Wednesday, October 5, 2011

Cross-Strait Insurance Agreement: Mutual Trust and Mutual Reliance

Cross-Strait Insurance Agreement: Mutual Trust and Mutual Reliance
China Times editorial (Taipei, Taiwan, ROC)
A Translation
October 5, 2011

Summary: The SEF recently announced that the 7th Chiang-Chen meeting will be held during the second half of this month. The most important goal is to sign a Cross-Strait Insurance Agreement. But Minister of Economic Affairs Shih Yen-hsiang said three disputes still stand in the way of an accord. They pertain to matters of personal safety, dispute settlement, and investment controls. Progress is being made, but our side is still not satisfied.

Full Text Below:

The SEF recently announced that the 7th Chiang-Chen meeting will be held during the second half of this month. The most important goal is to sign a Cross-Strait Insurance Agreement. But Minister of Economic Affairs Shih Yen-hsiang said three disputes still stand in the way of an accord. They pertain to matters of personal safety, dispute settlement, and investment controls. Progress is being made, but our side is still not satisfied.

The Cross-Strait Insurance Agreement affects many vital investments by Taiwan businessmen on the Chinese mainland. The two sides began negotiations last June, before the Cross-Strait Economic Cooperation Framework Agreement (ECFA) was signed. It was originally supposed to be signed in December, during the 6th Chiang-Chen meeting. But crucial disagreements prevented the two sides from reaching an accord. Now the two sides have announced that a partial agreement has been reached. The 7th Chiang-Chen meeting has long been viewed as a replay. Originally no consensus was reached on matters of personal safety and dispute settlement mechanisms. But efforts by both sides have resolved most major differences. So far the two sides still lack the determination to push the insurance agreement through, Will the 7th Chiang-Chen meeting enable its smooth passage? Many doubts remain.

The insurance agreement was originally one of ECFA's four major investment agreements. But the two sides agreed to give priority to insurance agreement negotiations. This was mainly in response to the demands of Taiwan businessmen over the years. In recent years the investment environment on the Chinese mainland has changed. Taiwan businessmen have encountered many problems, especially concerning personal safety and investment disputes. The Chinese mainland has a "Taiwan Investment Protection Act." It is the law that protects Taiwan businessmen. But when public safety agencies, public authorities, and government departments violate the rights of Taiwan businessmen, the law is inadequate. Taiwan businessmen hope the two sides will sign an insurance agreement. They want the Taiwan authorities to back them up They want them to protect the rights of Taiwan businessmen.

Our government has signed insurance agreements with nearly 30 nations. The Chinese mainland has signed insurance agreements with over 120 nations. A quick examination shows that the contents of these agreements are largely similar. They include definitions of investments and investors, the treatment of investments (treatment of citizens and MFN), freedom of movement for capital, compensation, collection and compensation, subrogation, dispute settlement, and information transparency. But Taiwan and the Chinese mainland have a special relationship. Cross-Strait insurance arrangements and international insurance agreements are not the same thing. This has led to a number of problems that require mutual consultation.

Taiwan businessmen are concerned about their personal safety. Such concerns are not usually part of international insurance agreements. But strong demand from the Taiwan side have made them part of the Cross-Strait Insurance Agreement. But jurisdiction over personal safety is a sensitive issue, After much wrangling, the personal safety of Taiwan businessmen was included in the agreement, with certain time limits. Victims must notify their families and the competent authorities within 24 hours. According to Chinese mainland law, when foreign, Taiwan, Hong Kong, and Macao businessmen are detained or held, family members and the competent authorities must be notified within 2 to 7 days. The insurance agreement requires 24 hour notice. According to Taiwan Affairs Office Director Wang Yi, this "breaks out of the existing framework" and affords Taiwan businessmen better treatment than the public on the Mainland, But according to reports, the Ministry of Economic Affairs says the 24-hour notice requirement will not be included in the text of the agreement. Instead, it will publish a press release. This shows that the authorities on the Chinese mainland are still reluctant to afford our people the same treatment it affords PRC citizens. If the clause is not included in the text of the agreement, it will inevitably be criticized as demeaning to Taiwan, and lead to internal disputes.

Now let us examine trade dispute settlement mechanisms. Person to person (P2P) disputes will be handled according to commercial arbitration mechanisms. Commercial contracts shall prevail. The key is how to solve disputes between local Taiwan and local mainland governments. This is the person to government (P2G) part. Our side wants international arbitration. The recent Taiwan-Japan investment agreement stipulated that disputes involving individuals and the government would be submitted to the International Chamber of Commerce, Abitration would be conducted according to an arbitral tribunal organized according to the Arbitration Rules of the United Nations or an arbitration institution agreed to by the two sides.

But International Arbitration touches Beijing's most sensitive political nerve. The Chinese mainland is unlikely to agree, According to reports, the two sides have reached a compromise. They are leaning toward "mediation" instead of "arbitration." But will "mediation" have legal teeth? That is a big question, and shows how complex the problem is.

Now consider "treatment as citizens" and "most favored nation treatment." Originally World Trade Organization (WTO) rules were to apply, But the treatment our side afforded Mainland Chinese businesses was far below WTO requirements. The Chinese mainland understands and is willing to make accomodations. This is clearly an internal matter. This principle was included in the text of the agreement. Our government has probably misinterpreted it. Its hesitancy is not surprising.

Cross-Strait issues are special and complex. But a concerted effort by both sides led to the signing of 15 agreements, including the highly complex ECFA, whose purpose was to establish a free trade area. Mutual trust and mutual understanding achieved a major breakthrough. The two sides must cherish these hard-won achievements. Mutual trust and mutual understanding should enable the two sides to compromise and reach an agreement on the insurance agreement, Can the insurance agreement be signed at the 7th Chiang-Chen meeting? The key to the problem is one's basic attitude. If the insurance agreement is not signed, the 7th Chiang-Chen meeting will not have much meaning.

中時電子報 新聞
中國時報  2011.10.05










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