The major part of this paper traces Taiwan's economic ties with the European Union. It traces these ties in the play between international legal sovereignty and functional sovereignty over time. Taiwan's economic ties i.e. trade and investment is a prime example of functional sovereignty culminating in her accession to the World Trade Organisation (WTO). The paper ends by raising the question of when functional sovereignty ends and international legal sovereignty begins since trade and investment ties with Taiwan means talking to the government which sits in Taipei having unofficial ties with Taiwan without granting it statehood recognition. Are there grey areas?However, to begin the exploration, the paper starts of by examining the concept of international legal sovereignty and Taiwan and proposing functional sovereignty as an alternative to framework Taiwan's ties, relations with other countries with which it trades and invests. It must be borne in mind that, while speaking of Taiwan-EU trade and investment ties, Taiwan's functional sovereignty could very well apply to any other country it is in economic engagement with.In examining Taiwan-EU trade and investment ties with the lens of functional sovereignty and international legal sovereignty in play, what is examined also unavoidably Taiwan's exports and imports, its investments abroad. Questions are asked about going up the value chain in goods produced, the diversification of its economy, diversification of trading partners and diversification of investment destinations.