20120808 EDITORIAL: Cross-strait pact needs watchful eye

EDITORIAL: Cross-strait pact needs watchful eye

Cross-strait talks between Association for Relations Across the Taiwan Straits Chairman Chen Yunlin (陳雲林) and Straits Exchange Foundation Chairman Chiang Pin-kung (江丙坤) are about to recommence. This round of talks will focus on cross-strait investment protection and promotion agreements, which will relate to the personal safety of hundreds of thousands of Taiwanese businesspeople investing in China, and Taiwanese politicians need to keep a close eye on the proceedings.

People from all over the world conduct business in China and even though Taiwanese have an advantage- — given their shared language and similar cultural background — there are still differences in the political and legal systems and in the way business is conducted. In the past, Taiwanese investors in China have become embroiled in disputes and faced personal risk, detention and arrest on many occasions.

The risks extend even to big corporations. Taiwan’s Shin Kong Mitsukoshi Department Store became entangled in a dispute over its joint operation of Shin Kong Place, resulting in Chinese security officials detaining Shin Kong’s general manager of Beijing operations Steven Wu (吳昕達) as he was about to board a plane back to Taiwan. There are also examples of Taiwanese seeing their investments disappear overnight in China. True, some have been able to pull a few strings and claw back some of the loss, but the vast majority find themselves with no recourse and have to accept the risks of investing in China.

Of course, investing and doing business always carry risks and it is investors who shoulder these risks. Taiwanese businesspeople have to prepare well in advance, which means doing their homework on not only local laws and regulations, market conditions and investment partners, but also on the political climate. All the government can do is establish systematic guarantees and arbitration mechanisms. However, even if an investment protection agreement is signed, that does not mean it will help solve all commercial disputes.

Although these negotiations were started some time ago, observers are in the dark about what form any agreement will take, aside from glimpses provided by Chiang, who has revealed that it would involve a systematic and diverse set of investment dispute resolution mechanisms. But will these mechanisms effectively safeguard the rights of Taiwanese businesspeople? As the political systems and human rights standards are different in Taiwan and China, Taiwan will have to keep an eye on the issue of human rights guarantees. These include whether they comply with international mediation options according to international practice, as well as the requirement to notify relatives within 24 hours of detention, a reporting system, family visitation rights, the right to consult with a lawyer and the right to have one present during interviews.

There is another aspect to this. After an investment protection and promotion agreement has been signed, Chinese businesspeople will also be able to invest in Taiwan. This will bring about huge changes for Taiwanese industry, and the government and opposition need to agree beforehand on whether “Chinese investment” differs from “foreign investment” in their definition of those terms. They also need to decide what Chinese investors would be allowed to do and how they are to be regulated. It is no good waiting until they have arrived and then decide what coat they are to wear. By then it will be too late.

There is consensus between the governing and opposition parties on the need for such an agreement; there is no argument there. However, they do have a shared responsibility to ensure the final signed agreement can provide adequate guarantees and recourse for Taiwanese investing in China. This agreement is extremely important and it cannot be allowed to be signed, as others have in the past, without first having been reviewed by the nation’s parliament.