 Welcome to Asian Review. I'm your host Bill Sharp. Our guest today is Mr. Michael Riley, former director, that is de facto British Ambassador, British Trade and Cultural Office in Taipei from 2005 to 2009. He and I were both recipients of the Taiwan Fellowship offered by the Taiwan Ministry of Foreign Affairs. And we both did our research at Taiwan's Academia Seneca. He served for over 30 years in the UK Foreign and Commonwealth Office, mainly dealing with UK diplomatic and trade policy towards East and Southeast Asia. Today, he will discuss the likely impact of Brexit on Taiwan. He's joining us via Skype from the UK, where it is 3 a.m., so I really want to thank him for getting up so very, very early to join us today. This is very, very generous of his time, so thank you very, very much. And welcome to Asian Review. Good afternoon to you, Bill, and thank you for your invitation. I see you made the time adjustment well. We're bidding us all happy a good afternoon here in Hawaii and in the middle of the Pacific. Well, let's see here. Before we get to Brexit, let's talk about a few, or I guess you would say more general things, as pertains to the relationship between the UK and Taiwan. How would you describe it at the moment? At the moment, I would say it is a good relationship. There's no major friction in it, no major tension, but it's not a particularly warm relationship, not as warm as it could be. I see. Is there a Taiwan lobby in parliament such as there is a Taiwan lobby in the US Congress and a so-called Taiwan lobby in the Japanese diet? Is there such an equivalent body in the UK Parliament? There's certainly a friendship group or what's called an old party group within the parliament, so there are people from all the main political parties in the Taiwan if you like friendship group. It is, I think, either the largest or the second largest such group within parliament, so that in itself says something about it. Oh, that's quite interesting. What would be the largest group? Well, to be honest, I think, well, put it this way, in my day that was the largest group, the largest such country to country group, bilateral group. I'm not aware that one has overtaken it. If one has, whew, no, you've got me there, it would probably be a European one. That's very, very interesting. Sorry, Dawn. In the US, of course, the National Rifle Association always has a huge lobby, and the Israeli lobby is huge, too, but Taiwan's pretty up there. It's slipped on the Chang Wei Bien era, but I think it's recovered somewhat. The difference is that there's a very large membership within the group in the UK. I don't think there is, within that group, and I don't want to be unkind to any of them, but I think it's a small number. I don't think there's necessarily the same level of commitment that you might get in the Japanese theater, or US Congress. Partly it's geography. Taiwan is on the other side of the world. You don't have a large Taiwan resident community here in the way you do in the states. The Japanese diet group is really very impressive. As you well know, every national day they send a huge contingent to Taiwan. Huge, huge, huge. They're all over the place. Well, how about the major newspapers in Britain? Who do they sort of line up with? China, Taiwan. How about the Times of London? My guess would be that it is more pro-Taiwan than pro-China, but I really don't know. I think in the UK society, so that would include parliament by and large, that would include the media, I think it's fair to say that there would be a high level of sympathy towards Taiwan. After all, as a country, we share the same values of democracy. We're both fairly liberal democracies. We have differences in some areas. But there isn't the same history of relationship between the two countries. There isn't the same current level of dynamism. If you compare, say, Korea and Taiwan in terms of their impact in the UK, Korea has made a big impact through its films, through its food, through its footballers. Taiwan, by contrast, its food, people in the UK don't see a distinctive Taiwanese food. They liken it to Chinese food. A lot of Chinese culture gets confused with its Chinese culture. So it doesn't have the same distinctive impact, if you like, that it comes to Korea House. That's a very interesting comment because people that don't think about Taiwan every day like us, it's going to be very hard for them to make the distinction between what is Taiwanese and what is Chinese. That's a very interesting point and they'll be very easily confused. Wow. Would the Guardian be a pro-China newspaper? I wouldn't say that any newspaper in the UK is pro-China. They're not sort of committed, if you like, in that way. Most of the UK papers take a fairly critical line, or very critical line, on things like Chinese human rights, general Chinese behaviour. So if you look at an issue like, say, value tie, by and large they're going to be more sympathetic to the Japanese position than the Chinese position. The Chinese embassy here complains bitterly, I'm sure, that the UK media... I see what you're saying. Well, you know, when I read things about George Osborne, who was the Chancellor of the Exchequer, he seems like he was really pushing it very, very, very hard to drive Britain and China very, very close. Now with the new Prime Minister, is she walking down the same path? She's, I think, more cautious, more method. More cautious, okay. Partly that's her personality. She is a more cautious person than George Osborne in this respect. Partly she's never had the same student level and theories as him that George Osborne had for China. As the former Home Affairs Minister, the Home Secretary, she's got an instinct to the awareness of caution about Chinese human rights issues, for example. So she's not as outwardly pro-Chinese or committed to China as George Osborne was. Then again, publicly, she has reaffirmed what Osborne has said about the importance of China as a trading partner for the UK. She has given the go-ahead for a very significant Chinese investment of money into the power sector. So there's a difference of degree, if you like, that I don't see a difference of substance in the approach. Interesting, interesting. Well, you did work for B, A and E, and I think you told me for the show you retired two years ago, was it? Does B, A and E sell many arms to Taiwan? Depends on what you mean by many. It was a recently good business in Taiwan, so it doesn't sell complete aircraft in the way that so-called Burlimo Lockheed might, but it's particularly strong in electronic areas, so it sells a lot more. It has an important office in Taipei. However, I should explain that B, A, E, although it's a British company, it's got a very big US operation. We have some of it here in Hawaii. And most of what it sells in Taiwan is from its US operations, not from the UK. I see. Well, now, if I were to go to Britain to study about China or Taiwan, I know you have an association with the University of Nanningham, so I suppose that will be your answer to the question. But in addition to the University of Nanningham, what universities would you suggest? It would depend if you were studying the language or if you were studying history or politics. There are different places, but the University has got its School of Oriental and African Studies. So has. So has, indeed. That runs specialist courses on Taiwan. So has, despite my not an affiliation, I have to give a plug to So has. Of course, of course. The London School of Economics runs courses on contemporary Taiwan politics. So specifically for Taiwan, I would say those three, if you want to study China, then there are a number of places you could go to. Oh, I see, I see. So actually, Britain has quite a number of facilities for learning about China, not only in language but politics, culture, history. It seems like there are just a number of places one can learn about China and Britain. A number of universities. So from a British perspective, China is a very big, very important country, so a lot of people are interested in learning about it. Well, before we move into Brexit, I should ask one other question here in sort of our more general discussion. Of course, Hong Kong was a British Crown colony for, was 150 years. Reverted to China in 1997. Britain still shows some concern for what goes on in Hong Kong. But does it have influence to, in any way, mold issues in Hong Kong? Did the agreements that China and Britain concluded prior to the reversion, that they still hold up, that they still have legs, if you will? Inevitably, I think that will depend to a certain extent who you ask. If you to ask the UK government, my former colleagues in the Foreign Office, they would say, yes, of course it does. I think if you stand back, the reality is you only have to look at the way China has been behaving in Hong Kong over the last year, 18 months in terms of people abducted from Hong Kong, the steers in China, to realise that China is acting with an increasing degree of impunity in Hong Kong. Some people would say, well, that's just the fact of life that China is so big and powerful, it's doing that. That doesn't mean, in my view, that the UK does not have a moral obligation to speak up about agreements and remind China of its agreements on Hong Kong. To be fair, the current Foreign Secretary for the Parliament has expressed concern about Chinese behaviour. My own feeling is that, if George Osborne had been a little bit more circumspect in his degree, if you like, if you said enough towards China, if the government of the day in private had made it very clear to China he was concerned about Hong Kong, it might have just made a mess out of the markets. And certainly the UK still has an obligation to make. I see. Well, I think that will take us right up to break. You're watching Asian Review. My guest today is Mr. Michael Riley, the former de facto British ambassador to Taiwan. We're going to take a break. We'll be right back. Don't go away. Thank you for watching Think Tech. I'm Grace Chang, the new host for Global Connections. We'll be here live every Thursday at 1 p.m. where we'll be talking to people around the islands or visiting the islands who are connected in various aspects of global affairs. So please tune in, and aloha, and thanks for watching. Hi, I'm Tim Appichella. I'm the host for Moving Hawaii Forward. And this show is dedicated to transportation and traffic issues in Oahu. We are all frustrated by sitting in our cars in bumper-to-bumper traffic. And this show is dedicated to talking with folks that not only we can define the problem, but we hopefully can come to the table with some solutions. So I invite you to join me every Tuesday at 12 noon. And let's move Hawaii forward. Welcome back to Asian Review. I'm your host, Bill Sharp. My guest today is Mr. Michael Riley, joining us from the UK where it is very early in the morning, and we really appreciate his joining us today. Before the break, we were talking about some, I guess you say, general questions about the UK's relationship with China. Also, it's residual responsibilities to Hong Kong. Now we want to move into the real issue of the day, and that's the impact of Brexit on the UK. Brexit being the British departure from the European Union. So just to throw you the question, what is the impact of Brexit on the UK? What will it be? Well, now, that would depend who you ask. I position very clear. I voted for us to remain in the EU, and I feel very strongly that in the long run, Brexit is going to be damaging to the UK. It had an immediate dramatic effect in the exchange rate that the planned sterling pretty well collapsed against the dollar. The economy has continued to grow quite well since Brexit. I'm surprised economists. But the reality is that it has created uncertainty. None of that uncertainty has gone away. Businesses, all of us like certainty. And I don't think we're going to see any dramatic sort of wider shocks within the economy. But over time, it's going to become less easy for us to trade with our European neighbours. It'll become less easy to invest there, to do all the things that we do now with Europe without thinking. And that's going to have an impact on the economy. The UK economy is going to grow less strongly. We're going to be less open as a country. I think there will inevitably be a small reduction, possibly a larger reduction in the number of Europeans coming to study in the UK. So just over time, we as a country I think will fail to achieve our full potential. There was an article in this week's Economist that was talking about the impact of Brexit on immigration and suggesting that it would have a rather negative impact and that actually Britain would probably suffer quite a bit because of that, that scientific researchers would be less likely to come to the UK. Certain jobs that immigrants typically do wouldn't be done or would have to find a new way to get done. It took a pretty negative view. And I would agree with that very strongly. As one very clear example of this, those campaigning for us to leave the EU have complained that national health service waiting times is so much longer because now so many EU immigrants are also using our hospital facilities that they're loaded. But the reality is that I think the figure is something like 40%, 40% of the staff in the NHS, the skilled staff, are from the EU. So we have a tremendous number of EU doctors, anesthetists, people like this, who may not leave and go back to the EU, but they're not going to be replaced by other people from the EU. So yes, we will lose skilled people that we badly need in our medical service. This is one example. That's interesting that the NHS, the National Health Service, is a high percentage of doctors that are from Europe. Wow. Interesting. Well, what about the impact of Brexit then on Taiwan? No, Taiwan is an interesting case. Logically, you might think it's not going to make trade any easier. The UK is outside the EU. So the UK is seen within the EU as being more focused on Asia. It's helped the EU to deepen its engagement with Asia. So a lot of people feel the UK leaves the EU. The EU becomes less interested. Perhaps close to China, Taiwan suffers. Personally, I think it will have actually very little impact on Taiwan. The first reason is... I could quite catch that last part. You think it will have very little impact on Taiwan? It's impact on Taiwan. The first reason for this is Taiwan has got used to its diplomatic isolation. Taiwanese have just learned to get on with life without all the things that those... the rest of us within the international community brought us take the granted. So they're used to not having all these friends around and not being part of the bigger plot. So they will find ways of carrying on doing business with the UK in the same way they've been resilient in the past. The second thought is that actually I think it might be positive from the EU perspective. You asked me earlier about George Osborne in China. The Chinese reaction to Brexit was very interesting. Their party newspaper, The Global Times, made it very clear that it was worrying that the UK would be less able to influence the rest of the EU. So China had come around to see the UK as its most important ally within the EU. So if the UK is outside the EU, it actually might make the EU less pro-Chinese. They're called a bit more sympathetic to Taiwan. Interesting. Well, another exit of sorts is President Trump's, how should we say, halting of TPP. And of course Taiwan was very keen to get into TPP. It was really betting a lot in a second round, becoming a member of TPP. Now that TPP is off the table, at least for the foreseeable future, what kind of impact is that going to have on Taiwan? I want to say about this stage. As you say, a lot of people within the, what we call the establishment, if you like, within the government, leading academic circles, top industrialists, have placed their faith in TPP. So inevitably a bit of a reaction, this is going to make life harder. But the first thing is, I have to ask how committed really was Taiwan to entering the TPP. A lot of the things that it would have had to have done to become a member of the TPP, I would say it's in Taiwan's interest to do anyone. The difficulty that a lot of business people face with Taiwan, it's not tariffs, but there are all sorts of regulations, non-tariff barriers that make it hard, actually for Taiwanese to export and hard for foreigners to import into Taiwan. Now Taiwan could go ahead and lift a lot of those anyway, it would be in its interest, it doesn't need to be in TPP to do that. But there's another factor too, or another angle, which is the EU has said that it's willing to enter what it calls an investment agreement with Taiwan. The Taiwanese are so focused on TPP that they thought an investment agreement, it's not really significant, let's leave it for now. But actually, although it's called an investment agreement, that could cover an awful lot of the things that Taiwan would have had to do to enter the TPP. Do you mean like remove trade barriers and that sort of thing? Exactly, particularly what we call the non-tariff barriers. So Taiwan has its own product testing requirements for cars, for example. Cars have to meet Taiwanese standards as well as global standards. Or what we call phytosanitary food imports. Taiwan has its own very specific set of food regulations which aren't the same as those of a number of other countries. But if Taiwan could start negotiations with the EU on an investment agreement, if that was to see some of these restrictions and regulations eased or lifted, that would have a very, very positive impact on Taiwan's trade with the whole of the EU. So I would say they shouldn't get too hung up about TPP. Yes, it's a blow, but look, they should be doing this anyway. And secondly, there are other opportunities out there, specifically with Europe, go for that. In a way, TPP was a bit of a long shot for Taiwan anyway, wasn't it? Well, I think they were very keen on TPP for a number of reasons. First of all, obviously the US is their number one ally. It's a very, very important trade partner for them. Japan is very important to them for trade reasons. They were very worried that if they weren't in TPP they were going to be completely locked out of the growth of these regional trading blocks. So that was a big driver for them. But I do wonder how committed they really were, as I said, because Taiwan is actually still quite a highly regulated economy. They could be getting rid of a lot of these regulations and restrictions anyway. In my view, that would help boost every economic growth. Well, let me ask you, some of this maybe you've hit upon in some of your previous answers, but just to put it clear, focus on it, just how open of an economy, how transparent of an economy is Taiwan? Well, to be fair, it's not bad. I'm sort of painting this slightly negative picture with Ford's regulations, but Taiwan is an economy that has thrived on trade. Trade has made Taiwan what it is today. But what has happened in the meantime, China has just risen so hugely in the world economy. Taiwan has benefited from that. Taiwanese companies have invested massively in China. I'd be told that we have one minute left, so I need to apprise you of that. Like the rest of us, Taiwan has got to deal with the reality of the rise of China. The time is a much more open economy than China, but it needs to look at what Korea has done. And maybe do a bit more in the way that Korea has to become more open. Great, great. Well, it looks like our time is up again. We've had a fascinating discussion. But again, it's time to go. And I want to thank our guests for joining us from the UK where it is so very early in the morning. And he just got back from Germany the other day as well. And thank you for watching. Next week my guest will be retired U.S. Army Lieutenant Colonel Scott Elinger, former Army Attache at the American Institute in Taiwan, the de facto embassy. So we'll see you then.