Steering through a Sea of Change

 

Professor (Condoleezza) Rice, Professor (Larry) Diamond, Professor (Francis) Fukuyama, Admiral (Gary) Roughead, distinguished guests, faculty members and students of Stanford University, ladies and gentlemen: Good evening!

It's your evening now, but it's our morning here in Taipei. Before I start, I want to pay my deep condolences to the victims of the explosion that happened at the Boston Marathon on Monday. My prayers and thoughts are with their family members. In the meantime, I also strongly condemn the violence on behalf of the government of the Republic of China (Taiwan). Let's start.

It is a great pleasure to address my friends at Stanford University this evening. Stanford University has long been a distinguished center of learning. Under the guidance of Professor Diamond, the Center on Democracy, Development, and the Rule of Law, through the Journal of Democracy, has made incomparable contributions to the study of democracy. Since Taiwan represents a shining example of how democracy can take root in the Chinese-speaking world, it is only fitting to join you today for this videoconference.

II. Changes in East Asia

Since I took office as President of the Republic of China in 2008, the geopolitical situation in East Asia has undergone tremendous change. Five years ago, there were two flash points: the Korean Peninsula and the Taiwan Strait. Today, the Korean Peninsula is at an unprecedented level of tension: North Korea has conducted a third nuclear test explosion, and in the aftermath of the resulting UN sanctions continues its saber rattling, even claiming that it has abrogated the 1953 Armistice Agreement that ended Korean War fighting 60 years ago. In contrast, tensions in the Taiwan Strait have been greatly reduced, and relations between Taiwan and mainland China continue to advance toward peace and prosperity.

This does not necessarily mean, however, that only one potential source of instability remains in East Asia. Geopolitical competition in both the East China Sea and the South China Sea is growing more intense even as the drive toward regional economic integration continues. In addition, three of the major players in East Asia―mainland China, South Korea and Japan―have changed leadership in the last eight months, while here in Taiwan, I was elected to a second term of office early last year.

Thus, amidst the uncertainty resulting from such changes, the Republic of China on Taiwan remains firmly committed to fostering peace and stability, and is a strong proponent of the liberal values cherished by democracies worldwide. It is against this backdrop that I would like to discuss how my administration has steered Taiwan through this sea of change.

III. How Cross-Strait Rapprochement Was Achieved

I decided to seek rapprochement with mainland China long before I took office in 2008. To ensure peace in the Taiwan Strait after some sixty tumultuous years, my administration had to meet both the challenges of establishing mutual trust between the two sides of the Taiwan Strait and of rebuilding Taiwan's strength so that peace could be guaranteed.

From the start, the "1992 Consensus" (九二共識) was a critical anchoring point for Taiwan and mainland China to find common ground on the otherwise intractable issue of "one China." The consensus, reached between the two sides in 1992, established a common understanding of "one China with respective interpretations" (一個中國，各自表述). With this understanding as the foundation, my administration designed a number of modus operandi that broadly defined how Taiwan would pursue peace and prosperity with mainland China. These included iteration of the "Three No's"―"No Unification, No Independence, and No Use of Force"―under the framework of the Republic of China Constitution (在中華民國憲法架構下，維持不統、不獨、不武的現狀). This formulation, grounded de jure in the 1947 Constitution of the Republic of China, sets clear parameters for how both parties can work to move the relationship forward in a positive direction without misunderstandings or hidden agendas, so as to build mutual trust and achieve mutual benefit for the people on either side of the Taiwan Strait.

"Beating swords into ploughshares" requires pragmatism and the wisdom to remain focused on what can be accomplished in spite of past differences. So we then called for "mutual non-recognition of sovereignty, mutual non-denial of governing authority" (主權互不承認，治權互不否認) allowing both sides to pursue substantive exchanges without being derailed by disagreements over sovereignty issues.

We also spelled out clearly to the other side, as well as to the Taiwan public, how we intended to proceed with the cross-strait dialogue. The priority of issues for the two sides to address would be "pressing matters before less pressing ones, easy matters before difficult ones, and economic matters before political ones" (先急後緩、先易後難、先經後政). My administration firmly believed in setting a clear agenda from the start, to prevent the cross-strait dialogue being bogged down by intractable issues when we could see that agreement might be found on many others. The goal is to build mutual trust which is fundamental for long-term progress in developing a peaceful cross-strait relationship. I firmly believe that this "building-blocks" approach is the only way to achieve lasting peace in the Taiwan Strait.

The result of this is 18 agreements concluded between Taiwan and mainland China over the past five years, covering such issues as direct flights, tourism, economic cooperation, intellectual property rights, nuclear safety, and mutual judicial assistance. Let me just give you an example of how things stand now. Five years ago, there were no scheduled flights between Taiwan and the mainland. Now there are 616 scheduled flights per week. Five years ago, 274,000 mainland people visited Taiwan. In 2012, there were 2.5 million people. When the SARS epidemic first broke out in 2003, mainland China completely ignored Taiwan's needs and concerns. But when the H7N9 avian flu struck recently, public health experts from both sides began working together to check its spread.

Over the next three years, the two sides are expected to complete negotiations on trade in services and trade in goods under the 2010 Economic Cooperation Framework Agreement (ECFA). Both sides will also greatly expand the level of educational and cultural exchanges. For example, the number of students from mainland China studying in Taiwan, which currently is 17,000 a year, is expected to rise, and there will be more cross-strait cultural cooperation. Each side also intends to set up offices in major cities on the other side to take better care of the 7 million people and over 160 billion US dollars' worth of goods and services that moved across the Taiwan Strait last year alone. As a result, cross-strait relations are now the most stable and peaceful that they have been in over 60 years.

IV. Taiwan's Enhanced International Presence

As cross-strait relations continue to develop peacefully, Taiwan is gaining an enhanced international presence. The clear parameters articulated by my administration as we began resumption of the cross-strait dialogue counter any mistaken attempt to link Taiwan's greater international participation to an agenda of "two Chinas," "one China, one Taiwan," or "Taiwan Independence." Taiwan today strives to conduct itself as a responsible stakeholder, that is, as a facilitator of peace, a provider of humanitarian aid, a promoter of cultural exchanges, a creator of new technology and business opportunity, and the standard bearer of Chinese culture.

The international community has seen recently how Taiwan deports itself as a responsible stakeholder and facilitator of peace. Last August, my administration proposed an East China Sea Peace Initiative urging that negotiation take precedence over confrontation regarding the sovereignty dispute over the Diaoyutai Islets. The following November, Taipei and Tokyo began negotiations on an East China Sea fishery agreement. Sixteen rounds of such talks had been held since 1996 but no agreement was ever reached. This time, both sides decided to jointly conserve and manage fishery resources in the Agreement Area of the East China Sea without changing their respective territorial and maritime claims regarding the Diaoyutai Islets. A fishery agreement was thus signed six days ago which safeguards the security of fishing boats from both sides in the Agreement Area, which is twice the size of Taiwan. This agreement marks a historic milestone in the development of Taiwan-Japan relations, and sets a good example of how the concerned parties can find ways to settle their dispute and preserve peace and stability in the region at the same time.

Our efforts over the past five years to enhance Taiwan's participation in the international community have also resulted in concrete progress. The Republic of China has kept intact its diplomatic relations with its 23 allies, and has enhanced its substantive relations with other countries. For instance, we signed an investment agreement with Japan in 2011, and are working to sign economic cooperation agreements with Singapore and New Zealand, respectively, in the near future. Meanwhile, our health minister has attended the World Health Assembly (WHA) of the WHO as an official observer since 2009, the same year as Taiwan acceded to the Government Procurement Agreement (GPA) of the WTO. For five years in a row, former Vice President Lien Chan (連戰) at my request has attended as "leader's representative" at the Leaders' Meeting of the Asia-Pacific Economic Cooperation (APEC) forum. On March 19 this year I led an official delegation to attend the investiture of Pope Francis, the first time for a Republic of China president to meet with a pope in the last 71 years, ever since the two countries established diplomatic ties in 1942. Taiwan's enhanced international presence attests to a virtuous cycle of improved cross-strait relations that encourages greater international support for allowing Taiwan further opportunities to play its role as a responsible stakeholder. This in turn further enhances regional peace and stability, which is in the best interest of the international community.

V. Taiwan-US Ties: Security, Economic, and Cultural

My administration is fully aware that strength is fundamental to achieving peace. When I took office five years ago, my administration worked promptly to restore high-level trust between Taipei and Washington. As former Secretary of State Hillary Clinton said in 2011 in Honolulu, Hawaii, Taiwan is an important security and economic partner of the United States. We deeply appreciate the relationship we have with the United States, including US arms sales to Taiwan. Only with a sufficient self-defense capability can Taiwan confidently engage in a dialogue with mainland China. The stability engendered by America's enhanced presence in the Western Pacific will certainly help.

The United States is Taiwan's third largest trading partner but remains the most important source of our technology. However large a trading partner mainland China is to Taiwan, the United States has always been an important trade and investment partner to Taiwan. The ICT (information and communication technology) industries are Taiwan's most important export sector and they are the largest recipient of US investment. We definitely want to deepen our economic ties with the United States. After successfully resolving the beef import issue last year, the Republic of China resumed trade negotiations with the US under the 1994 Taiwan-US Trade and Investment Framework Agreement (TIFA). Obviously, Taiwan needs to accelerate its pace of trade liberalization. For the good of its economic prosperity and national security, Taiwan cannot afford to be left out of the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).

Culturally, American values and its high academic standards have attracted Chinese students since Yung Wing (容閎) became the first Chinese student to study in the US back in 1847. Generations of Chinese students who studied in the United States have brought American values back to their homeland, making tremendous contributions to China's modernization, including the 1911 revolution. Today, the United States still remains the most sought-after academic destination for Taiwan students.

Taiwan is grateful to the United States for letting Taiwan join the Visa Waiver Program beginning in November last year. The Republic of China is the 37th nation in the world to secure that status, and the only one that does not have formal diplomatic relations with the United States. The more than 400,000 Taiwan visitors to the US each year not only take in American culture and natural scenery, they also shop very seriously in the United States and thus help reduce the US trade deficit with Taiwan. In a word, relations between the Republic of China and the United States have continued to thrive and grow since the end of formal diplomatic ties in 1979.

Nevertheless, Taiwan still faces many challenges, with only limited resources at its disposal. In formulating Taiwan's national security strategy, my administration has steered Taiwan toward a tripartite national security framework. The first part involves institutionalization of the rapprochement with mainland China so that neither side would ever contemplate resorting to non-peaceful means to settle their differences. The second part involves making Taiwan a model world citizen by upholding the principles of a liberal democracy, championing free trade and providing foreign aid to the international community. The third part involves strengthening national defense capability. This national security strategy is formulated to facilitate peaceful and positive development of cross-strait ties while remaining grounded in a pragmatic realization of the challenges we face. In other words, Taiwan and the United States share the same values and interests in preserving regional peace and stability.

VI. Taiwan's Ultimate Value: A Beacon of Democracy

States in a security partnership frequently fear being entrapped or abandoned by their partners. In the past, some in the United States have expressed concern that as mainland China rises, Taiwan might someday entrap the United States in an unnecessary conflict with mainland China. Others fear that Taiwan is tilting toward mainland China, thus "abandoning" the United States. Both arguments imply that the United States should reduce support for Taiwan. But neither view is warranted. My administration's pursuit of rapprochement with mainland China has clearly helped preserve and enhance peace in the Taiwan Strait. My administration's adherence to the Constitution of the Republic of China legally rules out any possibility of a reckless change in the status quo.

Taiwan has so much in common with the United States, from our love of democracy, to respect for human rights and the rule of law, to support for free trade, and even to an intense passion for basketball and baseball! We are also crazy about Jeremy Lin (林書豪) and Chien-Ming Wang (王建民). Taiwan cherishes its longstanding friendship with the United States and will always cherish the values and culture that the Chinese people have developed over five thousand years. Preserving the Republic of China has immense importance that goes far beyond the borders of Taiwan. For the first time in Chinese history, we in Taiwan have proved that democracy can thrive in a Chinese society. It presents a shining ray of hope to the 1.3 billion Chinese people on the mainland. I know how much this means to the government and people of the United States, just as it does to my administration and the people of Taiwan.

Ladies and gentlemen, my administration will steer this democracy through the sea of change in East Asia. We will endeavor to strengthen peace and prosperity in the Taiwan Strait; and, in the meantime, we will strive for an enhanced international presence for Taiwan that allows it to play its role as a responsible stakeholder in the international community. I feel nothing but confidence about the future of the Republic of China!

Thank you.

Questions & Answers

【Question 1】
Professor Condoleezza Rice: Thank you very much, President Ma, for that really quite interesting and thorough discussion. I would like to perhaps open our discussion with you by asking you to talk further about the remarks you made about the US-Taiwan relations. I was Secretary of State in 2008, when you were elected. Perhaps it is not understood fully that the United States was in fact very supportive of the idea of the improvement of cross-strait relations. The United States also have a great stake in a peaceful relationship and evolution of the relationship between the mainland and Taiwan. Sometimes, however, people worry that the improvement of the relations with the mainland may indeed begin to change the nature of the relationship between the United States and Taiwan. So even though I think in Washington, it is very much applauded what you have done in cross-strait relations, how would you answer those who say as Taiwan moves closer to the mainland in its relationships, the relationship with the United States will not be the same?

President Ma: Ever since I took office, we have greatly improved our relations with the mainland and greatly reduced the tensions between the two sides of the Taiwan Strait. That is certainly in the interest of the United States. Because we want to make sure, not only to the United States, to Japan, and to other friends in this part of the world, our rapprochement with mainland China will actually benefit the international community in general, specifically to the countries in East Asia. As I pointed out in my speech, actually there were two flashpoints in Asia. Now, the one in the Taiwan Strait has almost been removed. Our relations with the mainland continue to advance through peace and prosperity, and we are trying to build up the mutual trust so that neither side will restore to non-peaceful means to settle our differences. We are actually going in this direction as we planned, and I'm sure this will be very much in the US interest. That is why we continue to receive support for our policy to ease the tension across the Taiwan Strait. So I am very confident the relationship will be not only mutually beneficial to us and to mainland China, but also to the rest of the world.

【Question 2】
Professor Condoleezza Rice: Thank you President Ma, while we collect some questions from the audience, let me turn to my fellow panelists, perhaps to Admiral Roughead first. President Ma just addressed the security situation in the Asia-Pacific region, the worsening situation among a number of players there. How do you see the situation and perhaps you would like to engage President Ma on this security situation?

Admiral (Ret.) Gary Roughead: Thank you very much. President Ma, it is our privilege to be here and to be able to participate in this discussion. And I recall being in Taiwan last summer, talking about what is your recent East China Sea Peace Initiative, and it is clear to me that no one, as I know, has studied, researched and written on the situation, particularly in the East China Sea, as much as you have. But I think as you describe the security situation, clearly the advances of today, the unhelpful actions are being taken by North Korea, are dominating the security discussion and decisions in the region. But prior to that, it is clear that the maritime issues, the East China Sea and the South China Sea, tended to dominate and occupy the attention of so many countries. Your East China Sea Peace Initiative, that I think was very thoughtful, very far reaching and very structured, has been helpful. As I see it, with the agreement that has just be reached with Japan, it begins to move down the steps that you described in the peace initiative, which is dialogue, sharing of resources, then leading on to the code of conduct, and then joint research and exploration. You move down two steps in the case of East China Sea. Where do you see the situation going? And how do you see the environment for those further steps in your peace initiative?

President Ma:
Yes, I proposed the East China Sea Peace Initiative last August, I understand the difficulties of reaching consensus. That is why I divided the process into two phases. Phase one will involve three sets of bilateral talks, including bilateral talks between Japan and mainland China, mainland China and Taiwan, and Taiwan and Japan. Because it would be very difficult to begin with a tripartite negotiation, so we divide that into two phases. The second phase would be one set but trilateral negotiation, so we try to start the bilateral negotiation first with Japan.

Our work, more precisely, is to resume talks with Japan, after sixteen rounds of failed negotiations. This time we made it. Both sides recognize the need to have an agreement, to reduce the tension and escalation, and the agreement we signed six days ago, actually demonstrates how we can really handle a crisis situation to reach agreement without sacrificing each other's territorial and maritime claims. In other words, I always believe that while national sovereignty cannot be divided, natural resources can be shared. If we focus first on natural resources, joint development, joint conservation and management, I think we can develop a kind of mutual trust that may eventually lead us to the solution of sovereignty issues.

Obviously, our idea is that, as far as our relations with Japan are concerned, we hope we could also expand that to the other two sets of claimants in the area. Actually Japan already concluded a fishery agreement, an agreement on resource development with mainland China in the East China Sea. And we also have certain cooperation with mainland China on joint efforts on sea rescue, and oil development in the Taiwan Strait between our Chinese Petroleum Corporation and its counterpart on the mainland. So we do have some basis for bilateral negotiation. We can go from there. I think this is probably the only way to reduce tension in the East China Sea.

As you can see, we pay a lot of attention to playing the role of peace facilitator. So we reduce tension between mainland China and Taiwan and we also try to reduce tension between Taiwan and Japan regarding the fishery issues. The fishery agreement is very much welcomed by our fishermen, and also is accepted by the Japanese side. We understand we still have a long way to go, but at least we made a very good beginning. Thank you.

【Question 3】
Professor Condoleezza Rice: Franc, I would like to invite you to be involved. President Ma is describing a really very practical approach to a regional look at Asia. One of the things we open to discuss, however, is the lack of institutions in Asia. Franc, I would like you to comment on that and to President Ma as well.

Professor Francis Fukuyama: Thank you President Ma. It's really a great honor to see you again and to welcome you to Stanford if only virtually. Yes, I want to follow on and these follows on I think are naturally from Admiral Roughead's question, which has to do with the longer terms structure of Asia, the institutional structure, and Taiwan's role. Actually, Asia is an alphabet super different weakened institution, so you got APEC, ASEAN, ASEAN plus three, and TPP. So there's no any actual multilateral organization. Even the formal organization has become a formal competition. For example, ASEAN plus three includes ASEAN, Japan, Korea, and China, but it excludes the United States, Australia, New Zealand, and Canada.

Similarly the TPP, if we look down the road to see who is qualified for that, I am sure Taiwan is qualified, Japan is qualified. Most democratic countries could. But one country which is not likely to be qualified anytime soon is China. Obviously, there are competing divisions in terms of South China Sea. Chinese said to the individual members of ASEAN that "We don't want you even to talk about these issues multilaterally. We just want to do this on a bilateral basis." So I am wondering if you could just talk about whether there is an appropriate institutional form coming out of your East China Sea Peace Initiative, looking down the road that will be right for dealing with some of these really dangerous flash points, particularly whether it could provide an entry place for Taiwan to be a more secure and respective member in that community.

President Ma:
East China Sea and South China Sea are both flash points. Pretty much like what I said about Korean Peninsula and the Taiwan Strait. We try to do one thing at a time. We first remove the flash point in the Taiwan Strait. Certainly, Taiwan can hardly play a big role in the issue of Korean Peninsula. But in East China Sea, we are also a player, and we also play a constructive role. This is exactly the reason why I proposed the East China Sea Peace Initiative.

I have studied this issue for over 40 years. I understand actually the core of the issue is resources, not the island itself. So we may cope with the resources issue first, hoping to build some mutual trust and consensus before we move to the settlement of the territorial disputes. I think our first move to conclude the fishery agreement with Japan just demonstrates how this can be done gradually.

I understand it is very difficult to get the three sides together to discuss issues of common concerns, but this has to be done. There are still other solutions. And I got the inspiration from a very good precedent in the North Sea in Europe. They were quite a few claimants disputing the territorial and maritime issues because of the resources. Once three of the countries went to the International Court of Justice. Later, they decided to reach an agreement and found out cooperation is much better than confrontation. Today, the countries together actually created a very famous brand in international oil market – the Brent Crude. This is a very good precedent for other countries to learn from. If the North Sea coast countries can do it, why couldn't the coastal countries of East China Sea? We want to make a first step just to show that peace could be reached if we are serious.

And in terms of the South China Sea, as a result of more claimants, the situation is much more complex. It will take more time. As far as the South China Sea is concerned, I am cautiously optimistic that we can move from here to other areas, not just resources, but also joint effort to rescue at sea, environmental protection and joint marine scientific research. There are a lot of issues that affect the East China Sea, which agreement could be reached by countries in the region. In other words, the very basic idea is that international disputes should be settled peacefully. If there is no immediate solution, we could reach some consensus on provisional measures, which is actually called for by the United Nations Convention on the Law of the Sea, provisional Measure, in order to solve the very complex and intractable territorial disputes.

【Question 4】
Professor Condoleezza Rice: Let me remind everyone that we are being simultaneously broadcast in a number of other locations, and some of those people will be twittering in. While we are collecting questions from the audience, I promise that we will gather those questions very quickly. I would like to pose a question. Taiwan, as a beacon of democracy, particularly a beacon for 1.3 billion people across the strait, Profession Larry, will you take up that question and while I look at the questions that we already received?

Professor Larry Diamond: President Ma, it's a great honor to have you here and see you again. Thank you so much for honoring Stanford with this opportunity. Professor Rice has mentioned a couple of issues and one of them is relevant to democracy. So let me reiterate the first question she asked and add a second question to it. Many scholars are suggesting now that so many people from the mainland, as you indicated over 2 million, visiting Taiwan. Not few of them visited Taiwan during your presidential election campaign. We like to see a country has free and open campaign. Many of them across the strait are watching Taiwan TV, and for better or for worse, watching the battering you sometimes get as any president does in a free society on TV. What impact do you think this is happening on China? And how do you see the possible influence of Taiwan's increasingly consolidated and liberal democracy on the political evolution on the mainland. And the second question would be, what's the implication of Taiwan being a democracy? East Asia is moving increasingly in the democratic direction for peace. There is a democratic peace thesis that a region of democracy would be a zone of peace, but there are also who argue the movement to democracy in mainland could be destabilizing and might stimulate national sentiment. What's your view on this?

President Ma:
Obviously, what happen in Taiwan, particularly regarding democratic development, will have an impact on mainland China. You pointed out that an increasing number of people from mainland China coming to Taiwan just to watch our campaign and election process. I am sure they went back with a very different understanding about what's going on. I think mainland China has encountered many problems we had 30 years ago. But the time is very different now, particularly after the advent of the Internet. They can actually see all the campaign process through the Internet. I was very much surprised that this time there was no restriction on the access to information of this sort. There are people who came specifically to Taiwan to watch the election process. I am sure the impact will be felt in the future.

On the other hand, our effort to make peace across the Taiwan Strait is also very much appreciated, not only by the two sides of the Taiwan Strait, but by our neighbors. And I think these all contribute to a much more friendly international environment for Taiwan, and also to the stability in East Asia.

I don't foresee a very sudden change of the mainland's political system toward democracy. But obviously they will pay more attention to the human rights issues and to the treatment of dissidents. As you know, every year on the anniversary of June 4th, I make a statement, calling upon mainland side to follow the principles of human rights. I did this not only on the basis of western values, but on the typical traditional Chinese values to respect different opinions. This is also part of the great Chinese traditions. I think, by doing that, we try to bring the two sides together to dialogue of democracy, rule of law, human rights, and freedom. I think many people in Taiwan also consider that become a very important part of our relations with mainland, not just trade, not just investment, not just protection of intellectual property rights, but also the rights to express their opinion.

I think the impact will be felt and I am sure the process is very constructive and useful for the two sides to build some kind of consensus in the future about how the two different societies could interact with each other. Particularly when now in mainland China, quite a few NGOs emerge, which were not existing in the past. These NGOs and their counterparts in Taiwan have interactions. This further stimulates the emergence of the civil society in China. This is very important for the growth of democracy. So I think, for us, it is a very positive development for the two sides not only having trade investment but also other very important issues concerning democracy and human rights.

【Question 5】
Professor Condoleezza Rice: There are a couple of questions here about democracy and Taiwan. If I may just follow up on that question to Larry‘s comment. There must also be contacts between the younger generations now in Taiwan and on the mainland. How do you see that playing out over the years, university students, young business people, etc. Because you gave quite statistically how many visitors there are between the mainland and Taiwan, so can you talk about people-to-people aspect of the relationship?

President Ma:
As I pointed out in my speech, the number of visitors came to Taiwan last year was over 2.5 million. Of course, most of them are tourists and business people. But there were 17,000 students as well. Around less than 2,000 were registered full-time students and the rest are exchange students. Exchange students stay maybe half a year. But because of the number is growing, the impact is also being felt. If they stay here for six months, they will make use of every minute to travel, to meet people around Taiwan.

That process actually will change them a lot. After sixty years of separation between mainland China and Taiwan, there is a lot of misunderstanding. One Taiwanese student once told me, when he visited the mainland, a lady asked him: do you speak Portuguese in Taiwan? They probably read about the Portuguese sailors while they sailed around Taiwan. They called "IIa Formosa" in Portuguese, meaning beautiful island. It gives them that kind of impression. Taiwan also has many misunderstanding about mainland China. So this kind of exchange, which started five years ago, obviously will greatly reduce that kind of misunderstanding. This is a very important step toward peaceful development. If the young people from the two societies can understand each other at a rather early stage of their lives, I am sure there is possibility that they can build lifelong friendship. As more students come from mainland China, I think we will be in a better position to do that.

Therefore, I call for more liberalization on the current restrictions on the exchange students. We used to recognize 41 university diplomas of mainland China. This year, we increase from 41 to 111 so that more students will come to Taiwan. At the same time, more students will go to mainland China. We also encourage students to provide homestay for mainland students so that they will understand each other more. I think the interchange between young people will have the best result.

I am sure your country has also done that before. For countries like France and Germany, they also had massive exchange student programs after World War II. That forged lasting friendship between the two countries after centuries of feud between the two sides. This is something we should learn from history and from other countries. I am sure the people across the Taiwan Strait will have the wisdom to do this and I certainly will be very happy to continue to do that, to make that possible for young people from the two sides of the Taiwan Strait.

【Question 6】
Professor Condoleezza Rice: Thank you. From our audience, there is another question about democracy. But if I could, there are a couple of questions. Essentially, people are saying democracy is, by its very nature, people have different views. With democracy, they are allowed to express themselves. An excellent question is: since democracy brings very different views, how do you reconcile people's views within Taiwan who may have different international vision for Taiwan, national defense or even cross-strait relations? Are those voices being heard in Taiwan? Do you think there is consensus behind the idea of cross-strait rapprochement?

President Ma:
Good. This is a very good question. When we started to open up to mainland China and improved relations with them, obviously there were different opinions. So the Mainland Affairs Council, which is the agency in charge of our relations with the mainland, frequently conduct opinion polls, asking the same sets of questions. One of those is "do you think our interchange with mainland is too fast, too slow or just about right?" In the last 20 years, the figures show most people choose "just about right." But sometimes people believe it is too fast and sometimes people believe it's too slow. The majority believe it's just about right, about more than 40%. On the other hand, we also ask question about the future of Taiwan. One is reunification with the mainland, the other is independence, and the third one is maintaining the status quo. But if you count very precisely, almost more than 70% support "maintaining the status quo."

That's why in my speech, I pointed out maintaining no unification, no independence and no use of force in the Taiwan Strait under the Constitution of the Republic of China is the common denominator of the mainstream opinion in Taiwan. It has been like this for 20 years. I think this can be called "Taiwan consensus." That is why we consider maintaining the status quo is the most important foundation of our policy toward the mainland. That's one area.

For other aspects, for instance, as I pointed out in my speech, we are negotiating with the mainland to set up offices in each other's place. This issue is being debated in our Legislative Yuan for whether these offices will have the function to issue documents or to provide consular services. We made it very clear: the relations between Taiwan and mainland China are not state-to-state relations. It's a special relations, which is regulated on our side by our Constitution and specific laws. We want to make sure that there's no misunderstanding about "two Chinas, one China, one Taiwan or Taiwan independence." That is very important for cross-strait peace. So setting up offices is just intended to perform functions of taking care of people and businesses. The cross-strait movement of people has reached more than 7 million, and goods and services worth 160 billion US dollars, but there is no offices representing Taiwan in the mainland, no offices representing the mainland in Taiwan. This is not usual. We have to gradually make it possible. People might ask whether that constitutes some analogy in the international relations, but we made it very clear on the issue of sovereignty, we do not recognize each other, but on the issue of governing authority, we should not deny each other having such authority. Otherwise, we cannot engage with each other. This is a very delicate situation. But since we have handled that well in the past five years, there is no reason to say that we could not do it in the future.

【Question 7】
Professor Condoleezza Rice: Mr. President, we are running out of time, but I would like to ask two more questions from our audience. One is concerning the economy and Taiwan. You came into power at a very difficult time of the global economy, how do you see the development of Taiwan's economy and Taiwan's economy within a regional context of Asia?

President Ma:
We did encounter difficulties in the last couple of years. First there was financial tsunami. Then there was European debt. 70% of our GDP growth depends on exports, which is very different from other countries, such as Japan and Korea. So we have to maintain the momentum of exports in order to ensure our economic growth. Last year, the growth rate was only 1.26%, which was quite low. This year, it will be better, because the situation in Europe and the US are slightly better than they were last year.

We also try to transform our industrial structure. In the past, we focus on the efficiency of our companies. So it's actually an efficiency-driven economy, but we want to shift it to an innovation-driven economy so that we have our own brand names and we can be on the top of the industrial ladder. It is a painful process. We have to give up something to gain something. That's one area about industrial structural change.

Another one is we have been left out from the regional economic integration for so long. Not until 3 years ago, we signed the first Economic Cooperation Framework Agreement with mainland China, which is similar to an FTA. But that covers about only 20% of goods and services, so we are negotiating on the rest of ECFA. We will probably wrap up the trade on services in the next a couple of months. By the end of the year, we will complete the whole process on negotiations on trade on goods.

But you see, that is the only major trading partner we have a FTA similar agreement. Japan doesn't have one with us. We only have an investment agreement. The US doesn't have one with us. We also want to have one with the US. And hopefully, we will be able to join the TPP in the future. On the other hand, we start to negotiate economic cooperation agreement with Singapore and New Zealand. We are already left behind, very much behind, compared with our trading partners in the region. So we need to catch up and catch up fast. This is the difficulty we encounter, but I have very strong confidence in the business of Taiwan. Our competitiveness, according to the International Institute for Management Development in Lausanne, is almost top three in Asia. We still have cutting edge, but we really have to work hard and do more in terms of our trade liberalization so that Taiwan can be a free-trade island. This is probably the only way for our survival and for our development.

【Question 8】
Professor Condoleezza Rice: Mr. President, perhaps this is the last point. One of audience members has said that you are justly proud and Taiwan is justly proud of what you have done to improve cross-strait relations, to overcome hostilities. Asia is the region that is known to have many hostile relationships, and our questioner says, is there anything from the Taiwanese approach that can be exported and replicated in the very troubled region that is Asia. So perhaps you could make few remarks in that regard as the last point.

President Ma:
This is certainly a very difficult question to answer; everywhere in the world there are conflicts. But if you want to really have peace, then you really have to have the wisdom to understand the continuation of conflict will lead to even more suffering of the people. We have to compare the present and the future, and make the right choice.

Take our difference with Japan over the territorial issue of Diaoyutai Islets for instance. I was a university student, participated in the defending Diaoyutai movement more than forty years ago, so I understand the issue has to be settled. I looked at the issue, I studied the issue and I divided the issue: sovereignty and resources, which one should come first. What we are doing now is to shelve the issue of sovereignty dispute and proceed with joint resource development. We try to build mutual confidence, and try to build friendship in the process. Of course, we didn't make it in the last forty years, but we did it six days ago. Why? Because the situation has changed. People, after the escalation of tension, after the confrontation affecting everybody, understand that probably maintaining the peace and using peaceful means to settle difference is the best way.

Although the result may not please everybody, but at least we actually keep our territorial claims intact; on the other hand, we made some advances in the fishery issues. Now our fishermen could fish freely without interference from the Japanese coast guard, and vice versa. This is an improvement. This is a progress, and we can go from here. So first resources, maybe we can move from living resources to non-living resources, and to other issues. A trip of thousand miles, start with the first step. (千里之行始於足下) This is an old Chinese saying, which implies that, as long as you are determined to be a facilitator of peace, if there is a will, there is a way.

President Ma's Closing Remarks Following Q&A:

Dear friends and colleagues, since 2008 there have been peace and prosperity in the Taiwan Strait. We have seen more trade and investment, and movement of people and information, across the Taiwan Strait. We have seen an increasing number of mainland tourists, students, and professionals coming to Taiwan by direct flights. We certainly hope that they can bring home some new understanding, new appreciation, and new perspectives on what we have achieved here. On the other hand, it is also good for Taiwan people traveling to the mainland to understand more about their development. There is some cooperation—indeed a lot more—in the fields of education, culture and sports, criminal justice, and public health. We would like to see all these have some positive impacts on the peace and prosperity in the strait.

Harking back to events that happened in the past two decades in the Taiwan Strait and in the triangular relationship among Taipei, Washington, and Beijing, we may say we have finally found an equilibrium point where every party involved can be in a winning situation. This equilibrium point was possible because all parties recognized that negotiation serves as a much more efficient way than confrontation to bridge the gaps between and among them. Yet, by no means is this equilibrium point a certainty. We have to nurture it by being perceptive to others' vital interests, by sending the right signals, by being careful with the political rhetoric and gestures we make, and most importantly, by being credible.

Still, this is not enough. Taiwan has to meet a number of challenges on the domestic front to keep pace with the dynamic equilibrium in the strait and in East Asia. These challenges are daunting, but not insurmountable. Distinguished faculty members, ladies and gentlemen, as the president of the Republic of China, I will continue to steer Taiwan toward peace and prosperity. Our work is not done.

Thank you very much.