Politics & Law

Taiwan Politics Review – Lai takes office

22 May, 2024

Significant developments over the past month: President Lai's inaugural address, the battle over electricity prices, Legislative Yuan brawls and more…


By Ross Darrell Feingold


William Lai’s inaugural address

On 20 May, William Lai (賴清德) of the Democratic Progressive Party (DPP) was sworn in as president, succeeding Tsai Ing-wen (蔡英文), after which he delivered his inaugural address (available in English and Mandarin). On relations with China, Lai pledged to maintain the status quo (維持現狀) based on the “Four Commitments” (四個堅持) enunciated by Tsai in her 2021 National Day address (available in English and Mandarin): “Let us here renew with one another our enduring commitment to a free and democratic constitutional system, our commitment that the Republic of China and the People's Republic of China should not be subordinate to each other, our commitment to resist annexation or encroachment upon our sovereignty, and our commitment that the future of the Republic of China (Taiwan) must be decided in accordance with the will of the Taiwanese people.”


On the economy, Lai made multiple references to the importance of semiconductors and artificial intelligence, reiterated Taiwan’s desire to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and expressed a hope to sign investment agreements with other democracies. Also of interest to industry is that he said, “we must be resolved in our transition to net zero emissions by the year 2050.”


Analysis: It came as no surprise that Lai did not endorse the so-called “’92 Consensus”, and instead, Lai continues the policy of his predecessor Tsai. In Tsai’s 2016 inaugural address, she referred only to “mutual understandings” in 1992, which was a significant shift from the China policy her predecessor Ma Ying-jeou (馬英九) announced in his 2008 inaugural address which was that “based on the "1992 Consensus,” negotiations should resume at the earliest time possible”. Lai’s address is unlikely to cause China to resume government-to-government interaction. Lai’s interest in investment agreements is good news for European businesses in Taiwan. The reference to net zero was not accompanied by an energy policy discussion.


William Lai’s first cabinet

On 25 April, in the final round of announcements for ministerial level posts, Lai named his national security team. National Security Council (NSC) Secretary-General Wellington Koo (顧立雄) will be Minister of National Defence, incumbent Minister of Foreign Affairs Joseph Wu (吳釗燮) replaces Koo at the NSC, Lin Chia-lung (林佳龍), the outgoing Presidential Office Secretary-General, becomes foreign minister, and National Security Bureau Director-General Tsai Ming-yen (蔡明彥) will retain his post. Lai also named previous two-term Pingtung County magistrate Pan Men-an (潘孟安) as Presidential Office Secretary-General.


Although rare, Koo is not the first civilian (i.e., non-career military) individual to serve as defence minister. Among the positions Koo held in the eight years of the Tsai Administration are Ill-gotten Party Assets Settlement Committee Chairman, Financial Supervisory Commission Chairman, and NSC Secretary-General from May 2020 when Tsai began her second term. Lin is a former Taichung mayor and a former Minister of Transportation and Communications. Lin also served briefly as ambassador-at-large in charge of Taiwan's digital New Southbound Policy initiatives. During the administration of former President Chen Shui-bian, Lin served as the Government Information Office Director-General (an office that served as government spokesman before its elimination and the shifting of its duties to spokespersons in the Presidential Office and Executive Yuan).


Separately, on 10 May, new Premier Cho Jung-tai (卓榮泰) named ministers without portfolio, and the DPP issued a press release with the names of the two deputy ministers (政務次長, as distinguished from the vice minister, (常務次長) at each ministry.


Analysis: The shift of Foreign Minister Wu to the National Security Council means that Wu won’t be far away from foreign policy decision-making. At the announcement of the national security team, new Foreign Minster Lin “pledged to promote economic and trade diplomacy and business cooperation with foreign countries in the hope of strengthening Taiwan's diplomacy efforts”.


Among the ministers without portfolio, of interest to the foreign business community is the appointment of Yang Jen-ni (楊珍妮), who has served as deputy trade representative since 2007.


Electricity rates debate rages on after increase

As of 1 April, electricity rates increased for both residential and commercial users throughout Taiwan. Article 49 of the Electricity Act (available in English and Mandarin) empowers a committee, the “Electricity Tariff Examination Council” (Tariff Council), to set electricity rates which it does at twice yearly meetings. The Tariff Council members (current roster in Mandarin) includes government representatives, industry representatives, consumer representatives, and scholars.


On 1 May in the Legislative Yuan, Chinese Nationalist Party (Kuomintang, or KMT) legislators together with Taiwan People’s Party (TPP) legislators passed a nonbinding resolution to freeze electricity rates. KMT Legislative Caucus Whip Fu Kun-chi (傅崑萁) also said KMT legislators would consider freezing parts of the Ministry of Economic Affairs (MOEA) budget; electricity provider Taiwan Power Company (Taipower) is a state-owned enterprise for which MOEA is the primary shareholder. In addition, a proposal making its way through the legislative process would require the Legislative Yuan to approve rate changes proposed by the Tariff Council.


Also in the ongoing debate over Taipower’s finances and rates it charges users, on 2 May the Executive Yuan approved a budget request for submission to the Legislative Yuan that seeks a NT$100 billion subsidy to cover Taipower’s accumulated losses.


Analysis: It’s no surprise that opposition lawmakers are politicizing the rate increase. Standing on the side of consumers might make for good politics. However, it won't encourage consumption or address Taipower's financial problems (Taipower has accumulated tens of billions of Taiwan dollars in losses). In addition, Taipower, as recently as January, denied a rate increase would occur in the near term. However, if the Legislative Yuan passes a bill to give itself approval authority for rate increases such authority would only apply to future rate increases and not retroactively. Of concern to industry, given the MOEA’s broad roles which include regulatory authority as well as oversight of state-owned companies, freezing any part of the MOEA’s budget as a tool to force a review of the recently increased electricity rates is a risky move. Doing so amid a leadership transition to a new president and new MOEA minister makes it even more risky.

Hualien earthquake politics turns partisan

Search and rescue efforts in the immediate aftermath of the earthquake on 3 April were non-partisan, with close cooperation between the central and Hualien County governments. Weeks later reconstruction has become more partisan. On 2 May the Executive Yuan approved a budget of NT$28.55 billion for reconstruction (press release available in English and Mandarin). Legislator Fu, who represents Hualien County, continues to pursue a large infrastructure spending plan that will include construction of an expressway connecting Hualien and Taitung, construction of high-speed rail along Taiwan’s east coast, and extension of the Shuishalian Freeway (Freeway No. 6, also known as the Central East-West Freeway), further east to Hualien.


Legislative Yuan daylong brawls

On 17 May several rounds of brawls broke out (and five legislators sought medical care) over the course of the day in the Legislative Yuan that arose from the KMT and the TPP efforts to pass legislation opposed by the DPP that would, among other things, empower the Legislative Yuan to conduct investigations, and, criminalize contempt of the Legislative Yuan by government officials. After a day off on 20 May for the presidential inauguration, the Legislative Yuan resumed deliberations of the bills on 21 May with heated discussions but a minimum of fisticuffs; and as of this writing the bills are still going through the legislative process.


Analysis: The business community should continue to monitor the status of these bills, and if passed, understand the potential obligation to appear before the Legislative Yuan in the future and to otherwise cooperate with Legislative Yuan investigations.


Travel by Taiwan politicians

In late April, Legislator Fu led a delegation of seventeen KMT lawmakers to China. Fu said the purpose of the trip was “to foster peace and prosperity across the Taiwan Strait”. The delegation met with Wang Huning (王滬寧), chairman of the Chinese People's Political Consultative Conference, and Song Tao (宋濤), director of China's Taiwan Affairs Office. The Mainland Affairs Council warned the delegation that it wasn’t authorized to negotiate any items for which decision-making authority rests with the central government. Fu cited as positive outcomes of the trip China’s agreement to resume direct air routes between Taiwan and 30 major Chinese cities, to allow residents of 20 cities in China to apply online for a permit to visit Taiwan, to permit tourists from Fujian Province to visit Matsu, and expanded access to China for Taiwan agricultural and fishery products.


Taipei City Mayor Wayne Chiang (蔣萬安) visited Tokyo in mid-May, where he attended SusHi Tech Tokyo 2024.


Notable foreign visitors to Taiwan

During her final weeks in office, President Tsai met with visiting Members of the US Congress, Canadian parliamentarians, and a delegation from the Youth Division of Japan’s Liberal Democratic Party. President Tsai awarded visiting retired senior Japanese diplomat Tarumi Hideo the Order of Brilliant Star with Grand Cordon for his “outstanding contributions to Taiwan-Japan relations” during two postings to Taiwan and in leadership positions at Japan’s foreign ministry. Other notable foreign visitors include state-level officials from the US Democratic Party, and a delegation of non-government organisation officials from Ukraine.


For Lai’s inauguration, visitors included Eswatini’s king, the presidents of Marshall Islands, Palau, and Paraguay, and the prime ministers of Belize, Saint Lucia, Saint Vincent and the Grenadines, and Tuvalu. Delegations from the United States, Canada and Singapore, members of the European Parliament's Taiwan Friendship Group, as well as lawmakers from the United Kingdom, Japan, Australia and South Korea, attended as well. According to a Ministry of Foreign Affairs press release, 73 delegations and 687 foreign guests attended. Representing the United States, a bi-partisan delegation included former Assistant to the President and Director of the National Economic Council Brian Deese, former Deputy Secretary of State Richard Armitage, and former AIT Chair Richard Bush, accompanied by Virginia-based AIT Chair Laura Rosenberger and AIT Taipei Office Director Sandra Oudkirk. Former Trump Administration Secretary of State Mike Pompeo also attended.


Analysis: Singapore’s delegation was led by the same former speaker of parliament who led the delegation to Tsai’s first inaugural in 2016. The American Institute in Taiwan emphasized in its press release that the delegation was “In keeping with past precedent”. Pompeo’s attendance makes it his third known visit to Taiwan following visits in March 2022 and September 2022 for paid speeches.


Ross Darrell Feingold (@RossFeingold) is a lawyer and political risk analyst in Taipei.

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