Despite their remoteness and obvious differences, the economic relations between Taiwan and Paraguay are as close as they are allowed to be

Taiwan and Paraguay are practically on opposite sides of the globe, it is almost impossible for one to be further away from the other, as the city of Keelung on the island of Taiwan is the exact antipode of Asunción. However, this has not stopped these two nations from enjoying a very close economic and political relationship that they are sure to preserve.

Leer en español: Paraguay y Taiwán: Una relación improbable pero fructuosa

In the Paraguayan capital, 19,900 kilometers from Taipei, history and cooperation with Taiwan have left their mark. A statue of Chiang Kai-Shek, the exiled Chinese leader and founder of the Taiwanese nation, adorns a peaceful suburb of Asuncion. The statue was erected on the avenue 'President Chiang Kai-Shek', which borders Chiang Kai-Shek Park, opened in 1984.

Not far from Chiang Kai-Shek Avenue, is the house of the Paraguayan congress, built in 2003 using Taiwanese funds. Also, according to reports The Economist, not very far from there: a replica of the iconic Taipei 101 building, surrounded by the national flower of Taiwan, the plum blossom, and Paraguay, the passion flower. This monument was built to celebrate the sixtieth anniversary of diplomacy between Taiwan and Paraguay.

Beyond this, on August 15, the president of Taiwan, Tsai Ing-wen, will travel to Asunción to witness the inauguration of Paraguayan President-elect Mario Abdo Benítez, on a trip that only contemplates this stop, and that has been a nightmare logistics due to the risk that may involve hosting President Ing-wen for the relations of any government with China. Similarly, Paraguay is the only diplomatic ally of Taiwan in the region and had no problem in extending a formal invitation.

Impossible to compete economically with China

Although of the 19 countries that recognize the independent political status of Taiwan, 10 are in Latin America, the region's continued support for its struggle for recognition is threatened by China's economic power, which requires countries to stop recognize Taiwan as independent before forming political and economic ties with them.

For Taiwan, this is a problem, since it is impossible for it to compete with the 150 billion dollars that development banks in China have lent to Latin America since 2005. In addition, the attractiveness of the Chinese market has been irresistible for the region, that increased the proportion of oil exports to China from 2% in 2005 to 13% in 2016 according to Business Insider.

The so-called 'checkbook diplomacy' adopted by China has swept Latin America, one of the most important bastions of support for Taiwan in the world. For that reason, Taiwan continues to court Paraguay, keeping incentives in play to prevent this country from giving way to Chinese influence.

You may be interested: What does Bolivia gain from being a strategic partner of China?

A business relationship as broad as possible

Paraguay has a healthy economic relationship with Taiwan, where beef has become a fundamental product. In 2014, Paraguay exported 880 tons of beef per year to Taiwan. This year, 10,406 tonnes of meat were already exported to the island of Taiwan, said Sandra Oser, foreign trade manager of meat company Frigorífico Guaraní to the Paraguayan news agency IP.

This radical increase in trade between the two nations, which already makes the relatively small but populous nation of Taiwan the fifth destination worldwide for Paraguayan beef.

However, there is still a constraint that restricts the continuous development of relations between Taiwan and Paraguay: they can not negotiate a free trade agreement.

Although since 2005 there has been talk about the negotiation of a free trade agreement between the two nations, to this day, the process has not left any results. This is mainly due to Paraguay's membership of Mercosur, which requires the other members to approve the signing of the treaty, something difficult because no other member of the association recognizes Taiwan.

LatinAmerican Post | Pedro Bernal

Translated from "Paraguay y Taiwán: Una relación improbable pero fructuosa"