
Jason Miks of Australian magazine The Diplomat contacted me yesterday for comment on the economic cooperation framework agreement (ECFA) Taipei and Beijing are signing today. This was an opportunity for me to condense six months into a few rather conversational paragraphs. For those who haven't been following the developments closely, this should provide a good introduction — at least to the side that does not agree with the manner in which the whole process took place.
Firstly, in good old Chinese Communist Party (CCP) style, most of the negotiations were conducted behind doors and only very recently were the “early harvest” lists — the items from each side that will be receiving preferential tariff treatment — made public. Secondly, two public referendums proposed by opposition parties were turned down by the government on technicalities that would probably be unacceptable anywhere else in the world (at least in democracies). Third, while the trade pact is to be “reviewed” by the Legislative Yuan during an extra legislative session in July or August, the legislature is almost three-quarters controlled by the Chinese Nationalist Party (KMT) — President Ma Ying-jeou’s party, of which he is also chairman. If the previous 12 agreements that the Ma administration has signed with China are any indication, the LY will once again serve more as a rubber stamp than an actual instrument meant to keep the government honest. Fourth, both sides refused to negotiate under a WTO framework, which would have ensured that both entities are treated as equals [the ECFA document is entirely in Chinese and each side will provide the WTO with its own English version, we are told].
There is a misconception out there that the main opposition party, the Democratic Progressive Party (DPP), is “anti-ECFA” and “anti-China.” It isn’t. It is, rather, in favor of taking a more cautious approach and believes the public has the right to have a say over a pact that will undeniably have a substantial impact on the future of this country. Most trade agreements require years of negotiations. Not only was the ECFA negotiated in record time — about six months — but a fixed deadline appears to have been imposed for its signature, which is never a good thing in negotiations. Furthermore, beyond the complexities inherent in a trade pact, it involves one entity (China) that does not recognize the existence of the other (Taiwan), claims sovereignty over it and threatens force to accomplish this, if required.
Beijing has made no secret that it sees an ECFA as a stepping stone to unification; this could explain its “generosity” on the “early harvest” list and other sweeteners likely to follow. That’s why we’re seeing reports on TV and in the papers that Taipei is getting “almost everything that it wants” from Beijing. There are, therefore, very serious political implications to an ECFA, something that the KMT denies but that the CCP has made no secret of. Short of “selling out” Taiwan, as some have accused Ma of doing, his administration may very well be falling into a trap set by Beijing.
In terms of social impact, it’s too soon to tell, but an ECFA will likely benefit large industries while hurting the smaller and traditional ones. There is also great fear that a flood of cheap Chinese goods will hurt small industries in Taiwan (a phenomenon that has already been observed with ASEAN countries that recently entered into an FTA with China).
We must remember, as well, that an ECFA is transitory rather than an end in itself. More trade liberalization will follow, but the psychological blow has already been struck and a line has been crossed. If the KMT can get away with the manner in which it shoved the EFCA down people’s throat, whatever comes next that does not touch on politics should be a relatively smooth ride. The ECFA and future agreements will create facts on the ground that will be very difficult to undo, even if the DPP were to return into office in 2012.
In terms of social impact, it’s too soon to tell, but an ECFA will likely benefit large industries while hurting the smaller and traditional ones. There is also great fear that a flood of cheap Chinese goods will hurt small industries in Taiwan (a phenomenon that has already been observed with ASEAN countries that recently entered into an FTA with China).
We must remember, as well, that an ECFA is transitory rather than an end in itself. More trade liberalization will follow, but the psychological blow has already been struck and a line has been crossed. If the KMT can get away with the manner in which it shoved the EFCA down people’s throat, whatever comes next that does not touch on politics should be a relatively smooth ride. The ECFA and future agreements will create facts on the ground that will be very difficult to undo, even if the DPP were to return into office in 2012.
Overall, greater economic entanglement with China will give the latter more power to blackmail Taipei and more leverage on the various sectors of its industry. Even if not overt, this is a political outcome to what has been portrayed by Ma as a “purely economic” trade pact. It doesn’t matter that there is no political language in the ECFA documents to be signed on Tuesday.
See also my editorial on the same subject in the Taipei Times today.





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