Tuesday, May 4, 2010

President Ma is Determined to Sign FTAs

President Ma is Determined to Sign FTAs
China Times editorial (Taipei, Taiwan, ROC)
A Translation
May 4, 2010

President Ma Ying-jeou said he would elevate the status of the administration's free trade agreement (FTA) task force. He would personally head the organization. This is a rare departure from past practice. It underscores our leaders' resolve, and it deserves our applause.
The president is the nation's highest ranking political leader. Entities headed by the president have extraordinary significance. Examples include the National Unification Council and the Cultural Association. Such entities can be counted on the fingers of one hand. For the president to convene such an entity is no minor matter. It is a powerful political gesture, a declaration that the government intends to do everything in its power to promote the matter and to achieve results. Therefore when Ma Ying-jeou announces that the government is elevating the status of the FTA task force to the presidential level, it amounts to a political endorsement by the highest ranking official in the nation. It is a political commitment to the public as a whole. Obviously once the two sides sign ECFA, the Ma administration's next objective will be to sign FTAs.

Taipei has long sought to sign FTAs with other governments. But so far it has made little headway. Only five governments in Central America have signed. They are Panama, Guatemala, Nicaragua, Honduras, and El Salvador. The problem is primarily political -- opposition from Beijing. Taipei's major trading partners are not diplomatic allies. During past attempts to sign FTAs, the other side was often concerned about Beijing. The most progress made toward the signing of FTAs with former allies or non allies was with Singapore. But negotiations broke down over what to call the Republic of China government in Taipei.

Products exported from other countries are often tariff free. Products exported from the Taiwan region on the other hand, are subject to tariffs. This of course adversely impacts price competitiveness and profits. That is why our government actively sought World Trade Organization (WTO) membership for so long, and why it has now finally been able to join. We hoped that the WTO would eliminate all national trade barriers in one fell swoop. But progress was stalled during the Doha Rounds. Many governments reverted to bilateral and regional FTAs. To date nations the world over have signed 266 FTAs. On January 1 of this year, the ASEAN plus mainland China (ASEAN plus One) Free Trade Zone was launched. In terms of size it trails only the European Union and NAFTA. Two years from now, Japan and South Korea will join, making it ASEAN plus Three.

FTAs are of course not panaceas. Deciding which industries should be opened up and which should be protected will require lengthy consultation. Signing an FTA does not guarantee a dramatic increase in trade. But once a free trade bloc has been formed, not being part of it often means the loss of vital opportunities. That is why so many are worried. If Taipei cannot find a way to join FTAs as soon as possible, Taiwan's economy is likely to be marginalized in the global marketplace.

Signing ECFA will definitely help the cross-Strait flow of goods, capital and technology. But the public also wants Taipei to improve cross-Strait relations. It wants more internationalization. It does not want to move further away from the international community. It does not want to be absorbed by the mainland's economic system, and to gradually lose its autonomy. To do so would increase public anxiety. If the government can sign FTAs with the governments of other countries, it will create more trade opportunities. It will also establish balance, reducing dependence upon the mainland market, and decreasing public anxiety.

Beijing once opposed Taipei signing FTAs with non allies. It felt that signing FTAs was an assertion of national sovereignty. Therefore once the two sides sign ECFA, Beijing will no longer stop Taipei from signing FTAs with other countries. This will be an important indicator of Beijing's goodwill, and is something the Ma administration eagerly anticipates. Many governments have expressed a willingness to sign FTAs with Taipei. The precondition is that Beijing does not object. In other words, if this obstacle can be removed, Taipei may be able to sign FTAs much sooner.

In recent years Taipei has attempted to handle the matter according to WTO rules. Some time ago, the "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu" (Chinese Taipei for short) joined the WTO, the Conference on Asian Economic Cooperation (APEC) and other organizations. This was a flexible and pragmatic approach. Resort to such terminology allowed greater ambiguity regarding sovereignty. It increased the likelihood that Taipei would be admitted. This is not our favored model. This is not a perfect model. But it is the most viable model, and it enables us to rejoin the international community.

Beijing and Taipei are both WTO members. If Taipei uses the WTO model to sign FTAs with non allies, it is consistent with WTO resolutions. It does not conflict with these countries' non recognition policy toward the Republic of China. Beijing, which is also a WTO member, truly has no cause to object.

The Beijing government's Taiwan Affairs Office Director Wang Yi recently said that if Taipei signs FTAs with other countries, it will be "good for everyone." This is a positive development. We hope this means Beijing is willing to express greater goodwill toward Taipei. The diplomatic truce has enabled Taipei to attend the World Health Assembly. Once the two sides increase exchanges by signing ECFA, Beijing should drop its objections and allow Taipei to sign FTAs with other governments.

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