China-Taiwan Economic Cooperation Remains Unclear After TV Debate

April 27, 2010 Updated: April 27, 2010

After a highly controversial debate between Taiwan’s president and Chinese Nationalist Party Chairman Ma Ying-Jeou, and Democratic Progressive Party leader Tsai Ing-Wen, many questions still remain: Will the proposed Economic Cooperation Framework Agreement (ECFA) with China be changed? Will the debate initiate more objective conversations between the two parties? The aftereffects of the debate have become the focus of attention.

During a televised debate on April 25, Taiwan’s president Ma Ying-Jeou repeatedly emphasized that if the ECFA cannot protect the rights of Taiwan, he will reject the agreement. At the same time he said that he understands that the Chinese Communist Party’s ambition is to achieve a “one country, two systems peaceful unification,” but that he also believes in “nothing ventured, nothing gained.”

Ma said, “Of course, we understand the political motives that China has toward us. But I am confident in Taiwan’s democracy. Having economic flexibility will resolve other issues. We will seek to win despite the danger, and we will face the storm together.”

Ma also said that while negotiating the ECFA with China, he also wants to sign free trade agreements (FTA) with other trade partners. He said that he intends to personally head the FTA committee and will demand that the Chinese regime not interfere.

“Signing free trade agreements is the right of a WTO member. I wish to especially call on China to not interfere with our efforts to sign free trade agreements with other trade partners,” Ma said.

Democratic Progressive Party leader Mrs. Tsai Ing-Wen questioned Ma whether the ECFA was too rushed. Ma refuted saying this is a race against time. They’re faced with China joining the Association of Southeast Asian Nations (ASEAN) and the possibility of Japan and South Korea also joining the ASEAN in the future. If the Taiwanese government doesn’t hurry up, Taiwan won’t be able to catch up.

“If we don’t take this step right now, we will be out of the race,” Ma said.

Tsai cited statistics from the Chung Hua Institution for Economic Research showing that the effect of China joining the ASEAN has only a 0.035 percent influence on Taiwan’s GDP. She suggested the government should not exaggerate the effect.

Tsai also argued that signing the ECFA with China too early will affect the strategic balance of South East Asia. Actually, Japan and South Korea are still undecided whether or not to sign FTAs with China as they are worried that China will become the economic center of the Asia-Pacific. After Indonesia joined the ASEAN, it felt the impact of cheap products from China and is seeking to renegotiate tariff reductions on 228 items which it fears could weaken local industries after the ASEAN-China FTA that took effect on Jan. 1.

The Indonesia-China FTA, which is part of the wider ASEAN-China FTA, was signed in late 2004.

Ma said the government would be thinking about [the interests of] business at every step of the way and be prepared to reject the agreement. It would first negotiate under the ECFA "Early Harvest” list, and make adjustments later.

However, Tsai expressed concern that if the negotiation goes on the "Early Harvest" list, Taiwan will face having to open 90 percent of the market for the next 10 years, thus it would be hard to guarantee not opening agricultural products.

Tsai also pointed out that signing the ECFA will have a much greater impact than [being part of] the WTO, because the production structure of Taiwan overlaps that of China. This will be the “largest-scale production-structure adjustment, and reallocation of wealth” in the history of Taiwan. She questioned whether the government is prepared.

Ma responded that he has already planned NT$95 billion (approximately US$3.02 billion) to assist disadvantaged industries and laborers and has also prepared plans for 17 possible industries that might be hurt.

Read the original Chinese article.