Fourth Round of ECFA Talks Postponed

Breaking news this evening as the Mainland Affairs Council (MAC), which does not, as its title would suggest, help Taishang manage their mistresses in Shenzhen, announced that the fourth "informal" round of ECFA talks has been postponed.

Huang Chih-peng, chief of the Bureau of Foreign Trade under the Economics Ministry, said that the ministry had already received a message from the Mainland stating that the details of the consultations and progress required further discussion. As a result, Huang said that the two sides decided to postpone the informal talks. Asked whether the delay was related to the intense media coverage of public concern about the progress of a cross-Strait ECFA, the Economics Ministry spokesman declined to comment.

This week the European Chamber of Commerce here said that Taiwan should sign the ECFA with China as soon as possible, which would help it gain a market opening agreement with Europe. It might be helpful to review what has happened so far with agreements with China. Fortunately Taiwan News had a helpful summary today:

Although the KMT government confidently promised that 3,000 Chinese tourist arrivals daily and would inject NT$60 billion annually into the economy, the actual volume of PRC travellers averaged only 1,307 from December 2008 through September 2009, a fraction of the average 11,897 daily visits to the PRC by Taiwan citizens during the same period.

Moreover, the substantive benefits to Taiwan's economy and employment are subject to a substantial "discount'' due to the concentration of PRC package tour groups in the hands of PRC-approved tour companies and the "squeezing out'' of spending by higher-spending tourists from Japan or other nations and many local citizens who avoid sites frequented by PRC tour groups.

Although the number of PRC tourists more than doubled year on year to nearly 624,000 during the first eight months of 2009, the inflow of Japanese tourists, who spend 1.4 times more daily and spread their activity and purchases far more widely in Taiwan, shrank 10.7 percent to just over 638,000.

According to an estimate by the DPP's Policy Research and Coordination Department, gross revenues from Chinese tourism over the past 15 months has amounted to NT$32.8 billion, far less than the promised NT$60 billion annual input.

Moreover, the establishment of direct marine and air links has failed to revitalize Taiwan's major gateways such as Kaohsiung Port and Taiwan Taoyuan International Airport.

During the first half of 2009, Taiwan's main port of Kaohsiung, which was supposed to be revitalized by the implementation of direct links, suffered a 21.1 percent drop in cargo traffic, for the second worst record among East Asia's top 10 seaports.

During the first eight months of 2009, arrivals and departures through Taiwan Taoyuan International Airport fell nearly 11.5 percent, while total air cargo throughput dropped nearly 25 percent. While much of the decline is attributable to the economic recession, the structuring of the "direct links'' agreements in line with the PRC's characterization as "domestic routes'' also contributes to these declines.

Most of Taiwan's shipping fleet, mainly "flag of convenience'' cargo vessels, are barred from cross-strait marine shipping since they are "foreign'' registered, while Beijing's denial of fifth-freedom onward connections for Taiwan airliners and restriction of cargo shipments to direct cross-strait trade is reducing Taiwan's air and sea ports from "Asia-Pacific'' marine and air "hubs'' into "spokes'' for PRC ports, notably Shanghai.

Moreover, the toothless agreement on cross-strait food safety has failed to deliver the promised reparations for Taiwan companies hurt by imports of melamine - laced milk powder, while a pact on "judicial assistance'' inked in April has yet to result in the extradition of a single major economic fugitive back to Taiwan.

Similar points were made in the Taipei Times today. The DPP claimed that arrivals from other nations had fallen, including Taiwan's bread-and-butter South Koreans, whose arrivals had plunged 35%.

The confidence of foreigners like the European Chamber in the promises of China to Taiwan continues to amaze me, in light of these simple facts. Well, actually it doesn't -- a couple of years ago a delegation of pro-Taiwan academics traveled the capitals of western Europe and was told to get on with the business of unification so everyone could make money -- whereas in eastern Europe the locals knew exactly what was what.

Perhaps China will permit Taiwan to have free trade agreements (FTAs) with other nations, but why should it? China already has FTAs with many those nations, or will under upcoming agreements. Consider that if Taiwan does not have FTAs, then its businessmen will be compelled to move to China in order to take advantage of lower tariffs. There is in reality little incentive for China to permit Taiwan to have real FTAs with other nations. That is why one thing the US can do to aid Taiwan is to pursue an independent FTA with Taiwan, which will encourage other nations to do so.

A couple of other points -- people in the know are reporting that the old government message (ECFA will save Taiwan!) under the former Liu Cabinet is going to be replaced by an upgraded Version 2.0, which will strike a more nuanced tone of "benefits exceed costs". The line that ECFA will not damage sovereignty will continue, however.

Also, note again -- ECFA is NOT a free trade agreement. It's an agreement to open certain markets and industries to certain kinds of economic activities. Expect that to become more prominent in the government line as well. FTAs will be follow on agreements.....
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