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Debate glossed over some issues
By Tung Chen-yuan 童振源
Friday, Apr 30, 2010, Page 8
Last Sunday’s debate on a proposed economic cooperation framework agreement (ECFA)
with China between President Ma Ying-jeou (馬英九), in his capacity as chairman of
the Chinese Nationalist Party (KMT), and Democratic Progressive Party (DPP)
Chairperson Tsai Ing-wen (蔡英文) centered on two basic positions.
The DPP’s stance was described as isolationist, compared with the KMT’s policy
of opening up to China, which was countered as being risky. The two adversaries
locked horns on the impact of an ECFA, as well as the decision-making and
negotiation processes around it, although little was said on opening up service
industries or the impact of foreign investment. All in all, the event was a
positive development in Taiwanese politics, being the first time the leaders of
the ruling and opposition parties have been able to engage in a rational public
policy debate. It was also an opportunity for society as a whole to engage and
participate in important policy decisions.
Ma opened the proceedings by defining the DPP’s policy as essentially closing
Taiwan off from the world, as opposed to that of his own party, which has a more
“open” policy. The DPP’s approach, he said, would see Taiwan marginalized, and
offered no alternative to an ECFA. The KMT, by comparison, was attempting to
turn Taiwan’s weaknesses around and carve out a position for it on the
international scene. He said that the free-trade area formed between China and
ASEAN (ASEAN Plus One), which took effect in January, would have a considerable
impact on Taiwanese exports, adding urgency to signing a deal with China.
However, when Tsai said that ASEAN Plus One would not actually have a
significant effect on Taiwanese exports at all, Ma simply replied that it was
necessary for the government to fix the roof before it rained, in anticipation
of ASEAN Plus Three in 2012. Tsai appeared to have gotten the upper hand on this
point.
Tsai said an ECFA was based on an erroneous concept, and added that the impact
of ASEAN Plus One on Taiwan would be limited, as opposed to the impact of an
ECFA itself, which would be quite serious. She also said she shared the concerns
of the governments of other countries, such as Japan and South Korea, of an East
Asian strategic order with China playing a central role. These concerns made her
consider it inadvisable to rush into signing a binding economic framework
agreement that would lock Taiwan into complete trade liberalization with China.
Much more preferable, she said, would be a multilateral agreement within the
framework of the WTO, or a bilateral one along the lines of the Trade and
Investment Framework Agreement (TIFA) between the US and Taiwan. This would
allow Taiwan to maintain its economic autonomy while at the same time
liberalizing trade. However, she failed to respond to reservations about
Taiwan’s possible isolation in the midst of the economic consolidation of East
Asia.
The second point of the debate focused on the assessment of how significant the
impact of an ECFA would be on Taiwan’s economy; for this point, it was quite
apparent that the government was not well prepared. Tsai said if an ECFA is
signed, it would precipitate the biggest shake-up of industry and redistribution
of wealth Taiwan had even seen.
Ma responded that Taiwan will have some control of the timetable of an ECFA,
although Tsai’s understanding was that the terms of an ECFA were to be fully
realized within 10 years, and that this would have a huge impact on Taiwanese
industry. The debate then moved on to scrutinizing the effects an ECFA would
have, with Ma concentrating on an overall assessment together with its effect on
individual businesses, and Tsai focusing on problems with implementing the model
as well as the costs to be incurred from the required reorganization of
industry.
She accused the government of having inadequate policies in place to deal with
the changes, Ma’s response being a standard reply that failed to explain the
situation in any way.
The third part of the debate focused on the decision-making process and the
problem of transparency. At this point, Tsai went on the attack, with Ma on the
defensive. The DPP chairperson criticized the government’s current policy,
backed up by policy analysis and examples of businesses that would be put at a
disadvantage, with Ma countering that it was important to come up with
progressive policies.
Tsai then accused the government of lacking transparency and avoiding public
involvement in the process, refusing even to make the public aware of the
findings of the Chung-Hua Institution for Economic Research. She said Taiwan’s
future was being determined by a small number of people in Ma’s administration,
to which Ma replied that his government was willing to accept the oversight of
the national legislature, but that the DPP had refused to participate in this
oversight process.
Next up was the suggestion that Ma was allowing financial groups to influence
policy, with competing commercial interests present in the decision-making body.
To this, Ma said the government was being monitored and that an ECFA was being
drawn up with the interests of the whole country in mind.
Finally the debate turned to cross-strait negotiation tactics, and both sides
had their points. Tsai accused Ma of revealing his timetable and of not being
prepared for what would happen if the talks fell through, or of how to deal with
Beijing’s political machinations. She also returned to the theme of lack of
transparency, comparing the government’s ECFA policy with the furor that erupted
after it suddenly decided to allow the import of banned US beef products. Ma
reminded her that the DPP had failed to open up dialogue with China when it was
in power, and that his own party had succeeded in this regard, adding that the
KMT had made breakthroughs both with China and internationally.
It’s a shame, however, that the debate did not really touch on the idea of the
impact an ECFA would have on foreign investment or the opening up of the service
industries. Investment-driven trade provides the framework for much economic
activity in East Asia, and so international investment is going to be very
significant in the region. Ma did mention investment flows back from Taiwanese
businesses operating in China, and also brought up the findings from my own
work, while Tsai mentioned the possibility of more Taiwanese investment in
China.
However, there was no systematic narrative or discussion on these. Service
industries make up 73 percent of Taiwan’s GDP, and the draft proposal for an
ECFA includes liberalization of services between China and Taiwan, so the impact
on this sector is going to far outstrip that on the manufacturing or
agricultural sectors.
Tung Chen-yuan is a professor at National Chengchi
University’s Graduate Institute of Development Studies.
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