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Judging the ECFA by
the facts
By Honigmann Hong 洪財隆
A year has passed since Taiwan and China signed the Economic Cooperation
Framework Agreement (ECFA). Looking back on the arguments for and against the
agreement when it was first proposed at the beginning of 2009, everyone
approached the issue from their own starting point and so had little chance of
persuading one another.
Those who favored signing such an agreement had various reasons for supporting
it. Among them were that the ECFA would be a milestone in detente across the
Taiwan Strait, that it would establish a beachhead for institutionalized
cross-strait consultations, promote the normalization of cross-strait economic
and trade relations, allow Taiwan to effectively link up with China’s
fast-growing market and make it easier for Taiwan to sign free-trade agreements
(FTA) with its main trade partners, so that it would not become marginalized as
other economies formed regional trade blocs.
Opposition to the agreement, on the other hand, has mainly been based on the
idea that the ECFA would make Taiwan’s economy excessively dependent on China,
have an excessive impact on weak industries and push up unemployment. Opponents
feared that the ECFA would cause manufacturing to move offshore even faster than
it already was, which, given that there was no guarantee that Taiwan really
would be able to sign FTAs with its main trade partners, would further confirm
its peripheral role in a China-centered framework. They worried that the ECFA
would cause cross-strait trade relations to quickly diverge from the
multilateral framework of the WTO. Some went so far as to say that the signing
of the ECFA should be postponed or made subject to a referendum, on the grounds
that it lacked legitimacy.
These supporting and opposing viewpoints reflect differing opinions within
Taiwan about where we should place ourselves, confronted as we are with a
changing international economic and trade environment and evolving cross-strait
relations.
Today, however, the ECFA is a fait accompli. Barring some great change in
circumstances — especially on the part of the Chinese government — the fact will
remain that a new economic and trade environment has taken shape, along with new
expectations, especially in sectors associated with the early-harvest list of
goods and services that have been subject to immediate tariff concessions or
exemptions under the agreement. To a considerable extent, businesses in these
sectors have already reoriented themselves and made investments that are now
sunk costs and would be hard to recover. Everyone has to respect this new
economic order, and it is rather unlikely that either party to the agreement,
especially the Taiwan side, would ever invoke the ECFA’s termination clause
(Article 16).
In March, China’s National People’s Congress and Chinese People’s Political
Consultative Conference approved the nation’s outline for the 12th five-year
plan, making it China’s guiding program for governance from this year until
2015. The plan stipulates that China will actively implement the ECFA and other
cross-strait agreements during the next five years. In the area of economic
cooperation, the plan calls for promoting bi-directional investment and
strengthening cooperation in emerging industries and in financial and other
modern services. Since the five-year plan covers next year, when Taiwan has a
presidential election, and 2013, when a handover of power will take place in
China, the political directions talked about in the section of the plan devoted
to cross-strait affairs are necessarily intended to continue throughout.
Meetings between Straits Exchange Foundation Chairman Chiang Pin-kung (江丙坤) and
Association for Relations Across the Taiwan Strait Chairman Chen Yunlin (陳雲林)
have led to the signing of 15 agreements, the ECFA being one of them.
Recently, some Chinese and Taiwanese media have started trying to induce fear by
dropping heavy hints that a change in Taiwan’s political setup would take these
agreements back to square one. In reality, however, the ECFA says nothing about
political preconditions such as acceptance of the so-called “1992 consensus,”
either literally or by implication.
Even if there were no ECFA, cross-strait economic and trade interactions would
still have the multilateral frameworks that have been developing since 2002 to
work from. At least the most-favored nation treatment existing under the WTO
would continue. The multilateral framework ensures that, whatever happens,
cross-strait trade will not be set back to zero.
Just before Taiwan and China signed the ECFA on June 29 last year, President Ma
Ying-jeou (馬英九) made two pledges to the public. He said that Taiwan would be
able to escape from being shut out of regional pacts, because the ECFA would
make it easier for Taiwan to negotiate and sign FTAs with other important trade
partners, and that the government would notify the WTO of the ECFA, preventing
cross-strait affairs from becoming detached from international norms.
When questioned as to when these two political pledges would be fulfilled,
officials give the standard reply: “as soon as possible.” To tell the truth, I
am not very optimistic about these pledges, but I hope my judgement turns out be
wrong. After all, if Taiwan signs FTAs with other trade partners, it would
resolve one problem brought about by the ECFA: the excessive focus on China.
Logically, the cumulative effect of numerous bilateral agreements would be akin
to a multilateral framework, and very few people would be against Taiwan and
China joining any multilateral economic and trade framework like the WTO at the
same time.
If Taiwan can sign FTAs with more countries and, by means of these bilateral
agreements, neutralize its over-reliance on China under the ECFA — in other
words, go back to a multilateral framework — and if it can ensure that the ECFA,
in its content and in the notification procedure, strictly complies with the
accepted multilateral practices of the WTO, then the agreement will not restrict
Taiwan’s other options or determine its final choice. That would open the way to
a wider consensus that could gradually resolve the discord over the ECFA.
Honigmann Hong is an adjunct assistant professor in National Tsing Hua
University’s China studies program.
TRANSLATED BY JULIAN CLEGG
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