20100713 ECFA missing key clause: DPP

ECFA missing key clause: DPP

ON THE MOVE: DPP spokesperson Tsai Chi-chang said that following a similar pact with Beijing, a significant part of Hong Kong’s manufacturing industry shifted to China

By Vincent Y. Chao
STAFF REPORTER
Tuesday, Jul 13, 2010, Page 1

The Economic Cooperation Framework Agreement (ECFA) signed between Taiwan and China last month is missing a key clause that could potentially suspend the import of Chinese goods found to be causing significant damage to Taiwanese industries, opposition party lawmakers said yesterday.

That clause was included in the Closer Economic Partnership Agreement (CEPA) signed between Hong Kong and China in 2003, but left out of Taiwan’s trade pact with China signed in Chongqing last month.

The Democratic Progressive Party (DPP) caucus said it did not understand why the government had not asked for the same clause to be included in the ECFA, given the trade pact’s potential impact on Taiwan’s traditional and more vulnerable industries.

“The ECFA is missing this important life-saving clause,” DPP Legislator Kuan Bi-ling (管碧玲) said. “It shows that the ECFA cannot even match up to the CEPA” in terms of protecting sectors of the economy.

The DPP is strongly opposed to the trade agreement, saying that its tariff-reducing measures could have a negative impact on Taiwanese industries, employment and middle class salaries because of the possibility of a flood of cheaper goods from China. It has used Hong Kong as an example of why the agreement should not have been signed.

Speaking earlier, DPP spokesperson Tsai Chi-chang (蔡其昌) said that following the CEPA, a significant part of Hong Kong’s manufacturing industry moved to China, a move that depressed salaries.

Income disparity in the territory had grown to the highest in the world as a result, he said.

The DPP says the two agreements, signed seven years apart, both represent China’s political and economic ambitions toward Taiwan and Hong Kong. Both were also signed on the same date, June 29.

Article 9 of the CEPA, which deals with safeguards, states that either side can temporarily suspend tariff reductions in the event that “the implementation of the CEPA causes a sharp increase in the import of [certain] products originating from the other side which has caused or threatened to cause serious injury to the affected side’s domestic industry.”

The article says that both sides would have to “promptly commence consultations under … the CEPA in order to reach an agreement.”

DPP Legislator Lin Shu-fen (林淑芬) said it was a significant clause because it gives Hong Kong the ability to immediately halt imports found to be causing significant harm to the territory’s economy. Taiwan, however, can only choose to terminate the entire agreement at once and only 180 days after written notice has been given, she said.

Under Article 16 of the ECFA, Taiwan and China would have to hold negotiations within 30 days after a side gives written notice of its intention to terminate the agreement. Should there be a lack of consensus, the side must wait 180 days before the ECFA is terminated.

Chinese Nationalist Party (KMT) lawmakers said yesterday that the half-year waiting period before the agreement could be terminated was included to protect the interests of Taiwanese businesses in China.

“The main consideration for that was to give Taiwanese businesses investing in China a buffer period. It’s to prevent [these] businesses from having no time to respond in the case that China terminates the agreement,” he said.