Wednesday, February 18, 2009

____ integration will lead to ____ integration

In writings on Taiwan the US Establishment tends to argue, or express the belief, that economic integration between China and Taiwan will lead to political integration. But as Taiwan News notes in its recent editorial, the reality is that it is the desire for political integration of Taiwan into China that is driving the KMT's integration of Taiwan's economy into China's:
The right-wing Chinese Nationalist Party (Kuomintang) government is now preparing to literally give away the power to make or break Taiwan's economy and officially surrender Taiwan's sovereignty to the hostile People's Republic of China.

This surrender may be contained in a proposed "comprehensive economic cooperation agreement" (CECA) which Mainland Affairs Council Chairwoman Lai Shin-yuan announced Sunday is now a "fixed policy" of President Ma Ying-jeou's restored KMT government.

Lai's statement responded to a joint demand issued Thursday by Taiwan's six major industrial and commercial business associations for the KMT government to accelerate the signing of a CECA with Beijing to avoid being "marginalized" from the PRC market.

Although floated by Ma last April, the KMT government had appeared to treat the notion as a longer-term goal to be handled after "normalizing" direct transportation links and opening up tourism.

Without carrying out any substantive feasibility or "economic and social impact" assessment, the KMT government has already rushed into unilaterally easing regulatory firewalls on outgoing equity and portfolio investment into the PRC and plans to sign a financial services "memorandum of understanding" in the near future that would open the doors of our banking market to the PRC.

Without pausing to build a consensus in Taiwan society beyond the bounds of its "enterprise friends," the KMT now aims to step up the pace of Taiwan's integration into the PRC economy by lowering most regulatory firewalls in industrial and agricultural trade.
As Taiwan News goes on to say, this is the pandas in economic form:
Indeed, claims by KMT officials or mouthpieces that a CECA or even a CEPA (Closer Economic Partnership Agreement) is an "economic" agreement are exercises in deception that aims to pull the wool over the eyes of Taiwan's 23 million citizens and are not shared by PRC leaders who realize that politics and economics are indivisible.

The dead giveaway (or horse's leg) lies in the CECA's concept inclusion of features such as bilateral reductions in customs duties and for the duty free entry of 90 percent of exports into each other's market that would be exclusive to the two signatories.

Unless such concessions are simultaneously extended to all members of the World Trade Organization, to which both the PRC and Taiwan belong, under the WTO's "most favored nation" rule, the proposed CECA will not be legally under WTO rules as a "free trade area" agreement signed between two equal states but as an arrangement between the PRC central government and a nominally "separate" but subordinate "customs area" which is under the same national roof.
If the KMT was treating Taiwan and China as separate nations, then all WTO members would get the benefits of this agreement -- but they are not. This is another "domestic" arrangement. Our sovereignty is dying the death of a thousand cuts, and some, like this one, are much deeper than others.

Hey, anyone remember when the media reported that Lai Hsin-yuan was pro-independence? ROFL.

Today's news noted that the CECA discussions will not take place in the next round of Benes-Hitler Taiwan-China negotiations.
Strait Exchange Foundation President Chiang Pin-kun (江丙坤) today said that the signing of Comprehensive Economic Cooperation Agreement (CECA) is not included in the third round of cross-strait talks because a consensus should be reached first by experts from both sides.

The head of the semi-official organization in charge of cross-strait affairs today made the comment when attending The 9th Cross-strait, Hong Kong and Macau Economic Cooperation Seminar.

In terms of the call to the government from Taiwan’s plastics union to sign the CECA, Chiang said the agreement among members of the Association of Southeast Asian Nations, China, and South Korea put great pressure on Taiwanese industries. It also reminds people of the necessity and urgent need of the CECA signing with China, said Chiang.

Taiwan's plastics maker union yesterday called on the government to engage talks with China on export tariff exemptions, as Taiwanese industries face the threat of zero-tariff pacts between ASEAN members, China, Japan and South Korea.
This is the "shock doctrine" version of the CECA call -- if we don't get this, our economy is going to go bust! Better go for it! It also appeals to the latent fear in so many Taiwanese of being weeded out. The reason given for the lack of discussion between the KMT and the CCP on CECA is the need for further "expert" discussion -- experts whose role is to reduce the public to passive observers of decisions made by their "betters." There is actually no hurry on this -- the ASEAN + 1 free trade zone of ASEAN plus China does not go online until 2010 -- and no doubt it will be more symbolic than actual, since only someone utterly stupid or totally venal would have completely unimpaired trade with economy like China's. There's a reason why all the nations around China limit its impact on their economy.

The party that actually cares about the island, the DPP, is dead set against CECA:

The DPP strongly opposes the inking of the CECA between Taiwan and China in the absence of effective evaluation and social consensus. “Recklessly signing the CECA will deepen social conflict in Taiwan, and Taiwan may become overly reliant on China economically and finally become a subordinate to China,” Tsai said.

The DPP head asserted that all cross-strait negotiations and relevant policy-making process should be made totally transparent, and both the Legislative Yuan and political parties must establish an effective supervisory mechanism in this regard.

It always make me either cringe or laugh when people say the KMT and the DPP are the same. Which one is calling for democratic transparency, oversight, and participation in this process? Hint: it ain't the KMT.

On a related note, CNN reported a half-hour ago that Taiwan is in a recession:
Taiwan's economy slumped 8.36 percent during the last three months of 2008, the government said Wednesday.

The island's economy spiraled into recession with its second straight quarter of economic losses. For the third quarter of 2008, Taiwan's real gross domestic product (GDP), adjusted for inflation, slipped about 1 percent, according to the Directorate General of Budget, Accounting and Statistics.
Ma save us!


Anonymous said...

Speaking of recession... you wouldn't know it by the way people are shopping. I was at Mitsukoshi tonight and it was packed. Everyone was carrying a shopping bag. On Saturday it was a mad house. Either people are charging their way through the recession or it isn't hitting the consumer sector.

Thomas said...

Unfortunately, Ma's approach seems entirely focused on making the most out of claiming that Taiwan and China are both part of one country, even while maintaining to Taiwanese that they are separate.

This makes me genuinely curious as to what a "consensus" between both sides on a CECA would look like. If Chiang Ping-kun says no consensus has been reached, he might mean that the KMT has not yet been able to come up with a formulation of a CECA that would pass the obfuscation test within Taiwan yet would still please their Chinese masters.

I keep my fingers crossed that the few recent meetings of the DPP to establish policy directions are actually a sign of real direction and purpose in the DPP.

In terms of the CECA, it might be a good thing that Tsai and the DPP are putting their feet down now. If the upcoming deal signing with the PRC will not discuss a CECA, that gives the greens about seven or eight months to really organise some opposition and spell out a case. And as it seems we are not in for a real recovery in 2009 according to the IMF, this might dovetail nicely with low popular sentiment, especially if the vouchers don't lift Taiwan out of the doldrums and the direct shipping doesn't seem to be doing a great deal.

So watching the battle over a CECA might give us a mini prelude to the larger battle over a peace treaty, which Hu has already indicated China will not sign if it implies Taiwan is anything but a part of the PRC.

Of course, Ma will probably seek to justify his success entirely on winning one-time observer status at the WHA :-P He and the KMT old guard make me sick.

Anonymous said...

Why would the KMT (GMD) give Taiwan away to China? What's in it for them? The way I read it is, they've calculated that Taiwan's demographics do not favor a mainlander-dominated party...and so they're trying to change the demographics. The idea being that as Taiwan and China integrate, the swelling population of mainland Chinese--and locals with family or business connections to them--will tip the balance in their favor. Or perhaps they're aiming for a situation where citizens who would normally oppose them, do not dare to vote against them...?

Anonymous said...

If I may address the elephant in the room:

The KMT has every intention of reclaiming greater China (If we are to believe what Ma said in an interview in Japan last year). I truly believe there are operatives on both sides of the straits working on the return of the republic (not people's), and this cannot occur until there's been a integration that puts KMT back on the mainland. Taiwan is not an "issue" for these people. Sorry, but for most KMT, Taiwan is a turd.

The news reported today that there are a long list of donors implcated in the moneylaunderering of the Chens, and which comprise many of the island's industrial and business leaders. I'll bet you they're all DPP -- knowing that business here is fiercely divided poltically from the exchanges, to the banks, to the hospitals. The KMT needs to break the back of all this power.

I'm sure that some of us are wondering if this the DPP or TI attempt to create a huge reserve to battle the KMT's (mostly ill-gotten) fortune, or can it be that ALL of Taiwan's business leaders corrupt?

In any case, the KMT cannot allow there to be any rivals to their cause, and they will bring them down, Freedom House be damned.

Now to be the devil's advocate (at the expense of all TI supporters): Taiwan is rejoined to the mainland and their economies and fortunes married. Peace reigns in the region. North Korea is quelled. Japan and South Korea indirectly benefit from signing trade treaties that beneft them economically. In ten years, while the rest of the world is still exhausted from the recession, the greater China region thrives.

NON-NATIVE SPEAKERS -- Please look up "devil's advocate" in your dictionary before you flame me)

cfimages said...

Agree with the first Anon. I was at Ikea last weekend and there were more people measuring, browsing and buying than I've ever seen in the store before.

TicoExpat said...

Do they keep saying that if Taiwan "gets out of the way", there will be peace in the region? It is not only encouraging the bully, the lack of legitimacy of the PRC government cannot be justified by the "when Taiwan comes back, we Chinese will be powerful and no one will bully us again", if the CCP cannot fulfill its people's needs. They are the real bullies, and they will seek another "enemy" or "target for distraction" to be precise. And whwther this target is inside or outside, that will be irrelevant, as long as it fits their needs.

It will be the beginning of the end, in other words.

Thomas said...

"In ten years, while the rest of the world is still exhausted from the recession, the greater China region thrives."

Wow! You've thought of it all! Except you have forgotten to consider the wishes of the people who actually live in Taiwan.

My 2c: Being the devil's advocate requires more than presenting an unpopular opinion. It involves having your readers evaluate a situation from a previously unconsidered angle by taking the opposite opinion. All you have done is taken an establishment position, and, in doing so, left a key factor out of your argument.

Anonymous said...

I wonder if the devil could be prevailed upon the explain why unification would be expected to benefit Taiwan, Japan, and Korea economically? More likely, any business for which they do not enjoy a comparative advantage would, absent protectionist measures, migrate to cheaper regions of Greater China, as Taiwan comes to resemble coastal China in terms of living standards and social inequality.

As for peace, it already "prevails" (for now). Unification would just move borders around, and make surrounding countries that much more vulnerable to Chinese pressure.

On the issue of the KTM / GMD's aims, do you suppose that they expect to be allowed to compete in pan-Chinese elections? Or do they merely hope to receive appointment to the National People's Assembly, or some such? Surely they can't *all* be as stupid as Lian Chan...?

Anonymous said...

Yes DA you left out that dictatorships require enemies. The image of the enemy fuels the energy and spirit of the Party. It works as a tool for enforcing Party discipline and unity too. And it gives moral justification for cracking down on dissent. Just identify dissenters as part of the enemies of the moment (Falun Gong.) Or clasify all dissent as criminal with sweeping laws like giving away state secrets and threatening social social stability. Then step on the enemy. Then declare a glorious triumph. And endlessly repeat the process for as many decades as you can.

The KMT understands and uses the psychology and tools of political manipulation well. This doesn't show that they understand psychology and human nature. They can't see, analyze, and understand beyond what previous experience has shown them. If they could, wouldn't a lot of them who aren't at the center of power be thinking twice about the direction things are going?

They're going to end up worse off under CCP masters just like most others in Taiwan will. They just don't realize this. They've never been at the business end of dictatorship's stick. Their wallets and freedom will suffer like most other's will. Its not sheep leading sheep to the slaughter, but most are headed for a much tighter pen.

reeb said...

I wonder if the real thrust of a CECA is to somehow include Taiwan's NT$ in some type of new Asian reserve currency/system since the US$ is on its last legs.

I've read a few articles here and there on this topic over the years. Most recently from Jim Willie.

An Exchange Platform will cut out the banks altogether… [Chinese Premier] Wen delivered his speech in Davos and went straight to Berlin where they put the final touch on the new world currency basket, sponsored by Berlin-Moscow-Beijing-Tokyo-Riyadh. Moscow and Berlin already have a massive counter trade / barter trade agreement in place, and Beijing was eager to joint that platform as well.” The new global currencies are planned for launch in January 2010. They will be launched amidst growing chaos. Events up to that time will be tumultuous.

Here is another recent one from Bloomberg: Asia Agrees on $120 Billion Currency Pool Amid Crisis

In the Bloomberg article it mentions that Korea already burned through about 1/4 of their FX reserves to keep the Won competitive.

Anonymous said...

On the issue of the KTM / GMD's aims, do you suppose that they expect to be allowed to compete in pan-Chinese elections? Or do they merely hope to receive appointment to the National People's Assembly, or some such? Surely they can't *all* be as stupid as Lian Chan...?

You just don't get it. There'll be no democractic elections between CCP and KMT. Just a new republic, one without "people" in its name. The aim is to overthrow the CCP (if the people don't do it ahead of time) and replace it with a new authoritarian government (and I'll bet you there'll be lots of former CCPers who'll switch sides)