Taiwan-Japan Investment Agreement: Impact on Cross-Strait Investment Agreement
United Daily News editorial (Taipei, Taiwan, ROC)
September 30, 2011
Summary: The Taiwan-Japan Investment Agreement was signed on Thursday. This economic and trade agreement has the deepest significance and is the most widely covered topic since Taipei and Tokyo severed diplomatic relations in 1972. On the basis of this milestone, the future of Taipei/Tokyo economic and trade liberalization talks looks bright. We salute the Ma administration's accomplishments. Tokyo now sees Taipei/Tokyo relations in a new light. Many new opportunities are now available. By contrast, negotiations over the Cross-Strait Investment Agreement have stalled. They are all thunder and no lightning. Everyone is anxious. But certain considerations mean they cannot be rushed.
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The Taiwan-Japan Investment Agreement was signed on Thursday. This economic and trade agreement has the deepest significance and is the most widely covered topic since Taipei and Tokyo severed diplomatic relations in 1972. On the basis of this milestone, the future of Taipei/Tokyo economic and trade liberalization talks looks bright. We salute the Ma administration's accomplishments. Tokyo now sees Taipei/Tokyo relations in a new light. Many new opportunities are now available. By contrast, negotiations over the Cross-Strait Investment Agreement have stalled. They are all thunder and no lightning. Everyone is anxious. But certain considerations mean they cannot be rushed.
The Taiwan-Japan Investment Agreement keeps pace with international trends. The degree of investment liberalization, the scope and extent of protections provided, including international arbitration, break with Taiwan's current system. Take land acquisition compensation for example, Taiwan and Japan must provide compensation. The compensation must be immediate. Furthermore, it must reflect fair market value. So-called "fair" market value means it must exclude the devaluation resuting from acquisition. All levels of government must implement these compensation mechanisms. The spirit of fair market value compensation must be implemented, both internally and externally. This will help resolve many domestic disputes over land acquisition. The Taiwan-Japan Investment Agreement includes three codiciles. They list our government's current restrictions on foreign investment, making them part of an international agreement. In the future the government must gradually lift these restrictions, It can no longer renege. The effect will clearly be liberalizing.
We must uphold the the rule of law. Developed nations have transparent administrative procedures, Their institutional mechanisms and relief programs already provide adequate protection for investors. Unpredictable incidents are rare. For them, bilateral insurance agreements have limited significance. The scope of the the Taiwan-Japan Insurance Agreement is wide. The justice system on Taiwan is defective. But it is improving. Therefore, as far as attracting Japanese investment, the insurance agreement is probably icing on the cake. It is not the decisive factor. If we truly wish to attract Japanese and other foreign investments, we must improve our overall investment environment, improve cross-Strait relations, and take concrete steps to liberalize our markets,
Consider the impact of the Taiwan-Japan Investment Agreement: on the Cross-Strait Investment Agreement. The differences are clear. Taiwan businesses have been investing on the Chinese mainland for years. They have amassed vast investment interests. The legal system on the Chinese mainland provides inadequate legal protections, Therefore the Cross-Strait Investment Agreement is far more significant than the Taiwan-Japan Investment Agreement. The Taiwan-Japan Investment Agreement was reached in short order. Negotiations over the Cross-Strait Investment Agreement have gone back and forth repeatedly, They remain stuck on issues of personal safety and investment dispute resolution. Cross-strait relations are far more complex than Taiwan-Japan relations. But a more important reason is the sensitivities the two sides stillhave regarding sovereignty and other forms of political authority.
Beijing wants us to afford Mainland capital the same protections we normally give other countries. But it also wants to avoid the internationalization of cross-Strait arrangements. This may be the basis for insurance agreement negotiations. We want to allow in Mainland capital and to increase protections for Taiwan businesses on the Chinese mainland. We want equal treatment and a mandatory investment dispute settlement mechanism. These are difficult problems. But they do not figure into Taiwan-Japan relations. They have made a Cross-Strait Investment Agreement difficult to reach. That is understandable. Our side must normalize the investment of capital from the Chinese mainland. That is only reasonable. The other side is responding positively to concerns about personal safety. But it remains reluctant to accept an impartial, compulsory, third party dispute settlement mechanism. These are the key issues for the two sides. Apparently various forces are still wrestling with each other. A significant gap must be closed.
Cross-Strait relations are different from Taiwan-Japan relations. But the Taiwan-Japan insurance Agreement has yielded an early harvest. Everone on Taiwan, including the business community, sees the Taiwan-Japan Investment Agreement as a benchmark for a future Cross-Strait Investment Agreement. The Taiwan-Japan Investment Agreement has taken one giant leap. The cross-Strait agreement must offer more than merely proclamations and voluntary provisions. If it offers little more than the current Taiwan Business Protection Act, the government will have a hard time anwering to the public. The issue would become a political football. Therefore the Cross-Strait Investment Agreement must not be rushed. The most important thing is substance, Only then can we protect the interests of Taiwan capital on the Chinese mainland. In the end, it is more important that the Cross-Strait Investment Agreement be done right than done fast.
2011.09.30 02:57 am