20110124 Beans are spilled — ECFA is political

Beans are spilled — ECFA is political

By J. Michael Cole 寇謐將

It may have been inadvertent, but recent praise by US Secretary of State Hillary Rodham Clinton and US President Barack Obama for the Economic Cooperation Framework Agreement (ECFA) cut through the smokescreen blown up by President Ma Ying-jeou’s (馬英九) administration by directly pointing to its political impact.

Ever since the idea of a free-trade-like agreement between Taiwan and China was proposed, Ma and his government have emphasized time and again that the pact was purely economic in nature and had no political ramifications whatsoever. This position, stemming from necessary constraints, dovetailed with Ma’s promise not to enter political dialogue with Beijing during his term in office.

Though critics of the ECFA have not been deceived by these pronouncements and have repeatedly assailed it over its political ramifications, and despite open references to it by Beijing officials as an instrument of unification, Taipei has been unwavering in its claim that politics are extraneous to the agreement.

However, no sooner had Washington begun praising the trade agreement in terms of its political benefits than Taipei shifted gear and interpreted this as encouragement for extended dialogue with Beijing. Speaking at the US Department of State on Jan. 14, Clinton praised the ECFA and called for more dialogue and exchanges.

Five days later, the US-China Joint Statement issued during Chinese President Hu Jintao’s (胡錦濤) state visit to Washington stated that the US “applauded” the ECFA and “welcomed the new lines of communications developing between them [Taiwan and China],” adding that it looked forward to “efforts by both sides to increase dialogues and interactions in economic, -political and other fields.”

Amid all that praise lies an inadvertent landmine, namely Washington’s encouragement for “increased dialogues” in the political sphere.

Not only does this statement come close to contravening point six of Washington’s “six assurances” to Taiwan issued in 1982 to the effect that it “would not exert pressure on the ROC [Republic of China] to enter into negotiations with the PRC [People’s Republic of China],” but it also undercuts Ma’s promise not to begin talks on politics with Beijing.

Unfazed by this indiscriminate praise, the Presidential Office on Jan. 20 said it was pleased with Obama’s praise of the ECFA and its impact on relations and communications across the Taiwan Strait, adding that this was proof the international community approved of the trade agreement.

Washington’s indiscretion, if this is what it was, could arguably be blamed on the political necessities of the moment or a lack of understanding by Washington of the complexities of the political environment in Taiwan. Conversely, it could also be indicative of Washington’s ability to see the truth behind Ma’s wall of deception and its cognizance that the ECFA is primarily a political instrument.

By virtue of their respective positions, Obama and Clinton are primarily involved with matters at the strategic level, meaning that they have little time or energy to spend on the intricacies of foreign political development. However, lower-level officials and area specialists at the US Department of State and US National Security Council should be more attuned to such fine details and would know that, at least on Taiwan’s side, the ECFA has been promoted and sold as a purely economic entity.

In fact, half a decade ago, Alex Liebman, then a doctoral candidate at Harvard University’s department of government, was telling the annual CAPS-RAND-CEIP conference on the People’s Liberation Army that while Taiwan was being “marginalized” in a new East Asian economic environment that was becoming increasingly integrated, it was not hurting economically.

Although Taiwan was not part of any regional trade agreement — a direct result of Chinese obstruction — it saw equal or even greater increases in its share of trade with China and ASEAN than countries that were signatories to those agreements, Liebman wrote. In other words, regional economic integration and free-trade agreements had little positive incidence on trade volume — the region as a whole saw trade increases with China because the Chinese economy was growing by leaps.

If, as Liebman wrote, regional trade agreements have an insignificant impact on trade, then Ma’s argument that Taiwan had no choice but to sign an ECFA with China lest it be “left out” of an increasingly integrated region following ASEAN Plus Three (ASEAN plus China, Japan and South Korea) was fallacious, as past experience shows us that trade would have continued to prosper even in the absence of such a pact.

Case in point, from 1998 until last year, the only two major economies in which Taiwan’s exports have steadily increased are China and ASEAN, from 22 percent to 45 percent and 10 percent to a little less than 15 percent of total exports respectively. For the same period, total trade between Taiwan and China (plus Hong Kong and Macau) went from US$32.07 billion in 1998 to US$125.7 billion last year (excluding Hong Kong and Macau, trade with China in 1998 was just US$4.9 billion).

Trade between Taiwan and ASEAN, meanwhile, went from US$24.5 billion in 1998 to US$58.3 billion last year, Ministry of Finance statistics show. For this year, trade figures between Taiwan and China are likely to further increase, though this will likely be the result of economic sweeteners by Beijing rather than a direct outcome of the ECFA.

Explaining the utility of trade agreements and regional integration in the absence of actual trade intensification, Liebman said that Beijing has encouraged integration for political purposes — that is, to reassure regional countries amid apprehensions surrounding its phenomenal economic rise, while at the same time reasserting its strategy of “peaceful development.”

Politics, therefore, rather than economics, is at the heart of Beijing’s support for regional economic integration. Integration is a conduit for dialogue, one that places China firmly at the center. Consequently, it would be naive to assume that when it comes to Taiwan — one of China’s “core interests” — Beijing would put politics aside and regard the ECFA as a purely economic agreement.

In fact, the Chinese leadership has made it very clear that the pact’s raison d’etre is first and foremost political, knowing fully well that agreement or not, trade across the Strait would continue to increase as China’s economy rises.

Obama and Clinton may not have intended it that way, but their praise for the ECFA unmasked Ma’s little charade and showed what the trade agreement really is — a means by which to institutionalize dialogue across the Strait, with politics as the ultimate aim.

J. Michael Cole is deputy news editor at the Taipei Times.