A rallying cry opposing the China-Taiwan Economic Cooperation Framework Agreement (ECFA) is echoing across the island nation of Taiwan.
Initiated by the Taiwan Solidarity Union (TSU), a signature drive is seeking 100,000 signatures to force a referendum whereby voters accept or reject the ECFA.
Delivering signatures of at least 0.5 percent of registered Taiwanese voters—roughly 86,000 people—to the Taiwanese government initiates a legal process that can’t be circumvented under Taiwanese procedural standards.
As of date, no one in Taiwan beyond the negotiators has seen the language of the ECFA document. Opponents fear that political and economic concessions are mixed in and thus cannot stand the light of day.
“In essence, the ECFA amounts to a bilateral preferential or ‘free’ trade agreement between Taiwan and China, adjusted technically to account for sovereignty concerns on both sides,” said Merritt T. Cooke, founder of GC3 Strategy Inc., at a mid-March U.S.-China Economic and Security Review Commission hearing.
The Taiwanese government had rejected a call for a vote on the ECFA in 2009, claiming that it did not meet referendum law criteria. Under existing referendum law doctrine, a referendum must address a clear legislative principle. Proponents of a referendum denounced the narrow interpretation of the law, which restricts the people’s right to be heard.
“Resources have been misallocated toward blocking trade flows instead of towards investing in areas of competitive advantage,” stated Rupert J. Hammond-Chambers, president of the U.S.-Taiwan Business Council, during the hearings.
Opposing the Trade Pact
The opposition opposes the ECFA for several reasons. The treaty is negotiated by a small group of Taiwanese government officials under the auspices of sitting President Ma Ying-jeou without taking public opinion into consideration.
In addition, predictions are that China, with its thirst for exporting goods, would flood the Taiwanese market with products made in mainland China, exactly as it has done worldwide where markets are relatively open.
China’s trade actions have resulted in bankrupting small- and medium-sized companies worldwide. No country could compete with China’s market-distorting techniques, including manipulation of the Chinese currency, keeping labor in servitude, and using prison and labor camp inmates to produce products at zero labor cost.
Presently, there exists a list of 2,244 products that Taiwan will not let China export to its country, of which 800 are agricultural goods that are nonnegotiable according to the Taiwanese. But there are close to 1,333 products that could flood the Taiwanese market.
So the sitting Taiwanese government argues that tariffs will be lowered and Taiwan’s products will become cheaper, making them more competitive.
Opposition to the ECFA disagrees, as Taiwanese goods can never match the price of products produced in state-run companies that have access to capital and markets closed to Taiwanese companies.
The most vocal charges are that the ECFA is tilted toward China. Furthermore, Taiwan became a member of the World Trade Organization (WTO) in 2002, but under the name Chinese Taipei and not Taiwan, based on a demand by mainland China, which sees Taiwan as a breakaway territory. WTO calls for equality among members.
United States Speaks Out
U.S. experts believe that trade relations ease political relationships and provide an all-around win-win solution for all involved. Therefore, according to testimony before the U.S.-China Economic and Security Review Commission, U.S. industry and government officials support a trade agreement between China and Taiwan.
“Trade does indeed tend, all else equal, to reduce conflict between countries,” testified Scott L. Kastner, University of Maryland.
Several scenarios are suggested as to why China is pushing for the ECFA. In an economic relationship, China can strangle Taiwan without having to resort to aggressive solutions in its quest to bring Taiwan under its mantle.
On the other hand, any tactic that affects Taiwan’s economic independence and survival may be frowned upon by the rest of the world and may result in conflicts with the international community.
Goals by China and Taiwan are at different ends of the pendulum. China intends to pull
Taiwan into its fold by stealth, while Taiwan is only seeking economic equality.
“For Taiwan the agreement is principally about economics. Meanwhile, China sees it as one component of its unification strategy for China, the agreement is principally about politics,” said Hammond-Chambers during his testimony.
U.S.-Taiwan Trade Relations
The United States and Taiwan have established a significant trade and investment relationship. In 2009, the United States exported $18 billion to and imported $28 billion of goods from Taiwan, resulting in a $10 billion trade deficit for the United States.
Taiwan is considered among the top 15 trading partners of the United States, representing 2.1 percent of all goods exported to Taiwan in 2010, while China represented 7.4 percent of total U.S. exports.
“The United States is the largest foreign investor in Taiwan with cumulative direct investments of over $21 billion. Taiwan is our 10th largest trading partner, larger than Italy, India or Brazil, with trade amounting to over $46 billion last year,” said David B. Shear, deputy assistant secretary of the Bureau of East Asian and Pacific Affairs, at the U.S.-China Economic and Security Review Commission hearings.
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