ECFA August Round Up

The Dalai Lama has come to Taiwan, touring disaster areas, speaking to packed stadiums, and meeting with the pro-Taiwan parties. KMT Sec-Gen Wu Dun-yi told reporters today that China was trending toward canceling $1.5 billion in orders, Max Hirsch of Kyodo reported. China also scaled back celebrations for the cross-strait direct flights that started on the 31st, and has also nixed meetings on cross-strait business cooperation.

Just another bit of evidence showing that, unless you are absolutely subservient to China's demands, relations will "worsen." One wonders why anyone in the KMT imagines China will keep any private agreements it makes with them, but as the omnipresence of scams in local society attests, suspicion will never win its never-ending battle with greed.....

Meanwhile, the March to ECFA and the 2011 Hu-Ma Nobel Peace Prize Lovefest Tour continues apace. Morakot may have driven the cross-strait economic agreements from the headlines, but there was a bunch of good stuff in the news over the last month.

Chao Wen-hung, a fellow of the pro-Taiwan Taiwan Institute for Economic Research (TIER) asked whether ECFA will keep Taiwan's firms here. Chao's logic is quite elegant. First, China will not permit other countries to have Free Trade Agreements (FTA) with Taiwan, though China has FTAs with a number of countries. It is a common tactic for nations to move production to countries with FTAs to gain access to markets in the FTA. For example, one reason that China wants to move closer to Central American nations is to gain access to the US market through NAFTA and other FTAs. Chao argues that since China is unlikely to change its stance on FTAs after ECFA (it has nothing to gain thereby), Taiwanese makers will be forced to relocate to China to get access to other markets. In other words, ECFA will in fact marginalize the island.

Economist Peter Chow made a similar argument in the Taipei Times as well, arguing that only negotiating a comprehensive trade agreement with the US could prevent Taiwan from being a mere spoke with China as the hub. This means that Taiwan needs to accept US beef.

Hsu Chung-hsin dissected the Chunghwa Institute for Economic Research (CIER) report. The pro-KMT economic think tank points out, as I noted before, that Taiwanese flagship electronics sector will shrink, while polluting, lower-tech industries will benefit. While the government claims that textiles will benefit, the CIER report says that many textile subsectors will also take a hit. Hsu also points out that shifting products to the Chinese market will not grow the Taiwan market -- instead, Taiwan's markets in other countries will be cannibalized to send stuff to China, and China will move in to replace Taiwan. Another commentator observed that the CIER report assumes full employment in Taiwan, meaning that no claims about employment can be supported from that report, but the government uses it as the basis for its claims of job creation from ECFA.

Essentially Chow, Hsun, and Chao all say the same thing: increased dependence on China will restructure Taiwan's industries in a highly negative way. Taiwan needs to globalize more, not less.

Lee Teng-hui's former NSC deputy and key negotiator also criticized Ma....

Chang Jung-feng (張榮豐), who served as National Security Council deputy secretary-general during Lee Teng-hui’s (李登輝) presidency, said that it was important to strengthen the “best alternative to a negotiated agreement” before negotiating with Beijing.

Taking the example of both sides’ bids to join the WTO, Chang said Taipei had Washington’s backing that if Beijing obstructed Taiwan’s bid, Washington would strike down Beijing’s attempt to join the organization.

To be impatient only puts Taiwan in an adverse position when negotiating with Beijing, Chang said, adding that it was “stupid” for the administration to show its eagerness to sign the proposed pact by revealing its deadline.

The Administration plans to hold the ECFA meeting with China after the December elections.

In the furor over the Dalai Lama's visit many missed the absurd decision of the Executive Yuan's Referendum Committee to turn down the DPP's referendum about a referendum on ECFA. The Taipei Times editorialized:

The Cabinet’s Referendum Review Committee rejected the Democratic Progressive Party’s (DPP) referendum proposal on Thursday in part because the proposal “was not clear enough and asks the public to vote on something that has not yet happened.” These reasons defy common sense and show how the committee is trying to use administrative measures to block the move and thereby deprive the public of its right to hold a referendum.

The committee’s decision is not surprising or unexpected. The Chinese Nationalist Party (KMT) still believes in a party-state with minority rule and opposes the idea that the public should be allowed to directly express its will or help formulate government policy. The KMT can do nothing to stop Taiwan’s democratic progress, but it has used its legislative majority to set almost insurmountable requirements for the proposal, collection of signatures, registration and passage of referendums.

It was only to be expected that the six referendums held under these restrictive rules over the past few years have all failed. With its total grip on power, it was only natural that the KMT would block any referendum related to its proposed economic cooperation framework agreement (ECFA).

The committee ignored procedural justice by forcing through a motion suspending the right to speak and moving to a vote before all committee members had a chance to express their opinions. Absurdly, this meant a decision was reached even before the reasons for that decision had been established.

Taiwan News made similar points:

RRC Chairman Chao Yung-mao told reporters stated that "the topic was unclear and did not propose a concrete legal principle" and was "a petition to hold a referendum to ratify something which had not yet happened."

The RRC chief also claimed that the proposed topic to decide whether an ECFA should be submitted to citizen referendum "obviously exceeds the boundaries" of the scope of the Referendum Law.

Besides the fact that the RRC has no constitutional right to decide "for" the people what they should vote on, Chao's rationalizations actually demonstrate that the DPP-TSU topic does indeed involve a major "legislative principle," namely that any ECFA with the PRC should be subject to what is called a "mandatory referendum" in Switzerland, the country with the most sophisticated direct democracy mechanisms.

Finally, blogged before, but let's say it again. What's the Chinese goal with ECFA. According to Li Fei, the Deputy Director of China's Xiamen Taiwan Research Center...

"It’s a start toward full cross-strait economic integration and a necessary condition for marching forward toward final unification," Li said.

Yes, cross-strait relations are warming, the way a house fire warms you even as it burns your house down.
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