20100525 ECFA politics rear their ugly head

ECFA politics rear their ugly head

Tuesday, May 25, 2010, Page 8

The proposed economic cooperation framework agreement (ECFA) that President Ma Ying-jeou’s (馬英九) administration hopes to sign with China sometime next month is, despite what Ma wants the public to believe, a very political affair.

Any doubt that this is not the case was dispelled on Sunday after the Liberty Times (the Taipei Times’ sister paper) reported that customs authorities in Shenzhen City’s Yantian Port, one of the largest container ports in the world, said they would strictly enforce “country of origin” rules, meaning products made in Taiwan would have to be labeled “made in Taiwan, China” or be barred entry into the Chinese market.

Vice Minister of Economic Affairs Lin Sheng-chung (林聖忠) said that Taiwan would not accept this demand, as it went against the spirit of the WHO, of which Taiwan and the People’s Republic of China are separate members.

While it appears that the Chinese Council for the Promotion of International Trade first issued the directive that products from Taiwan be labeled either “Taiwan, China” or “Taipei, China” back in 2005, the demand was not taken seriously by Chinese customs officials — until a few months ago. The Liberty Times reported that in recent months several regions in China have been screening the labeling of Taiwanese products and rejected those marked “Made in Taiwan.”

If this decision was made purely out of economic incentives (as Ma would argue) and was simply an instance of protectionism, what the labeling says would be irrelevant and all goods originating from Taiwan would be blocked. That only goods bearing a Made in Taiwan label are denied entry is a clear indication that the politics of nationalism are influencing trade decisions.

Though the timing represents poor planning on Beijing’s part, it is in line with the open manner in which it has expressed the political undertones of the trade pact. In other words, while Ma has attempted to depoliticize an ECFA, Beijing has not made a secret of the fact that it regards it as a political instrument. The labeling crisis is yet another example of China’s guerrilla-warfare negotiating style. It overshoots, seems to undercut its staunch ally in Taipei, only to then step back and, as a “goodwill” gesture, make further “compromises,” which in this case will likely be a relaxation on labeling policies regarding products made in Taiwan.

Such a move is all the more likely if the labeling issue turns into a political storm that threatens the viability of an ECFA, or even Ma’s chances of being re-elected in 2012. What it does show, however, is that even if the Council for the Promotion of International Trade yields a little, we can expect the policy to re-emerge after 2012, especially once an ECFA has further tied Taiwan’s export-based economy to that of China.

Once hyper-dependence is created and institutionalized — and this is the very object of an ECFA, even if the rules of the game are changed — Taiwanese firms and ministry officials will no longer be in a position to protest and will have to accept the labeling Taiwanese products in a way that denigrates the country’s sovereignty. Furthermore, accepting such an unacceptable arrangement would deal a double blow to Taiwan if “Made in Taiwan, China” goods were intended for re-export, as it would add to Beijing’s relentless campaign to portray Taiwan as part of China, one shipment at a time.

So much for Ma’s apolitical trade pact.