Taiwanese President’s Visit to Paraguay Highlights Soybean Issue in Sino–US Trade War

By Frank Fang, Epoch Times
August 15, 2018 Updated: August 15, 2018

Taiwan’s President Tsai Ing-wen arrived in Paraguay on Aug. 14 for a visit that has brought into focus how the continuing trade war between China and the United States will have a major impact on Paraguay.

Tsai met with both current President Horacio Cartes and president-elect Mario Abdo Benitez after her arrival in Paraguay’s capital, Asuncion. Tsai and Cartes attended a ceremony to mark the opening of a local university that was jointly established by the two countries, and on Aug. 15, Tsai is scheduled to attend Benitez’s presidential inauguration ceremony.

According to Taiwanese English media outlet Taiwan News, Tsai and Benitez reached a consensus to strengthen the ties between the two countries, through trade, investment, and infrastructure projects.

Tsai’s visit—her second to Paraguay since she was elected president in May 2016—is considered significant, as Paraguay is currently Taiwan’s only diplomatic ally in South America. Since Tsai took office, five countries in Latin America and Africa have cut diplomatic ties with Taiwan—Burkina Faso, Dominican Republic, Gambia, São Tomé and Principe, and Panama—under pressure from Beijing.

Taiwan is a full-fledged democracy with its own constitution and military, but Beijing considers the island nation a renegade province that one day will be united with the mainland, by military force if necessary. Meanwhile, the Chinese regime has strategically established alliances with nations that have diplomatic ties with Taiwan—by giving large sums in loans and investments—to pressure them into recognizing only ‘one China.’  

Some have speculated that Paraguay is likely the next country to sever ties with Taiwan. U.S. Sen. Marco Rubio (R-Fla.), while speaking at a Senate subcommittee hearing on U.S. leadership in the Asia-Pacific region in May, said he was worried that Paraguay would soon recognize Beijing and drop relations with Taiwan, according to Taiwan News.

In addition, the continuing trade war between China and the United States has intensified the speculation about Paraguay’s diplomatic moves. China, the world’s biggest soybean consumer, has recently started buying more soybeans from South America, including Paraguay, after it imposed retaliatory tariffs of 25 percent on U.S. commodities, including soybeans, in early July. Many Chinese buyers have canceled U.S. soybean orders as a result of the tariffs.

Paraguay, the world’s fourth-largest soybean exporter, is a landlocked nation, so it must ship products to be exported to ports in neighboring countries first. Paraguay’s Industry Minister Gustavo Leite, when speaking to Reuters in April, explained that most of Paraguay’s soybeans went to Uruguay.

“So, China registers those beans as Uruguayan exports,” said Leite.

China imported 95.53 million tons of soybeans in 2017, 30.6 percent of which came from the United States, 26.2 percent from Brazil, and 43.2 percent from Argentina and Uruguay—with some of that percentage actually being from Paraguay, according to China’s state-run media Xinhua and People’s Daily.

Now, as China’s reliance on Paraguay’s soybeans increases, Taiwanese media have speculated that China would make moves to lure away Paraguay from Taiwan, even though China and Paraguay currently don’t have formal diplomatic relations.

Nevertheless, China and Paraguay are already trading partners. According to statistics reported by China’s Ministry of Foreign Affairs, the total trade volume between the two countries topped $1.594 billion in 2017, an increase of 33.7 percent from a year earlier. China’s exports to Paraguay stood at $1.56 billion, with imports at $330 million, increases of 33.4% and 47.5%, respectively, from 2016.

 Before leaving Taiwan, Tsai spoke with local media about the purpose of her trip.

She said she would seek to consolidate relations with allies, noting that every diplomatic blow “would only serve as energy for the next [diplomatic] breakthrough,” according to Taiwanese newspaper United Daily. She added that it was her responsibility as the president to expand Taiwan’s international presence and recognition.

Tsai has faced a challenging situation since she was elected, as China has amped up its aggressive rhetoric and saber-rattling. Nevertheless, she has made it clear that Taiwan won’t be intimidated.

During a stopover in Los Angeles on Aug. 13, she toured the Ronald Reagan Presidential Library in Simi Valley, California. Tsai quoted the former U.S. president while speaking to the press, according to the Taiwan-based English newspaper Taipei Times, commenting on current relations between China and Taiwan.

“Anything can be negotiated, except that our freedom and our future cannot be compromised,” said Tsai. Reagan spoke these words in 1986, after he met with then-Soviet Union leader Mikhail Gorbachev in Iceland. At the time, the two leaders were negotiating on arms reduction and failed to agree on a compromise.

After visiting Paraguay, Tsai is set to visit another diplomatic ally, Belize, on Aug. 17. She is scheduled to give a speech at Belize’s National Assembly during her three-day visit, then make a brief stopover in Houston, Texas, before returning to Taiwan on Aug. 20.

Follow Frank on Twitter: @HwaiDer