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Taiwan and Korea: Star-Crossed Business Partners

Taiwan and Korea: Star-Crossed Business Partners

Last month, the world learned that North Korea attempted to sell submarine designs to Taiwan in 2016. As Taiwan and North Korea do not have formal relations, the offer came through an unusual channel: a Taiwanese trading company that did business with North Korea received a “mandate” from the National Defense Commission (now the State Affairs Commission). Taipei confirmed the authenticity of the bid but turned it down, instead moving on to explore designs from European companies to modernize its submarine fleet.

This is not the first business overture between Taiwan and North Korea, though it is the one most closely tied to Taiwan’s security. Taiwan has a long history of trade with North Korea across a variety of sectors. Although the volume is very low compared to Taiwan’s trade with other countries and the prospects for growth are uncertain, interest persists in expanding commercial and business opportunities with the North. Taiwan is not a member of the United Nations and therefore is not obligated to comply with UN Security Council sanctions on North Korea. Nonetheless, Taipei will continue to scrupulously comply with these sanctions due to the heavy diplomatic and economic price it would pay by siding with North Korea against the international community and, more importantly, the United States. The potential strategic cost of losing the support of the US—which has sold Taiwan billions of dollars’ worth of arms over the years—far outweighs the benefit of a few submarines or a small trade deal.