Today, Tsai Ing-wen will be sworn in as the President of the self-styled Republic of China, known to almost everyone as Taiwan. Her inauguration speech will be significant in setting the tone for future relations between Taiwan and its gigantic cousin across the Taiwan Straits, the Peoples’ Republic of  China, whose economy is twenty times the size of Taiwan’s and its population larger by a multiple of 50. It is expected that Ms. Tsai, the democratically elected representative of the independence-leaning Democratic Progressive Party, will include in that speech a “gesture of goodwill” to China in terms of acknowledging a basis for continuing cross-Straits dialogue. That wording will make it clear that in her term of office there will be no declaration of independence by Taiwan, but it will also skirt around the issue of whether there is only “one China”. Whether that “gesture” will be sufficient to allow China to maintain the rhythm and pace of improved cross-Straits relations that has existed for the past 8 years under the regime of Tsai’s predecessor, Ma Ying-jeou of the Kuomintang (KMT) remains to be seen. In the immediate term, the likelihood is that there will be a pause. Nevertheless, provided that Ms. Tsai plays her cards well—and so far there is every indication that she is sensitive to the weight that her words and actions will carry—over the longer term the prospects are positive for a resumption of correct, if not warm, China-Taiwan relations.

For Canada, the message that Ms. Tsai’s will send in her inauguration speech is very relevant, as it will have an impact on Canada’s relations with China and with Taiwan. The now not-so-new Trudeau government is undergoing a review of Canada’s policy options with regard to China, and Mr. Trudeau is widely expected to make a bilateral visit to the PRC on the margins of this fall’s G20 meeting in China. Under consideration is Canadian membership in the PRC-sponsored Asia Infrastructure Investment Bank (AIIB) and a possible announcement of a start to negotiations toward a Free Trade or Economic Partnership Agreement with China. At the same time, Canada continues to have fairly robust economic relations with Taiwan, our fourth largest trading partner in Asia (not including India), although the balance of trade is strongly in Taiwan’s favour. Recently, Canada and Taiwan concluded an Avoidance of Double Taxation Agreement, and Taiwan would like the next step to be an Investment Protection Agreement, followed by a Bilateral Trade Agreement along the lines of the one it has with New Zealand, and likely soon, Australia. (Because Canada has no official diplomatic relations with Taiwan, such understandings are characterized as “Arrangements” and are concluded between the unofficial representative offices of both sides. China has tacitly accepted this type of unofficial arrangement). There is certainly scope for Canada to do more in Taiwan to advance its economic interests, and to strengthen cultural and educational ties for mutual benefit. To the extent that China and Taiwan can agree to maintain a peaceful and productive bilateral dialogue, and given the likely expanded ties between Canada and China, there is plenty of scope for Canada within its own one-China policy to further develop relations with Taiwan. Dealing with China and Taiwan is not a zero-sum game for Canada.

China would like Ms. Tsai to make reference to the so-called “1992 Consensus” which for the past eight years both the KMT and China accepted as the basis for cross-Straits dialogue. This consensus, the origins of which are murky, is deliberately ambiguous but at its core is the acceptance of the principle that there is but “one China” although, as part of the consensus Taiwan has emphasized that its acceptance of this is based on “respective interpretations”. Ms. Tsai was not elected to sign on to the KMT’s one-China policy, which was seen by many Taiwanese voters as giving China too many economic cards to play against Taiwan, but neither does her electorate want to rock the boat with the Mainland. According to various polls, while most Taiwanese would prefer independence for Taiwan if that were possible, they also recognize that such a step would precipitate an economic and political crisis and therefore favour the “status quo”. Ms. Tsai’s challenge is to convince China to accept the status quo, and not roll back the gains that have been made in establishing a full range of cross-Straits activities, from direct air links, to tourist and student exchange to bilateral agreements on the environment, fisheries, postal services, etc. To do so, she will have to carefully thread the needle by signalling to China that she wants to maintain the status quo and will not make any moves toward independence, while signalling to her electorate that she will bring a new tone to relations with China (standing up for Taiwan) while seeking to diversify Taiwan’s interests beyond China. China is unlikely to accept whatever formula she offers on May 20, and will flex its economic and diplomatic muscles to demonstrate that it has options. Once the posturing is over, however, common sense and pragmatism suggest that the two sides will find some form of acceptable modus vivendi. For Canada, this will be good news as it will ease the way to further pursuit of our interests on both sides of the Taiwan Straits.

Hugh Stephens is a Fellow at the Canadian Global Affairs Institute, Executive Fellow at the University of Calgary School of Public Policy and Distinguished Fellow at the Asia Pacific Foundation of Canada. He previously served (1995-98) as Executive Director of the Canadian Trade Office in Taipei, Canada’s unofficial representative office.