Global Integration Accelerating: Taiwan Must Respond
China Times Editorial (Taipei, Taiwan, ROC)
November 8, 2014
Executive Summary: 2015 is the year for regional economic reorganization. An irresistible force will hit Taiwan. Taiwan's ruling and opposition parties are fighting each other when they should be concerned about the nation's future. Participation in internationalization is Taiwan's only economic option. Sound cross-Strait relations are not a panacea. But without it, nothing is possible. Sound cross-Strait relations are a prerequisite for Taiwan's participation in the international economy. Willful blindness to international power politics, globalization, and the rise of the Chinese mainland, can only lead to Taiwan's marginalization under capitalist competition.
Full Text Below:
Former Vice President Vincent Siew is in Beijing today. He will attend the 2014 APEC meeting on behalf of President Ma. The theme of the meeting is "Shaping the Future through Asia-Pacific Partnership." On the eve of the meeting, Beijing and Tokyo reached a major agreement on bilateral relations. Xi Jinping and Shinzo Abe will formally meet next week. They hope to get Sino-Japanese strategic relations back on track. The Ma Xi meeting was a bust. Cross-Strait relations have been frozen since. Will Vice President Siew be able to meet with Xi Jinping to firm up cross-Strait political and economic relations? Can he ensure Taiwan's participation in Asia-Pacific regional economic integration? These are important questions that will affect our domestic economy.
The Ma Xi meeting was a bust. President Ma Ying-jeou expressed regret during an October 31 interview with the New York Times. President Ma Ying-jeou asked former Vice President Vincent Siew to attend the APEC Economic Leaders' Meeting on his behalf. This was the first time Ma formally responded to questions about the Ma Xi meeting. President Ma Ying-jeou said that the ROC government does not promote a two Chinas, one China, one Taiwan, or Taiwan independence policy. Ma Ying-jeou reaffirmed the 1992 consensus as the foundation of the cross-Strait relationship. He hoped that the two sides could return to the 1992 consensus and one China, different interpretations foundation, then proceed from there.
ROC participation in regional economic integration has been stalled as a result of two major problems. Trade negotiations have lagged, and Taiwan has not liberalized its financial sector. One. Trade between the Trans-Pacific Partnership Agreement (TPP), and the Regional Comprehensive Economic Partnership (RCEP) with Taiwan amounted to $ 200 billion last year. It accounted for 35% of Taiwan's foreign trade. RCEP trade with Taiwan was as much as $ 325 billion last year. It accounted for 57% of all foreign trade. But Taiwan lags behind in the signing of free trade agreements and overall Asian regional economic integration.
Only 10% of all exports are covered by free trade agreements. As a consequence, ROC exports are rapidly losing market share.
Taiwan's participation in these two major regional economic organizations has been delayed. The main reason for this is that Beijing objects to Taipei's position regarding regional economic activities. The Beijing authorities have made clear to the Taipei authorities that joining regional economic organizations and signing bilateral trade agreements with other countries requires proper communication between the two sides. The Beijing authorities have drawn up a road map for negotiation. The two sides must first complete follow up ECFA negotiations. Only then can Taipei engage in TPP and RCEP negotiations with other governments. In mid-September the ninth round of STA negotiations took place. The two sides' negotiating teams have yet to resume talks. The PRC-ROK FTA is likely to make significant progress during the upcoming APEC annual meeting. It will probably be signed before the end of the year. The ITRI predicts
that over the next 3-5 years Taiwan's manufacturing output will decline between 1.59 and 3.85 percentage points. The pressure is on for the two sides to sign the STA.
Two. Beijing is actively seeking to replace the USD with the RMB. Britain's Financial Times said Beijing is attempting to lay the groundwork for a Mainland China centered financial system. The prospect of Beijing achieving such an ambitious goal seems remote. But Beijing's strategic goal is clear. Beijing is attempting to establish a RMB regime to compete with the global USD regime established following World War II. Its effort include encouraging the use of the RMB as a reserve currency, trade settlement currency, and securities investment currency. Beijing is also drawing up global development plans and establishing new regional financial institutions. In July of this year, the China-led Brazil, Russia, India and South Africa, "BRICS" organization established a new development bank and emergency reserve fund to compete with the World Bank and the International Monetary Fund. Beijing must ensure transparency in its governance standards and mechanisms. Otherwise it cannot gain the prestige commensurate with its economic capacity.
Beijing is attempting to lead regional trade and financial integration. The ROC government has ignored the impact regional economic integration may have had on our economic security. It has not implemented effective risk management and hedging mechanisms. Worse still, the US will taper QE3. It will withdraw from international capital markets and return to the US market. The RMB will face enormous pressure to devalue. The impact on Mainland economic development next year could be serious. The Ma administration is busy campaigning. It must pay closer attention. The DPP must not think only about winning elections. It must not disregard the marginalization of Taiwan's international economic status and cross-Strait relations. It must not be both blind and unresponsive.
2015 is the year for regional economic reorganization. An irresistible force will hit Taiwan. Taiwan's ruling and opposition parties are fighting each other when they should be concerned about the nation's future. Participation in internationalization is Taiwan's only economic option. Sound cross-Strait relations are not a panacea. But without it, nothing is possible. Sound cross-Strait relations are a prerequisite for Taiwan's participation in the international economy. Willful blindness to international power politics, globalization, and the rise of the Chinese mainland, can only lead to Taiwan's marginalization under capitalist competition.
Ruling and opposition party leaders must choose wisely. They must prevent Taiwan's marginalization under cross-Strait relations and the global economy. We hope Vincent Siew and Xi Jinping will bring us good news.