Tuesday, March 17, 2009

What's in a Name?

Call it what you want, but one of the hottest issues of recent weeks in Taiwan has been the CECA/ECPA. In an article carried by the Japan Times ジャパンタイムズ ("Clinching a free trade accord with Beijing"), Frank Ching sets the scene:

"Chinese Premier Wen Jiabao recently offered to hold political and military talks with Taiwan in order to end the state of hostility between the two sides, which has existed for 60 years. Taiwan immediately rejected the offer, with President Ma Ying-jeou 馬英九 saying through a spokesman, 'At this stage, we will only talk about economic and trade issues.' That is certainly the right attitude to adopt. Relations with China have improved dramatically since Ma became Taiwan's leader last year, with four agreements — none of which were overtly political — signed in 2008. But he must move cautiously if only because there is a great deal of suspicion within Taiwan of Beijing's intentions. So sensitive is the situation that the president has had to change the name of the trade agreement that he wants to negotiate with Beijing, previously called a cross-strait Comprehensive Economic Cooperation Agreement (CECA). Political opponents felt that sounded too much like CEPA, the Closer Economic Partnership Arrangement that Hong Kong and Macau have signed with the mainland, and feared that such an accord would signify that Taiwan, like Hong Kong and Macau, came under Chinese sovereignty. Partly for that reason, Ma decided to change the name. Now, it is called ECFA for Economic Cooperation Framework Agreement. Taiwan also feels that a framework agreement will be easier to negotiate than a comprehensive one."

Ching has never been a supporter of an independent Taiwan, so his enthusiasm for the CEPA/ECFA comes as no surprise:

"To Taiwan, a trade agreement with Beijing is crucial not only because the mainland is now the island's most important trading partner but also because it hopes that such an accord will pave the way to agreements with the countries of Southeast Asia and end Taiwan's marginalization in the Asia-Pacific region. Beijing and the Association of Southeast Asian Nations (ASEAN) have reached an agreement under which most tariffs will be eliminated by next year between China and the six original ASEAN members. The remaining four members will be included in the FTA by 2015. This will create a free trade zone with a population larger than either NAFTA or the European Union. Moreover, Japan, South Korea and India also have FTA deals with ASEAN. And last month Australia and New Zealand signed FTA accords with ASEAN. Thus Taiwan's major trading partners are weaving an FTA network among themselves that excludes Taiwan. Unless this changes, Taiwan will find it more difficult to trade since it will have to pay export duties that other countries do not. Studies show that if China, Japan and South Korea join ASEAN in an FTA, Taiwan's GDP will shrink by more than one percentage point. The more countries involved, the greater the impact on Taiwan. That's why Taiwan is feeling increasingly desperate. It wants to reach a trade agreement with China after which, it hopes, other trading partners will be willing to sign similar accords. There is a danger that if Taiwan does not achieve a breakthrough, it will find itself in nearly the same boat as North Korea — an outcast within the international community."

Strong words. But how much more integration with the Chinese economy does Taiwan really need? Since restrictions were lifted in the early 1990's, billions of dollars have flowed from Taiwan into China, along with hundreds of thousands of businesspeople, and most worrisome of all, a lot of manufacturing jobs. In return for this growing dependence on the Chinese, what has Taiwan received in return? The Anti-Secession Law and a growing number of missiles pointed at it, are two things that come to mind, as well as the ongoing efforts to block or limit Taiwan's participation in international organizations. Even Ching admits that signing an accord on closer economic integration may not help Taiwan in the international arena:

"It is Ma's hope that once Beijing has reached a trade agreement with Taiwan, it will not object to similar agreements between Taiwan and its other trading partners. This will not necessarily be the case. Beijing may still object to other countries reaching trade agreements with Taiwan."

Of course, if the ultimate goal is political integration with China, then Taiwan, to paraphrase Ching's conclusion:

"...has everything to gain and little to lose."

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