United Kingdom’s Trade Policy Towards Taiwan (1949-1965)

As the formation of East-West Cold War, trade control came to be regarded as a significant tool to contain the eastern coalition by the western party headed by the United States. As the second most important member in western party, the United Kingdom played an indispensable role. Since the Second World War, UK has maintained a special partnership with US. Without UK’s cooperation, the strategy of global trade control initiated by US would not be effective. However, from the perspective of its own interests, UK did not always cooperate with US in an active manner, which was typically reflected on their policies to the People’s Republic of China. UK has established diplomatic relationship with PRC since 1950, while US chose Republic of China in Taiwan and provided massive military and economic aid. That difference brought UK into an embarrassing and delicate situation, which means, UK had to not only keep America-British Alliance, but also wish not to offend PRC in order to take care of its interest in mainland China. Therefore, UK had to take multiple aspects into account while implementing the western camp’s policy towards Asia, its trade policy to Taiwan was a significant example.This paper argues that, since the western countries implemented strategic trade control policy towards the eastern party in 1949, UK has adopted trade control policies to the mainland China and Taiwan, which is the beginning of UK-Taiwan trade policy. After the outbreak of Korea War, UK started to differentiate its trade control policy between mainland China and Taiwan. In October 1952, UK government publicized its trade control policy to Taiwan, which only restricted to export military goods. This policy kept working until 1965, when UK permitted to export defensive arms to Taiwan. Apart from trade control policy, UK also carried out its trade credit policy to Taiwan. Since the abolishment of "China Differential" to PRC in 1957, UK announced to implement trade credit terms towards Taiwan, which had never been practiced before. Since then, Considering the ease of international political environment, UK’s trade demand and the rapid development of Taiwan economy, UK government modified its trade credit policy for two times in 1958 and 1960, which extended credit period and increased annual maximum payment in various degrees. During the period from 1949 to 1965, Taiwan witnessed Korean War, the First Taiwan Strait Crisis and the Second Taiwan Strait Crises successively. Therefore, while discussing about the trade control or trade credit policy to Taiwan, the UK government had to give priority to consider the attitudes of its US ally and PRC, and then made decisions according to the UK-Taiwan trade demands, so as to maximize its own interests by means of comprehensively balancing political and economic factors.