Toward an EU-Taiwan Bilateral Investment Treaty: A Roadmap

Abstract

In its latest trade strategy document, released in 2015, Trade for All, the EU declared that “[B]uilding on the investment provisions under negotiation with China, the EU will explore launching negotiations on investment with Hong Kong and Taiwan”. Such proposal has been welcomed by Taiwan, but the road toward an EU-Taiwan bilateral investment treatment (BIT) is destined to be long and tortuous. Politically, the EU has, since the establishment of official diplomatic relations with China in 1975, adhered to a “One China policy”. Whether and how this “One China policy” might impact the shape and substance of a EU-Taiwan BIT is a subject to be explored. This political issue can be expressed in two specific questions. On the EU side, it is doubtful whether the EU would be willing to conclude a BIT with Taiwan before the inking an EU-China BIT. On the Taiwan side, the juxtaposition of Taiwan and Hong Kong seems to imply that the EU treats Taiwan and Hong Kong equally, at least from an economic perspective. Whether such a juxtaposition undermines Taiwan’s sovereignty should be carefully examined. Legally, while the EU and Taiwan are both Members of the World Trade Organisation (the WTO), they are not active actors in international investment law. Moreover, given that the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention) is open for signature only to sovereign states, neither the EU nor Taiwan is contracting parties to this Convention; similarly, the institutional design of the International Centre for the Settlement of Investment Disputes (ICSID) limits its activities to sovereign states, the dispute settlement mechanism of an EU-Taiwan BIT should be thus located in some other forum. Would such a design affect the effectiveness of an investment dispute resolution? Additionally, as there are no official diplomatic relations between the EU and Taiwan, how should this EU-Taiwan BIT be signed is also an intriguing question. Would it be done through their respective missions, or are their missions to the WTO an option? In view of these uncertainties, this chapter aims to probe the possible course of the EU-Taiwan BIT negotiations and outline a roadmap. This chapter first portrays current political and economic relations between the EU and Taiwan and then explores the possible form of the envisaged EU-Taiwan BIT by examining such critical issues as the contracting parties, the design of investor-State dispute resolution, the investment court proposal by the EU and the sequence in which the EU might conclude BITs with China and Taiwan.