Friday, December 24, 2010

Exercises from the Sixth Jiang/Chen Meeting

Exercises from the Sixth Jiang/Chen Meeting
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
December 24, 2010

The sixth Chiang/Chen meeting has drawn to a close. The two sides have successfully reached an agreement on "cross-Strait medical and health cooperation." But the meeting has also provoked a string of questions. These questions are even more intriguing than the results of the sixth Chiang/Chen meeting.

The first question concerns the consultation mechanism adopted by the two organizations, and the status of the two organizations. An agreement on investment insurance has yet to be reached. The establishment of a Cross-Strait Economic Cooperation Committee (CSECC) has been postponed. This has raised questions about what the Chiang/Chen meeting accomplished. It has also induced the two sides to issue comments testing the waters. SEF Chairman Chiang Pin-kung said if the two sides fail to sign an agreement, they need not convene another Chiang/Chen meeting. PRC Taiwan Affairs Office Director Wang Yi responded. He said the purpose of the meetings was not merely to sign agreements. It was also to establish a system for future consultations. Indeed, if one recalls the history of previous consultations, not all of them led to the signing of agreements. The Chiang/Chen meetings established an institutionalized consultation mechanism. The MAC considers this one of its major policy achievements.

Chiang's statement however, did make a valid point. Look at the 15 cross-Strait agreements that have been reached. Nearly all of them led to articles establishing direct cross-Strait links, to information exchanges, and to problem-solving between competent authorities. Suppose the status of agreements reached by the two organizations remains unchanged. More cross-Strait agreements will be signed. Fewer and fewer agreements will require the two organizations to act as buffers. But without the two organizations acting as buffers, simmering cross-Strait political issues will be laid bare, and lead to confrontations. That is hardly an answer. Therefore the sixth Chiang/Chen meeting has made another contribution. It has underscored a need to rethink the status of the two organizations.

The second question concerns the postponement of the establishment of a CSECC. The government has never fully explained the nature of the CSECC. Everyone is confused. They misinterpret its significance. This leads to widespread misunderstandings. In fact, the function of the CSECC is quite simple. It is to clarify the position of the ROC Ministry of Economic Affairs to the PRC Commerce Department. It does not change the status quo. This includes other systems, including those under the aegis of the Legislative Yuan. The opposition DPP has caricatured it as some sort of superauthority. In fact the CSECC will merely coordinate and integrate Taipei's negotiation resources in a synergistic manner. This will be highly beneficial to Taipei, When the DPP government negotiated a free trade agreement (FTA) in the past, it established similar institutions. The government erred when it negotiated ECFA. It failed to specify its function and the benefits it would bring. It failed to promptly rebut the opposition DPP's false allegations, It allowed a non-issue to spread and become an issue.

The third and final question concerns the cross-Strait investment protection agreement. Investment insurance agreements reduce the risk of overseas investment. They serve as incentives to increase mutual investment. They are mechanisms that have been adopted by the international community, not just Taipei and Beijing. Beijing has insurance agreements with over one hundred other governments. Taipei has concluded agreements for investment promotion and protection with 26 governments, Among these, Indonesia, the Philippines, Malaysia, Vietnam and India do not have diplomatic relations with Taipei, but would nevertheless like to conclude FTAs. Insurance agreements are not nearly as politically sensitive as FTAs or ECFA. But even cross-Strait negotiations over insurance agreement are beset with difficulties. According to Zheng Lizhong, vice chairman of ARATS, the two sides have yet to reach a consensus on the definition of cross-Strait investment, investment benefits, investment facilitation, expropriation compensation, and dispute settlement. This covers almost all issues of disagreement. This means that not one word has been written on cross-Strait insurance agreements!

Insurance agreements involve a broad range of complex legal issues. Negotiations will consume both time and energy. That is understandable. But in the final analysis, both sides must take a step back so they can see the big picture. Beijing should not be such a stickler over the institutional arrangements. Taipei should open itself up more to Mainland capital. It should adopt a more flexible attitude toward the formal aspects of mainland investment arbitration. Investment on the Mainland has reached record highs. Increasing the amount of protection afforded to Taiwan businessmen and their personal property, will benefit everyone. Businessman abroad have always placed a high priority on harmonious relations. Few are likely to sue the government. In fact, virtually no arbitration cases have arisen among the nations with which Beijing has signed insurance agreements. Even assuming grievances requiring lawsuits arise, Beijing already has a wide range of mediation channels.

As for Taiwan, insurance agreements are merely a means. The end is the promotion of investments. A multitude of restrictions continue to limit Mainland investments on Taiwan. If Mainland capital cannot come to Taiwan, what good is an an agreement providing investment insurance? The five cities elections have drawn to a close. The legislative elections have yet to begin, Now is the time to promote the next wave of Mainland investments, to issue an active expression of goodwill. Allowing Mainland capital to enter will facilitate an investment insurance agreement. But that is hardly its main purpose. Its main purpose is to lay a foundation for even larger scale cross-Strait interaction.

【聯合報╱社論】 2010.12.24








No comments: