As an isolated island lacking in natural resources, trade and investment are important instruments for Taiwan’s economic policies. However, due to political and diplomatic constraints, Taiwan has been largely excluded from international trade and investment regimes. Taiwan has participated in the Asia-Pacific Economic Cooperation (APEC) since 1991 and successfully joined the World Trade Organization in 2002. However, Taiwan can only participate in these forums as a separate customs territory. Bilaterally, due to China’s escalating pressure, Taiwan has been denied the possibility of concluding free trade agreements (FTAs) or bilateral investment agreements with those countries that maintain diplomatic relations with China and do not recognize Taiwan. On the trade front, Taiwan has taken advantage of its status as a “separate customs territory” and concluded two FTAs with Singapore and New Zealand. On the investment front, given the fact that there is no status comparative to “separate customs territory” and considering the strong link between international investment law, public authority and, consequently, sovereignty, Taiwan has been keen to find a way to overcome political obstacles, with a view toward offering legal protection to its investors overseas. Taiwan also seeks to enhance its legal status as an “entity sui generis” under international law. Consequently, Taiwan aims to innovatively advance its foreign policies and investment strategies and break free from China’s grasp on Taiwan’s international space through the conclusion of international investment agreements (IIAs) with its partners of economic and political importance. The three new updated Taiwan IIAs – vis-à-vis India, Vietnam, and the Philippines under the Tsai Ing-wen administration’s Indo-Pacific-focused New Southbound Policy (NSP) – represent valuable case studies in international law and international relations. They are employed to explore how Taiwan utilizes the conclusion of IIAs with its NSP partners to uphold its sovereignty and enhance its international legal status.

This article examines Taiwan’s engagement in IIA treaty-making and explores their positive implications for Taiwan’s international status from both international law and international relations perspectives. This article first argues that the modern concept of recognition does not necessarily refer to the recognition of statehood. Instead, in the case of Taiwan, where an official declaration of independence is practically impossible due to military coercion from China, the recognition is functionally granted, and the conclusion of economic agreements such as IIAs can alternatively reinforce Taiwan’s legal competence in the international sphere. With a specific focus on Taiwan’s three new IIAs with India, Vietnam, and the Philippines under the NSP, this article explores the political and economic motivations for Taiwan to update the IIAs with its NSP counterparts and applies an interdisciplinary approach to examine their nature and legal contexts. Further, this article applies the contextual analysis and argues that, compared to their previous versions, these new-generation IIAs concluded by Taiwan not only provide more effective legal guarantees to Taiwanese investors overseas from both substantial and procedural aspects, but also boost the recognition of Taiwan’s sovereign rights, including its authority to represent the island and its people, as well as its treaty-making capacity under international law. This article also conducts in-depth, semi-structured interviews with Taiwanese government officials involved in the negotiations for these three IIAs to provide the story behind the scenes. The article maintains that by updating its old IIAs and embracing progressive IIA reform policy recommendations, Taiwan intends to demonstrate that it is a responsible actor in the international community and is a well-prepared partner to negotiate new-generation IIAs with other countries. Most importantly, this article finds that these modernized IIAs between Taiwan and its NSP counterparts can potentially serve as the basis for Taiwan to extend its IIA network with other like-minded countries or international entities, especially the EU. EU-Taiwan relations are increasingly important, and the EU and Taiwan share economic and geopolitical interests in the Indo-Pacific region. Overall, this article provides both a broader understanding and an interdisciplinary analysis of how an unrecognized state such as Taiwan can employ the successful conclusions of IIAs to fortify its independent identity in international society from both international law and international relations perspectives.