Treaty Validity after Diplomatic Cut-Off : The Case of Taiwan-Panama FTA

This paper examines the legal status of a treaty after the termination of diplomatic relations between two countries by using Taiwan-Panama FTA as a case study. This paper argues that the severance of diplomatic relations does not affect the legal relations of Taiwan-related FTAs. This paper puts forward two arguments in support of the continuous legal validity of the Taiwan-Panama FTA: from the perspectives of public international law and law of the WTO. Firstly, as the law of treaties provides, the severance of diplomatic relations shall not affect treaty relations of the parties concerned, as codified in Article 63 of the VCLT. According to this rule, which presupposes the existence of the States concerned, legal relations established by treaties and diplomatic ties are legally independent. Therefore, breaking off diplomatic relations does not affect the treaty relations. However, in light of the extinction of international legal personality, one may argue that if de-recognition of a State is the underlying rationale of the severance of diplomatic relations, the treaties between the parties would cease to have effect. For Panama, this reasoning may serve its purpose while Taiwan will never accept its statehood contingent upon Panama’s recognition. Alternatively, even if one accepts that in the context of Taiwan-Panama relations, Taiwan would no longer be considered a State, the Taiwan-Panama FTA continues to have legal effect by virtue of Taiwan’s status of separate customs territory, as evidenced by its membership in the WTO