President Ma Ying-jeou (馬英九, asking question): Judging from what you just said, I feel you don't think tariffs are important or that it doesn't matter if they are higher, but higher tariffs may be a matter of life and death for an industry or family. To address the problem, your think tank proposed encouraging businesses that have to pay high tariffs to invest in mainland China. I want to know how you plan to deal with the 590,000 workers and their families? Once they relocate to the mainland, they will lose their jobs. I am curious whether relocating businesses is your alternative plan. Chairperson Tsai, everybody is very interested in your party's contingency plan. So why don't you use this opportunity to tell us?
DPP Chairperson Tsai Ing-wen (蔡英文): Mr President, I'm glad you asked me this question because we didn't have much time to talk more about this
The impact of ASEAN Plus One on Taiwan is small, only 0.035 percent of our GDP, according to a study conducted by the Chung-Hua Institution for Economic Research.
PHOTO COURTESY OF THE TAIPEI CITY ASSOCIATION OF PHOTO JOURNALIS
Besides, exports from ASEAN countries to the Chinese market are not in direct competition with ours. Our main trade competitors in the Chinese market are Japan and South Korea, not ASEAN countries.
You emphasize how urgent it is to sign an ECFA because the ASEAN Plus One deal came into force this year [on Jan. 1] and that if we don't hurry, we risk being marginalized [economically]. Mr President, I'm afraid you are the fearmonger.
ASEAN countries are not our main competitors in the Chinese market, at least not in the automobile, machinery and textile sectors. The 590,000 upstream workers in these industries will not be affected by the ASEAN Plus One trade pact. I don't understand why you keep exaggerating figures to scare people.
PHOTO: CHANG CHIA-MING, TAIPEI TIMES
Tariffs are important, but a mature industry must focus more on quality, reputation, innovation and added value. Tariffs are important, but if the Chinese yuan rises by 2 or 3 percentage points, the benefits we enjoy will soon be offset by its appreciation, given that the relationship between the yuan and the New Taiwan dollar has become increasingly closer.
The crux of the problem lies in industry competitiveness, not lower tariffs. What you said just now not only is unrealistic, but also inflates the impact of ASEAN Plus One.
You and many other government officials, as well as government pamphlets, claim that once an ECFA is signed, we will save US$300 billion in tariffs. Last year's statistics made public by the Ministry of Finance, however, showed a different picture: merely US$104.7 billion. Moreover, if you add the tax refund to the equation, the figure drops to US$50 billion or US$60 billion. I want to know why you keep exaggerating the figures and creating a false sense of urgency for signing an ECFA.
PHOTO: CNA
It is true that many countries are signing free-trade agreements, but they are individual cases and have yet to form a comprehensive phenomenon. While the situation is uncertain, you decide to rush to sign a trade pact with China without careful consideration. I wonder whether you ever carefully evaluated the risks involved.
You criticized us for adopting a dilatory tactic, but I say you are careless.
Ma (asking follow-up question): Chairperson Tsai, just now you said tariffs are not important, but I already told you tariffs are different in different industries. The tariff for machinery is 8 percent. If they cannot enjoy tariff exemptions, their competitiveness will suffer and some [companies] could go belly-up. Different businesses have different problems, so you cannot lump them together. You cannot apply the same figure to all sectors.
PHOTO COURTESY OF THE TAIPEI CITY ASSOCIATION OF PHOTO JOURNALIS
The ASEAN Plus One economic agreement took effect on Jan. 1. The ASEAN-Japan trade deal will go into effect in 2012 and the ASEAN-South Korea trade pact will soon follow. Don't you think a government should have more foresight? Do you really have to wait until things happen to take action? It will be too late. As a responsible government, shouldn't we take precautions?
We are all aware that if we don't do this, some businesses will suffer and we must tell the public [about this possibility]. We want to explain this to the DPP caucus at the legislature or hold joint legislative committee meetings, but your party continues to boycott the plan or even smear our good intentions.
Actually, an ECFA is not only about tariff reduction or exemption. I don't understand why you are against it. If the trade deal will benefit businesses that have to pay high tariffs now, why don't we just sign it?
You worry there will be risks involved. But we will proceed with care and only a few businesses will be included in the “early harvest” program, while the rest will take time. Isn't taking things one step at a time exactly what you want?
Tsai: You don't seem to understand what I just said, so I will tell you again. The ASEAN Plus One trade pact will have little impact on the machinery industry because our main competitors are Japan and South Korea.
The ASEAN Plus Three economic deal will not happen within the foreseeable future. A variety of studies have shown that both Japan and South Korea are equally worried about signing FTAs with China because they are afraid they cannot deal with the impact of an influx of Chinese goods.
They are also worried the trade deal would lead to a regional economic bloc centering around China. If that is the case, the strategic balance in the region will forever be changed.
So whether to sign a free-trade agreement or form a free-trade area in the East Asian region is a strategic consideration. We are not sure whether ASEAN Plus Three will take form in 2012, but many experts have predicted that it is unlikely to happen before 2015.
There are many free-trade agreements, free-trade areas or free-trade proposals being considered, but there are also many uncertainties. However, since you assume that ASEAN Plus Three will be established in 2012, you claim it is urgent that we sign an ECFA. I think such an assessment is unrealistic. That is why I said an ECFA is a policy that was made hastily — because it is based on miscalculation.
Of course we hope to see our exporters enjoy lower tariffs, but when they already enjoy most-favored nation treatment, why would we want to get tariffs that are 2 [percent] or 3 percent lower in exchange for a bigger price?
You claimed the “early harvest” list is small, but I'd like to remind you, Mr President, that once the “early harvest” program is finalized, you are bound by the WTO to open up at least 90 percent of the local market within 10 years. Maybe you don't feel the pressure of opening up the market for the first two to three years, but eventually local businesses will suffer because we must open our market to Chinese goods.
Once the tariffs reach zero, businesses focusing on the domestic market will bear the brunt. Can you tell me how many businesses will be affected?
Millions of jobs will be affected. People might not lose their jobs, but their salaries are unlikely to grow — or worse, they will drop. Isn't that important? Are those people not important?
If the owner of a machinery company knows that getting 2 to 3 percent preferential tariff treatment will cost many jobs or cause a drop in salaries, I believe the person will reconsider whether paying such a high price was worth it. Even a common person will think twice; you, as president, haven't you thought about that?
Tsai (asking question): Mr President, you still haven't answered my question about the US$300 billion you claim we will save in tariffs.
If we allow the import of industrial goods from China with zero tariff, China-based Taiwanese companies that already have factories in China are likely to take advantage of the preferential treatment to sell their products back to Taiwan, forcing these local businesses to relocate to China. Haven't you ever given it a thought? Haven't any of your economic advisers told you about this?
You claim an ECFA will create 260,000 jobs, but this has been challenged by many economists because the model is flawed. The number 260,000 may just be a figure for you, but for the unemployed, it is about survival and dignity. Can you please tell us clearly who will lose their jobs after an ECFA is signed? If you think we are frightening people, will you be so kind as to give us your assessment?
We are also curious about how you can promise there won't be any more imports of Chinese agricultural products once an ECFA is signed. Don't forget, you failed to deliver on your “6-3-3” economic policy. So how can we trust you will honor your promise concerning Chinese agricultural products?
Ma: Thank you for giving me the opportunity to explain this. Your approach is to take it easy, don't be hasty, but this is exactly what we worry about. Over the past eight years, your lackadaisical attitude is what caused Taiwan's slipping global trade status. Haven't we learned enough lessons? Because of your China policy, we are suffering in every single way, including the export market.
While you said the free-trade area in East Asia may not happen in the near future, didn't you also say I shouldn't listen too much to experts like Michael Porter or Ohmae Kenichi? You are right when you say that I am the president, so I am telling you I must plan ahead and that is exactly what I am doing.
I am setting up the framework and, depending on how the situation develops, we will negotiate with China if the impact is big. We can set the agenda, but we cannot wait until things happen to take action.
We are well aware of the DPP's approach, but over the past eight years, as long as somebody opposed a policy, you just called it quits. What we are doing now is to lay the groundwork and when the time comes, it will take us no time to push ahead step by step. That is what I call a responsible government and that is what I think a president should do.
I admit I'm not an expert, but I can integrate expert opinion and decide. If I don't make the move now, I won't be able solve the more serious problems our businesses will encounter in future.
You keep saying that once the “early harvest” program is finalized, we must open 90 percent of our market in 10 years. But I keep telling you that there are exceptions.
Taipei and Beijing agreed during the first round of negotiations on an ECFA that agricultural products would not be included. What it means is that both sides understand each other's specific situation.
You criticized me for not answering your questions, but you didn't answer mine either. How did you come up with the number 3.2 million people who would be affected by an ECFA and why did it jump to 5.9 million within five days?
You even said machinery companies pay low tariffs, but an owner I visited a few days ago told me he paid 8 percent. So please, do you know how credible the number is?
You also worry that some China-based Taiwanese businesspeople may sell their products back to Taiwan, but we have different mechanisms in place to monitor and prevent such things from happening. We also require businesses to provide the place-of-origin of products so they can follow the requirements of international trade. The 272 free-trade agreements signed over the years never experienced the problems you just mentioned.
What is more important is that we must have enough foresight to predict what lies ahead five or 10 years down the road. You will lose big if you think you can wait another two years. It will be harder to catch up if your market is seized by someone else.
As our market share in many countries kept falling over the years, shouldn't we speed up and try to catch up? If a government doesn't show its resolve to march ahead at the critical time, how can we face the people?
Just like you said, I am not an expert. That is why I am taking a bold approach to set the course for Taiwan's future.
Tsai (asking follow-up question): I think your not being an expert is fine, but nothing is more terrifying then someone who is not an expert and who doesn't listen to the experts, while thinking he or she is right and adopting a presumptuous approach.
You have been avoiding my questions all along. I asked you four questions but you haven't answered any of them. If you don't remember them, I can tell you again.
Why do you claim we can save US$300 billion in tariffs if we sign an ECFA? How big is the problem of reselling products from China to Taiwan? How many people will lose their jobs after an ECFA is signed? How will you honor your promise that no more Chinese agricultural products will enter the local market? Please give me your answers.
Ma: I already made it clear at the very beginning that we are well prepared for the impact that our weaker traditional businesses will face after an ECFA is signed. We have classified them into 17 categories.
For those suffering little impact, we will provide guidance and help them revive their businesses. The second type is those affected, but not seriously hit, and the third are businesses that are hard hit. It will cost more money to fix the problem, about NT$3.65 billion. We plan to set aside a total of NT$95 billion to deal with the problem and we are ready.
Chairperson Tsai, this is not the first time the government has earmarked money to help businesses cope with the impact of a trade deal. When we joined the WTO, the damage businesses suffered was way more than [what] an ECFA [could cause], but we overcame the difficulties. At that time you were in Cabinet, but I don't think you ever opposed joining the WTO. The impact of becoming a WTO member was not as big as many had expected and Taiwan responded well. It shows Taiwanese adapt well to different situations. Since there is already an example for us to follow, why don't we have more faith in the Taiwanese and believe that they have the courage, ability and perseverance to overcome more difficulties?
If you keep saying an ECFA is a terrible thing and that it is not a good idea to sign it, you are suppressing the ambitions of many Taiwanese. You are definitely not setting a good example.
We know unemployment is a problem and will continue to pay special attention to it. We will not focus merely on mainland China because our target is the world. For the Chinese market, we want tariffs to be reduced, exports to increase and we want a bigger share of their domestic market.
As you may know, nearly half of our exports going to the mainland continue on to other countries after processing. In other words, they depend on us and we also rely on them. We want to venture into their vast market and there is a chance right now, but it is not the only market we are interested in.
We will make similar efforts in other emerging economies such as Brazil, India and Russia. If we persist, we will produce better results this year. We are not putting all our eggs in one basket. We are diversifying our market, but to strike a balance, we cannot put just a few eggs in the biggest basket.
As I just said, about 17 industries would be affected by an ECFA, I can give you a detailed list after the debate. Anyhow, what I want to emphasize is that mainland China is not our only target market. Once we sign an ECFA with the mainland, Taiwan's economic status in East Asia will go up and it will help our bids to connect with the international market.
That is why so many countries and media are so interested in an ECFA and this debate because they are very curious about what next step Taiwan will take.
Ma (asking question): Chairperson Tsai, we are both international trade law scholars, you are of course clear that there currently are 272 free-trade agreements globally. All of these were first reviewed and passed by their respective legislatures and then reported to the WTO. We have already begun communicating with the legislature and have already reported to it four times, a number that is expected to increase as the Executive Yuan has planned 10 legislative reports. It means we are very pleased to submit this for legislative review and to do our job properly. The problem is, during this legislative session, we have tried to report to the legislature many times and were rebuffed [by the DPP.] Why must the DPP undertake such measures when we sincerely want to make the ECFA process transparent? I don't understand, as we are not afraid of making this transparent. We have tried to reveal everything we can talk about. Like I said, we don't need to wait until the legislature reviews an ECFA to disclose the “early harvest” list. We can do it before, but we have to wait until it is finalized; if it is not finalized how can we divulge it? Especially before this debate, we delivered the information you asked for, but you threw it in the garbage. It saddened the person that compiled the information. I think if everyone can communicate and debate reasonably, it will benefit this country more.
Tsai: It is true that both President Ma and I are international trade law scholars. However, this country cannot be governed simply by a person who studied international trade law; this country needs to be governed by a statesperson who understands economics, recognizes what people need and how they feel. And yet, the president [doesn't talk about] anything other than international trade law. I have already mentioned that the 272 FTAs you talk about have no relation to an ECFA. The reason is that the impact of an ECFA on our trade volume will be extremely large. This is why so many people have taken an interest in it and also why it must undergo strenuous monitoring. You mentioned that we don't go to the legislature to listen to reports by government agencies. President Ma, I'll tell you why: All they say is exactly like your comments here or many of your other public comments. It is just a repeat of comments like “we promise this” or “we promise that,” but we can never understand how you can promise that our agricultural products will continue to be protected and that the more than 800 items [agricultural goods currently barred from import from China] will still be restricted from import in the next decade. You still haven't answered this question.
What this means is that all those reports have been useless — you've only shown us information already made public. I looked at the information you gave us; a large chunk of it was press releases from the Mainland Affairs Council. The official document from the Bureau of Foreign Trade that I just showed you on the opening of agricultural goods was information that we had to ask for by ourselves. You never revealed the studies used by the government for the negotiations. For instance, you never even showed us the Chung-Hua Institution for Economic Research report or reports from many other academic institutions. We know you have already sealed a lot of the other information and statistics because you don't want the public to know.
Despite all your remarks, you still haven't even answered my simple question on the number of industries that would be affected [by an ECFA] and how many people work in those industries. I'll tell you how the DPP arrived at the conclusion that more than 5 million workers would be hurt by an ECFA. Of that figure, 550,000 are involved in the agricultural industry and 2.6 million are involved in manufacturing in addition to the rest of the work force involved in the service industry.
Of these figures, especially in the white-collar sector of the service industry, the impact will be huge. I have told you that they will be affected the most in the next 10 years after Taiwan opens most of its market to duty-free Chinese goods. You have a responsibility to disclose how many people will or will not be affected; it's what the government should be telling the public. Instead, you accuse us of fearmongering even while you [refuse to disclose] this information.
We think your legislative reports are only for the sake of procedure; you never sincerely wanted to tell us or the public what you are negotiating. If you are only willing to reveal the “early harvest” list after it is completed, is there a chance of modifying it? Will it be another debacle like the US beef issue where you found out that everyone was upset after you already finished the negotiations, but you were still unwilling to re-open negotiations [with the US]? I think it would be best if you revealed the information earlier in case you have to change what you have already finished negotiating and lose more international credibility.
Ma (asking follow-up question): I think it is strange that Chairperson Tsai would bring this up. You keep boycotting us in the legislature, sometimes to the point that we can't even deliver our report or even if we do, the DPP doesn't attend. You say that our reports are simple and that there is not enough information. But your job is to ask! You don't even attend the meetings; how will you have the information? Now you say that we should give you more information — ay, that's what the legislature is for.
You have to ask for it in the legislature and press government officials for the information, but you don't even show up or let us open the meeting. It's strange how this operates, we want to give our report, but you don't want to see it and then say to us that our reports are too simple. Ay, I don't think this is the right attitude. You should correct us in the legislature if you don't think that our reports in the legislature are right. That is the correct method.
The DPP was in government for eight years. During those years, Taiwan adopted an isolationist policy and sent boxes and boxes of cash to China, to Hong Kong. I think you are the Hong Kong leader's best friends. In the two years that we have been in administration, we have gradually seen the fish come back. This is because they think Taiwan is opening up and they are gradually having more confidence in Taiwan. A number [of Taiwanese businesses], including the Want Want Group, Natural Beauty Bio-Technology and Horein Biochemical Technology, are doing so. Why didn't they come back before, but are doing so now?
You say an ECFA is poisonous candy. I want to ask Chairperson Tsai: All the things you previously said were poisonous candy have turned out to be [much needed] medicine. If you can't even tell between the two … [cut off]
Tsai: President Ma, I trust that even though we did not attend your briefings, our lawmakers in the legislative committees have already asked your administrative officials very detailed questions, but many times, your administrative officials instead tell us that “it is secret,” that they cannot tell us or even that it doesn't exist. Under these circumstances, how can we believe you sincerely want to communicate with the legislature?
About your comments that the “fish” are coming back, take a look at the housing market or the stock market during these last few years. All these capital flows have led to an increasing risk that our bubble economy will burst. Look at the housing market in Taipei City — upscale housing prices have gone through the roof. In many places, prices have continued to rise. Isn't this what the central bank warned against? All this capital is now in real-estate speculation.
This is called the 'Hong Kong experience.' After it signed the Closer Economic Partnership Arrangement (CEPA) with China, massive amounts of Chinese and Hong Kong capital flowed into the territory and resulted in rampant speculation. Housing prices went up and the people could no longer afford to buy. Are these problems not important?
As to your comments on poisonous candy, I have not said this personally, but I have seen media reports term it this way. However, I want to tell you that this is not far from the truth. Because even while you say that under an ECFA we can receive some short-term benefits from China in the first two or three years, you forget that after that, in the next six to seven years, Taiwan will have to open its entire market to Chinese goods. After this happens, how many people will be left out of a job? You still have not told me how many people will be rendered jobless.
You can't even clearly understand the benefits of an ECFA. You haven't even responded to one of the four questions I posed earlier. How can we hope to receive any substantive answers from your officials in the legislature? It's a question of sincerity and if you are willing to come clean on the entire issue.
Our utmost concern is that the entire process of ECFA negotiations has a closed-door affair decided by a small group of people. We also have concerns that an ECFA was initially created to benefit a small group of large corporations. Of further concerns is whether there is some reason why you can't come clean with the public or the legislature. All your ECFA-related public promotion efforts have only been propaganda and you have yet to adequately and effectively explain the pact. You still can't explain properly the detrimental effects an ECFA would have on our industrial and agricultural sectors. Can you promise that you will continue to prevent Chinese agricultural items from coming to Taiwan in the next 10 years? I have asked you this repeatedly, but you have yet to respond.
Tsai (asking question): As any experienced negotiator knows, you must have a backup plan. President Ma has said he is in a hurry to complete this, that it is essential. But what happens when the negotiations fail to arrive at a conclusion? Experienced negotiators know this is called giving the opposing side the upper hand.
Under these circumstances, if you don't have a backup plan, but yet give yourself a deadline and say it is absolutely essential, how will you deal with failure? We see all the time in the media that the president keeps asking the opposition party for a backup plan. We think this is very strange because we thought a backup plan was the responsibility of the government.
Are we prepared to deal with a breakdown in negotiations? Can you tell us what your backup plan is?
Another point is that the president keeps saying China is prepared to offer us benefits. Why is China willing to do this? Can you explain why China is being so “nice” to us?
Ma: I'm happy to finally hear Chairperson Tsai admit that our policies are a poisonous candy. It's OK, because then it gives us a chance to show why it is not a poisonous candy. You asked us about how many people will be affected [by an ECFA]. I have already said that the figure is about 100,000 people. It's not that they will all be rendered jobless; it's that these people in 17 industries, including more fragile and traditional sectors, could potentially be affected. It is definitely not the 5.9 million that you have mentioned.
Also, you still have not told me how this number is calculated. Your saying the figure includes 'this and that' does not stand up to rigorous calculations. It is all a part of the DPP's political ploys. I think [your figures] are not very reliable.
More importantly, the agreement we will sign with China did not start after my term in office began. You might not have realized this, but many years ago, I went to Singapore to attend an Asian economic summit conference. The topic I presented on was “Why not 10-plus-4” [In reference to Taiwan joining ASEAN]. But the DPP government carried on as if it was not important and during the eight years [of DPP in government], there were no breakthroughs.
We have to make up for the eight years that were lost. If we do not do that, we will not have another eight years — this explains our haste. However, I have already mentioned that if [the agreement] does not benefit the entire Taiwanese economy, I will not accept the results. I would rather see the negotiations break down. It is not like we have no road to back down. I think I have already made this clear.
You say we want to sign the agreement for a few large corporations, but many of the small business [owners] I have met, their export orders are reliant on the lowering of [Chinese] tariffs. You think a few percentage points do not matter, but I'm telling you that for them, it is a matter of life and death. We have heard the cries from grassroots movements: it's not just for the big CEOs. This agreement, if passed, will benefit both large and smaller companies.
You mentioned you attended some legislative briefings. Why don't you just hold a few hearings in the legislature to discuss an ECFA? We will ask our ministers to attend these hearings and tell the truth. Chairperson Tsai, I don't think you have been sincere. Lawmakers have the right to question officials. Why give up that right, only to complain that we don't talk. I think the legislature is the channel for proper communication, yet you boycott the meetings and even unnecessarily use violence. After using those methods, how do you expect people to see you are a reasonable party that uses reason when questioning the government?
I hope that from this day on, if you could, Chairperson Tsai, ask your party's lawmakers to not boycott the [Chinese Nationalist Party] KMT through such methods and also to ask your lawmakers to cooperate with the KMT to reasonably ask the government on issues surrounding ECFA negotiations.
MaTsai (asking follow-up question): I think at this point in the debate, the president's temper is rising and we should get back to reasonable debate. You already decided to sign an ECFA backed by the interests of a few large corporations. All these smaller businesses that you claim support the agreement were only hastily organized afterwards. In 2008, did small tool companies already tell you that they need you to lower Chinese tariffs by a few percentage points? You did not listen to them then, you only listened to maybe a few CEOs of large petrochemical companies or CEOs from the automobile industry to decide that an ECFA is essential. You only decided to try and get the small tool companies to support you this year.
Is this how all your policies are made? I have already asked you so many questions here that you did not answer. How can we expect officials from your administration will respond? It is strange to think your officials will only truthfully respond under orders from the president. They should truthfully respond regardless. You said earlier that you would order your officials to respond to your questions. Why must they only do so under your orders?
President Ma, you still have not made your position very clear. What do you say about China's political ambitions?
Ma: Chairperson Tsai, I have told you that if we cannot protect Taiwan's interests, we can accept a breakdown in negotiations. You keep saying that we are under the influence of large corporations, but if you look closer, we included a policy to sign an ECFA into the KMT's national policy plan five years ago. At that time [in 2003,] I had already realized that Taiwan cannot be separated from the economic restructuring in East Asia. However, we have been unable to attend because of the influence of China and that is why we must solve the root of the problem.
After we resolve this problem, we will be in a better position to talk about and sign FTAs with other countries. I trust that during your position as Mainland Affairs Council minister and vice premier, you thought about signing FTAs with other countries. However, you ran into a roadblock, you couldn't make the policy work. You couldn't even make regularly scheduled cross-strait flights a reality. All you did was open up a few charter flights during the Lunar New Year holidays on a small scale. Even on some other policies, including Chinese tourists, something that is beneficial to Taiwan, you could not do it. It is because you couldn't finish the policies based on your plans and only under us did the policies move forward at full speed.
So it shows that I do not just back an ECFA with a few individual cases, it is a road that had to be walked by Taiwan sooner or later. Both small and large companies will be affected; otherwise, why would the whole world be crazy about FTAs? It is because the entire economy is affected. I think this is a point that everyone can understand. When we signed the WTO, we thought we could hitch a ride [to sign other FTAs], but the negotiations soon failed in multiple places, so we had to take a U-turn and sign other regional economic agreements. It is something we had no choice but to do.
Lawmakers have a right to question officials. Your people don't even show up and you find ways to boycott the meeting.
For example, in the past few days [when the legislature was meeting] on a law allowing Chinese students to come to Taiwan, we saw that a number of heavyweights like former Academia Sinica president Lee Yuan-tseh (李遠哲) come out in support of the proposal. The whole world is scrambling for good students, but look how we dealt with the proposal: We had scuffles in front of academics and university presidents. I really don't think it was a good example.
When you mention China's political ambitions regarding Taiwan, of course I know this. “One country, two systems” and “peaceful reunification,” we knew this from the start. Based on these political ambitions, however, will you just choose to ignore [mainland China]? This is what you did during the DPP's eight years in office. We know they have their ambitions, but we believe in Taiwan and we believe in Taiwan's democracy. Take a look at the 12 agreements that we have signed with China; did anything about one “country, two systems” and “peaceful reunification” appear in the text? No, it did not, nothing political appeared.
How were we able to accomplish this? It's because we know our policy of “No unification, no independence and no use of force” created space for Taiwan to forge ahead. At the same time, we have changed our cross-strait relationship, we have also changed, for the better, our international relationships. During your time in administration, your cross-strait and international relationships were both getting worse and going backwards.
Ma (asking question): The DPP keeps saying it doesn't understand the urgency of an ECFA. I want to tell Chairperson Tsai that ASEAN Plus One took effect in January. ASEAN Plus Japan will take effect in 2012, ASEAN Plus India will take effect in 2016, while ASEAN Plus New Zealand and Australia will come into force in 2018. Chairperson Tsai said those countries may not sign. The DPP said the same thing several years ago when I said the ASEAN [Plus One] would take effect this year. The ASEAN [Plus One] did take effect and as president I cannot take such risks [as to ignore them]. We have to have strategies when other countries [sign FTAs with] ASEAN. Countries around the world are seeking to sign FTAs. In Asia, South Korea signed seven [FTAs], mainland China signed nine and Singapore 14. Countries around us are signing FTAs and Taiwan is the only country that is not signing FTAs. Can we keep waiting? We can't. Other countries are off and running while we are still arguing about this. We also want to take definite steps and let's find out the solutions together, OK?
Tsai: You still haven't answered my question about the urgency [of signing an ECFA]. The impact of ASEAN Plus One on us is 0.03 percent and ASEAN Plus Three will not happen for the foreseeable future. Many experts estimate that ASEAN Plus Three will not happen within the next five years. The situation in East Asia is strategic and the area will experience a redistribution of power in the next 10 years.
An FTA is not only an issue of economy, but also one of strategy, with lots of strategic decisions involved. You said we are turning our attention to FTAs because the pace of WTO is slowing down. Let me tell you, President Ma, the WTO confirmed in December that it will complete the Doha negotiations this year and will strengthen its monitoring of FTAs while accelerating the process of multi-trade negotiations to catch up with FTAs.
When the WTO increases its pace, the FTA process will slow down. Like I just said, there is strategic thinking involved as Japan and South Korea sign FTAs with China. Japan and South Korea also worry that China will become the economic and political center in East Asia. As long as China remains an authoritarian country with a threatening military, it will continue to be a source of anxiety for many Asian countries.
Under these circumstances, do you still remain positive and claim that FTAs are just an economic pact and that everyone wants to sign one? If we worry about the import of Chinese products, wouldn't Japan and South Korea worry as well? Wouldn't they apprehend the import of Chinese industrial products into their local economies? They also have unemployment problems and the problems could be very serious.
Don't act naive and think that [an FTA] would bring us a wonderful future with the opening of trade and that the region will turn into some kind of heaven. It's not that simple. Indonesia is questioning ASEAN Plus One and asking to delay its implementation. Many Southeast Asian countries are beginning to worry about the impact. Signing an ECFA is not urgent. It is littered with problems, including the survival of local industries, unemployment and a nation's strategic status.
President Ma, do you think we will enjoy a higher status in Southeast Asia if we sign [an ECFA] with China? Signing an ECFA will destroy the strategic balance in East Asia and change the situation in the region. China could become the center in East Asia; would Taiwan benefit from such a situation? President Ma must think again. Liberalization is not romantic, but full of challenges. If we cannot face the challenges, we won't be able to enjoy the fruits of liberalization and we could end up losing everything.
Ma (asking follow-up question): You said the ASEAN Plus Three will not happen within the foreseeable future and that FTAs need strategic thinking. I understand that, but mainland China is both a threat and an opportunity. It depends on us to minimize the threat and maximize the opportunity. You said the WTO Doha negotiations will be concluded this year. To be honest, no one can be sure about it as the negotiations have been stalled for years. Our strategy is not to fall behind the wave of economic integration among Eastern Asian countries and to move forward step by step. You call for caution; we plan to forge ahead because Taiwan won't be able to handle future situations if we don't.
You said we should not ask for the DPP's alternative plan and you said our plan isn't good enough. I already said I would suspend negotiations if Taiwan's interests were not protected [by an ECFA]. I do have other plans. What I'd like to know is, if you faced a similar situation, would you still choose to wait? How long would you wait? You also failed to offer any solutions in your opening statement. I am not trying to force you to give us alternative solutions. However, when you criticize us, I think that as the nation's biggest opposition party, the DPP should let the people know what you have to offer other than waiting, avoidance, fear and intimidation.
Tsai: It is regretful that President Ma still fails to answer my questions and to tell us about his alternative solutions. Let me tell you my alternative solution. My solution is known by average people on the street and your administration has discussed such measures before. However, you didn't adopt the plan because you chose to proceed hastily. When it comes to international economy and trade, we advocate taking things slowly and steadily.
The DPP doesn't want to be a risk-taker and forfeit the nation's future for an ECFA. We want to keep our options open, rather than being tied to the 10-year timetable [of opening up markets]. We don't want China to control the process of industrial redistribution. We want to follow our own timetable in accordance with the economic situation and cross-strait development, and to take steady steps to have free-trade negotiations with the US, EU, Japan, China and ASEAN countries.
We can connect with the world under the structure of the WTO. There are many trade negotiation mechanisms under the WTO, such as negotiations on industrial branches. The WTO also has a zero-tariff mechanism and if we worry about tariffs for small machine tool factories [discussed above], we can negotiate them under the WTO framework. Why do you insist on negotiating this in an ECFA?
The structure between us and the US-trade and investment framework agreement (TIFA) is a good mechanism. We can make steady progress under such a structure and discuss the contents of an FTA one by one. While we do not use the term “FTA,” we adopt the content. We can change the name to FTA when political obstacles no longer exist. This is how we can take steady steps and not be confined to the 10-year timetable. We discussed the issue with US trade representatives when the DPP was in power and they agreed with it. They referred to the measure as “building blocks,” which is the best way to develop our economic and trade relations in the face of political difficulties.
What I want to know are the government's strategies. If you want the country to be invincible in terms of global competition, we have pretty much nothing to lose as we already receive most-favored nation treatment under the WTO. However, you created a sense of urgency and an environment full of uncertainty in your rush to sign an ECFA by June. Within 10 years, we will have to allow the import of all industrial and agricultural products from China, as well as open the service industry. What is such a policy if not a hasty one? The DPP took steady steps and proceeded with caution, but you accused us of adopting a closed-door policy.
Tsai (asking question): I'm telling you that we will break the strategic balance in East Asia by signing an ECFA. Do you think an East Asia centered around China is the best choice for Taiwan? Opening up isn't something romantic and it's full of challenges. If we can't handle those challenges, you won't be able to enjoy the fruits of opening up.
Ma: Measures under the WTO cannot solve all our problems and the Bureau of Foreign Trade said the alternative measures proposed by the DPP are not feasible. We understand the challenges, that's why we negotiate carefully and step by step. We will also respond if things change in the future.
Economic integration in Asia is going on so fast; signing an FTA with the mainland right away would be reckless. That's why we are trying to create a buffer period by signing an ECFA. At the same time, we're also negotiating our [trade] agreement with the US, but the problem is that when we're not connected to the mainland, other countries would hesitate about signing [trade agreements] with us. Redistribution of wealth is of course also an important issue and we're thinking that we can take care of those left out through tax breaks and welfare policies.
Tsai (asking follow-up question): You didn't answer my question, you only repeated it. We can't wait until we open up to think about these issues. China gives you selective trade privileges through certain benefits, which will shift wealth in favor of pro-China individuals in Taiwan. How are you going to resolve that redistribution of wealth?
Ma: I did answer, I said we'll respond with measures including tax breaks and social welfare. There is no absolute rule of opening up the market within 10 years — it was 15 years [in the FTA] we signed with Nicaragua; the US has even signed one with 24 years. The mainland said it would grant benefits to Taiwan; I said it's not conceding benefits, but is rather mutually beneficial, because both sides will gain. We sell mostly upstream parts to the mainland to be manufactured and sold to Europe and the Americas. The mainland needs us too.
We can only know what is mutually beneficial once we're at the negotiation table. That said, we will negotiate with the protection of Taiwan's sovereignty in mind. You said NT$95 billion is not enough, well, this is only a rough number that can be adjusted later. We won't put all the 17 industries on the opening up list; we're just trying to prepare them early. The pressure on WTO negotiations was much greater than on those surrounding an ECFA. That previous experience [WTO negotiations] is why [what we're doing right now cannot be called] reckless. However, if we don't take the first step right now, we will be left out of the game.
Also See: Ma, Tsai lock horns in ECFA debate
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