Tuesday, August 3, 2010

Cross-Strait Economic and Trade Negotiations Require More than A Tacit Understanding and Goodwill

Cross-Strait Economic and Trade Negotiations Require More than A Tacit Understanding and GoodwillUnited Daily News editorial (Taipei, Taiwan, ROC)
A Translation
August 3, 2010

During recent cross-Strait negotiations, the addition of new airline destinations led to a disagreement over air traffic rights. Air traffic rights have been subjected to intense debate. A single clue tells all. The disagreement reveals the structural nature of Taiwan's cross-Strait economic and trade consultation problems. The government must pay close attention. It must seek appropriate solutions ahead of follow-up negotiations.

One problem is that negotiators for our side have equated "tacit understandings" with "articles of agreement," and given the public the wrong perception. Equating "tacit understandings" with "articles of agreement" is a mistake that rarely occurs when negotiating air traffic rights with other governments. One reason is that prior to negotiations, representatives for our side looked at the two sides' positions and arrived at unrealistic expectations. Statements made by Mainland representatives at the negotiating table were perceived as more generous and accomodating than intended. Even if Mainland China is genuinely inclined to be generous and accomodating, that is merely an inclination, a declaration of principle. It is an approach toward dealing with irreconcilable differences between the two sides. But just as in international economic and trade negotiations, it is not always possible to implement general principles when negotiating specific issues.

In recent years, Mainland China's economic system has undergone structural changes. Industry interests and industry viewpoints are given greater consideration during the formulation of economic and trade policy. In recent years, competition among Mainland China airlines has been intense. This is also true for high speed rail routes. Negotiations over air traffic rights involve the interests of airline companies and even airports. The operators are influential members at either the central or local government level. With the end of negotiations, they are having second thoughts. They are backpedaling on the concessions they are willing to make. They are asking themselves what is in the best interest of local governments and Mainland industries. This is not difficult to understand. This is why equating a declaration of general principles with a technical negotiation over a specific issue inevitably leads to dangerous miscalculations.

Secondly, negotiators for our side are deficient in political sensitivity. Another point of controversy concerns airline routes. The Mainland side is artificially directing new airline routes through Fuzhou and Xiamen, cities with lower market demand. These are the cities the Mainland is energetically promoting as the core of the Western Taiwan Straits Economic Region. We do not intend to speculate on whether Mainland airline routes for the Western Taiwan Straits Economic Region are part of a larger plan for the Western Taiwan Straits Economic Region. But our side has always had reservations about making the Western Taiwan Straits Economic Region part of cross-Strait economic and trade negotiations. At least we have yet to formulate an overall position on the matter. During negotiations over the cross-Strait economic agreement (ECFA) for example, our side did their utmost to avoid having economic cooperation equated with regional cooperation. But as we know from negotiations over air traffic rights, the Mainland side has made the Western Taiwan Straits Economic Region an objective larger than ECFA. Perhaps negotiators for our side fully understood the sensitivity of the Western Taiwan Straits Economic Region, and accepted the Mainland's proposals as a show of flexibility. But if they did so out of ignorance, or because the government was unclear about its significance, then it has a systemic problem that requires immediate correction.

The disagreement also highlights the need for increased participation by legal professionals in economic and trade negotiations. Outsiders have no way of knowing whether legal experts were present during recent air traffic rights negotiations. But based on the results, even if legal experts were present, they were ineffectual and their advice went unheeded. Current cross-Strait trade negotiations have proceeded smoothly only because the two sides agreed to tackle the easy issues first. Future negotiations will become increasingly difficult. More special interests and stakeholders will make demands. They will haggle over ever penny. They will dot every i, and cross every t. This is inevitable. The cross-Strait economic and trade agreement is one of the few agreements that can be written in our mother tongue. But just because it can be written in Chinese, that does not mean we can understand its legal implications. Legalese often saves something for a rainy day. Guarding against any downside often takes precedence over ensuring an upside. The atmosphere during negotiations was highly positive, with a high degree of tacit agreement. Insisting on the legal niceties could easily have been perceived as raining on the parade. But the air traffic rights incident highlights the importance of participation by legal professionals.

Over the coming months, negotiations over navigation rights will recommence. Six months after ECFA goes into effect, negotiations over investment protection measures, trade in goods, trade in services, and dispute settlements will begin. The cross-Strait economic cooperation committee must begin operations. But the dispute over air traffic rights betrays a lack of preparedness on the part of various ministries and departments. Therefore the government must quickly internalize its past experiences, publish strategy guides, and correct its structural problems. It must coordinate the various ministries' negotiating positions. Only then can it avoid turning a golden opportunity into a major crisis.

2010.08.03 01:36 am







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