional’ in the desire, above all, to increase Chinese investment in the British economy and to secure benefits for the British financial services industry from China’s development of its own financial sector.4 Showing a remarkable lack of judgement, if not sheer contempt for human rights concerns, Osborne even visited Xinjiang, a region with no obvious commercial opportunity for the UK, shortly after China had sentenced a prominent moderate academic from the region to life imprisonment.5 This new policy reached its apogee in October 2015, with President Xi Jinping’s state visit to Britain, the start of what was then heralded as the ‘golden era’ in bilateral relations. There are no doubt many plausible explanations for the way British exports continued to grow, despite the political friction, but the history books show that, far from it being an isolated example, China’s approach to trade is driven less by rhetoric and politics and more by pragmatism and

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self-interest, albeit dressed up in politics when it is to China’s advantage to do so. In 1961, for example, the British aircraft and engineering company Vickers won an order to supply six Viscount aircraft to China. The order was remarkable in many respects. First, at the time, China was still suffering from the huge famine incurred as a result of Mao’s ‘Great Leap Forward’, Mao himself describing the economy as reaching a low point in 1961. Public accounts of the famine in China frequently blame it on an American embargo on trade. Not mentioned is that Mao continued to supply grain to the Soviet Union even while his people were starving. By 1961 China was finally spending foreign exchange to buy grain from overseas to alleviate the famine, but £4.5 million of its silver reserves were still used to buy the Viscounts rather than more grain.6 Secondly, while British diplomats in Beijing initially seemed determined to read a political motive into the contract, they eventually concluded that it was dictated primarily by technical and commercial considerations. Senior Chinese had flown in Viscounts in service in other countries and found them far superior to the Soviet aircraft then used almost exclusively in China. The chargé d’ affaires in Beijing described the negotiations as proceeding against a background of ‘uncertainty’ in the bilateral relationship but once China showed interest, negotiations were completed very quickly, in little more than a year. If there was any political angle, it was more the state of Sino-Soviet relations and China’s dissatisfaction with the quality of Soviet goods and technology than China’s relations with the west.7 By placing the order, China may have hoped to sow dissension among Western countries, for delivery of the aircraft went ahead despite opposition from the USA, whose embargo on trade with the PRC was still in force. In a phrase that would resonate almost sixty years later, when US president Donald Trump was said to be ‘apoplectic’ with rage over the British government’s decision to allow the Chinese telecommunications company Huawei a role in its new 5G mobile phone networks, US secretary of state Dean Rusk was said to be ‘not very happy’ when news of the Viscount sale was announced. In 1961 if not in 2020, politicians in London ascribed American objections more to domestic politics than strategic considerations, although to comply with restrictions set by COCOM (the Coordinating Committee for Multilateral Export Controls, which governed exports of sensitive items to Communist bloc

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countries), some American communication equipment and weather radars on the Viscounts had to be replaced by alternatives. For all the much-vaunted ‘special relationship’ between the UK and USA, British politicians have been happy enough to ignore it when they have seen advantage to their relations with China in doing so: in David Cameron’s time as prime minister, not long after the row over him meeting the Dalai Lama, the UK was also willing to risk American displeasure in its rush to become the first western country to sign up to China’s Asian Infrastructure Investment Bank (AIIB), FCO concerns notwithstanding.8 Although diplomatic hopes that the initial order for six Viscounts would be followed by another, larger one, this never materialised. A decade later, however, a similar opportunity arose when China bought its first civilian jet aircraft, some British Tridents bought second-hand from Pakistan. This time, the British government was more sensitive to American concerns and, mindful of the reaction to the sale of the Viscounts, initially sought to oppose the deal, only changing its mind when the US declined to block it, which it could have done either by refusing the export to China of American components on the planes, or by stopping Boeing or other American manufacturers from supplying replacement aircraft to Pakistan.9 On this occasion China did follow up with further orders, buying six more aircraft from builders Hawker Siddeley in 1971 and another six, with options to buy more, the following year.10 It would go on to become the largest foreign customer for the Trident. Arguably, there was a more explicit political link on this occasion, as the 1971 order came shortly ahead of China joining the United Nations at the expense of Taiwan, a move which the UK supported. Then in 1972, after Britain had closed its consulate in Taiwan, relations between the two countries were upgraded to ambassadorial level.11 But this was not happening in isolation—Chinese entry to the UN had been widely supported and its relations with the USA were also in a very positive phase after President Nixon’s visit to Beijing in 1972—so again, it is hard to read a political message into the contracts. British diplomats did try to, nonetheless. This was understandable: Mao Zedong still ruled China, the Cultural Revolution was not over, and the awarding of overseas contracts of any significance was seen as a political decision. Precedents such as this help explain the caution of the British ambassador in Peking over the opening of a Taiwan trade office,

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related in Chapter 5. But as with the sale of the Viscounts, it seems more likely that China was simply acting in its own self-interest: it needed new aircraft and chose those which best suited its overall needs and price. In this regard, it was behaving no differently to European countries in their aggressive pursuit of overseas orders for their national companies. One feature common to both the Viscount and Trident deals was that the aircraft were sold at a loss. In the case of the Tridents, this led to the British government agreeing to forego a levy on the sale of each aircraft which should have been paid to recoup launch aid from the government granted to finance the original Trident programme.12 Either the Chinese were more skilful and aggressive negotiators or, as in the case of Hawk sales to Malaysia and Indonesia mentioned in the previous chapter, or GEC’s desire for a negotiated contract in Korea covered in Chapter 3, British companies simply struggled to be competitive in selling overseas. This wider dependency on government assistance in one form or another, but usually financial, is hard to reconcile with the concept of a nation wedded to free trade.

GEC and Daya Bay It would remain apparent in dealings with China throughout the 1980s and 1990s as the reform of the Chinese economy and its economic takeoff got under way. The competitive nationalism and neo-mercantilism that were to be such prominent features of European relations with Korea and Taiwan were equally noticeable as competition intensified in China with the lure of big infrastructure contracts, including new airports, oil and gas terminals, metro lines and nuclear power stations. A strong focus of British government attention in this was the Daya Bay nuclear power station in Guangdong province, close to the border with Hong Kong. This would eventually be another success for GEC, who won the bid to supply the power turbines, unlike in Korea (Chapter 3). As with their ambitions there, the reactors for Daya Bay came from Framatome of France. With a value to GEC of around £250 million, in both size and complexity this was very different to the Viscount and Trident orders, and on the face of it an excellent example of the importance of political relations in winning contracts in China. It may have helped that at the time the deal was signed, US suppliers were barred by their own government from supplying nuclear equipment to China, partly for safety reasons, and partly because of concerns that

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China had failed to abide by the non-proliferation rules set by the International Atomic Energy Act and had supplied ‘dual-use’ technology to Iran, Iraq and Pakistan.13 Setting this aside, however, the contract was in many ways something of a text book case study of how to win contracts in China. But contrary to what might be assumed, politics was far from central to this. GEC’s success did come against the background of the successful conclusion of the bilateral negotiations between the UK and China over the handover of Hong Kong and signature of the Sino-British Joint Declaration in December 1984. But negotiations over the Daya Bay project had started earlier and would last for seven years, the contract only being signed in 1986. As Leon Brittan, secretary of state for trade and industry at the time, explained ‘To have reached this position on this complex project has required exceptional patience and determination over long years of negotiation by all concerned.’ It also required deep pockets—GEC had spent ‘many millions’ in preparing its bid, with teams of experts spending months at a time in China on negotiations.14 Crucially, however, the success owed much to the personal relationship that GEC had established with Lord Kadoorie, the chairman of Hong Kong’s China Light and Power (CLP). CLP was a joint-venture partner in the project with Guangdong Nuclear Power and therefore very influential in the contract decisions. In Kadoorie’s eyes, the relationship was of mutual benefit. He told prime minister John Major that CLP had saved ‘4-5%’ by consistently buying from GEC, while the relationship helped ensure that problems did not arise as bilateral relations between the UK and China became more difficult as the handover of Hong Kong grew closer, especially following the events in Tiananmen Square in Beijing in the summer of 1989.15 As with repeat orders from the Taiwan Railways Administration (Chapter 5), by establishing a relationship with Lord Kadoorie, GEC was in a far stronger position to be rewarded with future business by his company. In 1990, one senior British politician estimated that CLP had helped British companies win orders with a cumulative value in excess of £1 billion since the 1970s.16 Yet, as we have seen in both Korea and Taiwan, the lessons of GEC’s success—the need for patience, persistence and building personal relationships—were often lost on or ignored by other European companies seeking to do business in the region and on their political cheerleaders. Although all these high-profile examples—aircraft orders and a nuclear power station—were driven primarily by commercial considerations, there

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is nonetheless considerable contemporary evidence to support the argument that China uses trade as a political weapon. The past decade has seen it block imports of Norwegian smoked salmon after dissident Liu Xiaobo was awarded the Nobel peace prize in 2010; and imports of Philippine mangoes in 2016 after an international tribunal in The Hague found in favour of the Philippines in its case against Chinese occupation of shoals and reefs in the South China Sea. In 2018, Korean retail group Lotte was forced out of China after government inspired consumer boycotts in protest at it making land available in Korea for the deployment of the THAAD (Terminal High Altitude Air Defence) missile defence system to which China was opposed. More recently, international airlines and hotels have faced threats of unspecified retaliatory action unless they referred to Taiwan as a province of China on their websites.17 In all these cases the Chinese behaviour was in response to matters or policies unrelated to trade. Significantly, however, while all have been high profile in terms of publicity, except for the case of Lotte and the THAAD, the impact of them on the respective bilateral trade has been modest or even minimal. In the case of Norway, for example, although media reports spoke of an immediate significant fall in its exports to China after its smoked salmon was blocked, its total exports to China were at a record high in 2011 and again in 2014 as China increased its purchases of Norwegian oil.18 In other words, China has been careful to target such measures in ways that achieve maximum publicity with minimal impact on its own needs or interests. The same was also the case in its response to Dutch and French arms sales to Taiwan in the 1980s and early 1990s which was considered in Chapter 5. For the most part, the Chinese government has also been careful to follow the letter of WTO law in such disputes, not least to make it harder for injured parties to take countervailing action. By dressing up the boycotts as the action of outraged nationals, as in the case of the consumer boycotts of Lotte, or in threats to airlines unless they refer to Taiwan as a province of China on their websites, China makes it difficult to take formal retaliatory action. The policy is not new, Korean governments in the 1990s indulged in similar behaviour, especially after the 1997 Asian financial crisis. Nor is it so different from the competitive nationalism pursued in business opportunities by European countries, the UK included. The difference this time is in the scale of the impact.

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The issues that both Europe and the USA face today in their commercial relations with China are not dissimilar to those they faced in their relations with Japan in the 1980s, also then running a large trade surplus and standing accused of unfair trading practices. There were similar tensions in its relationship with the USA, including its purchase of supposedly ‘vital’ parts of the ‘American landscape,’ such as New York’s Rockefeller Center or Hollywood’s Columbia Pictures.19 Largely forgotten now are the ‘voluntary restraint agreements’ that Japan was pressured into agreeing to protect supposedly vital sectors of European economies (one reason why, with the advent of the Single Market, Japanese companies were so eager to set up manufacturing facilities inside the EC), or that the Japanese were exhorted to increase domestic consumption, especially on their homes, which one Commission official reportedly likened to ‘rabbit hutches.’20 In the case of Japan in the 1980s, however, the USA and EC countries for the most part had a single objective which was to reduce, if not eliminate, their bilateral balance of trade deficits. In 2020 that remains the focus of efforts of the Trump administration in the USA but for many European countries a bigger objective is to secure Chinese investment in their own economies, or even Chinese help in financing their government deficits (as it does the US government deficit through its purchase of Treasury bonds).

‘Divide and Rule’ and European Competitive Nationalism The eagerness with which European politicians sought to secure such assistance in the aftermath of Europe’s financial problems after the 2008 financial crisis displayed a remarkable lack of understanding, of basic knowledge even, of Chinese attitudes and sensitivities. As one journalist explained: ‘in the dirty, overcrowded wards [of a Beijing hospital], visitors can glimpse why there is little enthusiasm in this country for bailing out rich Europeans while most Chinese lack access to even basic social services.’21 European supplicants, worried about the impact of tough adjustment measures on their own societies, often seemed ignorant of the extent to which parts of the Chinese economy have gone through major restructuring in recent years. This has affected the north east of the country, sometimes referred to as China’s rust belt, particularly hard. On a September 2014 visit to the shipbuilding city and port of Dalian, for example, I was told of a Korean

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owned shipyard which had closed down abruptly with the loss of 40,000 jobs and big debts outstanding to local banks after the parent company went into liquidation. One leading Chinese academic has written graphically of the impact on his generation of being sent to work in the countryside during the Cultural Revolution, saying ‘The hardships we had to put up with then are more than you could imagine today.’22 People who have experienced such sufferings are hardly likely to be sympathetic to the problems of those they probably consider to be effete westerners. A widely held belief in Europe is that China pursues a ‘divide and rule’ approach in its dealings with the EU. But European engagement with China is too frequently driven first and foremost by national selfinterest, often short-term in nature. One prominent European think-tank has shown how this engagement is very similar to engagement with Taiwan in the 1990s; the objectives are similar so, too, is the frequent failure to achieve the hoped for results. As in Taiwan twenty years earlier, European countries compete with one another for attention in China: between January 2016 and May 2017, the UK alone had 14 ‘direct Ministerial encounters,’ with Chinese counterparts, while Germany had nine and a ‘near full-on yearly government-to-government exchange.’ The UK, Germany and France all compete to hold ‘strategic’ or ‘security’ and financial dialogues. As a result, China practises ‘pick and choose’ in its relations with the EU, focusing on its direct interests and often ignoring EU norms in its proposals.23 Another academic analysis has shown convincingly how the potential for a closer relationship is repeatedly undermined by major political differences, not only between China and the EU but also within China and within the EU. These include fundamental differences over the role of the market, the division of competences within the EU between the Union and member states, making it almost impossible for the EU to deliver a coherent external economic policy, and an unresolved debate within the EU over whether such a policy should be values based or interests based. The upshot, the authors conclude, is that the EU-China relationship remains underdeveloped and the EU largely ‘operationally dysfunctional’ in managing the key EU-US-China relationship.24

British Diplomacy and China The UK might be expected to understand this better than most of its erstwhile partners. Not only does it have a long relationship with China, albeit

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a frequently controversial one, its responsibility for Hong Kong until almost the end of the last century gave it responsibilities, connections and insights into China that were less readily available to other EU members. Today, the embassy in Beijing is one of Britain’s largest, and with the supporting consular offices around the country in Shanghai, Chongqing and Wuhan, it is collectively Britain’s largest diplomatic presence overseas, with more and more of its diplomats fluent in Chinese. But despite these undoubted advantages, British policy towards China appears almost remarkably ineffective, characterised by sudden, sometimes almost quixotic, changes in policy and seemingly lacking any considered, strategic approach. In the 1980s and 1990s this was, perhaps, understandable, the over-riding priority being to negotiate a successful handover of Hong Kong. This may have led policy makers and diplomats to ignore broader issues. As Margaret Thatcher admitted to Korea’s president Roh Tae-Woo in November 1989 after the events in Tiananmen Square the previous summer, Britain ‘had thought the Chinese were making progress in the right direction…We had never thought [Deng Xiaoping] would impose [a Cultural revolution situation] on his own people…the events of the summer have been very worrying for the people of Hong Kong.’25 One former diplomat in the Beijing embassy has ascribed the shortcomings to something more fundamental, however, namely the failings of his own colleagues in their dealings with the Chinese government. He ascribes this weakness to what he calls dismissively the ‘Cradock approach,’ after Sir Percy Cradock, British ambassador in Beijing in the early 1980s, who was also heavily involved in the agreement on the handing over of Hong Kong. This approach betrays a seeming lack of interest in all but a very narrow range of matters, which the writer ascribes to ‘a sense of imperious self-importance and lack of emotional empathy, with little real substance to back it up,’ in which ‘the Chinese…were a grand bureaucracy with whom interaction was confined to a dozen people’ and that interaction confined to matters of direct interest only to themselves, presumably.26 It is an attitude I have also experienced over the years, from my first visit to Beijing in 1981 (when Cradock was still the ambassador) to my time as a business representative from 2011. The 1981 visit was to learn more about North Korea, on which I was expected to report from my position in the embassy in Seoul. Beijing was where the few foreign journalists who had been able to visit Pyongyang were based, as well as some diplomats accredited to the north but not resident there, and China was

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of course one of North Korea’s closest allies. All this was irrelevant to my colleagues in the embassy, who considered my visit as no more than a distraction and objected to it in strong terms. After pressure from London, they eventually gave way and arranged for me to meet the head of the Korea desk in the Chinese foreign ministry. Contrary to their assertions beforehand, in a meeting conducted entirely in Korean, without interpretation, he interrogated me closely about European attitudes towards the Korean peninsula. With no embassy of their own in Seoul at the time, this was a rare opportunity for the Chinese to garner first-hand information, something my colleagues had failed even to consider. Earlier that year, François Mitterrand had been elected president of France, and as explained in Chapter 3, there was an expectation that he would move to recognise North Korea as a state. I was quizzed hard about French intentions, an issue on which I felt wholly unprepared given the attitude beforehand of colleagues towards the meeting. China was clearly anxious to try to learn how South Korea might react to any such move and what, if any, wider European reactions there might be. My counterpart in the meeting, Zhang Tingyang, was one of the most senior Chinese officials to handle relations with both the Koreas (he had studied at Kim Il Sung University in Pyongyang and had been the interpreter in high level meetings between China and North Korea) and would go on to be the first Chinese ambassador to South Korea in 1992. But colleagues in Beijing made no attempt to follow up this contact. Presumably, they did not consider the two Koreas’ relations with China to be of any interest.27 Thirty years later, heeding the advice of former colleagues, I sought their help in seeking a call on officials in the National Development and Reform Commission (NDRC), China’s pre-eminent economic planning and co-ordination body, to brief them on our company’s strategy in China, only to be told apologetically that this would be too difficult for the embassy. British trade officials in the country were also unable to help with gaining appointments at one of the country’s largest automotive companies. Neither issue proved to be of any consequence as I found that my own Chinese colleague was more than capable of arranging such meetings without any embassy involvement. But they do raise questions about the role and effectiveness of the large diplomatic effort in China, the more so given the freeze in relations after the Cameron—Dalai Lama meeting in 2012. During this supposed hiatus, former colleagues in the embassy complained that Chinese counterparts would not even answer

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the phone when they tried to call. But our business contacts and discussions carried on regardless, including with senior Chinese officials when appropriate. To suggest that the large trade mission that accompanied David Cameron to Beijing on his December 2013 visit was part of an established pattern of a hiatus in relations being followed by such a mission is probably to read too much into the tea-leaves but there were certainly precedents. In 1995, also against a backdrop of poor bilateral relations over Hong Kong, Michael Heseltine as President of the Board of Trade took 150 businessmen on a jumbo-jet to China ‘to help knock a hole in the trade deficit.’28 But while the politicians were fretting about the size of this, together with the poor state of bilateral relations, and lobbyists were urging them to address it, British exports to China were growing at a faster rate than those of Germany, France or Italy, the three other large European economies, increasing more than 200% in the three years from 1992 to 1995.29 By the time of Cameron’s visit in 2013, however, the £800 million trade deficit at the time of Heseltine’s mission had grown to over £20 billion. This growth in the size of the trade deficit should be seen in the context of the increase in bilateral trade, which peaked briefly in 2014, then declined before peaking again in 2018. But political attitudes ebbed and flowed in line with its expansion, alternating between paying attention to human rights concerns and focusing on trade instead. Policy fluctuated accordingly, as demonstrated better under David Cameron than under any other British prime minister, relations swinging from the deep freeze after his meeting with the Dalai Lama to the ‘golden era’ in bilateral relations just three years later. The driving force for this volte face was not Cameron, nor the FCO, but his chancellor, George Osborne. By his own admission, Osborne’s fixation with China started in his youth when he spent a holiday backpacking around the country. But the pro-China policies he promoted as chancellor also appear to have been heavily influenced by a select coterie of individuals with specific business interests in the country, in the financial services and property sectors.30 Osborne and his supporters would argue that promoting inward investment and British financial services were entirely appropriate for the chancellor of the exchequer, trade promotion more generally being the remit of the business secretary or trade minister. But the attention he

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devoted to these efforts was arguably out of all proportion to the contribution financial services make to British exports to China generally. Although the services sector is undoubtedly important to the British economy overall, and to British exports, in 2018 exports of services to China were just one quarter those of exports of goods. Exports of machinery at £2.7bn were seven times those of financial services.31 Furthermore, although the ostensible justification for the change in tack was Chinese reaction to the meeting with the Dalai Lama, not only were British exports continuing to grow regardless, but China was also content to allow a visit by the Lord Mayor of London (who is accorded ministerial rank on overseas trips) to Beijing to promote London’s role as a centre for handling renminbi denominated business during this period.32 For all that, in its ‘values-free’ and transactional approach, the Osborne policy was no more successful in achieving broader trade objectives than the determination to help GEC win the power turbines contract in Korea had been more than thirty years earlier. By 2013, the UK share of the Chinese market had fallen to just 1%, lower even than the 1.7% market share for Korea that had prompted heart-searching in the Department for Trade in London in the mid-1980s (see Chapter 4).33 And, as noted, despite the publicity given to exports of services, manufactured goods remain much more important in British exports to China.

From ‘Golden Era’ to ‘Project Defend’ If Osborne’s policy was no more successful than previous ones, nor was it any longer lasting, for by 2020 it had been overtaken by ‘Project Defend,’ ostensibly a strategy to strengthen Britain’s trade links but driven by a desire to reduce reliance on China for a wide range of imports considered vital to the economy, or for national security.34 The change in attitude was even more dramatic than that which presaged the ‘golden era’. Several of the ministers in the government in 2020 had also been in government in 2016, when, against both the USA and most of its then EU partners, the UK was arguing in the WTO for China to be granted market economy status. Although, seemingly contradicting its avowed free-market philosophy, a government spokesperson was also quoted then as saying that the government had gone further than previous British governments in supporting EU tariffs on steel imports, including from China.35

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The catalyst for the latest change in attitude was, according to those involved, China’s handling of the Covid-19 pandemic and its imposition of a draconian national security law on Hong Kong, in apparent contravention of its obligations under the Sino-British Joint Declaration of 1984. But these moves are entirely consistent with Chinese behaviour over the last decade and before, including its reaction to the awarding of the Nobel Peace Prize to Liu Xiaobo in 2010, its rejection of the July 2016 ruling by the Permanent Court of Arbitration of its claim to most of the reefs and shoals in the South China Sea, its steadily more repressive policies in Xinjiang and more.36 It is British policy that has changed over the years, seemingly according to the whim of whoever happens to be most influential or most engaged at the time within the British government. Presumably, neither Osborne nor his successors have read Sun Tzu’s On the Art of War.37 Had they done so, preferably in the first English translation by Lionel Giles, they would know from the translator’s comments that China’s experience of war in all its phases has been such as no modern state can parallel.38 That is certainly consistent with Chinese diplomacy in the Mao era, characterised as it was by a Napoleonic zeal in trying to export revolution. But it goes much deeper, something that contemporary observers, who are prone to equate current Chinese assertiveness with the Communist Party, or Xi Jinping personally, too often overlook. The Qing dynasty, for example, was responsible for what was probably the first case of genocide in the modern era, in its extermination of the Dzungars in the mid-eighteenth century, while ninety years ago, a western traveller in Xinjiang summarised Han Chinese attitudes towards the Uighurs as ‘invariably contemptuous and invariably afraid,’ an attitude reflected, surely, in the current incarceration of perhaps one million Uighurs in what are, in effect, concentration camps.39 Yan Xuetong, probably the country’s most influential foreign policy analyst, cites Mencius, no less, as saying that undertaking war to preserve dying states, ensure succession for those without an heir, overthrowing tyranny and ending slaughter is right. But Yan goes much further. He argues that relations between states should be based on a hierarchical principle, hegemony in other words, and chillingly advocates maintaining a hard line policy towards Taiwan, a policy of repression as he puts it, using force if necessary to prevent any formal declaration of independence.40 With attitudes like this, how should the UK handle its relations with China, especially now that it has left the EU? For all its historic experience

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of dealing with China, as in other instances, it could do worse than look at how Germany conducts its relations. At one level, the two have much in common. Senior politicians in both Germany and the UK share an apparent enthusiasm for leading trade missions to China. By autumn 2019 German chancellor Angela Merkel had paid no fewer than twelve visits to China as chancellor, almost invariably accompanied by senior figures from German industry and announcing large new deals each time. Like David Cameron, she has also incurred Chinese displeasure by meeting the Dalai Lama, in her case in 2007. Again, China cancelled ministerial contacts in protest although in this case a single meeting, rather than an indefinite suspension of contacts. But Merkel has adopted a much more consistent approach on human rights matters than have British governments. She was the first EU leader to announce that she would not attend the opening of the 2008 Olympic Games in Beijing because of concerns about China’s policy in Tibet.41 In 2018 she was probably instrumental in securing the release from house arrest in China of Liu Xia, widow of Nobel Peace Prize laureate Liu Xiaobo, and arranging for her to travel to Germany for medical treatment. This came only weeks after Germany had also become the first European country to grant refugee status to Hong Kong activists.42 Angela Merkel has also regularly raised human rights issues on her visits to China, both in public and, it is assumed, more forcefully in private conversations with China’s leaders. The difference in approach between Germany and the UK led one prominent European think-tank to place them at extremes in terms of attitudes towards China, Germany receiving praise for actively seeking an EU free trade agreement and raising human rights, while the UK ‘openly prioritised its bilateral relations with China over a coordinated European approach.’ Similarly, the UK ‘chose financial benefits over values in their dealing with Beijing at important junctures.’43 UK officials might argue that Germany’s regular surplus in its trade with China places it in a stronger position than the UK in its dealings, but Germany’s bilateral trading relationship has been by no means problem free. In 2012, in response to a petition from the European association of solar panel manufacturers, the European Commission launched an antidumping investigation into European imports of solar panels made in China. By this time China was the world’s largest manufacturer of such panels and the EU the largest user. In 2013, the Commission concluded that Chinese panels were being sold in Europe below the cost of their manufacture and increased the import duty on them from 11.8 to 47.6%.

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China retaliated by announcing an anti-subsidy probe into wine imports from the EU.44 Although the dispute was ostensibly between the EU and China, Germany was the EU country most affected. The initial petition on behalf of the European manufacturers’ association was at the behest of a German company, Solarworld, the largest panel manufacturer in the country. Although the immediate target of the Chinese response was European wine imports, half of which came from France, it also threatened to investigate the import of luxury cars, which would affect German manufacturers above all. While the European Commission is able to launch anti-dumping measures on its own, without the authority of member states, Merkel soon made Germany’s position clear, announcing in a joint press conference with Chinese premier Li Keqiang in May 2013 that ‘Germany will do all it can so that this won’t lead to import tariffs. That’s not something we believe in.’ Her very public stance undermined the Commission, which just two months later announced that it had reached agreement with China on a minimum price for imported solar panels.45 Germany, in short, appears to have been able successfully to pursue a broad-based approach to its relations with China, of which trade missions are but one part of wider objectives rather than being an end in themselves, as they can seem to be in the case of the UK. Nor is Germany unique. My own time in China coincided with that of one particularly energetic ambassador from an ASEAN country who delighted in trying to overcome the everyday obstacles to pursuing relations, rather than collapsing in front of them. Apologists for Britain’s approach argue that it is fundamental to doing business in China, a view to which many of its own diplomats appear to subscribe. But it is surely right to question whether the high-level trade missions to which politicians seem to remain so attached serve any useful purpose given the huge changes in the Chinese economy over the last forty years. Notwithstanding the continuing centralising tendencies of the Communist Party, especially under Xi Jinping, and the continuing importance of State-Owned Enterprises (SOEs), the Chinese economy is now far more diverse, being an integral part of global supply chains and with a large and thriving private sector. Just one foreign company, Taiwan’s Honhai Precision (or Foxconn), employs as many as one million Chinese workers.46 And even in SOEs, one can reasonably ask to what

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extent contract decisions are taken on political grounds, especially if one considers precedents stretching back sixty years. More likely, arguments in favour of trade missions may simply reflect established ways of working with the Chinese government and a reluctance to change. For, while the foreign ministry in Beijing is not a high-status or powerful department, being disparaged by many Chinese officials as the ‘ministry for translations,’ for foreign embassies, it acts as a ‘gatekeeper,’ seeking to control their access to all other organs and departments of government. Working around this requires tact, patience, and ingenuity. Much easier simply to go along with it, so that ‘cautiousness, a love of easy outcomes and addiction to external pomp and ritual’ predominate in British dealings with the Chinese authorities.47 Such attitudes all too easily reinforce a transactional approach to diplomacy, in which a single contract signing, or the award of a licence to a specific firm, are all too easily presented as ‘successes,’ while the fundamental obstacles or differences remain unresolved. British diplomats would do well to bear in mind the advice of one of their predecessors, a governor of Hong Kong who described the Chinese as ‘bloody tough’ negotiators, or learn from Lord Kadoorie and his success in doing business in the country. He reportedly described the Chinese as ‘the most conceited people he had ever met [who] could not forget that they had been in silk while we were still in woad.’48 One presumes that flattery was part of his negotiating strategy. There are plenty of reasons for embassies to be helping ease the path of doing business in China. The challenges and frustrations that nonChinese companies face in the country have been documented extensively. The theft or pirating of intellectual property, the hacking of computers to seek information, the compulsory transfer of technology, the barriers to trade and more have been reported frequently, perhaps most prominently in the very public pressure from the USA since 2019 in the course of President Trump’s trade war with the country. The British embassy has a mini-army of staff to address them, added to which is another veritable army of personnel in cities around China, dedicated to the task of helping British companies win business contracts by opening doors, making connections, smoothing the way, offering advice and more. Without doubt, the FCO and the Department for Trade in London will be able to produce statistics showing the value of this operation in terms of export orders won and assuage doubters as to its effectiveness. But much of it seems badly out-dated in today’s China, where young

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Chinese with a modicum of initiative and enterprise can open doors in some of the country’s largest organisations more effectively than can an embassy official. Business interests and lobby groups are also large, well organised and effective in China, both the American and EU Chambers of Commerce having representation not only across the country but in different sectoral groups, reflecting the interests and concerns of members. Their size and influence mean they enjoy regular access to senior officials, although they would undoubtedly welcome more, and more positive responses from those officials to their concerns. This is especially relevant in the context of Brexit, not least given the argument of some Brexiters that the UK will now be able quickly to negotiate a bilateral FTA with China. They might be well advised to take a hard look first at the lack of progress that the European Commission has made to date in its six years of negotiations with China over a comprehensive investment agreement, not least because the EU has been attempting to include in this an agreement on trade in some services, which would have been of benefit to the UK. They should also look carefully at the experience of Switzerland, a European country which has already signed an FTA with China but in which the benefits are very much to the favour of China.49 These experiences suggest that Brexiter optimism about an early agreement is probably misplaced, and that instead the UK should be asking whether the considerable resources currently devoted to commercial relations with China are really justified or could be used more effectively elsewhere. To date, China has not imposed or threatened trade sanctions against the EU other than in specific trade disputes, such as the solar panel case outlined above. At the time of writing, however, a worrying cautionary tale may be found in China’s relations with Canada, pertinent not just because of British government aspirations for a post-Brexit trading relationship with the EU modelled on that between the EU and Canada. At the start of December 2018, Canadian authorities detained Meng Wanzhou, chief financial officer of the Chinese telecommunications giant Huawei and daughter of the company’s founder, in response to an extradition request from the US to face charges of breaching American financial sanctions against Iran. In retaliation, China promptly detained two Canadian citizens resident in the country on espionage charges, without access to either lawyers or their families, and only very limited consular access.50

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British politicians should be under no illusions that China would behave differently towards the UK. In the early 1950s, British business representatives were prevented from leaving China, held hostage in effect as leverage in bilateral negotiations, while in 1967 Reuters correspondent Anthony Grey was held in the basement of his house in Peking, in retaliation for the detention in Hong Kong of eight pro-China journalists who had violated emergency regulations during Chinese-instigated riots.51 In 2009, a Briton was executed after being convicted of drug smuggling, despite a personal request for clemency by the prime minister, the only European to be executed by China in sixty years.52 Two high profile cases from my own time in China were the murder by the wife of a prominent senior politician, Bo Xilai, of British businessman Neil Heywood, and the imprisonment of private investigator Peter Humphrey and his wife after they had been recruited by GSK in an attempt to investigate a whistle-blower who had revealed that the company was engaged in widespread bribery and corruption in the country.53 Each case demonstrated, albeit in different ways, that China was a country where rule by law was applied at the whim of the government, but that the embassy seemed oblivious to events in the country in which British interests or individuals were directly involved. These examples are worrying in themselves. To date, however, China has not threatened to impose trade sanctions against any EU member state, other than in direct response to specific trade-related measures that the EU was considering imposing. Presumably, the collective might of the EU in trade terms has given its members protection from such threats. The same was not the case for Canada, however, which as well as seeing its nationals detained, suffered temporary bans by China on imports of its vegetable oil, pork and beef (the pork ban was rescinded as China faced major shortages following the outbreak and spread of African swine fever in its domestic herds).54 Would the UK, outside the EU face similar risks? A further cautionary note from the Meng Wanzhou case, and that of Lotte and THAAD, is that in each case the government concerned—Canada and South Korea—had previously been making considerable efforts to establish good bilateral relations with China. Perhaps China still expects its friends to behave like client states, a view reinforced by its ambassador’s reaction to the British government’s decision in July 2020 to order the removal of all equipment made by Huawei from the country’s 5G mobile phone network by 2027. He told journalists that ‘if you want to make China a

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hostile country, you will have to bear the consequences.’55 Along with examining its trade promotion effort in China, both the Meng case, and more especially the more recent Huawei one, suggest that the UK urgently needs a clear strategy for its trade policy for China generally, one that includes a hard-headed examination of the risks as well as potential benefits, and that goes more deeply than meaningless soundbites about a ‘golden era.’ Post-Brexit, the UK is going to face difficult choices and decisions in its foreign policy, including in its relationship with China. Not dealing with it is not an option—not only is the country too big to ignore even on trade terms alone, but as a fellow permanent member of the UN Security Council, a country with major domestic human rights concerns, not least in its treatment of the Uighur minority, a major emitter of carbon and pursuing an increasingly assertive foreign policy, especially towards its neighbours, engaging with it over a range of multilateral issues is essential. And bilateral matters can be equally difficult. At the time of writing, the British government finds itself firmly in the middle of a spat between the USA and China over the use of technology from Huawei, and involved in sharp public exchanges about the introduction of a national security law in Hong Kong. While many British politicians and indeed diplomats may think otherwise, for most of the last forty years the country’s foreign policy has been essentially a neo-mercantilist one, in which the pursuit of supposed business advantage for the UK has been placed first and foremost. But its relative trade performance with China has barely changed in that time, suggesting that it has not been a particularly successful policy. Being a member of the EU has given the UK an element of ‘safety in numbers’ against possible Chinese retaliation, however, as well as the resources (in the Commission) to try to negotiate a more favourable trading arrangement on its behalf. This will no longer apply in the future. Tempting though it might be to continue along the ‘golden era’ path, and there will be many with vested interests arguing Britain should do just that, policy makers should instead consider Germany’s experience. As in Korea in the case of the trial of Kim Dae Jung in 1980, and in China forty years later, it seems willing to take a more robust line on human rights without suffering any adverse effects on its trading relations. Rather than continuing to pursue transactional and neo-mercantilist diplomacy, British policy makers would do well to heed the advice of another former diplomat that being ‘courteous and

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extremely firm’ is the way to succeed in China, in whose political and business culture ‘attempts to ingratiate oneself tend to be seen as selfabasement.’56

Notes 1. N. Trench, minute, 17 August 1961, FO 371/158424 TNA. 2. Sir George Staunton: An Authentic Account of an Embassy from the King of Great Britain to the Emperor of China, London, 1797, p. 15. 3. Prime Minister David Cameron in China for Biggest Trade Mission in 200 Years, The Telegraph, 3 December 2013, https://www.telegr aph.co.uk/news/picturegalleries/worldnews/8119511/Prime-MinisterDavid-Cameron-in-China-for-biggest-trade-mission-in-200-years.html? image=11, both retrieved 5 February 2020. 4. Sam Beatson: Era of Re-alignments: Britain and Its Relations with China Post-Brexit, in Huang and Reilly, eds.: The Implications of Brexit for East Asia, op.cit. 5. Osborne Seeks Trade in China’s Restive Xinjiang Region, Financial Times, 23 September 2015, https://www.ft.com/content/73c4e982614a-11e5-a28b-50226830d644, retrieved 25 June 2020. 6. Yang Jisheng: Tombstone, Hong Kong, 2008; Sunday Telegraph, 10 December 1961. 7. Chargé d’ Affaires Peking to FCO, 18 December 1961, BT11/5834, Peking telegram 366 to FCO, August 1961, FO 371/158424 TNA. 8. Donald Trump ‘Apoplectic’ in Call with Boris Johnson over Huawei, Financial Times, 6 February 2020; FCO telegram 8854 to Washington, 30 November 1961, BT 11/5834 TNA; George Osborne Rejected Diplomatic Advice to Join China-Led Bank, Financial Times, 26 March 2015, https://www.ft.com/content/c256e788-d3bc-11e4-a9d3-00144f eab7de, retrieved 17 March 2020. 9. FCO telegram 342 to Washington, 6 February 1970, FCO 37/728 TNA. 10. FV 14/82 1972 TNA. 11. British Trident Airliners Bought by People’s Republic of China. 1971, British Pathé Historical Collection, https://www.britishpathe.com/ video/VLVAQUGBU4WB5T3SPZ5U371ZHPGW-UK-BRITISHTRIDENT-AIRLINERS-BOUGHT-BY-PEOPLES-REPUBLIC-OFCHINA/query/Trident; https://reuters.screenocean.com/record/ 572140, both retrieved 5 February 2020. 12. FV 14/82, 1972 TNA. 13. Lingao Nuclear Power Station, Guangdong, https://www.power-techno logy.com/projects/lingao/, retrieved 8 February 2020. 14. Brittan to Thatcher, 15 January 1986, PREM 19/3798 TNA.

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15. Wall, No. 10 Downing St., to Gozney, FCO, 8 September 1992, PREM 19/3798 TNA. 16. Slocock, DTI to Powell, No. 10 Downing St., 18 June 1990, PREM 19/3798 TNA. 17. S Korea Retailers a Casualty of Political Stand-Off, Financial Times, 11 September 2017, https://www.ft.com/content/c5fb42c8-969f-11e7a652-cde3f882dd7b; White House Presses US Airlines to Resist Beijing over Taiwan, Financial Times, 5 June 2018, https://www.ft.com/con tent/74498d14-68cb-11e8-b6eb-4acfcfb08c11, both retrieved 25 June 2020. 18. M. Reilly: Competitive Nationalism and the EU’s China Strategy, Lau China Institute Policy Paper, vol. 1 (5), 2017. 19. Japanese Buy New York Cachet with Deal for Rockefeller Center, New York Times, 31 October 1989, https://www.nytimes.com/1989/10/ 31/business/japanese-buy-new-york-cachet-with-deal-for-rockefeller-cen ter.html, retrieved 5 February 2020. 20. See https://www.japan-guide.com/forum/quereadisplay.html?0+39549, retrieved 5 February 2020. 21. Jamil Anderlini: China Keen to Avoid Domestic Backlash, Financial Times, 20 November 2011, https://www.ft.com/content/c6ca459e1065-11e1-8010-00144feabdc0, retrieved 24 March 2020. 22. Yan Xuetong: Ancient Chinese Thought, Modern Chinese Power, Princeton 2011, p. 230. 23. European Council on Foreign Relations (ECFR): China at the Gates —A New Power Audit of EU -China Relations, op.cit. 24. J. Farnell and P. Irwin Crookes: Politics of EU -China Economic Relations: An Uneasy Partnership, op.cit. 25. Record of meeting between prime minister and president of Korea, 28 November 1989, PREM 19/354 TNA. 26. J. Flowerdew: The Final Years of British Hong Kong : The Discourse of Colonial Withdrawal, 1998, p. 132; Kerry Brown: What’s Wrong with Diplomacy? Melbourne, 2014. 27. Coates, Peking to Reilly, Seoul, letter of 26 October 1992, FCO 21/5237 TNA. 28. Heseltine Heads China Visit, The Independent, 12 May 1995, https:// www.independent.co.uk/news/business/heseltine-heads-china-visit-161 9220.html, retrieved 25 June 2020. 29. IMF: Direction of Trade Statistics. 30. Jim Pickard: George Osborne’s Four Lords Push for Stronger UK-China Ties, Financial Times, 21 October 2015, https://www.ft.com/content/ ae5a6ed4-77eb-11e5-a95a-27d368e1ddf7; retrieved 6 February 2020. 31. House of Commons Briefing Paper: Statistics on UK Trade with China, November 2019.

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32. ‘Right Time’ for London to Build RMB Business, China Daily, 19 September 2012, http://www.chinadaily.com.cn/cndy/2012-09/19/ content_15766769.htm, retrieved 16 February 2020. 33. IMF: Direction of Trade Statistics, cited in M. Reilly: Competitive Nationalism and the EU’s China Strategy, op.cit; David Cameron Leads Huge Trade Delegation to China, Financial Times, 29 November 2013, https://www.ft.com/content/c03663be-58ef-11e3a7cb-00144feabdc0, retrieved 6 February 2020. 34. UK looks to Wean Itself Off Chinese Imports, Financial Times, 10 June 2020, https://www.ft.com/content/dc22913c-4abd-4258-89fb-e45a43 42e2a6, retrieved 26 July 2020. 35. EU States Point Finger over Tata Steel and Anti-dumping Tariffs, Financial Times, 31 March 2016, https://www.ft.com/content/a8da356af753-11e5-96db-fc683b5e52db, retrieved 26 July 2020. 36. Tribunal Rejects Beijing’s Claims in South China Sea, New York Times, 13 July 2016, https://www.nytimes.com/2016/07/13/world/asia/southchina-sea-hague-ruling-philippines.html, retrieved 26 July 2020. 37. Sun Tzu’s treatise is generally considered to be by far the oldest and best compendium of military science in China and widely cited today as a textbook guide to negotiating strategy and management science more generally. See English translation by Lionel Giles, 1910. 38. Ibid. 39. David M. Crowe: War Crimes, Genocide, and Justice: A Global History, 2014; Peter Fleming: News from Tartary, London, 1936, p. 200. 40. Yan Xuetong: op.cit. 41. M. Reilly: Competitive Nationalism and the EU’s China Strategy, op.cit. 42. Liu Xia: Widow of Nobel Laureate Arrives in Berlin After Release from China, The Guardian, 10 July 2018, https://www.theguardian. com/world/2018/jul/10/liu-xia-nobel-laureates-widow-allowed-toleave-china-for-europe; Hong Kong Activists Get Asylum in Germany; Denounce Extradition Law, Reuters, 22 May 2019, https://www.reu ters.com/article/us-hongkong-politics-refugees/hong-kong-activists-getasylum-in-germany-denounce-extradition-law-idUSKCN1SS1LI, both retrieved 16 February 2020. 43. Angela Stanzel: Merkel’s Visit to China: Freedom, Trade, but No Europe, 11 September 2019, Institut Montaigne Blog, https://www.institutmont aigne.org/en/blog/merkels-visit-china-freedom-trade-no-europe; European Council on Foreign Relations (ECFR): European Foreign Policy Scorecard 2016, https://www.ecfr.eu/scorecard/2016/china, both retrieved 8 February 2020. 44. Yu Chen: EU -China Solar Panels Trade Dispute: Settlement and Challenges to the EU , European Institute for Asian Studies, Brussels, June 2015.

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45. Merkel, Li Call for End to EU-China Solar Trade Row, Reuters, 26 May 2013, https://www.reuters.com/article/us-china-eu-trade-merkel/ merkel-li-call-for-end-to-eu-china-solar-trade-row-idUSBRE94P0CD20 130526, retrieved 16 February 2020; Yu Chen, op.cit. 46. Kathrin Hille: Coronavirus Freezes Return of China’s Migrant Workers, Financial Times, 1 February 2020, https://www.ft.com/content/60f ad2a4-43ee-11ea-a43a-c4b328d9061c, retrieved 6 February 2020. 47. Ibid. 48. Wall, No. 10 Downing St., to Gozney, FCO, 8 September 1992, op.cit. 49. EU -China Comprehensive Agreement on Investment, Brussels, 13 February 2020, https://trade.ec.europa.eu/doclib/press/index.cfm?id= 2115; Legge, Stefan, Patrick Ziltener and Jian Han: 2018. Sino-Swiss FTA, Utilisation Rate Analysis in Sino-Swiss FTA—2018 Academic Evaluation Report, edited by T. Casas et al., Basel MDPI, pp. 22–26. 50. Charles Parton: Taking Hostages Is Routine in Xi Jinping’s China, Financial Times, 10 December 2019, https://www.ft.com/content/3dd50c7a3066-4320-9866-f763cdba9758, retrieved 8 February 2020. 51. Anthony Grey: Hostage in Peking, 1970. 52. Condemnation as China Executes Briton for Drug Smuggling, cnn.com, 30 December 2009, edition.cnn.com/2009/WORLD/asiapcf/12/29/ china.britain.smuggler/index.html, retrieved 15 July 2019. 53. David Barboza: Drug Giant Faced a Reckoning as China Took Aim at Bribery, New York Times, 1 November 2016, https://www.nytimes. com/2016/11/02/business/international/china-rules-glaxo-bribes-sextape-whistleblower-cautionary-tale.html, retrieved 15 July 2019. 54. Charles Parton: op.cit. 55. China Envoy Warns of ‘Consequences’ If Britain Rejects Huawei, Financial Times, 6 July 2020, https://www.ft.com/content/3d67d1c1-98ff439a-90a1-099c18621ee9, retrieved 21 July 2020. 56. James Richards: A Complicated Friendship Between China and Britain, Financial Times, 30 October 2015, https://www.ft.com/content/961 0159a-7e5d-11e5-98fb-5a6d4728f74e, retrieved 8 February 2020.

CHAPTER 9

The United Kingdom and East Asia Towards 2050

Critics of the argument that British policy towards East Asia has been neomercantilist might contend that the examples of interventionism that I have quoted mostly pre-date the structural reforms in the British economy introduced under Margaret Thatcher from the 1980s. As a result of these, state support for companies was steadily scaled back. They might also argue that I have focused too narrowly on examples from a single company and that the book would have been more appropriately titled ‘GEC and East Asia since 1980.’ While GEC does feature extensively, that is largely a reflection of the company’s significance in the British economy for much of the period. While extensive, the coverage here of its involvement in East Asia is also far from exhaustive. Not mentioned, for example, is its controversial sale of Offshore Patrol Vessels to Brunei in 1995, of which Brunei never took delivery, or its—also controversial—bid to sell a radar system to the Philippines in the mid-1990s.1 A detailed study of the full extent of its business activities in East Asia and the way it worked with British politicians in pursuit of these is yet to be written. In its heyday, in the late 1980s and early 1990s, GEC was the UK’s largest private sector employer and arguably the country’s most successful company, making annual profits of over £1 billion. By the early twenty-first century it had ceased to exist. But the issues raised by its pursuit of business in East Asia, especially the cosy and often unquestioning relationship it enjoyed with senior British politicians, remain pertinent, nowhere more so than in British policy towards China, © The Author(s) 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6_9

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as demonstrated by George Osborne’s relationship with a few key personalities, mentioned in the previous chapter.2 Neo-mercantilism continues but is less obvious. A further counter argument is that the scaling back of overt state support, for example through ATP, was due at least as much to the advent of the European Single Market and the introduction under it of rules governing state aid to business. As of October 2020, these rules remained a stumbling block in the negotiations between the UK and EU over their future relationship, suggesting that under prime minister Boris Johnson the British government may be contemplating a return to the interventionist policies of the pre-Thatcherite past. The Pergau dam scandal arose precisely because of the re-introduction under Thatcher’s premiership of the Aid for Trade Provision (ATP). This project may have been exceptional in the sums involved, but it was hardly unique in the way that state aid was used to help companies win business they may not have done otherwise. One British company involved in a high profile but controversial ATP project supplying bridges to the Philippines at the turn of the millennium subsequently admitted bribing officials in at least six countries.3 Any reduction in state intervention also reflects the changed nature of the British economy since 1980, of which GEC’s dismemberment and collapse was the most high-profile manifestation. Between then and 2018, the contribution of manufacturing to British gross domestic product (GDP) more than halved, falling to under 10%.4 Given this, it is perhaps no surprise that British officials have publicly attached importance to future free trade agreements, including any with China, covering trade in services as well as in manufactured goods. Nor is it surprising that the British financial services sector supports this strongly. But manufactured goods still comprise 42% of all British exports, meaning they should not be overlooked in the setting of overall trade policy, including towards East Asia.5 In the 1980s British ambassadors were instructed to include in their annual reviews, and more especially in their valedictory despatches written on leaving a post at the end of their term, a ‘forward look,’ trying to predict the future for the country in question and its relations with the United Kingdom. Known as the ‘Whither Ruritania?’ section, with hindsight it is striking how often major changes were not foreseen. The downfall of the Shah of Iran came as a shock (and was in itself a reason for the introduction of the instruction), the collapse of the Iron Curtain

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and of the Soviet Union were both surprises, Kim Young Sam and Lech Walesa, respectively future presidents of a democratic South Korea and democratic Poland, were earlier dismissed as ‘yesterday’s men.’ This is said not as a criticism but as a warning that diplomats are no better than anyone else at crystal-ball gazing. With that caveat, the concerns and uncertainties set out in Chapter 1 are all too apparent. For all the periodic belligerence of the North Korean regime, the biggest worry in East Asia in the coming decades is more likely to be the conduct of the Chinese government. The North Korean threat is long-standing but is specific in its nature and has been largely contained in the near seventy years since the armistice that brought the Korean War to an end was signed. The same cannot be said of China, which has a long history of aggressive behaviour towards its neighbours, contrary to its own assertions, and which has been increasing defence spending annually at double digit levels in percentage terms since before the turn of the century. (That it nevertheless spends more on internal security than on external defence suggests the CCP is deeply uneasy about the loyalty of its own citizens.) It is possible that China will go the way Japan did, widely expected to be the leader of the ‘Pacific century’ until brought down by a huge economic bubble and the ‘lost decade.’ Unlike Japan in 1980, however, China under Xi Jinping is an authoritarian country, whose government tolerates less and less dissent and increasingly uses nationalism in pursuit of its aims. And unlike most western countries, the UK included, China has a clear long-term strategy towards the rest of the world embracing both economic advancement and territorial expansion.

The China Syndrome In the four years since the Brexit referendum of June 2016, British policy towards its European neighbours has changed radically. But the change in its policy towards China has been even more dramatic, from the ‘golden era’ to ‘Project Defend,’ from open engagement to reducing reliance on China and calling for sanctions against Chinese officials.6 While the ‘golden era’ always seemed more soundbite than substance, the volte face is dramatic for both its speed and extent. Nor is the change in sentiment confined to British opinion. Attitudes towards China in much of western Europe have also hardened. 7

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In London, the immediate catalyst was China’s imposition on Hong Kong of a new, and wide-ranging, national security law, in continental Europe it was China’s crude use of the Covid-19 pandemic to further its own national interests. But other factors had been contributing to a growing unease, including pressure from the US government on European countries not to use equipment from China’s Huawei in their 5G networks, the sometimes aggressive behaviour of Chinese diplomats (in all probability playing to domestic audiences in China), plus lingering concerns about human rights abuses, China’s trade policy and a growing unease that far from integrating more fully into a relatively liberal global world order, China is seeking to re-shape the world order in line with its own interests. All this, so the conventional argument seems to go, is the result of a new, more assertive Chinese foreign policy under Xi Jinping. But what is really new is the attitude in Europe. The last decade has seen a steady increase in provocations by China against its neighbours, be they around the Senkaku/Diaoyutai islands, in the South China Sea or in the Himalayas. The contemporary concerns over its incarceration of Uighurs in Xinjiang, the imposition of the draconian national security law on Hong Kong, and an increasingly hostile attitude towards the government in Taiwan, need to be seen in this context. Those who ascribe this behaviour specifically to the Chinese Communist Party or to Xi Jinping overlook the long history of Chinese expansionism, and the extent to which the Communist Party has both tapped into and fomented the nationalist narrative in China.8 Much of it, notably the ‘Nine Dash Line’ in the South China Sea, the annexation of Tibet and the claim to Taiwan, are simply continuations of claims first made by Chiang Kai-shek. Xi Jinping’s oft-repeated objective of the ‘great rejuvenation of the Chinese people,’ to be achieved by 2049, which explicitly includes the absorption of Taiwan, makes this behaviour the more worrying. (Mao Zedong’s call for Taiwan to be independent, made to the American journalist Edgar Snow, has been airbrushed out of China’s historical narrative.)9 But Chinese policy has been consistent, in marked contrast to the wild fluctuations in Western policy towards it. Managing Chinese assertiveness over the next twenty- five years will be the major challenge facing any country in its relations with East Asia. It will require leadership, statecraft, and above all the same sort of consistency in policy as China itself displays.

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Since the founding of the People’s Republic of China in 1949, the USA has provided the leadership and statecraft, if not consistency, in dealing with China but there has been little of either under the Trump administration. The way the president has belittled and berated allies only makes it less likely, even while it has become more pressing. The president has been criticised by former members of his own administration for his apparent prioritisation of a trade deal over human rights concerns, although efforts to rally the support of allies over the latter also appear to have received little support.10 At one time the UK might have attempted to rally support among allies on behalf of Washington or to try to help co-ordinate a joint US/EU approach. But the ambitions of Theresa May to do just that, which she raised at the EU Summit in Malta in early 2017, now look decidedly fanciful.11 At the time of writing, however, the alarm of many western governments at China’s imposition of a new and wide-ranging national security law on Hong Kong may turn out to be the spur to a collective, more critical and less accommodating policy towards China on the part of the G7 and other like-minded countries.12 When combined with other concerns about Chinese behaviour, it does suggest that, barring some fundamental change, the ‘golden era’ in bilateral relations is already consigned to history. The UK cannot ignore China, however, much less East Asia. In the 1960s and 1970s, it was possible to do so for the most part, not least because under Mao Zedong China had turned its back on the world. That is no longer the case, as the spread of the Covid-19 pandemic made all too clear. As Angela Merkel has said, Europe and China are ‘partners in economic co-operation and combating climate change, but also competitors with very different political systems. Not to talk to each other would certainly be a bad idea.’ She was subsequently criticised in Germany, including by members of her own party, for not taking a tougher line. But at least she has demonstrated consistency in her dealings with the Chinese leadership, unlike many of her counterparts.13 For the UK, the need to talk to China is, if anything, even stronger in view of its continuing obligation to support the freedoms and autonomy guaranteed to Hong Kong under the Sino-British Joint Declaration of December 1984. But talking to China does not mean acquiescing in its increasingly unacceptable behaviour, and both the EU and UK must to do more to work with and support China’s neighbours, Japan, South Korea

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and Taiwan especially, as countries with which they share common values of democracy, respect for human rights and the rule of law. The need for more support for Taiwan is especially pressing, faced as it is with a threat from China to its very existence, a threat which must be taken seriously in the light of China’s steady erosion of Hong Kong’s autonomy. It might not be realistic to expect either the EU or UK to provide Taiwan with hard security guarantees, but they could and should do more in terms of psychological support. The UK could end its ‘gratuitously disagreeable’ attitude of treating Taiwan’s representatives like pariahs, for example, by granting the representative offices in the UK the same status as Hong Kong’s officials in London enjoy. Doing so would not constitute diplomatic recognition so requires only a change in attitude, not in policy. The EU, for its part, should open negotiations with Taiwan over a bilateral comprehensive investment agreement. Its excuse for not having done so before now is that it can only be done once a similar agreement with China has been signed. But not only does the prospect of this appear more remote than ever, such an approach is based on nothing stronger than the agreement under which China joined the WTO ahead of Taiwan, and Chinese lobbying in Brussels.14 It owes nothing to any international convention and not only would such a move be welcome to Taiwan, it would send a clear signal to China of EU frustration and unhappiness with its behaviour. Of eight former British foreign secretaries asked about the country’s foreign policy priorities after Brexit, however, only three mentioned East Asia at all and only one, William Hague, urged the importance of a coherent strategy towards China. British policy makers also risk being woefully ignorant of how their country is really seen in East Asia postBrexit. As one British diplomat explained, private reactions in the region to the outcome of the referendum and its aftermath encompassed ‘a spectrum from mild bemusement about Brexit to really quite serious and deep incredulity on the other end of the spectrum,’ while another has compared it to ‘the complacency and arrogance of colonial leadership,’ his hosts seeing ‘The nation they admired for stability, common sense, tolerance and realism … beset by division, obsessed with ideology, careless of the truth, its leaders apparently determined to keep on digging.’15 Significantly, all but one of the ex- foreign secretaries argued that more resources would be needed, either for ‘sensible’ increases in defence spending or on expanding the overseas network of diplomatic missions,

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or both, to counter the impact of Brexit. It is a striking reversal of the policy of retrenchment pursued in fits and starts for the better part of the last forty years, and far from clear that it is what the British electorate envisaged the ‘post-Brexit dividend’ to be when voting in the 2016 referendum.16 When advocated in early 2019 it might have seemed credible, even reasonable. But given the massive increase in government debt as a result of the 2020 Covid-19 pandemic, plus government statements of intent about ‘rebuilding’ the country’s infrastructure, the prospect of significant additional money being spent on defence or diplomacy seems remote. Although at the time of writing the UK’s latest defence review, due to be published in autumn 2020, was expected to recommend a more visible British security presence in East Asia, this was likely to be more symbolic than substantive, and met at least in part by re-allocating resources from elsewhere.17 An indicator of the government’s more likely intentions came with the announcement in June 2020 of its intention to merge the FCO with the Department for International Development (DfID), a clear indication of its desire to tie development aid more explicitly to its foreign policy objectives including, no doubt, helping companies win overseas contracts. Winning such business has been central to successive British governments’ policy towards East Asia over the last four decades and is likely to remain so for the foreseeable future. For any government that professes to favour free trade, the future of the global trading system should therefore be a major concern. As with the rise of China, protecting the system will require leadership, patience, compromises, and skilful multilateral diplomacy. Above all, it requires an effective multilateral body to set the rules and ensure fair play by all. As with the rise of China, it is something on which the USA has traditionally taken a leading role. But under the Trump administration, the USA is not simply no longer doing so but in the eyes of many is actively undermining both the World Trade Organisation, principally through its refusal to consider any new appointments to the organisation’s appellate body, which adjudicates trade disputes, and the multilateral trading system more generally, in its pursuit of bilateral trade deals.

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Isolationism or Co-operation? An effective WTO would be very much in the UK’s interests as it starts to negotiate its own trade agreements outside the EU. Frequent mention of the organisation was made in the domestic British debate over the terms of the Withdrawal Agreement with the EU and future relations with the union. But this was almost wholly confined to debating points and rhetoric about ‘WTO rules’ and the basis on which the UK would continue to trade with the EU should it fail to reach an agreement. Discussion of the future of the WTO, or the UK’s objectives and interests in relation to that, was almost entirely absent. In large part this lack of broader interest in the WTO simply reflects the reality of the last forty years, during which the UK’s multilateral trade policy was handled on its behalf by the European Commission. The country lacks an entire generation and more of skilled negotiators, trade lawyers and other international trade experts in its national government. The political imperative for the current government in Westminster and, in all likelihood its successor, will be the negotiating of new agreements to replace those that the EU has concluded over the years with countries such as Japan, Canada, Korea, Singapore and more. In these circumstances, even a government anxious to see a strong and effective WTO would struggle to find the skills and capacity to work with others to achieve it. Although British ministers have made repeated reference in speeches and interviews to their commitment to global free trade, the lack of accompanying statements on the role of the WTO in delivering this suggests they will be content to leave it to others to lead on the future of the organisation. An unexpected opportunity to show leadership on this came with the unexpected decision in mid-2020 of Roberto Azevêdo, director-general of the WTO, to step down from the role. This was a chance for the government in London to test the claim advanced by one think tank that the WTO was ‘panting’ for UK leadership, especially as no candidate came forward from the EU.18 The government duly nominated a candidate, but one seemingly chosen on ideological grounds rather than competence or relevant experience, and who was eliminated from the contest at an early stage.19 It is not an auspicious beginning. Until the government has a clear policy on the role of the WTO in international trade, there is surely much to be said for the UK simply following the EU lead and co-ordinating its position accordingly. The EU

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has the skills and experience that the UK lacks in multilateral trade negotiations, it has the economic weight of the world’s largest single market, its position on the importance of the multilateral trading system is well established and it is one which the UK has consistently supported over the years. Unfortunately, the government in London seems intent on pursuing a different approach. It would also make sense for the UK to continue to try to co-ordinate its foreign policy with its erstwhile partners, certainly for as long as US foreign policy remains so quixotic. They remain neighbours, most of them are also members of a common security pact (NATO) and they face common threats, not least from Russia. The opportunities and threats they face in East Asia are also largely the same. The UK’s position in its long and often tetchy negotiations with China in the run up to the handover of Hong Kong in 1997 was strengthened considerably by the support it received from its EU partners, on matters such as visa free travel to Europe by Hong Kong passport holders, for example. The UK and France have co-operated together before, as in Libya in 2011, albeit with mixed success. Even as a permanent member of the UN Security Council, the UK will struggle to achieve influence on its own. But the prospect of the UK working with its neighbours seems sadly remote, at least in the short term. Jean-Claude Juncker, European Commission president at the time of the referendum, ascribed the decision by British voters to ‘years of lies,’ saying that if ‘over 40 years…explaining to your general public that European Union is stupid, that there is nothing worth, that you have to leave, that … membership is not bringing any advantages… you can’t be surprised that the day you ask people: ‘Do you want to stay or do you want to leave?’ that a too high number of British – in the case we are discussing – are expressing the view that it is better to leave.’20 But perhaps the real reason lies with something more fundamental, more visceral in British attitudes and culture, expressed by Adolf Hitler when he said that ‘England [sic] had always felt itself to be an insular power. It is alien to Europe, or even hostile to Europe. It has no future in Europe.’21 As evidence, one could point to the Gordon Riots of 240 years ago, protesting against the Catholic Relief Act. Substitute the rioters’ rallying cry of ‘No Popery,’ aimed firmly at perceived foreign—more specifically European—influence, by the Brexiters’ complaint of ‘Brussels bureaucrats’ and the similarities are striking, down to the prevalence of rumours or ‘fake news’ in each case. The only difference, perhaps, was the

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relative lack of violence around the Brexit referendum, despite the murder of one MP in the run-up to it, and politicians threatening disorder if the result was not implemented.22 Another, personal, example comes from accompanying a group of visiting British MPs to a meeting with Taiwan’s president Ma Ying- jeou, following the latter’s inauguration in May 2008. In the meeting, one MP responded to Ma’s explanation of the very real threat Taiwan faced from China’s 1200 short and medium range missiles targeted on the island by claiming that Britons knew how he felt, facing as they did missiles targeted at the country from Europe. One fears there are too many others who think the same.23 Although formal co-operation between the EU and UK over policy towards East Asia is therefore unlikely, in practice their approaches will remain similar, not least because their interests in the region remain aligned. In March 2019, while the UK was still a member, the European Council held its first summit meeting in thirty years focused specifically on China. The motivating factors were related more to trade matters than to security or human rights, with industrial policy, cyber security and trade and investment policy topping the agenda. But the change in tone and language was striking, with the Council endorsing a strategy paper labelling China a ‘systemic rival.’24 Twelve months later, one commentator argued that matters had gone further, with a ‘paradigm shift’ in relations between the EU and China beginning to take place and the EU having abandoned its previous ambition for a closer, more integrated relationship.25 Although the catalyst for this was the Covid-19 pandemic and more specifically China’s response, the increasingly authoritarian and nationalistic conduct of China under Xi Jinping were seen as the principal underlying causes. While there can be little doubt that growing Chinese assertiveness is driving growing ‘pushback’ in Europe, it remains to be seen whether this view will be sustained. The EU has long struggled to develop, let alone sustain, a coherent foreign policy approach but as opportunities for European companies to win big orders in China diminish, or promised Chinese investment in Europe is seen to come with unwelcome terms attached, so a more coherent approach may develop. Another driver of the increasingly wary European attitude towards China has been the growing trade war between the USA and China and fears of ‘becoming roadkill in a Sino-American game of chicken.’26 This is a worry that the EU shares with China’s neighbours and one might expect to see both the EU and UK at least exchange views with them more frequently on this and related challenges in the years ahead.

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A Leadership Role for Japan? Of the former British foreign secretaries referred to above, however, only two so much as mentioned Japan in the context of the UK’s post-Brexit foreign policy, despite its importance as a fellow member of the G7, a country like the UK benefiting from American security guarantees, and a country whose investment in the UK economy has been so important for British jobs and prosperity. It is hard to imagine Japan receiving so little attention in the 1980s, or to conceive of Margaret Thatcher postponing a visit to Tokyo because the Chinese were not willing to agree a visit to Beijing as part of the same trip, in the way that David Cameron did in early 2012. But it also seems strange now to read of Japan ‘maintaining its close alliance with the United States, solidifying the new China relationship, and looking ahead to a growing triangular alliance with Washington and Peking.’27 Japan’s ‘lost decade’ of economic stagnation after the collapse of the asset price bubble in 1991 was compounded by a succession of weak governments, changing trade patterns, due in part to the rise of the Yen after the Plaza Agreement of 1985, and historical ‘baggage’ in its relations with its neighbours, principally Korea and China, whose leaders lose little opportunity to exploit it for their own domestic advantage. Over the last three decades these forces have combined to make Japan’s influence today seem a far cry from what it was in the 1980s. It struggled to respond to the rise of Chinese influence within the region, seeming to sit on the sidelines and sulk while this happened, perhaps in part because it did not know how best to respond to the rise of interest in China in both Washington and European capitals. But Japan is still the world’s third biggest economy; more importantly, in marked contrast to China, it shares the same values the UK and EU profess to and considers itself as one of the three key pillars of the Western Alliance.28 This makes the relative lack of attention paid to it by the UK the more remarkable, especially as Britain has benefited so much from Japanese inward investment since the mid-1980s. In 2015, foreign direct investment in the UK from Japan was more than twenty times that from China, yet the importance of this for the British economy scarcely featured in the debate and referendum over EU membership the following year. Japanese companies have invested in the UK economy on an unprecedented scale since the advent of the Single Market in 1986, now accounting for almost 5% of all jobs in the UK manufacturing sector

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alone.29 More than 50% of all Japanese investment in the EU is based in the UK, the bulk of it there to take advantage of the Single Market. Furthermore, while British politicians were still wrangling over the future of the country’s relationship with the EU, East Asian countries were already being forced to adapt to the new realities emanating from Washington. Half a year after the Brexit referendum, they had to start adjusting to the policies of Donald Trump as US president, including his conviction that ‘trade wars are good, and easy to win.’30 While China would bear the brunt of the impact of his views over the next three years, as the two countries engaged in a series of skirmishes involving tariffs and counter-tariffs, the immediate consequences affected Japan most directly, one of Trump’s first acts after inauguration being to withdraw the USA from the fledgling Trans-Pacific Partnership (TPP) trade agreement. More than this, the very global order on which Japan had built its post 2nd World War policies, security relationships and diplomacy was under threat. An increasingly nationalistic and assertive China under Xi Jinping only added to the uncertainty. But far from turning inward on itself in reaction to the twin shocks of the Brexit referendum and Donald Trump’s ‘America First’ policy, under prime minister Shinzo Abe, Japan has shown leadership on a scale hitherto unprecedented since 1945, by successfully resurrecting the TPP agreement and re-branding it as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)—a TPP minus the USA in effect. Intriguingly, Abe has also said that post-Brexit Britain would be welcome ‘with open arms’ to join the CPTPP. While the proposal appealed to Brexiters with their vision of a ‘Global Britain’ it seems fanciful, not least because geography, combined with the relatively small size of most of the 11 CPTPP members’ economies, means that it would never be a substitute for the EU market for UK businesses. But Abe has since signalled that Japan’s bilateral free trade agreement with the EU could also be aligned with the CPTPP. If this happened, and if Britain also joined the CPTPP, this would place Japan at the centre of what would be the world’s largest free trade area and the UK would be a member, Brexit notwithstanding. Japan and the UK subsequently failed to agree a bilateral ‘cut and paste’ free trade agreement that, post-Brexit, would have preserved the access to the Japanese market that British companies enjoyed under the bilateral agreement between Japan and the EU. This suggested that

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British membership of the CPTPP will be far from automatic.31 (A bilateral deal in principle was reached in September 2020). But the UK’s international trade secretary met ambassadors from the CPTPP member countries in early July 2020 in a clear indication of the British government’s interest in pursuing CPTPP membership, although concluding any agreement was expected to take several years.32 Abe’s suggestion could therefore be the keystone of both the EU’s and UK’s relations with East Asia after Brexit. Much will depend on what, if any, broader objectives there may be for CPTPP membership. Japan’s sudden enthusiasm for combining the separate agreements certainly deserves scrutiny. It may be motivated by a desire to protect the multilateral trading system in the face of a protectionist American president who appears to have an antipathy to multilateral agreements generally. Working with the EU and other likeminded countries, such as Canada, to protect the system and preserve the WTO is to be welcomed. It is probably also a defensive move, in reaction to Japan’s economic rivals, notably Korea, signing bilateral FTAs. Japanese firms faced being placed at a significant disadvantage if Japan had not also entered into bilateral agreements with its main trading partners. But neither South Korea nor Taiwan are currently members of the CPTPP and if the EU and UK are to consider seriously the Japanese proposal, they should push for membership for both. This is not just because both are important trading partners, whose inclusion in the broader agreement would be positive for both trade and growth. South Korea and Japan face common threats, from both China and North Korea. It is in their own interests to work together more but their own relationship is beset by rivalry and mistrust, fuelled by nationalist tensions in both. Excluding South Korea from such a trading bloc would only add fuel to these tensions, while bringing in Taiwan would help reduce its international isolation. Perhaps most fundamentally, the EU and UK share common values with all three. Collaborating in this way would also be an effective way of responding to the rise of Chinese assertiveness under Xi Jinping. Possible future membership of the bloc for China could, indeed should, be left open, provided it shows itself willing to adhere fully to the obligations of membership. While Brexiters might welcome the idea of the UK joining the CPTPP, assuming agreement can be reached on the terms, a question that has not

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so far been addressed is whether membership of the group might bring with it accompanying expectations in terms of security. Before resigning as prime minister in 2020, Shinzo Abe made clear his determination to maintain, and even increase, security co-operation with the USA, despite difficulties over trade policy. Japan would almost certainly welcome similar co-operation, albeit on a much smaller scale, with the UK. The two countries agreed a three- year defence co-operation plan in 2017 and in late June 2020, the Ministry of Defence in London announced the permanent deployment of Royal Marines ‘east of Suez’ as part of a new ‘persistent global presence.’ The scale is modest: two Royal Navy frigates visited Japan in 2018 and 45 army personnel visited for joint training, while the marine deployment will be numbered in hundreds.33 Nevertheless, the deployment marks a significant change to five decades of withdrawing from global commitments. Further measures are also possible, such as more frequent Freedom of Navigation Operations (‘FONOPs’) by Royal Navy ships in the South China Sea. While the new presence may be largely symbolic, the symbolism will still be welcomed by Japan and most of its neighbours, especially as the emphasis of the deployments will be on working with allied countries. Nor will the message be lost on China. Such measures will also appeal to politicians in London with their post- EU vision of a ‘Global Britain.’ But even a modest increase in activities will require a significant commitment of resources far from home, and a careful balancing act given the tensions and disputes within the region. The big question, and the most important one, is whether these will be sustained as long term commitments or whether the resources will be withdrawn after a few years, especially once the full long-term cost of responding to the 2020 Covid-19 pandemic becomes clear. For the biggest constraint on such ambitions is the inability or unwillingness of British politicians to make long term commitments, the more so given other demands on limited resources. In this respect, the UK’s future position bears comparison with that of Canada. As a fellow member of the G7, G20, NATO and the Commonwealth, Canada is not without influence on the global stage. But it is only a fraction of the influence the EU brings to bear, an influence that until now the UK has played a major part in shaping, almost always to its own advantage. As with Canada and the case of Meng Wanzhou, outside the EU, from a position of influencing global policy, the UK risks becoming not only a rule taker rather than rule maker but a pawn in other countries’ fights. The way in which policy on the use of Huawei equipment

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changed so radically in a matter of months in the first half of 2020 was a possible early indication of that. The UK can build a new relationship with the countries of East Asia. Given their growing importance economically and politically it should certainly make doing so a priority. But if it is to do so successfully, Britain’s leaders, policy makers and businesses need to cast aside old-fashioned stereotypes and patronising assumptions or ‘superior wisdom.’ They can no longer afford to take countries in the region for granted and need to move beyond relations built on fatuous soundbites such as the ‘golden era,’ that was already looking decidedly tarnished almost as soon as David Cameron and George Osborne, its principal proponents on the UK side, had left office. Instead, they should seek to build lasting relationships based on shared values, mutual respect and understanding and a willingness to learn. It will require engaging in patient negotiations, in consensus-building and in multilateral diplomacy; it will also require commitment, perseverance and energy. Britain’s politicians will have to be more willing to travel, to listen more and preach less, and engage in sometimes difficult negotiations if they wish to wield influence on the world stage after Brexit. Whether this will be forthcoming remains to be seen. It is tempting at present to be pessimistic about the future. The resurgence of nationalism is rekindling old tensions, not least in East Asia. Frustrations at growing divisions in society since the 2008 global financial crisis have fuelled an angry populism that has helped produce new leaders, full of rhetoric but so far lacking in effective action for tackling the problems and challenges the world faces. Brexit was but one manifestation of this, another was the lack of a collective response to deal with the threat of the Covid-19 pandemic. The failure, so far, to agree an effective collective strategy for tackling global warming is another. Faced with such problems, it is easy to overlook the enormous progress that has been made in East Asia over the last four decades, in reducing poverty, improved health and access to education, in bringing unprecedented, broadly based prosperity, in greater security and more. I have been privileged to have experienced so much of it. The region faces major challenges but it would be foolish to assume that it cannot rise to them, and even more foolish for the UK and EU not to continue to work with the countries of the region in building a better future.

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Notes 1. GEC-Marconi Denies Radar Cancellation, Flight Global, 13 December 1995, https://www.flightglobal.com/gec-marconi-denies-radar-cancellat ion/1352, retrieved 22 July 2020. 2. Jim Pickard: George Osborne’s Four Lords Push for Stronger UK-China Ties, Financial Times, 21 October 2015, op.cit. 3. British Family Firm Accused of Getting Rich by Building Bridges to Nowhere, The Guardian, 20 December 2005, https://www.theguardian. com/politics/2005/dec/20/uk.freedomofinformation; Bridge Builder Fined For Bribes, Financial Times, 25 September 2009, https://www.ft. com/content/62751218-aa05-11de-a3ce-00144feabdc0, both retrieved 29 June 2020. 4. GDP Output Approach—Low-Level Aggregates, Time Series, Office of National Statistics, https://www.ons.gov.uk/economy/grossdomesticpr oductgdp/datasets/ukgdpolowlevelaggregates, retrieved 29 June 2020. 5. Chris Rhodes: House of Commons Briefing Paper 01942, Manufacturing: Statistics and Policy, 10 January 2020. 6. Britain’s Armed Forces Pivot East to Face Growing China Threat, Financial Times, 3 July 2020, https://www.ft.com/content/20910e6d5ae7-4026-aaee-947e22c3dd60; UK Faces Calls to Target China with New Sanctions, Financial Times, 7 July 2020, https://www.ft.com/con tent/0453cdd8-fe47-47c6-8748-439c7f1abaa5?segmentId=b0d7e6533467-12ab-c0f0-77e4424cdb4c, both retrieved 7 July 2020. 7. Mark Leonard: The End of Europe’s Chinese Dream, ECFR, 27 May 2020, https://www.ecfr.eu/article/commentary_the_end_of_eur opes_chinese_dream, retrieved 30 June 2020. 8. Odd Arne Westad; Restless Empire—China and the World Since 1750, London 2012; Owen Lattimore: Inner Asian Frontiers of China, New York 1940. 9. Steve Tsang: The Cold War’s Odd Couple, op.cit, p. 64. 10. Donald Trump Asked Xi Jinping for Election Help, John Bolton Claims, Financial Times, 18 June 2020, https://www.ft.com/content/ 2226adc7-f897-4fa3-abdc-ba2ca2183cfc; Donald Trump Presses Allies to Confront China over Uighur Rights, Financial Times, 31 March 2019, https://www.ft.com/content/fdceb126-5354-11e9-91f9-b6515a 54c5b1, both retrieved 29 June 2020. 11. May’s Pledge to Bind Trump to Europe Wins Mixed Reception, Financial Times, 3 February 2017, https://www.ft.com/content/8ed9d182-ea3411e6-967b-c88452263daf, retrieved 29 June 2020. 12. China Draws Condemnation for New Hong Kong Security Law, Financial Times, 1 July 2020, https://www.ft.com/content/052989fc2748-4f8e-a2b0-539c32e1ad72?desktop=true&segmentId=d8d3e364-

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5197-20eb-17cf-2437841d178a#myft:notification:instant-email:content, retrieved 1 July 2020. Merkel on Covid-19, Brexit and Global Challenges, Interview with Europa Group of newspapers, The Guardian, 27 June 2020; Merkel Comes Under Fire at Home for China Stance, Financial Times, 7 July 2020, https://www.ft.com/content/bf1adef9-a681-48c0-99b8-f55 1e7a5b66d, retrieved 7 July 2020. EU Warns China That Investment Talks Are Entering ‘Critical Stage’, Financial Times, 28 June 2020, https://www.ft.com/content/a51 97502-6106-48e9-bb81-e4d87925d619?desktop=true&segmentId=d8d 3e364-5197-20eb-17cf-2437841d178a#myft:notification:instant-email: content, retrieved 2 July 2020. Patrick Wintour: Brexit Viewed with Incredulity Overseas, Says Ambassador, The Guardian, 23 June 2019, https://www.theguardian.com/ politics/2019/jun/23/brexit-destroying-uk-reputation-overseas-southkorea-says-diplomat, retrieved 16 August 2019; Outgoing British High Commissioner to Singapore Scott Wightman Warns of ‘Lasting Damage’ from Brexit, The Straits Times, 13 June 2019, https://www.straitstimes. com/world/europe/outgoing-british-high-commissioner-to-singaporescott-wightman-warns-of-lasting-damage, retrieved 1 August 2019 Where Should Britain Go Post-Brexit? Eight Foreign Secretaries Respond, Financial Times, 11 January 2019, https://www.ft.com/content/3d8 451c4-13a2-11e9-a581-4ff78404524e, retrieved 2 August 2019. Britain’s Armed Forces Pivot East to Face Growing China Threat, Financial Times, 3 July 2020, op.cit. The Brexit Inflection Point: The Pathway to Prosperity, Legatum Institute, 2017, cited in M. Wolf: Six Impossible Notions About ‘Brexit Britain’, Financial Times, 30 November 2017, https://www.ft.com/content/06e fe986-d52b-11e7-a303-9060cb1e5f44?emailId=5a20a69b8b77210004 f7916a&segmentId=2f40f9e8-c8d5-af4c-ecdd-78ad0b93926b, retrieved 21 July 2020. UK Set to Nominate Liam Fox for Top WTO job, Financial Times, 8 July 2020, https://www.ft.com/content/5f5d1d87-afc3-419f-b8fb-7db d038c3163, retrieved 22 July 2020. Brexit Vote Not Surprising After Years of Lies About EU, Says JeanClaude Juncker, The Guardian, 15 September 2016, https://www.the guardian.com/politics/2016/sep/15/brexit-vote-years-of-lies-eu-jeanclaude-juncker, retrieved 1 April 2020. Ian Kershaw: Hitler, Nemesis, 1936–1945, London 2001, cited in Jonathan Fenby: Alliance, London 2006, p. 81. Antonia Fraser: The King and the Catholics, London 2018, pp. 6–14; Tory Chairman James Cleverly Fears There Will Be Riots If Brexit Doesn’t Happen on October 31, Daily Mail, 30 September 2019, https://

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www.dailymail.co.uk/news/article-7522415/Tory-chairman-James-Cle verly-fears-riots-Brexit-doesnt-happen-October-31.html, retrieved 1 April 2020. The MP in question was Robert Spink, at the time representing UKIP but elected to parliament as a Conservative. He lost his seat in 2010 and in 2017 was convicted on four counts of electoral fraud. European Foreign Policy: A New Realism on China, Financial Times, 20 March 2019, https://www.ft.com/content/d7145792-4743-11e9-b16896a37d002cd3, retrieved 30 June 2020. Mark Leonard: The End of Europe’s Chinese Dream, op.cit Ibid. Robert Shaplen: A Turning Wheel, op.cit, p. 361 Daisuke Ikemoto: Is the Western Alliance Crumbling? A Japanese Perspective on Brexit, in Huang and Reilly eds.: The Implications of Brexit for East Asia, op.cit. Office for National Statistics, Employment by industry (Labour Force Survey) May 2019, https://www.ons.gov.uk/employmentandlabourma rket/peopleinwork/employmentandemployeetypes/datasets/employmen tbyindustryemp13, retrieved 2 August 2019; Britain Cannot Easily Dismiss Japanese Brexit Warning Letter, The Guardian, 4 September 2016, https://www.theguardian.com/politics/2016/sep/04/britain-jap anese-brexit-letter-eu, retrieved 10 November 2016. @realDonaldTrump, 2 March 2018, https://twitter.com/i/moments/ 969519906097106944?lang=en, retrieved 17 September 2019. Ikemoto: op.cit; UK Would Be Welcomed to TPP ‘With Open Arms’, says Shinzo Abe, Financial Times, 8 October 2018, https://www.ft.com/ content/57c4e3ce-ca22-11e8-b276-b9069bde0956, retrieved 2 August 2019; No Deal Brexit Risks Rise as UK- Japan Trade Talks Stall, Financial Times, 8 February 2019, https://www.ft.com/content/5ce60af2-2b9011e9-a5ab-ff8ef2b976c7, retrieved 16 August 2019; The 11 members of the CPTPP are: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Iana Dreyer: CPTPP + US: The Emergence of a British Trade Policy Strategy, Borderlex, 16 July 2020, https://borderlex.eu/2020/07/16/ cptpp-us-the-emergence-of-a-british-trade-policy-strategy/, retrieved 22 July 2020. UK and Japan Strengthen Defence Ties, 14 December 2017, https:// www.gov.uk/government/news/uk-and-japan-strengthen-defence-tie s--2, retrieved 17 September 2019; Britain’s Armed Forces Pivot East to Face Growing China Threat, Financial Times, 3 July 2020, op.cit.

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Index

A Abe, Shinzo, 164, 166, 170 Aceh, 11 Addis, Sir John first British ambassador to PRC, 70 AEI, 75 Afghanistan Soviet invasion of, 4 Aid for Trade Provision (ATP), 106, 109–112, 154 Airbus, 93, 104 sale of aircraft to Taiwan, 77 Albright, Madeleine former US secretary of state, 118, 126 Alsthom, 35 Alstom-Siemens contract to supply high speed trains to Taiwan, 93 Al-Yamamah arms contract, 111 American Chamber of Commerce in China, 146 Amnesty International, 68

Anglo-Taiwan Trade Committee, 74, 75 Arab spring, 127 Argentina, 52 economic dependence on UK, 18 Aris, Michael, 120. See also Aung San Suu Kyi ASEAN (Association of South East Asian Nations), 10, 11, 13 ASEAN Regional Forum (ARF), 11, 116–119 1998 meeting in Manila, 118 Asia Europe Meetings (ASEM), 11, 119 Hanoi Summit, 2004, 121 Asian Infrastructure Investment Bank (AIIB), 132 Association of South East Asian Nations (ASEAN), 46, 50, 107–109, 114–123, 126 Aung San Suu Kyi, 120, 121 Austin & Pickersgill cargo ships for Vietnam and ATP, 106, 109

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Singapore Pte Ltd. 2020 M. Reilly, The Great Free Trade Myth, https://doi.org/10.1007/978-981-15-8558-6

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INDEX

Australia, 17, 22, 24, 63 and re-settlement of boat people, 109, 113–115, 125 British investments in, 20 opposition to British membership of ARF, 118 Austria opening of trade office in Taiwan, 78 Auswaertiges Amt (German foreign ministry) and EU policy on Myanmar, 122 Azevêdo, Roberto Director-General of WTO, 160

B BAe146. See British Aerospace Bangemann, Martin former European Commissioner for Internal Market, 58, 62 Bangkok, 115 ASEAN Regional Forum meeting in, 116 barriers to imports in China, 145 in South Korea, 52, 53, 59–61 in Taiwan, 80, 81, 97 in UK on Taiwanese goods, 75 Korean fears about, 59 Bates, Bill British ambassador to Korea, 35, 37, 39, 43, 48 Beijing, 58, 127, 131, 134, 136, 150 British embassy, 73, 138, 145 2008 Olympic Games, 143 Tiananmen Square massacre, 5 Belgium, 44 Belt and Road Initiative, 18 Berlin Wall, 56 Blair, Tony, 22 and EU arms embargo, 95

ASEM meeting, 2000, 119 Blue House, 5 boat people, 5, 11, 106, 109, 112, 113, 115, 123, 125 Boeing, 132 supply of aircraft to Taiwan, 93, 104 Bonn, 36, 38 Bosphorus Bridge and reintroduction of ATP, 110 Bo Xilai, 147 Brexit, 8, 12, 13, 15, 16, 25, 31, 36, 62, 65, 82, 115, 118, 126, 146, 148, 149 reactions to in East Asia, 158 referendum, 8, 155, 162, 164 British Aerospace, 111 BAe 146 aircraft and Taiwan, 89 British Council activities in Myanmar, 122 closure of teaching facilities in Taiwan, 93 lack of presence in Taiwan, 81 British economy contribution of service sector to GDP, 28 importance of manufactured exports, 28 British Forces Post Office, 4 British North Borneo, 22 British Nuclear Fuels Ltd. (BNFL), 72 British Overseas Territories and foreign investment in Myanmar, 122 British Overseas Trade Board (BOTB) and Anglo-Taiwan Trade Committee, 75 British Rail Engineering Limited (BREL), 71 Brittan, Leon European Commissioner for Trade and External Affairs, 61

INDEX

Secretary of State for Trade and Industry, 134 Bruges speech by Margaret Thatcher, 55, 62 Brunei, 13, 22, 23, 105, 120 British responsibiluty for its external affairs, 23 independence, 23 Offshore Patrol Vessels. See GEC: Offshore Patrol Vessels oil reserves, 24 Burma. See Myanmar isolationist policy of, 120 Busan, 34 Bush, George W., 121 Butterworth radar station, role in FPDA, 23 C Cambodia, 5, 11, 107–109, 113, 115, 116, 119, 121, 123 famine in, 108 genocide in, 107 1989 Paris peace conference on, 116 1991 Paris peace conference on, 116 Cameron, David, 132, 163, 167 meeting with Dalai Lama, 129, 139 2013 trade mission to China, 129, 140 Canada, 74, 109, 115, 125, 160, 165, 166, 170 and resettlement of boat people, 113, 114 declining share of British exports, 24 relations with China, 146, 147 Carrington, Lord former British foreign secretary, 42 Cathay Pacific Airways, 28

179

Catholic Relief Act, 161 Chamberlain, Joseph, 23 British colonial secretary, 19 Chamberlain, Neville British chancellor of the exchequer, 19 Chen Shui-bian, 67, 97, 103 Chiang Ching-kuo, 67 Chiang Kai-shek, 21, 34, 67, 69, 73, 156 nuclear weapons ambitions of, 73 China, 4, 13, 51, 57, 63 American Chamber of Commerce, 146 as another Japan, 155 barriers to imports, 145 British exports to, 129 British investments in, 20 British policy towards, 138 ‘century of humiliation’, 9, 19 civil war in, 21 comprehensive investment agreement with EU, 146 Covid-19 pandemic, 156 difficulties of doing business in, 128 emperor of and attempts to establish trade relations, 128 EU Chamber of Commerce, 146 European competition for attention in, 137 execution of British national, 147 foreign ministry, status of, 145 free trade agreement with Switzerland, 146 growth of British exports to, 140 Hong Kong National Security Law, 156 hostages, 147 market economy status, 141 National Development and Reform Commission (NDRC), 139

180

INDEX

pressure of embassies on Western universities, 101 purchases of Norwegian oil, 135 relations with Canada, 146 relations with Myanmar, 122 rust belt, 136 supply of ’dual-use’ technology to Iran, Iraq and Pakistan, 134 support for Khmer Rouge, 108 trade as a political weapon, 135 trade policy, 17 UK share of imports, 141 China Airlines (CAL), 77, 93 China People’s Republic of (PRC), 3, 5, 6, 10–12, 69, 70, 76, 83, 157 Anti-Secession Law, 95 as a strategic rival, 6 backing for Khmer Rouge, 107 British recognition of, 20, 69 diplomatic relations with UK, 69 establishment of diplomatic relations with South Korea, 57 intellectual property rights, 53 China Republic of (RoC), 69, 70, 72, 73, 76, 85 attempts to buy depleted uranium, 74 trade office in London, 70, 74 see also Taiwan Chinese civil war, 6 Chinese Communist Party, 155, 156 Chinese refugees from Vietnam, 106 Chirac, Jacques, 95, 96, 121 Choi Kyu-Hah South Korean president,1980, 39 Chongqing, 138 Chun Doo Hwan, 38–45, 47, 49, 56 British representation at inauguration, 43 handover of power, 51 invitation to UK, 44 Rangoon bomb attack, 43

visit to Europe, 1986, 45 Chunghwa Picture Tubes Mossend plant, 91 Churchill, Winston S. contempt for the Chinese, 21 climate change, 12 COCOM, 131 Cold War, 2–4, 21, 31 Columbia Pictures purchase of by Japanese interests, 136 Common Foreign and Security Policy (CFSP), 58, 115, 117, 118, 123 Commonwealth, 20, 105, 166 Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), 164, 165 invitation to UK to join, 164 Confederation of British Industry (CBI) and Anglo-Taiwan Trade Committee, 74 Conservative Party, 17, 19 Cook, Robin former British foreign secretary, 119 Corn Laws abolition of, 17 Costa Rica support for Taiwan in OIE, 98 counterfeiting by Taiwanese companies, 75, 80 coup military, in South Korea, 37, 38, 67 Covid-19 pandemic, 157, 159, 162, 166, 167 CPTPP. See Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) Cradock, Sir Percy former British ambassador to PRC, 138

INDEX

Cross-strait relations importance of Taiwanese investment for PRC, 101 start of regular cross-strait flights, 98 Cultural Revolution, 6, 132, 137 Cyprus, 121 support for China, 98 D Dalai Lama, 129, 132, 139–141, 143 Dalian, 136 Daya Bay nuclear power station, 133, 134 Demilitarised Zone (DMZ), 5 Democratic Progressive Party (DPP), 67, 87, 93, 94, 98 Deng Xiaoping, 6, 138 Department of Trade and Industry, 52, 75, 77, 141, 145 Offshore Supplies Office, 109 Diaoyutai islands. See Senkaku islands diplomacy values-based approach, 7 DMZ (de-militarised zone), 35 Douglas-Home, Sir Alec former British foreign secretary, 7 Duke of Gloucester visit to Seoul, 44 E environmental protection, 12 EU Chamber of Commerce in China, 146 EU-China strategic partnership, 94 EU guidelines on East Asia, 96 European Commission, 8, 9, 26, 27, 37, 44, 54, 55, 61, 63, 64, 80, 85, 146, 160 anti-dumping investigation and solar panels dispute, 143

181

contacts with Taiwanese, 76 criticism of Japanese housing, 136 diplomatic relations with PRC, 76 Free Trade Agreement with ASEAN. See European Union (EU) lack of contacts with Taiwanese, 97 opening of office in Taipei, 92 preferential tariffs of, 27 presence in Taiwan, 97 state-aid for inward investment, 91 trade agreement with PRC, 76 European Community (EC), 20, 26, 37, 39–42, 44, 45, 50, 57, 62. See also European Union (EU) and Cambodian refugees, 115 contribution to UN relief programme in Cambodia, 108 growth of trade with China, 80 growth of trade with Taiwan, 81 Political Committee of, 39, 40, 49 raection to death sentence on Kim Dae Jung, 42 European Council policy on China, 162 European Economic Community (EEC). See European Community (EC) European External Action Service (EEAS), 96 European Single Market, 9, 29, 59, 123, 136, 154, 163, 164 and rules on state aid, 112 impact on Taiwanese investment, 90 European Union (EU), 15–17, 27, 30, 32, 57. See also European Community (EC) accession of Spain and Portugal, 51 and North Korea civil nuclear energy programme, 62 arms embargo on China, 92, 94, 102

182

INDEX

Asia Working Group, 121 bilateral trade with Taiwan, 87, 94 competitive nationalism of members, 30 export to GDP ratio, 15 free trade agreement with ASEAN, 119 free trade agreement with Japan, 164 2017 Malta Summit, 157 representation by Troika, 117, 118 values diplomacy, 119 Evergreen Group move of European headquarters from London to Hamburg, 81 Export Credit Guarantees Department (ECGD) cover for sale of Hawks to Indonesia. See Hawk aircraft F Falkland Islands, 52 Ferranti British defence company, 45, 56 Fielding, Leslie Director-General for External Relations, European Commission, 76, 80 Five Power Defence Arrangements (FPDA), 22, 23, 32 Foreign & Commonwealth Office (FCO), 1, 22, 36, 39, 42, 45, 59, 72, 89, 107, 112, 145 and British membership of AIIB, 132 and ’golden era’, 140 differences over policy to Taiwan, 80 diplomatic relations with North Korea, 119 lack of influence in S. Korea, 37 merger with DfID, 159

Overseas Development Administration as part of, 112 Policy Planning staff, 117 Foreign Direct Investment benefits of to the UK, 9 ’Fortress Europe’, 58, 59, 62 Fox, Liam ‘fat and lazy’ businessmen, 27 former British international trade secretary, 15, 27, 31 Framatome, 35, 39, 133 Framework Agreement between Korea and the EU, 61 France, 2, 9, 23, 25, 26, 30, 35–37, 40, 43–45, 56, 59, 72, 74, 76, 77, 106, 108, 117, 125 and Cambodian Peace Conferences, 116 and Cambodian refugees, 108 and resettlement of boat people, 114 arms sales to China, 96 defence sales to Taiwan, 78, 82, 116 Economic Co-operation Agreement with Korea, 26 non-recognition of North Korea, 45 representation at Park Chung Hee’s funeral, 36 representation in Taiwan, 78 Freedom of Navigation in South China Sea, 166

G Gambia support for Taiwan in OIE, 98 GEC-Alsthom, 88 General Agreement on Tariffs and Trade (GATT), 26, 52, 62 General Electric Company (GEC), 11

INDEX

Offshore Patrol Vessels for Brunei, 153 power turbines for Daya Bay, 133 power turbines in Korea, 35, 39, 41, 46, 47, 88 railway electrification in Taiwan, 71–73, 75 Seoul metro contract, 42, 44 General Electric (GE) (US company), 72, 79 and fourth nuclear power plant in Taiwan, 92 Generalised System of Preferences (GSP), 26, 51–54, 76 of GATT, 37. See also GATT 1954 Geneva conference on Indo China UK chairing of, 108 genocide against the Dzungars by the Qing, 142 in Cambodia. See Cambodia Genscher, Hans Dietrich former German foreign minister, 41, 42 Germany, 17, 18, 20, 25–27, 74 and boat people, 114 as market for British exports, 17 exports to Korea compared to UK exports, 47 representation at Park Chung Hee’s funeral, 36 sponsorship of Korean students, 26 Germany, Federal Republic of West Germany, 37, 40, 41, 43–45, 47, 56, 59, 72 Giles, Lionel. See Sun Tzu: On the Art of War Gilmour, Sir Ian junior British foreign minister, 38, 39 Giscard d’Estaing, Valéry, 74

183

Gleysteen, William US ambassador to Korea, 35 ’Global Britain’, 166 Global Times , 12, 13 golden era in Sino-British relations, 130, 140, 148, 155, 157, 167 Gordon Riots, 161 Gorst, Peter ATTC representative in Taipei, 75 Great Britain, 19. See also United Kingdom Great Leap Forward, 6, 131 Grey, Anthony detention in China, 147 GSK allegations of corrupt practices in China, 147 Guangdong Nuclear Power Company, 134 Guangzhou French consulate, 79, 80 Gurkhas, 22, 23 Guthrie ownership of Malaysian rubber plantations, 110 Gwangju, 38–40 May 1980 massacre, 5

H Hague, William former British foreign secretary, 158 Haitai and UK chewing gum market, 60, 64, 91 Hanoi, 105, 113, 121, 125, 126 Hawk aircraft, 42, 45, 56, 111 sale to Indonesia, 112 sale to Malaysia, 111, 133 Hawker Siddeley, 132 Healey, Denis

184

INDEX

former chancellor of the exchequer, 23 Heng Samrin, 107 Heseltine, Michael President of the Board of Trade, 140 Heywood, Neil murder by wife of Bo Xilai, 147 Himalayas Chinese behaviour in, 156 Hinton, Lord former chairman of Central Electricity Generating Board civil nuclear power in Taiwan, 72 Hitler, Adolf on England and Europe, 161 Hong Kong, 1, 7, 18, 21, 23–27, 70, 79, 80, 128, 133, 134, 138, 140, 143, 145, 147, 149–151 and EU trade, 94 and Vietnamese boat people, 112–115, 125 British exports and public procurement contracts, 29 closed camps for boat people, 115 erosion of autonomy in, 158 imposition of National Security Law, 148 national security law. See China: Hong Kong National Security Law 1967 riots in, 73 screening policy for boat people, 115 Hong Kong and Shanghai Bank. See HSBC Honhai Precision (Foxconn), 144 largest private sector employer in China, 94 HSBC, 18, 25, 28 Hua Guofeng, 36

Huawei, 156, 166 5G phone networks, 131, 146, 148, 149 human rights, 1, 2, 12, 34, 36, 40, 43, 45, 47, 51, 56, 61, 67, 68, 96, 102, 112, 118, 120, 129, 140, 143, 148, 156–158, 162 Humphrey, Peter detention in China, 147 I Imperial Chemical Industries (ICI), 55 imperial preference, 19 import licensing in Korea, 36 India, 27 Indonesia, 11, 13, 22 Intellectual Property Rights (IPR), 53, 56, 61 lack of protection for in Taiwan, 97 theft of in China, 128, 145 International Atomic Energy Act and China, 134 International Atomic Energy Agency (IAEA) Taiwanese expulsion from, 73 International Consultative Group (ICG) on Vietnamese refugees, 113, 116 International Development Act, 2002, 112, 125 International Monetary Fund (IMF), 8 inward investment to the UK from East Asia, 8 to the UK from Japan, 11, 163 Iran Shah of, 4, 154 impact of overthrow on energy prices, 33 Iron Curtain, 56, 154

INDEX

collapse of, 116 Italy, 20, 26, 27, 40, 78, 82 J Japan, 4, 6, 20, 21, 25, 31, 51, 53, 59, 72, 82, 155, 157, 160, 163–165, 170 and CPTPP, 164 as member of ‘Western Alliance’, 163 defence co-operation plan with UK, 166 ‘lost decade’, 6, 163 principal funder of ODP, 113 relations with neighbours, 163 trade negotiations with UK, 164 visa free access for Taiwanese, 100 Jardine Matheson, 25, 28, 74 Javelin missiles possible sale to Korea, 56 Johnson, Boris, 154 Juncker, Jean-Claude former European Commission president, 161 K Kadoorie, Lord chairman, China Light and Power relationship with GEC, 134 views on Chinese, 145 Kaohsiung, 67, 68, 71 10 December 1979 protests, 75, 77 Khmer Rouge, 107, 108 Kim Dae Jung, 38, 40, 42–44, 47, 51, 148 exile in USA, 44 reactions to death sentence on, 42 Kim Il Sung University, 139 Kim Young Sam, 34, 38, 44, 48, 51, 59, 155 under house arrest, 44

185

Kissinger, Henry former US secretary of state, 74 Koo, Jeffrey and BAe 146 project, 89 Korea, North (DPRK), 2, 6, 138, 139, 155 absence of UK contacts with, 77 and Rangoon bomb, 5, 43 bomb on Korean Air plane, 5 commando squad, assassination attempt, 4 nuclear development programme, 62 Korean War, 2, 3, 21, 69, 83 Korea, Republic of (RoK). See Korea, South Korea, South, 13, 38, 46, 116, 157, 160, 165 access to GSP, 52, 76 annual rate of economic growth, 52 barriers to imports, 52, 53 British exports to, 46 centenary of diplomatic relations with UK, 44 curfew, 43 democratic elections in, 51 difference in UK relations compared to Taiwan, 69 diplomatic allies, 34 diplomatic isolation of, 2 diplomatic priorities, 57 economic situation in, 33 European competition for influence in, 56 financial sector restrictions, 53 free trade agreements, 165 Free Trade Agreement with EU, 61 ’golden opportunities for British businessmen’, 2 hosting of 1988 Olympic Games, 60 intellectual property rights, 53

186

INDEX

leading user of GSP, 26 low share of imports from UK, 52, 63 obligations under GATT, 55 one of Asian ’tiger economies’, 70 1980 protests in, 37–39, 48–50 size of economy, 10, 46 trade policies of, 51 ‘underinformed about Europe’, 58 views UK as protectionist, 26 visit by British foreign secretary, 7 visit by Duke of Gloucester, 1983, 44 Kuomintang (KMT) (Chinese Nationalist Party), 67, 87, 98, 103

L Lafayette frigates, 78, 95 Lankester, Tim former permanent secretary, Overseas Development Administration, 111 Laos, 120, 121 Le Corbusier, 3 Lee Hong Koo Korean unification minister visit to London, 1991, 58 Lee Kuan Yew, 105 Lee Teng-hui visit to London, 2000, 91 Li Keqiang, 62, 64, 144 Limerick, Lord former British trade minister, 71 Lite-On investment in Scotland, 91 Liu Xia, 151 widow of Liu Xiaobo, 143 Liu Xiabo Chinese dissident and Nobel Peace Prize winner, 135, 142, 143

London, 18, 31 pre-eminent global financial centre, 18 Stock Exchange, 110 venue of first ASEM summit, 119 visit to China by Lord Mayor of, 141 Los Angeles, 56 Lotte, Korean retail group boycotts of in China, 135, 147 Luxembourg, 117

M Maastricht Treaty, 115, 116 Macartney, Lord mission to Peking, 129 Macmillan, Harold former British prime minister, 22 Mahathir Mohamad, 19, 46, 109–111, 124 assurances from Margaret Thatcher, 111 Buy British Last Policy, 19, 110 threat to shoot boat people, 109 views on conflict in Bosnia, 117 Majestic Trading Company, 70 Major, John former British prime minister, 89 meeting with Lord Kadoorie, 134 Malaya, 17, 20, 22, 69 communist insurgency in, 20, 24 importance for British trade, 20 Malaysia, 24, 50, 105, 106, 112, 120, 123–125. See also Malaya British exports to, 46, 106, 110 ’Buy British Last’ policy, 110, 46 introduction of full cost fees for students at UK universities and impact on relations, 110 visit by Margaret Thatcher, 110

INDEX

Malaysia Airlines, 111 Malta, 121 Manila, 34, 124 Mao Zedong, 107, 127, 131, 132, 156, 157 refusal to establish diplomatic relations with UK, 69 Marcos, Ferdinand former Philippine president, 34 martial law in South Korea, 34 in Taiwan, 67 in Taiwan and the Philippines, 34 Martial Law Command, Korea, 38 Ma Ying-jeou, 162 2008 election as president of Taiwan, 98 May, Theresa former British prime minister, 15, 157 McLaren, Robin head of Far Eastern Department, FCO, 39 Mencius on the legitimacy of war, 142 Meng Wanzhou, 166 detention in Canada, 146, 147 Merkel, Angela, 96, 157 relations with China, 143 solar panels dispute, 144 Mexico, 52 Military Armistice Commission (MAC), 5, 69 Ministry of Defence (UK), 166 Mirage fighter aircraft sale of to Taiwan, 78, 95 Mitter, Rana, 21, 31 Mitterrand, Francois, 44, 139 visit to North Korea, 1981, 44 Morgan, John British ambassador to Korea, 43 Morrice, Philip

187

British representative in Taiwan, 87, 90, 102 Moscow, 56 Myanmar, 11, 118–122, 126 admission to ASEAN, 120 relations with China, 122 sanctions against, 120

N NAAFI, 4 Needham, Richard former British trade minister visits to Taiwan, 88 Nelson, Lord chairman of GEC, president of Sino-British Trade Council, 73 Netherlands, 40 exports to Taiwan, 79 sale of submarines to Taiwan, 78 trade with Taiwan, 92 New Zealand, 20, 22, 24, 32 ’Nine Dash Line’, 156 Nissan car factory in Sunderland, 59 Nixon, Richard visit to Beijing, 1972, 108, 132 Non-Proliferation Treaty (NPT), 73 North Atlantic Treaty Organisation (NATO), 161, 166 Norway exports to China, 135 Nott, John former British trade secretary, 37, 38 complaints about exporters, 25, 27, 128 Nuclear Electric bid for fourth nuclear power station contract in Taiwan, 88, 90. See also Westinghouse Nuclear Suppliers Group, 74

188

INDEX

O On the Art of War. See Sun Tzu: On the Art of War Osborne, George former chancellor of the exchequer, 140, 142, 149, 150, 154, 167, 168 and AIIB, 149 influence on China policy, 129 interest in China, 140 relations with China, 129 ’values-free’ policy of, 141 visit to Xinjiang, 130

P Pakistan, 132, 134 Panmunjom, 5 Paris, 36, 38, 39 Park Chung Hee, 1, 5, 33, 36 assassination of, 33, 34, 38, 46 Patel, Priti resignation as international development secretary, 112 Pax Americana, 6 Pearl Harbor, 20 Peel, Robert, 17 People’s Liberation Army (PLA) and invasion of Vietnam, 108 People’s Republic of China (PRC), 36. See also China People’s Republic of Pergau Dam, 111, 112, 124, 154 Permanent Court of Arbitration, 142 pharmaceutical industry and lack of copyright protection, 53, 54 Philippines, 4, 11, 13, 34, 50 and ATP, 154 Chinese occupation of S China Sea reefs, 135 Philips NV

dispute over compulsory licensing, 93 investments in Taiwan, 92 Plaza Agreement, 1985, 59, 163 Pol Pot, 107 Pope John Paul II appeal for clemency for Kim Dae Jung, 42 Powell, Jonathan chief of staff to Tony Blair, 22 Preah Vihear forcible return of Cambodian refugees from, 108, 109 Presbyterian Church in Taiwan, 68 Primakov, Yevgeni former Russian foreign minister cabaret performance with Madeleine Albright at ARF, 118 ’Project Defend’, 155 pushback Singaporean policy, 109, 113, 114 Pyongyang, 6, 57, 138, 139 Q Qing dynasty genocide of Dzungars, 142 Quemoy (Kinmen) 1958 Crisis, 21 R Raffarin, Jean-Pierre former French prime minister support for China’s Anti-Secession Law, 95 Rangoon (Yangon), 5, 43 Reagan, Ronald, 43 and resettlement of boat people, 114

INDEX

refugees from Vietnam. See boat people regional development agencies, 60 bidding wars for investments from overseas, 91 renminbi (RMB) role of London as clearing centre, 141 Republic of China (RoC). See Taiwan Republic of Korea (RoK). See Korea, South Rhee Syngman former South Korean president, 38 riot control equipment sale of to Taiwan by UK, 68 Roachbank, British cargo ship, 107 carrying Vietnamese refugees, 68 Rockefeller Center, New York purchase by Japanese interests, 136 Roh Tae Woo, 51, 138 visit to Europe, 56 Rolls-Royce sale of Spey engines to PRC, 70 supply of engines to Taiwan overturned, 93 Roosevelt, Franklin D., 20, 21 Royal Air Force (RAF), 4, 23 Royal Marines deployment east of Suez, 166 Royal Navy, 23, 31, 166 presence in East Asia, 20 Rusk, Dean former US secretary of state reaction to sale of Viscount aircraft to China, 131 Russia, 57

S Sabah, 22 Saigon, 4, 105 Samsung

189

Teesside factory, 60 Sarawak, 22 Schengen common visa area and Taiwan, 99–101 Schmidt, Helmut, 40 Schr˝ oder, Gerhard, 95, 96 Scotch whisky imports into Korea, 53, 55, 61 Section 301 US trade policy measure, 53, 62, 63 self-interest, national as driver of policy towards China, 137 Senkaku islands, 156 Seoul, 5, 13, 52, 56, 58, 64 American embassy, 2, 35 architecture, 2 ASEM meeting, 2000, 119 British embassy, 1, 3, 33, 35, 47, 58, 138 embassies in, 2 French embassy, 3 hosting of 1988 Olympic Games, 56 RoC (Taiwan) embassy, 3, 57 Russian (Soviet Union) embassy, 57 threat from North Korea, 4, 62 US army base, 4 visit by Margaret Thatcher, 53 Shanghai, 138 Shanghai Expo, 2010, 100 Shaplen, Robert, 4, 6, 7, 13 Shell blocked by PRC from bidding for licences, 78 Short, Clare former international development secretary, 124 Singapore, 1, 20, 22–24, 26, 31, 70, 105, 109, 113, 114, 119, 120, 122–126, 160 Single European Act, 57

190

INDEX

Sino-British Joint Declaration, 134, 157 smoked salmon Chinese embargo on imports from Norway, 135 Smoot-Hawley tariff, 19 Snow, Edgar, 156 Soames, Christopher former vice-president, European Commission, 81, 85 soju competitive threat from Scotch whisky, 55 Solarworld, 144 South Africa railway electrification in Taiwan, 71, 72 South China Sea, 6, 156 Freedom of Navigation Operations, 166 South East Asia Zone of Peace, Freedom and Neutrality Singaporean views about, 22 Soviet Union (USSR), 3, 5, 56, 155 Spain state visit to China by King Juan Carlos, 98 special relationship between USA and UK, 132 Spreckley, Nicholas, 45, 52 British ambassador to Korea, 48, 50 British High Commissioner to Malaysia, 111, 124 Standard Chartered Bank, 25, 28 State-Owned Enterprises (SOEs), 144 Suez crisis, 46, 108, 114 and end to British pretensions, 21 Suharto, 22 Sukarno and Konfrontasi policy, 22, 24 Sun Tzu On the Art of War, 142

Swires, 25, 28 Switzerland free trade agreement with China, 146 systemic rival China as, of EU, 162

T Taipei, 7, 10 direct flights to London, 100 European Commission presence, 80 Taipei metro French company awarded contract, 79 Taiwan, 1, 3, 6, 10, 12, 13, 21, 25, 27, 32, 34, 51, 52, 57, 63, 65, 67–69, 72, 75, 83, 85, 89, 90, 92, 102, 103, 156, 158, 162, 165 British bilateral trade with, 21 British policy on status of, 69 development of civil nuclear power, 72 difficulty of obtaining visas for UK, 76, 81, 99 double taxation agreements with, 92 European restrictions on textile imports, 27 impact of lifting visa requirement for nationals, 100 importance in global semiconductor industry, 63 investment agreement with EU, 158 railway electrification. See GEC textile agreement with EEC, 76 trade in 1950s, 21 trade with Europe, 81 visitors to UK, 100 Taiwan Aerospace Corporation (TAC) and BAe 146, 89

INDEX

Taiwan Railways Administration (TRA), 71, 134 Taiwan Textile Federation, 27 Tamsui, Taiwan British consulate, 3, 69, 70, 74 tea consumption contribution to British trade deficit with China, 129 THAAD (Terminal High Altitude Air Defence) missile defence system, 135, 147 Thailand, 107, 113, 114, 125 Thales and frigate sales to Taiwan. See France: defence sales to Taiwan Thatcher, Margaret, 8, 13, 39, 41, 47, 49, 63–65, 68, 85, 138, 153, 163 and ATP, 110 and resettlement of boat people, 114 and Single Market, 57 Korean import duty on whisky, 53 meeting with Lee Teng-hui in London, 92 speech in Bruges, 1988, 55, 62 suspension of aid to Vietnam, 109 visit to Malaysia, 1985, 110 Thein Sein, 122 Tiananmen Square massacre in 1989, 82, 94, 134, 138 Tibet, 9 Chinese policy in, 143 tiger economies, 1, 25, 34, 70 Timor Leste (East Timor), 11, 112 Tokyo, 163 1986 economic summit, 22 Total (French energy company) investments in Myanmar, 122 trade policy European Commission responsibility for, 9

191

Trans-Pacific Partnership (TPP). See CPTPP Trident aircraft, 70 purchase by China, 71, 132, 133, 149 Trump, Donald, US President and relations with allies, 157 reaction to British use of Huawei equipment, 131 ‘trade wars are good, and easy to win’, 164 trade war with China, 145 withdrawal from TPP, 164 Tsang, Steve, 21, 31 U Uighurs Han fear of and contempt for, 142 incarceration of in concentration camps, 142, 156 treatment of, 148 United Kingdom (UK), 2, 3, 6, 8, 15, 17–28, 30–32. See also Great Britain and Cabinet Minister level visit to Taiwan, 89 and Cambodian refugees, 108 and CPTPP membership, 165 and membership of ARF, 117, 118 and Myanmar, 120–122 and re-settlement of boat people, 107, 112–116, 125 and Taiwanese civil nuclear power, 72 arms sales, 124 as a free-trading country, 17 Asia Europe Meetings (ASEM), 118 balance of trade with South Korea, 61 bilateral trade with Taiwan, 72 centenary of diplomatic relations with Korea, 44

192

INDEX

defence co-operation plan with Japan, 166 diplomatic relations with North Korea, 119 export performance in East Asian markets, 52 exports low growth of to Korea, compared to those of Germany, 47 export to GDP ratio, 15 1954 Geneva conference, 108 hopes for free trade agreement with China, 146 influence on European policy, 7 overseas capital assets of, 20 protection of domestic industry, 26, 27 representation at Park Chung Hee’s funeral, 36 restrictions on textile imports from Taiwan, 75 sale of jet trainer aircraft to Korea, 56 security presence in East Asia, 22 small share of Chinese and Korean markets, 53 special relationship with USA, 21–23 trade negotiations with Japan, 164 trade of, 15 UN Honour Guard in Korea, 23 upgrading of representation in Taipei, 82, 88 Withdrawal Agreement with the EU, 160 ‘workshop of the world’, 17 United Nations Security Council (UNSC), 2, 23, 80, 117, 148, 161 United Nations (UN), 2, 3, 57, 58, 89

and Cambodian genocide, 107 and Korean War. See Korean War China replaces Taiwan, 132 Commission on Human Rights, 107 High Commission for Refugees (UNHCR), 108, 114 Honour Guard in Korea, 4, 69 Orderly Departure Programme (ODP), 109, 113 relief programme in Cambodia, 108 United Reformed Church, 68 United States of America (USA), 2, 6, 12 and Nuclear Suppliers Group, 74 as market for British exports, 17 embargo on trade with PRC, 131 friction with Korea over trade, 51 influence in South Korea, 35 recall of ambassdaor in Seoul, 34 sale of F-16s to Taiwan, 79 security guarantees to East Asian countries, 34 unilateral approach to trade negotiations, 54, 62 Uruguay Round, 52, 54 USSR (Soviet Union), 108 V values diplomacy, 119 Vickers Viscount aircraft sale of to China, 131–133 Vietnam, 13, 107, 109, 113, 119 boat people, 11 British aid to, 106 British exports to, 106, 109 Chinese invasion of, 4 refugees. See boat people Vietnam War, 5, 105, 106 voluntary restraint agreements, 9, 26 and Japan, 136 and Taiwan, 75, 80

INDEX

W Walesa, Lech, 155 Warsaw Pact, 57 Western Alliance Japan as a pillar of, 163 Westinghouse bid for fourth nuclear power plant contract in Taiwan. See Nuclear Electric West Side Story cabaret performance at 1998 ARF, 118 White House, 22 Whitelaw, William former British home secretary, 68 Wilson, Harold former British prime minister, 73 World Organisation for Animal Health (OIE) Chinese attempt to expel Taiwan, 97 World Trade Organisation (WTO), 26, 52, 53, 62, 135, 159, 160, 165 Chinese accession to, 158 Taiwanese membership of, 92 Trade Barriers Regulations Committee ruling in favour of Philips against Taiwan government, 93

193

1st World War, 18 2nd World War, 2, 6, 8, 24, 28, 56, 164 Wuhan, 5, 138

X Xiamen, 22 Xi Jinping, 6, 130, 142, 144, 152, 155, 156, 162, 164, 165, 168 ‘great rejuvenation of the Chinese people’, 156

Y Yangon. See Rangoon Yan Xuetong, 142 Youde, Sir Edward, 41 Younger, Sir George former British defence secretary, 111 Yujong Hoe Korean National Assembly caucus, 33

Z Zhang Tingyang first Chinese ambassador to South Korea, 139