Saturday, May 30, 2009

ECFA in US eyes

Over at the Jamestown China Brief retired Foreign Service Officer Terry Cooke offers a robust but thoroughly Establishment view of the ECFA package, Cross-Strait Matrix: The Economic Cooperation Framework Agreement. It's worth reading for its wide-ranging point of view, although naturally the actual details of the recent agreements are omitted, since they would contradict the case he's trying to make. After an introduction that pointed to the EU and to the agreements between Beijing and Hong Kong, Cooke notes:
Nourished by these tap-roots, the ECFA concept sprouted again dramatically in early 2009 as the global economy continued to worsen. In mid-February, attention in Taiwan galvanized around the CECA concept after local press reported the Taiwanese National Security Council’s Secretary General, Su Chi, as stating that the government had decided to sign a CECA with China (CNA, Feb 14). Major industry associations immediately voiced support for the initiative, even before anti-China sentiment in Taiwan’s fractious democracy could organize to oppose the initiative. Yiin Chi-min, the minister of economic affairs, and President Ma then began an energetic campaign of pitching the concept to the Taiwanese public—presenting it as ‘inevitable’ and a virtual fait accompli, as a process that could be wrapped up by mid-year, as something that could add nearly 1.4 percent to Taiwan’s GDP, and as a boon to Taiwan’s efforts to forge free trade agreements (FTAs) with ASEAN, the United States and others.

During March and April, public debate over the concept led to various adjustments of these ‘pitch points.’ First, the CECA name was jettisoned as being too reminiscent of China’s CEPA with Hong Kong. Given Beijing’s sovereignty over the Hong Kong Special Administrative Region (SAR), the concern was that a similarly named trade agreement would erode Taipei’s posture of vigorously contested sovereignty vis-à-vis Beijing. Next, admission was made that the democratic nature of Taiwanese society required more public airing of the concept and a greater degree of consensus-building before the concept would be ripe for finalization in an agreement with Beijing. Accordingly, the timeframe for concluding the agreement with China has now lengthened. Following the model of the Financial Cooperation Agreement (which was discussed informally in the 2nd round in November 2008 and formally concluded in the 3rd round in April 2009), the ECFA is being staged for informal levels of discussion at the 4th round of the process, which is slated to take place at the end of 2009 (United Daily News [Taiwan], May 27).
Cooke actually puts his finger on some of the major problems without really acknowledging that they are problems, such as the KMT's use of "shock doctrine" tactics -- "we need a cross strait agreement now to save the economy!" -- to get the pact accepted. He neglects to inform the reader that a plurality of the public opposes ECFA, even in polls by pro-KMT news organizations. This fact of widespread public opposition is the reason that in Belize this week President Ma Ying-jeou once again retiterated that ECFA would not be subject to a public referendum. The big boys in the financial industry who plan to scoop Taiwan out like a gourd don't like public interference in their ability to make money.

It's funny to read that the EU and CEPA are models or antecedents, because the reality is that the mutual agreement between the CCP and the KMT to annex Taiwan to China is what is driving ECFA -- and the EU and CEPA agreements are not "models" but simply convenient rationalizations for a specific strategy for doing this, a cross strait economic agreement.

Cooke also claims that CECA was dropped because it sounded too much like CEPA, the Hong Kong agreement, but in fact CECA died because it was a free trade agreement which would have fallen under the WTO and GATT rules, giving Taiwan enhanced sovereignty. Hence CECA the globally-regulated FTA became ECFA the loose bilateral cooperation agreement.

Cooke observes:
.....This fits in with broad U.S. regional policy goals of supporting cross-Strait commercial engagement and economic integration as means for promoting regional prosperity and stability. The ECFA proposal and the cross-Strait cooperative dialogue process more generally are both seen in Washington as practical mechanisms for advancing those goals.
Cooke belongs to the school that increased economic integration will lead to "peace". This is an article of faith unsupported by historical examples, and one could easily come up with dozens of counterexamples. The problem between China and Taiwan is China's desire to annex the island. If that did not exist, there would be peace and economic integration would not be an issue. By the same token, so long as China maintains that desire, economic integration will not bring peace, because China's goal in "integration" is annexation: increasing Taiwan's dependence on it, levering Taiwanese firms out of lucrative cross-strait markets (as it has done with the gravel shipping and direct flight deals), dividing Taiwan's populace, and sucking out the island's economic strength. As the Taipei Times reported today, a KMT lawmaker warned on that very issue:

Chinese Nationalist Party (KMT) Legislator Lo Shu-lei (羅淑蕾) said yesterday that a local Chinese government had “unreasonably” offered a large subsidy to encourage Taiwanese businesses to return to Taiwan.

Lo said she had received information from China-based Taiwanese businesspeople that the Dongguan City Government had offered Taiwanese businesses in the city a 20 million yuan (US$2.9 million) subsidy to encourage them to invest in Taiwan.

“What could the Dongguan City Government’s motive be? Why did it decide to offer a cash reward to encourage China-based Taiwanese businesses to return to the Taiwanese market?” she said.

Lo said the offer applied only to companies headquartered in Dongguan and whose annual turnover was more than NT$1 billion (US$3 million). At least 20 Taiwanese businesses had expressed interest in the subsidy, she said.

Lo said she suspected the Dongguan offer was aimed at bringing the companies’ capital back to China after they pool their resources in Taiwan.
Moreover, as economic integration accelerates, Taiwan will grow weaker relative to China, both economically and militarily...

....think that through. At present the high cost of military action against Taiwan deters China from attacking the island, along with the fact that the KMT can be expected to deliver the island into China's hands. Assuming ECFA, two contradictory trends will manifest themselves. One is that Taiwan will continue to grow weaker, especially since we are not going to get new fighters and other military equipment from the US as the Obama Administration kowtows to Beijing. The other is that the island's people do not want to be annexed to China and will likely remain firm in this view. But as the cost of military action against Taiwan falls -- especially with the signals the US and its foreign policy establishment are sending that they are willing to sell out Taiwan -- the attractiveness of the military option will rise to solve the problem of those pesky Taiwanese who won't annex themselves voluntarily. Thus, further integration may well lead to a cross-strait conflict.

Never mind that once China gets Taiwan, it will shift its sights to its other territorial goals. Sooner or later there will be war over its Himal claims, Assam, the Spratlys, the Senkakus.... or whatever new claims China manufactures as its appetite increases. I'd be curious to know what territory US foreign policy analysts are planning to sell out to China next. The beast you guys helped create will have to be fed, you know.....

Thus, all the talk of "inevitability" of ECFA and integration is actually part of a larger, sustained campaign to get locals to resign themselves to the idea of being annexed to the PRC. It's all of a piece, because ECFA is not about "economic integration" on the EU model but economic incorporation on the typical colonial/imperial model. Remember that so far China's agreements with Taiwan have treated it as a domestic market, and excluded foreign firms from participation. Foreign airlines are not allowed to fly Taiwan-China routes, and ships registered to third party flags of convenience are not allowed on cross-strait shipping routes. Surely there is a clue here in China's attitude how the US and its firms are going to be treated....
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