The Brewing Conflict over CECA

There's so many things going on in Taiwan now, but what are the top 10 stories on the Kuomintang News Network (KNN) website as I am writing this post? Take a gander:

Chen Starts Eating after Wu’s Visit
Chen’s Lawyers Accuse Prosecutors of Str...
Ma Absent from the Opposition Conference
What a Former President!
Chen Cheng-hui Pleads Guilty, May Impact...
Wu Shu-jen Visits Chen Shui-bian
Former President Chen Shui-Bian Stages H...
Huang’s NT$ 100 Million Check May Belong...
TPHC Rejects Chen Shui-bian’s Interlocut...
DPP Lawmakers Block Premier’s Repo

Yes, that's right -- eight of the top ten stories are about the Chen case, showing the KMT's uncontained obsession with the former president. This is often the case, and I like to dip in now and then to confirm their idea of what "news" is.

The KMT's use of the Chen case as a media instrument is also on display, as the stories have been use to divert the public from other important issues, such as the growing controversy in Taiwan over the CECA agreement, an alleged free trade agreement between Taiwan and China (previous post). Taiwan News discussed some of the issues in a recent editorial:

Mainland Affairs Council Chairwoman Lai Shin-yuan dismissed such concerns by stressing that an "integrated economic cooperation agreement" would be negotiated under the framework of the World Trade Organization and would only be an "economic" agreement and did not impinge on Taiwan's sovereignty and thus did not require ratification by national citizen referendum, a process that she claimed would turn an "economic" issue into an "ideological" conflict.

However, Lai undoubtedly knows that trade talks do not have to directly deal with political issues to be "political" or "ideological" or to involve "sovereignty."

Such is the case in the proposed CECA because the PRC refuses to recognize Taiwan's independent sovereignty (even under the "Republic of China" name) and is openly committed to its annexation under the rubric of "unification" and since PRC State Chairman Hu Jintao explicitly indicated in his New Year's Eve "six point" speech that any such agreement would be signed only under Beijing's "one China principle," which posits that Taiwan is part of the PRC.

Lai's claim that a CECA would not impinge on the sovereignty of Taiwan is not shared by the international community, as shown by news reports in The New York Times and The Washington Post last weekend that describe the possible signing of a CECA as "an important step toward unification."

This consensus in the world community that Taiwan's agreement to such terms would be a "step toward unification" with the "one China" of the PRC will not be overturned by Lai's unilateral claim or by Ma's unreal self-delusion that "no matter what (Hu) thinks, we think 'one China' refers to the Republic of China."

Moreover, nowhere in any statements by Hu or any other PRC trade negotiator is there the slightest hint that a CECA or IECA would be negotiated under the WTO, even though both the PRC and Taiwan are full members.

Indeed, the PRC has fiercely warned nations not to sign free trade or regional trade agreements with Taiwan precisely to force Taiwan into negotiating a CECA first and thus denigrate our status to that equivalent to the PRC's own Hong Kong Special Administrative Region.

The KMT Administration's position is the classic "shock doctrine" position:

1. Hurry! The rest of Asia, including China, is forming a free trade region!
2. We'll be locked out of this if we don't get on board now!
3. Our economy is in the tank! We must do something now!
4. Claims that opponents' objections are "ideological"

The idea that CECA's opponents are driven by "ideology" but CECA proponents themselves are ideology-free pragmatists is found in both MAC Chairman Lai's comments above, and this recent China Times editorial, whose final paragraph sums up the Chain of Fear:

"....East Asian regional economic integration is just around the corner. The global financial crisis has yet to subside. Taiwan's economy, dependent upon the growth of exports, remains besieged on all sides. Signing CECA is merely one way to break through this siege. Besides, all cases involving tariff agreements must be approved by the Legislative Yuan. At that time all concerns will be addressed. If after all we have endured over the past eight years, we still cannot get past ideological struggles, that will be the real tragedy."

Similarly the Vice Premier today said that the agreement was only economic:

Vice Premier Paul Chiu (邱正雄) denied accusations that signing a comprehensive economic cooperation agreement (CECA) with China would trade away Taiwan’s sovereignty and bring unification with China one step closer, adding that the government’s intention to sign a CECA with China was purely an economic decision.

Chiu said the plan, initiated by the Ministry of Economic Affairs, was aimed mainly at enabling Taiwan to meet the challenges that would arise from the ASEAN Plus One (China) agreement set to take effect next year.

Several business groups have been arguing for the agreement, as the Taipei Times reported, based on the same two arguments: unrestricted market access will favor Taiwan, and we have to get it now because of the ASEAN free trade agreement coming online next year.

A recent Washington Post piece displayed the hollowness of KMT position, for China sees CECA exactly the way the DPP does: as another step toward annexing the island:

The Comprehensive Economic Cooperation Agreement would allow the free flow of goods, services and capital across the Taiwan Strait at a time when the economies of the mainland and the democratic self-ruled island are increasingly interdependent. While Taiwanese groups have tried to play down the political implications of the economic pact, those on the mainland are already talking about the eventual union of the two.

Li Fei, deputy director of the Taiwan Studies Center at Xiamen University on the mainland, said the agreement would be a significant milestone in gradually warming relations between the antagonists. "It's a start toward full cross-strait economic integration and a necessary condition for marching forward toward final unification," Li said.

What is driving CECA is not economic need, but political ideology -- specifically, KMT and CCP "One China" political ideology. The need to hurry is an ideological decision by KMT elites who want to see the island in China's grip ASAP. (UPDATE: KNN says that Li Fei denies having ever said this -- since it caused a controversy here.)DPP TSU Chairman Huang Kun-hui even threatened to impeach recall Ma over CECA although the legislature is controlled by the KMT (Taiwan News has coverage here)

Despite the claim that opposition to CECA is driven by ideology, in fact, as an upcoming commentary in English from DPP Chair Tsai Ing-wen notes, the DPP's problem is that the economic assumptions underlying the idea of "free trade" with China are all wrong. (The Chinese version was published a few days ago by the China Times). The DPP has always maintained that the China trade must be carefully handled to avoid destroying the local industrial and economic base. The KMT -- not so much.

It should be noted that the pattern of KMT agreeements with China is that they benefit China disproportionately. I find it difficult to imagine that a CECA agreement negotiated with China by the KMT is going to be comprehensively beneficial to the island's industries.

CECA is certain to be treated as a domestic agreement by China, which refuses to submit it to the WTO framework though both Taiwan and China are members, and by local business as a legal lever they can use to get around the cap on China investment, weak as it is, to move still more production across the water. "Exports" are merely the pretense for continued hollowing out of the economy. Note that while ASEAN arranges an FTA among its members, and FTAs proliferate in Asia, Taiwan, excluded from international bodies by China's fierce opposition to its independent existence, has only China it can turn to.

Readers may gain some insight into what a "free trade" agreement really means (read: managed trade) and how China has been treated by ASEAN from this 2007 article on India's experience with the ASEAN FTA regime. China's previous FTAs are reviewed in this 2006 article. This small article is a piece of a much larger discussion on East Asian FTAs; links are on their sidebar.

Taiwan needs to step back and catch its breath. The ASEAN + China FTA will not remove all barriers overnight, but will phase them out over time, and many industries will still be protected. There's no need to do CECA right away -- what drives the urgency is not economics, but ideology.

Pro-China ideology.

[Taiwan]