Expedite ECFA: Keep It Simple, Tackle Fewer Issues
United Daily News editorial (Taipei, Taiwan, ROC)
April 6, 2010
The second formal consultation over the cross-Strait Economic Cooperation Framework Agreement (ECFA) was held last week. The two sides' official remarks sounded good. But the public detected a whiff of impatience among negotiators. The public sensed that the negotiations were rather trying, and that the two sides wanted to "expedite the signing by keeping the agreement simple and tackling fewer issues."
Chiang and Chen met four times and signed the cross-Strait tax agreement. The two sides reached a consensus. Nevertheless they ran into more than a few roadblocks. Therefore the decision to "expedite the signing by keeping the agreement simple and tackling fewer issues" may be applied not merely to the "early harvest," but also to ECFA as a whole. Only then can cross-Strait economic and trade negotiations continue.
The Mainland's negotiator for ECFA is Tang Wei, head of the Department of Taiwan, Hong Kong and Macao Affairs under the Mainland's Ministry of Commerce. On the very first day of consultations he suggested expediting tariff reductions and exemptions by keeping the agreement simple and tackling fewer issues. As he explained in an interview, if one wishes to expedite the signing, one simply cannot cover every issue. His remark triggered concern that the 500 items proposed by our side may be cut down. The next day, the two sides explained their conclusions. Minister of Economic Affairs Liang Kuo-hsing remained vague, saying "All we ought to demand we have demanded. All we ought to retain we have retained." The two sides reiterated that farmers on Taiwan, ordinary people, and small and medium businesses will be taken care of, and that negotiations over place of origin rules would soon begin. But information remained fragmentary. The public still does not know what was demanded and what was retained. Rumors proliferated. Unknown variables may lead to repeated changes in the early harvest list.
Meanwhile, negative developments have emerged that may impede consultations. One development concerns the wording of the ECFA preamble, whether Taipei would be explicitly permitted to "participate in the Asia-Pacific Economic Cooperation organization." This is part of our attempt to sign regional free trade agreements (FTAs) with other Asia-Pacific countries. If this is incorporated into ECFA, it will mean Beijing has formally agreed not to prevent us from signing FTAs with other countries. This would enable the Republic of China's economy to become more closely integrated with the global economy, and prevent our marginalization. The two sides have yet to reach a consensus.
The second negative development is that the other side wants the "normalization of cross-Straits economic and trade relations" and "full liberalization." Our side has not agreed. According to the ECFA liberalization timetable, our side would no longer have any reason to refuse to open our markets to sensitive products from the Mainland, including the disparity in the size of our markets. Full liberalization would involve the financial services industry and other service industries. It would drag in more complex bilateral problems. Even if we hope to liberalize ten years from now, this cannot be decided now. As a result, consultations remain stuck.
The failure to determine which items will be on the early harvest list may be merely the result of haggling between the negotiators. The items may need further study before they can be announced. We need not read too much into the failure. But the government must help people understand the principles by which the early harvest list was created, and the benefits each side will offer the other. The Mainland is giving Taiwan tariff reductions and exemptions. We are giving the Mainland similar treatment for some of its products. Which items did the Mainland mention? Which industries on Taiwan will be affected? The government must explain and put the public's mind at ease. We believe the government's decisions about what to ask for, what to give, how much to ask for, and how little to give were based on the Ministry of Economics' best calculations of what in our interest. Nevertheless the government must explain its thinking to the public.
Other, more complex issues may create obstacles to ECFA. Should decisions be made during the initial stages of consultation? The government can conduct a reevaluation. After all, ECFA is an agreement to promote cross-Strait economic and trade liberalization. The two sides have agreed to gradual, not instant liberalization. First stage consultation should follow the principle of "expedite the signing by keeping the agreement simple and tackling fewer issues." We must first establish a framework, a preamble, a liberalization procedure, an early harvest list, economic cooperation projects, a defense mechanism, and a termination mechanism. The details can be dealt with once ECFA has been signed. One item can be signed at a time. This is reminiscent of ASEAN talks with the Mainland. Liberalization will be accelerated, decelerated, or even halted altogether, based on the economic situation. This will prevent negotiations from becoming stalled over any particular issue.
Academia Sinica scholar Chu Ching-yi and National Taiwan University economics professor Lin Chuan recently published a book entitled, "A New Vision of Economics." They note that the impact of regional trade organizations has yet to fully emerge. Only by acting here and now, can we avoid disaster. Therefore, signing ECFA is not merely about normalizing cross-Strait trade. It is also about responding and preparing for regional economic eventualities. The Republic of China must seize this opportunity. It can no longer delay.
2010.04.06 02:38 am