Agreements with Non-Recognised Entities: The Case of Taiwan

Published: 31 August 2023 Author: Stefan Talmon

On 15 July 2021, the Ministry of Foreign Affairs, Republic of China (Taiwan), announced the signing of an air services agreement between Taiwan and Germany. The signing ceremony was conducted in a hybrid format. The document was signed at the Ministry of Transportation and Communication in Taipei by the Director General of the German Institute Taipei, Germany’s representation on the island. The signing was witnessed by the Minister of Transport and Communication and the Director-General of the Europe Department of the Ministry of Foreign Affairs. The Parliamentary Secretary of State at the Federal Ministry of Transport and Digital Infrastructure, Steffen Bilger, delivered a congratulatory message via a prerecorded video. At the same time, the document was signed at the Taipei Representative Office in Berlin by Taiwan’s representative in Germany who was connected via video link. The agreement took effect immediately.

The document, which had been negotiated since September 2016, consisted of eighteen articles. Like other bilateral air services agreements, it included definitions and provisions on the granting of rights, designation and authorisation, recognition of certificates, operational safety and aviation security, user charges, customs duties, fair competition and commercial opportunities. The document also incorporated provisions of the Convention on International Civil Aviation and the ICAO Safety Standards and Recommended Practices.

Under the new agreement the number of passenger flights between Taiwan and Germany was increased from seven to eleven per week, and the number of cargo flight was increased from three to five per week. Taiwanese airlines China Airlines and EVA Air were allowed to fly from Taipei not only to Frankfurt but also to Munich. In addition, planes were granted fifth freedom rights; that is, traffic rights to and from third countries. It was expected that the agreement would greatly increase the number of tourists and the volume of freight transported between the two sides.

While the Ministry of Foreign Affairs, Republic of China (Taiwan), and the media referred to the document signed as an air services agreement between Taiwan and Germany, no such agreement could be found in the treaty data base or treaty collection of either Germany or the Republic of China (Taiwan). The Vienna Convention on the Law of Treaties defines a ‘treaty’ as ‘an international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more instruments and whatever its particular designation.’ As Germany did not recognize the Republic of China or Taiwan as a ‘State’, it could not conclude an international treaty with it. This was explained with regard to the conclusion of a double taxation agreement between the German Institute Taipei and the Taipei Representative Office in the Federal Republic of Germany in 2011. The government bill on the conclusion of the double taxation agreement stated:

Double taxation in relation to Taiwan is a burden on German-Taiwanese economic relations. Both sides have negotiated an agreement to resolve these problems and to improve administrative cooperation. Since the Federal Republic of Germany has never recognized a sovereign State on Taiwan, this agreement was not concluded as an international treaty. The agreement was therefore signed on 19 December 2011 in Berlin by the head of the Taipei Representative Office in the Federal Republic of Germany and on 28 December 2011 by the head of the German Institute Taipei.

As with formal inter-State double taxation agreements, both the federal states and the federal parliament were involved in the process and approved of the conclusion of the agreement with Taiwan. As double taxation agreements require amendments to existing domestic tax law, they require the consent of the legislature. In Germany, double taxation agreements fall under Article 59(2) of the Basic Law which provides that ‘[t]reaties that … relate to subjects of federal legislation shall require the consent or participation, in the form of a federal law, of the bodies responsible in such a case for the enactment of federal law.’ As the double taxation agreement with Taiwan, however, did not qualify as a ‘treaty’ in terms of international law, national implementation of the agreement could not be based on Article 59(2) of the Basic Law. A novel way therefore had to be found to implement the agreement with Taiwan domestically. The agreement was given effect within the framework of a national tax law based on Articles 105  and 108(5) of the Basic Law. The agreement was published in the Federal Law Gazette, as was the date of the entry into force of the agreement.

Unlike the double taxation agreement, the document on air services was not an ‘agreement’ between the German Institute Taipei and the Taipei Representative Office in the Federal Republic of Germany but a ‘joint declaration of intent’ of the two institutions. In German practice, joint declarations of intent are legally non-binding international agreements. Neither the federal parliament nor the federal states were involved in the process of drawing up this agreement. Air services agreements like double taxation agreements relate to subjects of federal legislation and therefore generally require the consent or participation of the legislature in the form of a federal a law according to Article 59(2) of the Basic Law. The joint declaration of intent on air services, however, was not implemented by way of domestic legislation, either on the basis of Article 59(2) or on the basis of any other provision of the Basic Law. It must therefore have been implemented within the framework of existing laws and regulations by executive action.

Despite its character as a political rather than a legal agreement, the 2021 joint declaration of intent on air services constituted an ‘upgrade’ in the relations between Germany and Taiwan. The declaration replaced an air transport agreement signed in 2001 by the chairmen of two civil society organizations – the German Transport Forum, an industry association for passenger and cargo transport, and the Taipei Airfreight Forwarders & Logistics Association of Taiwan. By having the declaration signed by their official representatives, the two sides demonstrated their willingness to have more direct and more formal relations.

The new joint declaration of intent on air services was yet another example of the ever-growing relations between the two sides in recent years. Germany was Taiwan’s largest trading partner in Europe, which led to a close relationship spanning a broad spectrum of areas such as trade, transportation, science, and technology. Between 2011 and 2021, the two sides signed the following cooperation documents :

  • Agreement between the Taipei Representative Office in the Federal Republic of Germany and the German Institute in Taipei for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital, signed on 19 December 2011 and on 28 December 2011
  • Protocol to the Agreement for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and on Capital signed on 19 December 2011 and on 28 December 2011
  • Arrangement on Cooperation between the Taiwan Customs Service and the German Customs Service to Combat Customs Fraud, signed by representatives of the German and Taiwan Customs Service on 25 September 2012
  • Arrangement between the Taipei Representative Office in the Federal Republic of Germany and the German Institute in Taipei on the Transfer of Sentenced Persons and Cooperation in the Enforcement of Penal Sentence, signed on 23 October 2013 and 6 November 2013
  • Joint Declaration of Intent on Intensifying Future Education Cooperation, signed by the Ministry of Education of Taiwan and the Standing Conference of the Ministers of Education and Cultural Affairs of the Länder in the Federal Republic of Germany on 1 September 2015
  • Joint Declaration of Intent on Cooperation for Drugs and Medical Devices signed by the Director-General of the Taiwan Food and Drug Administration and the President of the Federal Institute for Drugs and Medical Devices signed on 13 October 2015
  • Joint Declaration of Intent on Expanding the Youth Working Holiday Program signed by Head of the Taipei Representative Office in the Federal Republic of Germany and the Director-General of the German Institute Taipei on 24 March 2016
  • Joint Declaration of Intent on Cooperation in the Field of Energy Transition, signed by Head of the Taipei Representative Office in the Federal Republic of Germany and the Director-General of the German Institute Taipei on 21 December 2016
  • Joint Declaration of Intent on Cooperation in the Field of Road Safety, signed by the Head of the Taipei Representative Office in the Federal Republic of Germany and the Deputy Director-General of the German Institute Taipei on 26 August 2019
  • Joint Declaration of Intent on Cooperation on Land Transport Issues [including self-driving cars], signed by the Head of the Taipei Representative Office in the Federal Republic of Germany and the Deputy Director-General of the German Institute Taipei on 26 August 2019
  • Joint Declaration of Intent on Cooperation in Promoting Transitional Justice, signed by the Head of the Taipei Representative Office in the Federal Republic of Germany and the Director-General of the German Institute Taipei on 12 December 2019
  • Joint Declaration of Intent on the Procedure for the Exchange of Driver’s Licenses, signed by the Head of the Taipei Representative Office in the Federal Republic of Germany and the Director-General of the German Institute Taipei on 12 December 2019
  • Joint Declaration of Intent on Mutual Assistance and Cooperation in Cross-Border Banking and Insurance Supervision, signed by the Head of the Taipei Representative Office in the Federal Republic of Germany and the Deputy Director-General of the German Institute Taipei on 20 February 2020

In addition, it was reported that the Head of the Taipei Representative Office and the Director-General of the German Institute Taipei signed joint declarations of intent on cooperation on research, development and innovation for small and medium-sized enterprises in May 2017, cooperation in emissions trading in April 2018, and automated immigration clearance in July 2020. While all these documents named the ‘Taipei Representative Office in the Federal Republic’ as the contracting party, it was clear that the agreements were in fact concluded with ‘Taiwan’.

With the exception of the 2011 Agreement for the Avoidance of Double Taxation, none of these agreements was published in the Federal Law Gazette or publicised otherwise. The Federal Government conducted its contractual relations with the authorities in Taiwan on a very low-profile basis, if not in a secretive way, in order not to ruffle any feathers with the government in Beijing which considered any relations with the authorities on Taiwan as being contrary to the one-China principle.

While formal treaties between Germany and Taiwan would be incompatible with the one-China principle; that is, the recognition of only one Chinese State, agreements between the German and Taiwanese authorities and, in particular, between the Taipei Representative Office in the Federal Republic of Germany and the German Institute Taipei were unproblematic under international law. This is demonstrated by the fact that even the government in Beijing has concluded agreements with the authorities on Taiwan. On 25 August 2015, the Taipei-based Straits Exchange Foundation and Beijing-headquartered Association for Relations Across the Taiwan Straits concluded agreements on flight safety and taxation cooperation.

Germany could have concluded even legally binding agreements under international law with the authorities in Taiwan, as the conclusion of such agreements does not necessarily imply recognition of the other contracting party as a sovereign State. Germany, for example, concluded legally binding agreements with the Palestine National Authority without thereby recognising a State of Palestine.

The choice by the Federal Government of the form of a legally non-binding joint declaration of intent was mainly politically motivated. This is shown by the fact that the same subject matters covered by the declarations were dealt with in binding international agreements with other parties. However, with mutual trust and goodwill political agreements can create just as stable contractual relationships as legally binding agreements.

 

Category: Statehood and recognition

DOI: 10.17176/20230831-183000-0

Author

  • Stefan Talmon

    Stefan Talmon is Professor of Public Law, Public International Law and European Union Law, and Director at the Institute of Public International Law at the University of Bonn. He is also a Supernumerary Fellow of St. Anne’s College, Oxford, and practices as a Barrister from Twenty Essex, London. He is the editor of GPIL.

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