|
ECFA no foundation for the future
By Lin Cho-shui 林濁水
Friday, Apr 16, 2010, Page 8
During the second round of talks on a proposed economic cooperation framework
agreement (ECFA) between Taiwan and China early this month, Beijing aggressively
demanded trade normalization and proposed a list of 700 items that it wished to
see on an “early harvest” list.
The demand for trade normalization takes aim at the fact that Taiwan blocks the
import of 22,452 Chinese products. The 700 items on China’s early harvest list
include many products that could greatly harm Taiwan’s traditional industries.
While China’s intentions are questionable, it has already agreed to Taiwan’s
demands that the agricultural sector and traditional industries be protected and
that Taiwan will not be opened up to Chinese labor.
Beijing has also agreed to change the words “trade normalization” to “economic
cooperation” and has given its word that Taiwan will not be forced to lower tax
rates on Chinese agricultural products already allowed in Taiwan.
This unorthodox approach is clearly an attempt to resuscitate the falling
approval ratings of President Ma Ying-jeou (馬英九) and his team.
In other words, the Chinese side first makes aggressive demands, only to later
demonstrate its “good will” by seemingly acceding to the wishes of the Taiwanese
side.
The Chinese Nationalist Party (KMT) is very satisfied, feeling that it has won a
major battle.
Bureau of Foreign Trade Director-General Huang Chih-peng (黃志鵬) was quite happy
to debate the ECFA with Democratic Progressive Party (DPP) representatives
earlier this month, on April 5.
Unexpectedly, however, once the debate started, attending university students,
most of whom originally supported the inking of an ECFA, thought Huang lost the
debate.
This was all rather dramatic. The pan-blue camp has many other weak points that
were not exposed or taken advantage of during the debate; otherwise it would
have suffered an even more crushing defeat.
But does the pan-blue camp really have to keep losing?
Not necessarily.
Its single biggest problem is that China believes free-trade agreements (FTA)
are negotiated between countries and therefore will not countenance other
nations negotiating FTAs with Taiwan.
In this climate, the pan-blue camp cannot guarantee that other nations will be
willing to negotiate FTAs with Taiwan once an ECFA is signed, although there is
little evidence one way or another.
For example, an FTA negotiated between Hong Kong and New Zealand in 2001 was
blocked the following year, but after China and New Zealand signed an FTA in
2008, an FTA was also signed between New Zealand and Hong Kong.
If it is Beijing’s plan to liberate Taiwan from trade marginalization, then the
pan-blue camp could very well make a quick comeback from its current woes.
However, it is still very hard to say with any certainty that everything will go
in its favor.
The WTO hopes that all nations will become more liberal based on a foundation of
normal trade relations.
As such, once an ECFA is sent to the WTO, the principle of transparency dictates
that Taiwan and China must come up with plans and a timetable for further
liberalization.
For example, according to WTO regulations, an FTA between two nations must make
90 percent of products tariff-free within 10 years. This poses a problem for
Taiwan, which currently restricts the sale of as much as 20 percent of Chinese
products.
In other words, this is a far cry from trade normalization as defined by the WTO.
It would be very difficult to make these imports tariff-free within the
aforementioned time schedule while retaining the support of the Taiwanese
public.
The proposed ECFA is a hodgepodge of irregularities, parts that do not meet WTO
standards and early harvest plans that exceed WTO regulations. These are very
strange priorities and the major issues are being mixed together.
For example, the KMT has guaranteed that no permission will be given for the
importation of 2,000 Chinese products.
The party has also said it will work hard to sign FTAs with other nations once
an ECFA is signed.
Blocking certain Chinese imports is a form of trade protectionism, while signing
FTAs with other nations is a form of trade liberalization.
The spirit inherent in these two approaches is mutually contradictory and will
inevitably give rise to many contradictory situations when put into practice,
which will hamper the intended effects of both an ECFA and an FTA.
Regardless of what happens, the proposed ECFA is already a freak agreement that
nobody at the WTO has ever seen before.
Furthermore, South Korea, Taiwan’s biggest industrial competitor and a nation
that cares deeply about its competitiveness, has already started complaining
that an ECFA is a ploy to merge China’s cheap electronics and Taiwan’s panel
expertise to create a “Chiwan” that will compete directly with large South
Korean companies like Samsung.
China is now proposing that Taiwan open up industries like petrochemicals and
precision machinery, other examples of major South Korean exports to China.
Will South Korea just sit back and let China and the KMT make this happen?
These questions make the long-term future of any ECFA very hard to predict.
Is Taiwan’s economic future really reliant on an ECFA?
It is clear that Taiwan faces a looming crisis in industrial strategy and a lot
of damage could be done by naively assuming that an ECFA, the content of which
still remains strictly under wraps, will be the answer to all our problems.
Lin Cho-shui is a former Democratic Progressive Party
legislator.
|
