Negotiations on July 31, 2004

Negotiations under threat: Chiu

UNIFICATION LAW: The Mainland Affairs Council said that China's attempt to legislate the annexation of Taiwan would send the wrong message to the world
By Melody Chen
STAFF REPORTER , WITH AGENCIES

Beijing would significantly curtail the possibility of cross-strait negotiations if it insists on a unification law with Taiwan, the Mainland Affairs Council said yesterday.

"China will encounter a certain degree of restriction and difficulty if it tries to place Taiwan policy within a legal framework. It would lose a great deal of flexibility," said council Chairman Chiu Tai-san at a press conference.

Chiu's was responding to comments by Wang Zaixi, vice minister of China's Taiwan Affairs Office, who said on Thursday that Beijing was "seriously considering creating a unification law" at a cross-strait forum in Hangzhou.

"If China must produce such a law, it has to take into account the international community's expectations that cross-strait problems can be solved by peaceful means," Chiu said.

Beijing would face unexpected difficulties if it implemented the unification law, Chiu added.

Wang said that China had not set a 20-year timetable to unify Taiwan.

However, he warned that Bei-jing would not rule out war if President Chen Shui-bian pursued his plan to adopt a new constitution by 2008.

"New tensions may arise and even a serious crisis in the cross-strait situation if Chen obstinately pursues his timetable," Wang said in a front-page interview with the China Daily published yesterday.

"We cannot completely rule out the possibility [of a military conflict] though it is not at all what we hope for," Wang said.

Wang added that the cross-strait political stalemate would continue during Chen's second term unless he accepted the "one China" principle.

"It would be hard for both sides to break the present political stalemate in the short term," he said.

"There will be no way for us to break the ice in political ties in the coming four years unless Chen returns to the one-China principle. What we can do is just work hard to prevent bilateral relations from deteriorating," he said.

Wang said that Taiwan's security depended on how Chen deals with the "one China" principle rather than whether he bought more aircraft and missiles from the US.

Chiu said that the council was monitoring Beijing's media, psychological and legal campaigns to bring about unification. A unification law would be part of the legal campaign, he added.

Chen, who has said on numerous occasions that constitutional reform would focus on the structure of government, said during a trip to the south of the nation on Thursday that China was attempting to lay a legal foundation for it to use force against the nation.

"Taiwan's status is defined as a `special administrative region' in Beijing's draft of the unification law. Is it right for Beijing to do this?" he asked.

"I am very concerned about the unification law ... Can our 23 million people remain unwary of this situation?" he asked.

Chen added that nearly 500,000 Hong Kong residents had taken to the street to protest against Article 23 of Hong Kong's Basic Law, an anti-subversion law, on July 1, 2003.

Taiwan and Singapore need an FTA

By Chao Wen-heng

Two foreign figures who are vital to the nation's trade and economic relations recently visited Taiwan -- one being Singaporean Deputy Prime Minister Lee Hsien Loong and the other assistant US Trade Representative Charles Freeman. They came to Taiwan with totally different views about the signing of free trade agreements (FTA) with the nation.

Freeman reiterated the US's lack of interest in signing such a pact, while Lee showed Singapore's consistent interest in a deal. As the nation is seeking FTA partners, the discrepancy in the two visitors' attitudes provides us new ways of looking at the issue.

Some believe that Taiwan's search for FTA partners is politically motivated. I don't think this is an accurate observation. As a country highly dependent on foreign trade, Taiwan realizes that its economic development may suffer as a result of FTAs' being signed by nations that compete with it in trade. Therefore, seeking FTA partners is a defensive mechanism. As it is getting increasingly difficult to secure FTA partners, and trade competitors are seeking such deals more aggressively, the motivation to enter into such pacts is even stronger. This, together with stalled progress in the WTO, should give the country a sense of urgency to seek FTA deals.

Singapore is one of the few countries that has shown a keen interest in signing an FTA with Taiwan and has been working toward achieving it. However, faced with interference from China, Singapore said that it opted not to be the first country to sign an FTA with Taiwan. It is interesting that Beijing is attempting to prevent Taiwan from signing FTAs.

According to Shi Guangsheng, China's minister of Foreign Trade and Economic Cooperation, Beijing is determined to oppose any FTA talks between Taipei and countries with which Beijing has formal diplomatic relations. It is Beijing's view that Taipei is using the FTA talks as a means to move toward independence. I don't understand this logic since FTAs are only a commitment to lower tariffs. If there were no cross-strait issues, Taiwan, like many other countries, would still seek FTA possibilities, as they are critical to the survival of a trade-oriented economy.

Despite its opposition to Taipei forging FTAs with other countries, Beijing itself is interested in signing the Closer Economic Partnership Arrangement (CEPA) with Taiwan. This is another intriguing phenomenon. Though both China and Singapore are highly interested in signing an FTA or CEPA with Taiwan, both initiatives may fail for various reasons. The Singapore-Taiwan FTA may not go through as a result of Beijing's interference as mentioned above. The CEPA with Taiwan may not materialize because Taiwan still has concerns over the "magnet effect" of China.

Many countries other than Taiwan have concerns over signing FTAs with China because it represents not only a vast market but also a competitor. The uncertainty of the implication of signing an FTA with China is too high. Besides, if Taiwan signs an FTA with China and the latter does not allow Taiwan to sign FTAs with other countries, then it would be a closed free-trade area and Taiwan's trade and economic relations would be limited to this area.

In view of the keen interest in achieving FTAs linking Taiwan, China and Singapore, there is a compromise that makes it possible for the three countries to sign FTAs with each other, especially as each has an interest in signing with at least one of the others.

Beijing does not like a Singapore-Taiwan FTA probably because it is afraid that such a pact will further alienate Taiwan from China. But how about the idea of China also being part of such an FTA? If Taiwan is reluctant to sign FTA with China because of the "magnet effect," how about signing a deal with Hong Kong? Signing an FTA with Hong Kong could partly eliminate the "magnet effect" for Taiwan. At the same time, as Hong Kong is part of China, a Hong Kong-Taiwan FTA would also show a certain degree of economic integration between Taiwan and China.

Then, Hong Kong could act as a model for China to sign FTAs with other countries. This would also benefit Hong Kong as an international hub.

Besides, for Singapore, signing an FTA with Taiwan and Hong Kong means establishing free trade relations with the two important trade partners outside the framework of ASEAN, a move that will help it become a center of free trade.

Based on the above, I recommend inviting Hong Kong to join a Taiwan-Singapore free trade agreement, thus forming a Hong Kong-Taiwan-Singapore free trade area. Such a move would also make Hong Kong a buffer zone for the economic integration of "greater China." Besides, the negotiations among Hong Kong, Singapore and Taiwan would be more feasible as they would be less likely to touch upon sovereignty disputes.

Chao Wen-heng is an associate research fellow at the Taiwan Institute of Economic Research and holds a doctorate in international politics and economics from the University of Maryland.

Translated by Jennie Shih