Minister Without Portfolio Yiin Chii-ming (尹啟銘) has published an article harboring his suspicions about my opinions on an economic cooperation framework agreement (ECFA). I believe the ECFA is another version of the Comprehensive Economic Partnership Agreement (CEPA) that China has signed with Hong Kong and Macau. The purpose of signing an ECFA is to establish a “one China” market. I am proposing a few suggestions to support my point of view.
Vice President Vincent Siew (蕭萬長) has been promoting a cross-strait common market — a “one China” market — since 2000. In an article on the idea and the implementation of a cross-strait common market published in the Chinese-language political commentary publication China Review News (中國評論新聞) in Hong Kong in August 2005 and in a speech on the same topic given at Tamkang University on Dec. 1, 2005, Siew offered a definition of the “one China” market when he said that “in the future, this market, which includes Taiwan, Hong Kong, Macau and the Chinese mainland, will pursue further economic integration within the WTO framework to bring about full liberalization of goods, personnel, capital, services and information exchanges.”
He also advocated an early opening up of direct cross-strait flights and relaxing the limitations on investments in China so that in the end economic and trade policies and currency finally could be fully unified.
In the afternoon of April 29, 2005, Chinese Nationalist Party (KMT) Chairman Lien Chan (連戰) and Chinese Communist Party (CCP) Chairman Hu Jintao (胡錦濤) met at the first KMT-CCP forum, where they reached a five-point common understanding. After the meeting, they issued separate press releases that closely followed Article 6, Paragraph 2 of China’s “Anti-Secession” Law, by saying that they will use the three direct links to strengthen the efforts to promote economic exchanges and cooperation. The KMT suggested establishing a cross-strait common market — a “one China” market — while Beijing proposed a “close cross-strait economic cooperation arrangement” — the CEPA China signed with Hong Kong and Macau.
During an exclusive interview with Mexico’s largest newspaper, the Sun News on Aug. 26, 2008, President Ma Ying-jeou (馬英九) said that the cross-strait relationship was not a matter of relations between countries, but rather a matter of relations between regions. By making this claim, he diminished Taiwan to a region, which was a clear hint at his preparedness to signing an ECFA.
Then on Sept. 8 that year, Chinese Vice Minister of Commerce Jiang Zengwei (姜增偉) said Beijing and Taipei could consider signing an agreement similar to the CEPA.
Coincidentally on Sept. 11, Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung (江丙坤) said that whether the agreement was called a CEPA or a comprehensive economic cooperation agreement (CECA) was a side-issue, and that what mattered was the content. He also said the main thing is that the agreement is mutually beneficial to both Taiwan and China. According to Chiang, a CECA would be a series of economic arrangements imitating an ASEAN free trade agreement while a CEPA would include reducing customs taxes, lowering investment barriers and guaranteeing investments.
The fourth KMT-CCP forum — a forum dealing with cross-strait economic, trade and cultural issues — on Dec. 20 and 21, 2008, focused on expanding and consolidating cross-strait economic exchanges and cooperation. Prior to the forum, Ma proposed the possibility of signing a CECA to function as a framework for long-term economic and trade exchanges. After the forum, the CCP and the KMT announced nine common suggestions which focused mainly on the opening up of the three direct links, the full deregulation of goods, personnel, capital, services and information and the normalization of economic and trade relations. The forum was considered a platform on which the “one China” market could be established. These nine points paved the way for the signing of a CECA or an ECFA.
On New Year’s Eve 2008, Hu delivered a speech outlining what has become known as “Hu’s Six Points,” laying down the conditions for future cross-strait dealings. The first of these emphasized the importance of a firm adherence to the “one China” principle to the furtherance of political dialogue, the idea being that if the two sides of the Taiwan Strait could agree on this principle they could establish a consistent standpoint and thereby facilitate agreement. Next, he talked about the need to “promote economic cooperation to foster mutual prosperity” in order to bring about the normalization of cross-strait economic relations as well as to systematize economic cooperation. To this end, he said, China and Taiwan should sign a CECA and establish a special cross-strait economic cooperation mechanism.
Three months after that, on Feb. 27 last year, Ma coined the term “economic cooperation framework agreement” to describe a future cross-strait economic agreement.
Four months on, in early July, Yiin, then minister for economic affairs, admitted that many people were still unsure as to exactly what the ECFA was, and offered a simile to help out. He described it as three yolks in a single egg white. The three yolks are the lifting of tariffs on commodities, services and investment. These are none other than the three objectives of Article 1 of the CEPA.
There is a principle in economics to the effect that you should spread risk, or in other words you should not put all of your eggs in one basket. Taiwan is overly dependent on China, with over 40 percent of our exports heading for their market, which spells danger for our economy. Naturally, this is a cause for concern. If you look at other countries, such as the US, Japan and South Korea, you will notice that their exports are considerably more spread out, and even though their dependence of China as a market for their export goods has indeed increased, it remains at between 20 and 30 percent, far lower than that of Taiwan. Taiwan’s vulnerability is further exacerbated by the fact that we are in danger of being swallowed up by China, something that the afore mentioned countries don’t have to be concerned about.
Wang To-far is a professor of economics at National Taipei University.
TRANSLATED BY WU TAIJING AND PAUL COOPER
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