Taiwanese Swooning at latest ECFA Success

My man Ben of Letters from Taiwan remarked to me in chat today:

Good job the diplomatic truce and ECFA totally stopped Beijing blocking TW on international stage and getting in the way of signing FTAs with Malaysia and Australia. Oh wait... Beijing meddling in Taiwan's trade pacts...

Readers will recall those heady days of 2009 and 2010, when the Ma government was promising that the ECFA trade agreement would enable Taiwan to sign FTAs with other countries. As recently as 2013 the WTO came out with a book in favor of ECFA, saying it would help Taiwan sign FTAs. Of course, the failure of Ech!-Fah! to result in FTAs because Beijing wouldn't permit them was totally foreseeable. D'uh:

Taiwan's economics minister Duh Tyzz-jiun has accused the mainland's government of meddling in other countries' efforts to sign trade pacts with the island, according to a local media report. The minister said countries that were likely to enter into substantive trade talks with Taiwan this year had decided to hold off after Beijing expressed concerns about their engagement with Taiwan, the Central News Agency reported yesterday, citing an interview Duh gave with the United Daily News group. Duh said Beijing had obstructed Taiwanese efforts to reach or sign free-trade agreements with at least two countries,...

In the run-up to the signing of ECFA Ma emphasized again and again that ECFA would lead to FTAs and that we needed to tie ourselves to China, marginalize ourselves even further, in order to get FTAs. As I pointed out at the time, that was shock doctrine policy-making at work:

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"

Yea, verily, remember when TV ads and the President himself said that without ECFA Taiwan would be "isolated like North Korea"? The logic of his "argument" is encapsulated in this example:

President Ma stressed that the signing of FTAs (Free Trade Agreements) had become a global trend. If Taiwan hesitated to first sign an ECFA with the Mainland, Japan and the ASEAN countries would not sign FTAs with Taiwan. In the past eight years, the DPP administration had made no progress in signing FTAs with other countries because the DPP had refused to sign any kind of economic agreement with the Mainland.

That last comment is technically right but morally wrong -- the DPP had an agreement all wrapped up with Singapore, but China nixed it.

It goes without saying that the usual suspects were rah-rahing Taiwan into FTA oblivion. Yes, the Establishment was clueless. AmCham stated in its 2009 Taiwan White Paper that “the conclusion of ECFA would pave the way for Taiwan to participate in regional trade blocs and enter into bilateral FTAs with additional trading partners.” The European Chamber of Commerce said in its 2009-2010 Position Paper: “The sooner Taiwan signs ECFA with China, the quicker political impediments to other countries signing economic agreements with Taiwan will be removed.” If that wasn't fantastic enough, some of this ECFA=FTAs stuff rose to amazing heights of fantasy...

Bwahahahaha! As early as 2011 WSJ was observing that ECFA had turned out to be a failure on the FTA front. By 2012 the Ma Administration was pushing greater progress on ECFA to compensate for the failure of FTAs to materialize.

As I noted in posts at the time (Don't Mistake My Blue-Swayed Schmooze, just read the whole post, it is as germane now as it was when it was written in 2009; this one is also good ), there was only one problem with this combination of rosy prediction and devastating threats conveyed in the foreign and domestic press:

Imagine how this would look had the article presented a key piece of information: China has consistently refused to promise that Taiwan can have FTAs with other nations. Its real goal, argue some analysts, is to force Taiwan firms to relocate to China to take advantage of China's FTAs.

That's right, all this yakitty-yak-yak existed to cover up the simple fact that China had never promised not to interfere. The goal of ECFA was always political and economic: to hollow out Taiwan's productive industries and gut its economy, since that is a powerful resource for Taiwan independence and Taiwan democracy.

EFCA + FTAs was always cargo cult economics. We've built it, and they haven't come.
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Daily Links:

• Taiwan Best Trip Contest: Win money for traveling.
• New pier on Taiping Island to be completed by 2015
• CPI blog: Taiwan's relations with Slovenia
• Factory closures push Thai workers out of Taiwan
• Hu closing gap in Taichung:

  According to polls conducted by Taiwan Indicators Survey Research, a private polling firm, Hu was lagging his major rival Lin Chia-lung of the Democratic Progressive Party (DPP) by 10.4 percentage points in late May, but the gap was narrowed significantly to 2.4 percentage points by the end of September.

• Taiwan to crack down on Chinese fishing vessels stealing and poaching. For the one millionth time since I've been here. 

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

KMT Splits?

Yep, there was still one larva on the leaf where I had first seen them. They had turned into this.

BREAKING: DPP Sec-Gen again summonsed by Special Prosecutors. Still named as "related person/ 關係人" not defendant or suspect. Thus technically no right to lawyer.

KMT Caucus Whip resigns over Control Yuan vote, scribes the Taipei Times. An interesting signal of what's going on inside the KMT...

Lin and the KMT caucus blamed outgoing Control Yuan President Wang Chien-shien (王建煊) for the “surprising outcome” on Tuesday night, after it became clear that KMT lawmakers had failed to vote in line with the party’s wishes.

Not only was incoming Control Yuan president Chang Po-ya’s (張博雅) nomination confirmed by only a hair’s breadth, 11 of the 27 candidates for Control Yuan members were voted down by the legislature, despite Ma’s insistence on a “complete passage that leaves no one behind.”

The President, who is the Party Chairman, had insisted to his legislators that everyone pass. The KMT rejected the bulk of Control Yuan nominees. The President's clout in his own party does not appear great enough to get everyone to hold their nose and vote his way on Control Yuan officials. Ma is a lame duck in his own party.

Recall that the trigger for the occupation of the legislature was the KMT's decision to cut off the debate before it began, declare it completed, and then declare that the Services Pact had passed review and was now law -- without a vote in the legislature. It seems clear that the KMT lacks the power to compel its legislators to line up behind that dog of a service pact, if it can't even get them to vote for a routine bit of favor-swapping corruption like the Control Yuan nominees.

Hence the real problem with the delay in the Services Pact isn't the Sunflowers. They just make a convenient whipping boy. The real problem is that the KMT legislators don't want to pass it, and can't be made to.

I suspect they will just have to wait until after the election in November to move on the Services Pact.
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Daily Links:

• Wang Dan, exiled dissident from China, sided with Sunflowers and is anti-CCP: can't get special dispensation to return to Taiwan. Pro-China, pro-KMT gangster with outstanding warrants? No problem. UPDATED: they are letting him in. 
• Sean Lien, KMT mayoral candidate, still making gaffes faster than they can be tracked.
• Brian Benedictus on The Formula that the media uses to describe Taiwan. My view is that it should include what Taiwan thinks of China. 
• Mr Blue and Mr Green discuss Sean Lien's video with foreigners
• Anti-gay videos in school from nutcase Christians: poisonous, anti-social, authoritarian American religious nuttery is finally being exported to Taiwan. It's been such a wonderful place without it.
• BBC is the latest media organ to report on the ongoing struggles of Taiwan's family firms to replace their elderly leaders. Reports have been flowing these last few years.
• In which Ben prompts the CCK Foundation to make a clarification to the Taipei Times
• China-S Kor free trade pact to hurt Taiwan.
• Great feature on aboriginal affairs in Taipei Times. KMT has reduced aboriginal lands to 13% of what they were under the Japanese, Maddog noted on Twitter.
• Danny Bloom in the NYTimes on climate fiction. Go Danny!

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

Student protests spark economy as Honhai Chairman pans democracy, says it won't put food on the table

A temple in Pingtung.

Terry Gou made headlines this week, denigrating democracy.....

Hon Hai Technology Group chairman Terry Gou (郭台銘) said yesterday that “democracy makes no pottage” and that social movements were only a waste of social resources that did the nation’s GDP growth no good.

That's it, in a nutshell. J Michael ripped him excellently here, pointing out that Gou's real audience is might well be Beijing. Gou wants to import equipment from Huawei, the Chinese maker which is widely suspected of tight cooperation with Chinese security services and threatened to not pay his taxes if he couldn't import it. But it was Huang Tien-lin who deflated him most persuasively in today's Taipei Times, pointing out that blocking the trade pact gave the economy a boost....

Long before the protests against the cross-strait service trade agreement began on March 18, I had said that if the agreement were blocked, Taiwan’s economy would do better than forecast. Today we are faced with the facts. The student movement saved the nation just before the doors to hell were closed behind us and public confidence has increased. In March, during the student protests, exports reached US$27.76 billion, the third-highest month in history. Last month, economic indicators remained “green,” signaling steady growth, and foreign stock investors overbought for 26 days, with net purchases reaching NT$137.5 billion (US$4.6 billion).

These amounted to market approval of the political turmoil that went on for more than a month. Furthermore, the stock market index increased by 172 points during the student protests, or 1.98 percent, making it among the strongest markets in Asia.

This is part of a larger argument that Huang makes, which contends that keeping our distance from China enhances our economic growth. I think this argument is partly wrong -- from the end of the Lee Administration to the end of the Chen Administration was the Golden Age of Taiwan investment in China, when Taiwan exported stuff made in Taiwan and processed it there. We enjoyed reasonable growth, especially in the last couple of booming years of the Chen Administration. Huang links that to Chen's attempt to slow the drift into the China abyss:

The third was then-president Chen Shui-bian’s (陳水扁) announcement putting an end to the “active opening” policy on New Year’s Day 2006 and applying the breaks to further deregulation of cross-strait trade. The result was that the economy took a turn for the better, and 2006 and 2007 provided the best economic performance during Chen’s eight-year presidency, with the stock market almost breaking through the 10,000-point mark, reaching 9,859 points.

Should add that economic growth is expected, at the moment, to be better than last year. Cross-strait integration is slowly strangling Taiwan's economy. The government has become quite effective at deploying neo-liberal discourse to conceal its relocation of Taiwan into China's orbit. For example...

Both the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) are important to Taiwan and will play a crucial role in the country's economic development, Cho said in his opening remarks at an international forum on the service industry.

The output of Taiwan's service industry could fall by US$1.9 billion if the country fails to join the TPP, but could increase by US$8.58 billion if it becomes part of the economic bloc, he said.

Although services account for 70 percent of Taiwan's gross domestic product, they make up only 1 percent of the global market, Cho said. "There is plenty of room for Taiwan to develop," he added.

Taiwan should open up its services market more, which could help upgrade its industries, increase output and create jobs, Cho said.

The last is actually correct. The catch is, you have to open up to a market that is better than you at doing these things and competes on quality, so you can learn from it, not from one that is less skilled than you are and competing on cost. China can't upgrade Taiwan's service industries; the effect will be the opposite. Indeed, we are already seeing that in manufacturing.

Respecting this neoliberal discourse, the students did not disavow the neoliberal economic religion itself, but rather emphasized that they were for a good trade pact, but the services pact isn't one. This was a clever move and even better, the international media reported it correctly.

Meanwhile, as if to prove that we don't need the services pact, two Taiwanese banks announced further overseas expansion this week.

Cathay Financial Holding Co. said it has obtained approval from the Central Bank of Myanmar to set up a representative office for Cathay United Bank in Yangon, which the parent company expects will open during the third quarter this year.

Yangon, in Myanmar. Lots of people predicting Myanmar will be The Next Asian Tiger. Taiwanese firms already trickling in, but other Asian states remain far ahead in investment there, with China in the lead. With new investment markets like Myanmar opening up, distancing Taiwan from China and slowing the pace of integration is a possibility that should be a policy... but not under the current Administration.
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Daily Links:

• Taiwan hospitals suffer from nursing shortages. Hospitals and nurses are another example of the way female labor is exploited to maintain the profitability of local institutions.
• The canals of Changhua County
• US might tap into Taiwan early warning radar.
• Head of national security bureau Tsai De-sheng resigns. Many observers are interpreting this as Ma's right hand King Pu-tsun sweeping out those who will not play ball -- Tsai was one who did not sing the praises of China.
• Pro-KMT paper says students lack independence of thought and objectivity. Because you are only independent and objective if you do what the KMT tells you to do.
• KMT under threat: Changhua County Chief KMT primary is contested by the losers (FocusTw reports winner). This is splitting the party in Changhua. In Nantou there are two serious pan-Blue candidates, helping the DPP. In both counties the KMT faces corruption scandals. Yeehah. The Changhua KMT and DPP likely nominees are both current legislators so the election of either will trigger a by-election, as will a couple of other races. With a tight race in Taichung, central Taichung politics will be fun this year.
• High Comedy: the Taiwan rep office in Australia responds to Taiwan scholar Mark Harrison's piece on the Sunflowers. "Therefore, the story of Taiwan shouldn’t be simply or unfairly interpreted as the Taiwanese struggle against authoritarianism and for democracy, but the planned and consistent movement to prosperity and its unique, multi-opinion and vibrant democracy." and other fantasies. Every sentence in it is a gem, and so revealing of a certain mindset of authoritarian control. Note how the official presents the KMT's view of the past -- obviously thinking that KMT = ROC. The Party-State mentality is alive and well in the KMT and its minions, who communicate in declarations and commands, unable to persuade or lead. In a democracy, government officials who are not direct appointees should remain nuetral....
• ADDED: Nuke plants may have to shut down early. Seems there is no place to store the waste. The gov't must have known this was coming....

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

CEPA Failing to win Hearts and Minds in Hong Kong.

My man Charles Tsai rolls past an old and long disused coastal defense blockhouse on our 100 mile ride today.

Hong Kong had ECFA before there was ECFA, called CEPA. SCMP reports that it's failing to win hearts and minds in Hong Kong. Any of this sound familiar? Beijing is treating Taiwan exactly the same as Hong Kong:

The cross-border free-trade pact offers Hong Kong companies preferential access to mainland markets. There are zero tariffs on goods imported from Hong Kong, although the city's small manufacturing base limits the effectiveness of that measure. Nine supplementary deals signed since 2004 have further liberalised trade in goods and services. [just like ECFA! Pact + supplementary deals]

The Hong Kong government has hailed the economic impact of the deal. [just like the Ma government] Earnings for Hong Kong companies from mainland-related business facilitated by Cepa reached HK$61.6 billion between 2004 and 2009, according to government figures. The individual traveller scheme, which allows mainlanders from key cities to visit Hong Kong without joining tour groups, is credited with boosting the retail, catering and property sectors, although the influx of visitors has proved controversial. [just like Taiwan]

.....

However, the political benefits of Cepa appear to have gradually faded. In a similar survey last month by the public opinion programme, just 25 per cent said they trusted the central government - the lowest since February 1999 - while the proportion of respondents who distrusted Beijing was at its highest since February 1997.

Beijing has also failed to make much headway in fostering Hongkongers' emotional attachment towards the mainland. The HKU tracking poll asks Hongkongers to rate how strongly they identify as Chinese, on a scale of one to 10.

Last month's poll saw the rating fall to 6.8 points - 0.67 point lower than in the previous poll in December and just a whisker above the record low of June 1999. By comparison, the ranking for Hong Kong identity stood at 8.13 points.

The survey also found that 38 per cent of the 1,055 respondents identified themselves distinctly as Hongkongers, an increase of 11 percentage points from December. Some 23 per cent identified themselves as Chinese. [yawp, just like Taiwan only not as far along in the process]

The article quotes an advisor to the CCP government on Hong Kong affairs as saying that its as if some in Hong Kong feel the city-state is too dependent on China. Another expert observes that economic issues can't win hearts and minds because political issues are the real problem. Anyone recognize any parallels with Taiwan?

ECFA was signed on the anniversary of the CEPA signing and was originally called CECA....

I have heard Chinese complain about how the Tibetans are well treated but still resist. I wonder sometimes whether the function of things like ECFA and CECA isn't to address hearts-n-minds in Hong Kong and Taiwan, but to address hearts-n-minds in the Motherland, saying "See how well we've treated them? And still they reject us!" -- to prepare the population for the anguish of maiming and murdering their brothers across the Strait in order to bring them into the fold. "See? They deserved it for rejecting us."

Speaking of ECFA, New Zealand and Taiwan are inking an economic cooperation pact, one of those FTAs that ECFA was supposed to get us in droves. The signing takes place July 10. Hopefully Singapore will follow soon.
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Daily Links:

• New blog: Language Boat
• Apple Daily says its bad that so many want to enter the civil service exams
• Special Issue of Asian Studies on International Resource Politics in Asia
• AFP piece on bombast from General Luo of China
• From Taiwan to Alaska, around the world on a bike

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

Some gossip on the TPP

Gossip drifting over to me ears from inside the Beltway: apparently Taipei is signaling Washington privately that despite what it is publicly saying, the Ma Administration does not want to become part of the TPP. One wonders what private protocols have been negotiated between Beijing and Taipei over closer links to Washington. We already know the Administration doesn't want the F-16s despite the noises it makes publicly.

Anyway, believe or don't, as you please. Just passing along some stuff whispered in my ear......

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!

Ecch Faux Stats

Taiwan Today hosted another one of the government's claims of triumph for ECFA this week.

The Cross-Straits Economic Cooperation Framework Agreement (ECFA) is paying handsome dividends for Taiwan, spurring significant tariff savings and business growth, according to the ROC Ministry of Economic Affairs Dec. 22.

The article goes on to give "details" about the great economic growth under the ECFA Cargo Cult regime. But first I thought I drag out overall numbers so we could get a feel for ECFA's effect on the exports to China. Here are the numbers for 2004-11 for value of exports to China in million$ (DGBAS):

YR
04 36,349
05 43,644
06 51,809
07 62,417
08 66,884
09 54,249
10 76,935
11 83,960

The pact came into effect in Sept of 2010. Here are numbers through Oct for 2012 (million$):

J 5,261
F 6,486
M 7,114
A 6,822
M 6,922
J 6,528
J 6,762
A 6,673
S 7,223
O 7,167

Ten month total: 66,957

Assuming we get $8,000 million for Nov and Dec, that would put 2012 at $83 or $84 billion. Roughly the same as last year. Of course, the global economy is in a nasty sustained downturn thanks to the austerity insanity in Europe and the total indifference of American elites to the fate of the US economy and the individuals who inhabit it, so we shouldn't be expecting too much anyway. But let's graph these numbers so we can view the trend line:

I had Excel put in the trend line on this quick-n-dirty chart. It's obvious even to the Mark I eyeball that the numbers for 2010 and 2011 and 2012 lie on the trend line (in fact slightly below where we would have been had the trend for 2004-07 continued). If ECFA were really that awesome what we should see is a spike after 2010, with the years 2005-2008 lying clearly below this simpleminded trend line. BUT: Remember that (1) in 2009 the economy collapsed and it was still recovering in 2010 and (2) numbers like this tend to level off and become stable over time. What stands out, really, is how deeply the Great Recession scored the global economy. It's a relief to know that the Obama Administration jailed all the bankers and instituted a tough new regulatory regime like any sane and competent government would do, isn't it? O wait....

Anyway, the Taiwan Today piece gave some more breathless numbers:

The latest MOEA statistics show that from January 2011 to October this year, the ECFA generated US$551 million in tariff savings for local firms and farmers.

Jan 2011 through Oct 2012, tariff savings of $US 551 million on a hair over $150 billion in exports to China.  That means that the total savings are roughly 1/300 of the export total. How big can the effect be? After all, shifts in the value of currency, labor costs, or inflation are much greater...

In case you were wondering about the trend for 2012 through November, exports to China are down 5.5%, to ASEAN 6 up 9.3%, and to America down 10%. Yay ECFA!

We then get some numbers in percentages....

For the first 11 months, agricultural exports to mainland China were US$146 million, up 36.47 percent year on year. Oranges, live groupers and tea leaves top the list at 103.76 percent, 32.22 percent and 11.89 percent, respectively.

The wording is strange. I think the author meant to say that the exports to China were UP $146 million. Otherwise, the second sentence makes no sense as written. Indeed, the DGBAS numbers have ag exports to China at $630 million through Oct of this year for a y-o-y rise of 17%, well more than $146 million. Because of the way this was worded last year, I suspect that this wording is actually meant to apply to the early harvest agricultural goodies and not to ag exports as a whole.

I've blogged on this issue several times. Let's just repeat what I wrote last year at this time because it is still apropo:

The COA then goes on to make my bullshit sensor signal a five alarm fire:

In the Jan.-Oct. period, Taiwan farm produce exports to China, in 18 categories that were included on an ECFA early harvest list, totaled 14,242 tons at a value of US$95.7 million, according to Chang.

Ok, in the 18 ag product categories, there was a total gain of US$95.7 million. Now hold still, because a couple of paragraphs later come some numbers.

In the 18 categories, the sale of live groupers surged by a whopping 192 percent year-on-year to an export value of US$79.66 million, she said. Chang attributed the increase mainly to the ECFA “early harvest” tariff concession program and the opening of 15 Chinese seaports for direct shipping links.

So... maybe I am reading this wrong, but of the $95.7 million increase, $79.66 million is groupers. 83% of the increase is from one product! Add the number given by the spokesperson for tea exports, $7.37 million, and 90% of the gain is from just two products. We're not succeeding in agricultural products, just in raising fish. Subtract that $79.66 million and the agricultural deficit sucks -- which shows how important definitions of what counts as agriculture are -- most people when they hear the word "agriculture" don't think of fish.

The numbers are basically in the same proportions, just larger. Grouper and tea still account for the bulk of the rise in exports to China. The 103% rise for oranges is probably from a very small base, no doubt why percentages and not absolute numbers are given. The comforting idea that ECFA is going to save the poor farmers of southern Taiwan is a con. Unless you raise grouper -- fish and related products account for 2/3 of the island's agricultural exports (data source) -- you are not making money off agricultural trade. That post I wrote last year also explains why the profits are not going to Taiwan.

Taiwan runs an agricultural trade deficit with China proper but when you throw in Hong Kong, counted separately in the Taiwan figures, it seems that Taiwan still runs a slight ag trade surplus. Japan, China, and Hong Kong are first, second, and third as agricultural trade destinations (DGBAS). Against that, there's likely a flood of smuggled agricultural goods from China not counted in the trade figures (see this article).

Despite the hype, agricultural exports to China are not flying out of the containers. Rather, they consist of a couple of high value items whose profits are concentrated in a few powerful hands. This is why China cannot woo the south with the promise of agricultural concessions. Because they have no appeal for the vast majority of farmers.
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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

Economist Validates and other Predictions

A few posts down, I noted how The Economist "criticism" of President Ma was actually a backhanded affirmation of his policies and provision of cover for the many deep issues that plague his Administration. I observed:

...By using the term bumbler to adumbrate the many such issues surrounding Ma's presidency, The Economist actually hides the severe problems with Ma while making a pretense of criticizing him.

The Taipei Times reported today on The Economists' response to the issues raised by the pan-Green media's outpouring of glee...

Ministry spokesperson Steve Hsia (夏季昌) said Dominic Ziegler, Asia editor of the weekly magazine, said he had noticed that “bumbler” had been “irresponsibly mistranslated” by some Taiwanese media as “笨蛋” (or “dimwit”), which he said was a “gross mistranslation.”

Ziegler said the two Chinese characters used in local media were an incorrect translation of “bumbler.”

Ziegler sent an e-mail reply to Representative to the UK Shen Lyu-shun (沈呂巡), Hsia said, in response to the ministry’s reaction to the article titled “Ma the bumbler” in its current edition, which in its body calls Ma an “ineffectual bumbler.”

Hsia quoted Ziegler as saying that the word “bumbler” is not an insult to Ma because it describes a man “who acts indecisively or in a slightly confused manner.”

As I said, The Economist supports Ma's work on behalf of Taiwan's wealthy non-taxpayers, his wrench of Taiwan into China's orbit, his signing of the less-than-useful ECFA, and sundry other matters. He's just a bumbler, the poor lad, but he's doing the right thing. Ziegler's response was well-played, the media always makes a nice whipping boy and in this case, even better, he happens to be right. If only we lived in that alternate universe where the pan-Green media had dialed up some of the many informed native speakers who live in Taiwan, comment regularly on these issues, and who can meaningfully translate "bumbler" so that Ziegler had no foothold for The Economists' defense of Ma -- imagine if the pan-Green media had instead focused some heat on The Economist for its several glaring errors of fact and interpretation, putting the mag on the defensive, Ziegler would be eating a healthy serving of Corvus retractus today...

In other news, remember when this blog and numerous other commenters noted that (1) prior to ECFA China never promised to let Taiwan have FTAs and (2) it probably never would, since letting Taiwan have FTAs is not in China's interest? Well, scholar Alan Romberg was talking at the release of his new book about the Taiwan-Singapore Economic Cooperation Agreement...

Turning to Taiwan’s quest for international space, Romberg said China would oppose any issues related to Taiwan’s assertion of sovereignty.

This could be seen in Taiwan-Singapore ties in the form of an economic cooperation agreement instead of a free-trade agreement, over which China expressed serious concern and sought to ascertain if Singapore adhered to the “one-China” policy, Romberg said, urging China to show more flexibility in such matters

What? No FTAs? Who could have imagined China would continue to squeeze Taiwan internationally and fight against FTAs for Taiwan?
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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

Sunday Short Shorts

Today may have been the best day of the whole year. Dongji Rd, north of Dongshih.

The Taipei Times reports on some of the fallout from this silliness:

About 10 percent of Japanese tour groups with bookings to visit Taiwan have canceled their travel plans amid a territorial dispute over the Diaoyutai Islands (釣魚台), local media reported.

Located about 185km northeast of Taiwan, the Diaoyutais — known as the Senkaku Islands in Japan — have been under Japan’s control since 1972, but are also claimed by Taiwan and China.

The second sentence contains a gross error, as the islands have been Japanese since 1895. This is a CNA report, but the fact that such sentences occur, without comment or nuance, is scary. The tour groups said the cancellations were caused by fears of encounters with Chinese tourists, but the report also said that the incident where Taiwanese and Japanese ships exchange water cannon fire caused Japanese to think that China and the ROC are ganging up on Tokyo. This may be the government's intention, but I kinda doubt it. The ROC claim to the Senkakus is so faux and so disconnected from reality..... UPDATE: Yankdownunder observes:

• Error 3: The move sparked widespread protests in China that hurt Japanese businesses. J businesses were looted and burned. That sentence like most reports is very misleading.
• Error 4: engaged in a water-cannon altercation in waters near the Diaoyutais on Sept. 25. Wrong! not near but in Japanese waters.

One negative consequence of the Senkaku blitz by Beijing is the creeping realization by the world's media that right-wingers in China claim Okinawa, and that the Senkakus are related to the Ryukyus in Chinese minds. It was a pleasure this week to see AFP, whose reporting has at times been remarkably pro-Beijing, come out with a piece on that very topic. Its grasp of history is sketchy but it sure is nice to see...

The belief that China has a legitimate claim to the Ryukyu Islands has existed among flag-wavers in China -- and Taiwan -- for years.

But it has been given new attention by the row over the uninhabited islets, known as the Diaoyu islands in China, which claims them, and as the Senkaku chain in Japan, which controls them.

This follows a WaPo piece a few months back.

Unicorns FTAs: The Legislature's Budgetary Research Center, after ripping the government a couple of weeks ago for the lack of benefits from ECFA, came out with another study this week on the weakness of the government's FTA drive.

Efforts by President Ma Ying-jeou’s (馬英九) administration to sign free-trade agreements (FTA) with other nations has failed to show any concrete results thus far, a report from the Legislature’s Budgetary Research Center has said, adding that “it lacks clear strategic planning and negotiation mechanisms and is inefficient in forging domestic consensus.”

I am assured that the Budgetary Research Center is non-partisan, by people in the know, much like the GAO. Its reports are alas, not available online. Ma spoke on that topic recently, apparently aware of the report. Talk is cheap. Where are my FTAs?
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Daily Links:

• Chiayi city councilman attempts to buy speaker's spot.
• Banana Kingdom of Taiwan
• Taiwan behind Hong Kong in Chinese tourists. Thank the Flying Spaghetti Monster. We should be seeking ways to diversify our arrivals. 
• India enticing Taiwanese business. Yay! 
• China denies visas to Japanese members of Taiwan orchestra.

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

Looking Backward: Free Economic Zones in Taiwan

Anyone remember the promises? 6-6-3? The Golden Decade? All that good stuff? Yeah, they foundered somewhere off the Diaoyutai. President Ma's ROC National Day Address offered a kind of apology for ignoring the economy in the form of still more promises...

In his National Day address titled “Forging Ahead Together with Composure in the Face of Adversity,” Ma sought to tackle economic issues and said his administration would focus its efforts on boosting the development of service industries, raising salaries and eliminating investment barriers to create more job opportunities.

“To bolster of national security and Taiwan’s interests, we will relax regulations on foreign investments to create a friendlier and more convenient investment environment. In the future, liberalization will become the norm and barriers the exception,” Ma said at a National Day ceremony in front of the Presidential Office.

Ma said relaxing regulations on foreign investment would create a better investment environment and more jobs, and he promised that the government would strike a balance between labor rights and foreign investment.

Why the need to strike a balance between labor rights and foreign investment? It seems an unsubtle hint that the government is going to make another half-hearted attempt to bring in Chinese workers via some kind of increased foreign labor plan, something that keeps being proposed by KMTers (over the last two decades) and opposed by everyone else, including many in the KMT. The government has already relaxed the rules on foreign labor to allow another 80,000 workers on top of the record-high 440,000 foreign workers already present in Taiwan. The new rules say that any business that relocates from China to Taiwan will be able to recruit additional foreign labor. Moreover, overseas firms that establish an enterprise in Taiwan will be able to recruit 5-10% of their labor force from overseas. Wonder how that would work with Chinese firms? Would they be able to bring in labor from China?

In any case there already is a loophole through which Chinese labor is entering Taiwan in a trickle -- a business can open an associated school and hand out "scholarships" and "internships", then bring in Chinese "students" (read: workers) via that route. I've heard this is already happening. Would like more confirmation.....

The Ma Administration also plans to erect "Free Economic Demonstration Zones" around Taiwan. The first one is slated for K-town, already under development. WantWant ChinaTimes has some simply penetrating commentary:

Taiwan's Council for Economic Planning and Development announced recently that a draft plan for showcase free economic zones will be presented in November before its scheduled introduction next year, aimed at attracting investment to boost exports.

The free economic zones, which are part of President Ma Ying-jeou's policies formulated to achieve his Golden Decade vision, are based on the traditional model that ensures rapid economic development through free trade.

The Ma Administration's policies are the policies of the 1960s: low-cost labor and economic development zones.

The FEDZ plan, according to another WantWant piece, offers foreign investors terms more favorable than the WTO mandates, while offering China "only" what the WTO mandates.

A Taipei times commentary observed that in many cases, FTAs forbid labor payment discrimination systems. This means that the FEDZ policy may hamper Taiwan's ability to sign FTAs -- another broken Ma promise, recall -- as outgoing labor minister Jennifer Wang observed as she went out the door. Both that commentary and the WantWant commentary make exactly the same point: if low-wage labor in Taiwan grows, it will only bring in dirty, labor-intensive industries....from the TT commentary:

If a policy of decoupling the wages paid to foreign workers from those paid to native workers is to have the desired effect of increasing job opportunities for Taiwanese workers, it will have to be a nationwide policy, not one limited to certain special zones. Furthermore, if special zones were to promote differential wages for foreign migrant workers as an attraction, it is very likely that most of the investors it would attract would be labor-intensive manufacturers, and that is not in keeping with the original purpose for which special zones were set up.

The whole purpose of the original export zones was to get foreign makers to invest, bring in expertise, and upgrade the skills of Taiwan workers. The wave of science parks help foster growth in tech industries. Now it's 1960 again....

...worse, we all know what those industries will want: free land in the zone, subsidized labor (foreign workers at low cost), subsidized water, and subsidized electricity. The profits of such firms will come, essentially from the pockets of taxpayers in the form of government subsidies.
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Daily Links:

• Drew's excellent write-up of the great Double 10 ride of Taichung cyclists. I couldn't make it, really regret it. 
• Apple Analyst on Taiwan and China road trip
• Universal guffaws at the MOD's request that Apple maps blur the location of a sensitive radar.
• Dunhua Road Bike Lanes Kaput
• The ROC government places four ads in major US papers. Stop the insanity, please.
• I don't usually recommend pieces from CSIS, which generally is an Establishment echo chamber, but Brad Glosserman's piece on the way China's leaders appear to view things is quite interesting. 
• Sanity Break: Dave 2X's excellent bird photos from Taiwan

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

Taiwan exports to China not getting boost like they should from ECFA

The CNA reports that ECFA isn't all it was meant to be for Taiwan's exports to China....who could have predicted that?

Although Taiwan has the advantage of tariff incentives in its trade with China, which South Korea and Japan do not have, those two countries still posted higher export growth rates than Taiwan during the first seven months of 2011, Vivien Liou, deputy editor-in-chief of the Taipei-based Business Weekly, said in a press conference in which the poll results were announced.

Between January and July this year, exports to China of the 539 items covered under the early harvest list totaled US$11.8 billion, up 14.4 percent from the same period of last year.

That was lower than the 17.5 percent compound annual growth of the same group of exports to China between 2006 and 2008, before the global economic tsunami hit, Liou said, and also poorer than other countries in the region without ECFA benefits.

According to the weekly's figures, Japan and South Korea saw exports of the same group of products to China grow at rates of 14.96 percent and 28.91 percent, respectively.

But exports of products covered by the ECFA did benefit to some extent, according to CNA calculations, based on Chinese customs and Business Weekly figures. ulations, based on Chinese customs and Business Weekly figures. Their 14.4 percent export growth to China was nearly double the 8.7 growth of exports from Taiwan that were not covered under the early harvest list.

Haha --- exports to China grew more rapidly under Chen Shui-bian than post-ECFA. That's actually to be expected -- as volume rises, relative gains become more difficult (it is very easy to grow 10% if your trade is only a million bucks, but if it is a billion, a 10% gain represents a much larger absolute figure that the economy must generate). China said that its data showed manufacturing expanding for the first time in four months; the recent slowdown in China is likely impacting Taiwan export growth more than ECFA. Another factor might be the appreciating yuan which is hitting re-export of Taiwan products imported into China for assembly.

Note that the data come from the PRC. I wondered why the CNA had calculated the data in such a strange way, so I bopped over to the MOEA website in Taiwan but the search interface is clunkier than a crippled elephant at a ballet try-out. Then I knew.....

The CNA piece also says:

Shih Hui-tzu, a researcher at the Chung-Hua Institution for Economic Research, was quoted as saying that if South Korea, Taiwan's principal trade rival, were to sign a free trade agreement (FTA) with China, it would be "the most powerful rival" for the ECFA.

Shih also pointed out that it will be very difficult for Taiwan to sign FTAs with the European Union, the Association of Southeast Asian Nations and the United States in the short term, which means that the Chinese market, therefore, is "Taiwan's only chance to beat (South Korea)."

Taiwan's obsession with South Korea here is combined with the fear that dominates so many comparisons in Taiwan -- the fear of being weeded out of the competition, as well as the island nation's obsession with rankings. "We must beat South Korea!" as if somewhere, someone is keeping score.

Again one must ask: Where are the FTAs we were promised?
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Daily Links:

• Derecognize us? We'll call in your debt, you puny Caribbean state.
• Taiwan cycling festival starts Nov 6.
• After one media organ warned that South China Sea rivals should fear the sound of cannons, a  China newspaper says that China's neighbors should not take peaceful approach for granted. It's all pro forma appeals to nationalism, I'm sure.
• Taiwan, NZ considering trade agreement

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

ECFA not panacea for free trade agreements.

WSJ has a nifty piece on ECFA today, pointing out that ECFA has not improved Taiwan's situation with regard to the free trade agreements proliferating around Asia. Back in 2009 I wrote:

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"

Fast forward to 2011 and this important rationale for the KMT Administration's ECFA signing has turned out to be a dud so far. As the WSJ piece notes:

Although Taiwan signed a landmark trade agreement with China last year, many experts say the island's trade negotiations with key markets such as the European Union and Japan have been bogged down by Chinese opposition and political differences. This has led Taiwan's export-dependent economy to become increasingly cut off from the network of trade agreements that have proliferated over the past decade, giving Taiwan's regional rivals a competitive advantage that could harm the island's long-term growth prospects, they argue.

In particular, an agreement that will eliminate most tariffs between South Korea and the European Union that is set to take effect July 1 will likely harm Taiwan, as its exports to the EU in industries such as plastics, auto parts and machinery will continue to be subjected to tariffs ranging from 16% to 55%, the Taiwan External Trade Council warned Wednesday.

"Taiwan's major competitor is South Korea; almost 70% of Taiwan exports to Europe overlap with South Korea. This will bring tremendous pressure on Taiwan's businesses," said Chen-yuan Tung, professor at National Chengchi University's Graduate Institute of Development Studies. If Korea's trade agreement with the U.S.—which was originally crafted in April 2007 but has yet to gain approval—passes, the pressure will be even higher, he added.

As WSJ notes, many analysts said at the time that signing ECFA would enable FTAs with other nations, especially the US, Japan, and the EU. So far only Singapore has shown interest.

Another issue that we were told ECFA would help with was foreign investment. Here are the percentage changes in approved cases of foreign direct investment for 2008, 2009, and 2010: -46.4%, -41.8%, -20.6%(DGBAS). Granted, we took a beating from the world financial crisis but in the first quarter of 2011 it fell another 34%. Clearly an ugly pattern is forming. No doubt China, a much better place for investment at the moment, is attracting much of the capital that might have been invested in Taiwan, true both of foreign capital and capital that Taiwanese themselves have parked overseas.

Tung Chen-yuan (童振源) has had a couple of commentaries in the Taipei Times recently on Taiwan's economy. I have omitted some of Tung's piece where the numbers are decontextualized and lack concrete meaning. However, some of it is quite good. In his most recent one, he remarks:

It is worth noting that almost a year after the ECFA was signed, the early effects are far less impressive than expected.

First, Taiwan has only completed a joint study with Singapore into the signing of an FTA. It seems unlikely that such an agreement will be signed between the two countries in the near future, let alone with other Southeast Asian countries.

Even if Singapore and Taiwan were to sign an FTA, that would be of little significance to Taiwan’s economy as a whole, since trade between the two only makes up 3.6 percent of Taiwan’s foreign trade.

Tung also asserts:

Fifth, following the implementation of the ECFA, Taiwanese investment in China continued to grow rapidly. In 2008, Taiwanese businesspeople invested US$10.69 billion in China, an increase of 128 percent. In 2009, the figure was US$7.14 billion, 33 percent less than the year before because of the impact of the international financial crisis.

Last year, investment increased by US$12.23 billion, an 102 percent increase. In the first quarter this year, Taiwanese investment in China continued its rapid increase, growing by 65.4 percent, or US$3.71 billion, although Taiwanese foreign investment has declined by 4.8 percent.

Sixth, following the implementation of the ECFA, Taiwanese capital has continued to flow out of the country. During the three years of Ma’s presidency, a net average of US$20 billion of international capital has flowed out of Taiwan annually, much more than the US$13.2 billion that flowed out of Taiwan every year under the DPP administration.

Little investment is flowing in from China; moreover, speculative investment from Chinese in properties in the Taipei Basin has no effect on the island's standard of living.

As we come up to the elections in January it will be interesting to see whether and how the DPP makes use of ECFA's failures to live up to any of its constantly shifting rationales (the economy recovered fine without ECFA). It will also be interesting to see how much the Ma gov't will give away to Singapore if it can get the FTA in prior to the election.
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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums! Delenda est, baby.

Uncle Sam Demurs as the EU Advances =UPDATED=

As in Taiwan the legislature brawled over the pact, there were some interesting (non)-developments on FTAs and ECFA. First, upon hearing that ECFA had been signed, the United States eagerly rushed to support democracy, enhance its own trade interests, expand its influence in East Asia, and drive peaceful economic growth in the region by offering Taiwan a US-Taiwan FTA.

Nope, I lied. Uncle Sam doesn't need trade or economic growth or East Asian influence because the US economy is booming right now and our foreign policy has made us the envy of the world, while China is in rapid decline.

Oh wait, that's not right either. I'll try again.

Ok, what actually happened is nothing. David Shear, US State Department Official, speaking at a seminar in Washington, announced that the US thought that Taiwan had the right to enter into FTAs.

"Under WTO rules, any WTO member is free to negotiate trade agreements with other members as long as WTO standards are met, and we believe Taiwan should be able to do that," he said at a seminar in Washington, D.C. on relations across the Taiwan Strait.

This was the first time that US officials had expressed that thought, precisely, but I doubt anyone was much worried, since Taiwan already has FTAs with several countries.

Shear said, however, that "the United States has no plans to begin talks with Taiwan about an FTA at this time."

.....

Shear said the U.S. would reinforce bilateral trade and economic cooperation through the existing Taiwan-U.S. Trade and Investment Framework Agreement (TIFA).

FTAs sure are nice when other people do them, but let's not and say we did, offers The Greatest Nation on Earth. The US official once again announced that ECFA was A Good Thing (he could hardly do otherwise) but left this little tidbit at the end:

As to whether any ministerial-level U.S. officials are likely to visit Taiwan, Shear said the U.S. does not have any such plan at the moment. The issue should be considered in a larger framework guiding U.S.-China relations, he said.

In other words, whether US cabinet-level officials visit Taiwan is contigent on whether it pisses Beijing off. Pssst...maybe that's why you should do it, guys! It would be great if the next official said that such visits were part of a larger framework guiding US-China-Taiwan relations.

About the only good thing in all this is that when I was off searching to see when exactly it was the TIFA talks stalled I got this hit first, which almost made up for the fact that it turns out that TIFA has been dead in the water since 2007 over the beef fracas. Plans are to restart at the end of 2010. So congratulations Taiwan, ECFA changes nothing between the US and Taiwan.

Meanwhile, across the Atlantic, an ECIPE paper argued that the time had come for an EU-Taiwan FTA under the WTO framework:

This paper discusses the economics and geopolitics of EU Taiwan commercial relations and weighs the case for a free trade agreement (FTA) between them. There is a widespread belief that China will oppose an EU-Taiwan FTA. The recent cross-Straits rapprochement, recently crowned by a trade agreement, could provide a window for Taiwan to sign trade deals with other partners. An FTA with Taiwan would boost some of Europe’s most competitive sectors in ICT, automotives, pharmaceutical products, and telecommunications, financial, business, transport and environmental services. Taiwan needs to position itself as a production platform for global markets. Taiwan is member of the World Trade Organisation - legal obstacles to an EU Taiwan FTA are minimal. But China needs to be reassured that the agreement does not involve recognition of Taiwan’s formal statehood.

Love that last sentence. Poor China, always in need of reassurance.

An EU-Taiwan FTA would be great, always provided that it didn't claim that Taiwan was part of China. Done under the WTO framework it need not do that. But this is all pie in the sky at this point.

Today's light humor is provided by this Mainland Affairs Council (MAC) poll on ECFA, which found, not surprisingly, that the good people of Taiwan are swooning over the pact. I'll let Taiwan Today carry the ball:

The poll found that nearly 61 percent support the ECFA negotiation results. A resounding 79.3 percent endorsed the government’s handling of cross-strait affairs via the institutionalized negotiations. Only 15.9 percent disapproved of the government’s conduct.

What a success! The polls have swiveled round overnight!

Stop the presses! KNN was kind enough to publish the whole poll. Many of the questions are loaded (and others notable chiefly for their absence), but number 3 is a keeper:

The former DPP government allowed 17 items of Mainland products, including towels, bedding products, clothes, and shoes, to enter the Taiwan market, to the detriment of these local industries. In the latest ECFA negotiation, the current KMT government neither decreased the tariffs on these 17 items nor allowed any additional items from Taiwan’s disadvantaged industries to be imported to Taiwan. Do you think the current government has protected Taiwan’s disadvantaged industries?

No leading the respondent there! This was conducted by the China Credit Information Service, which has old connections to...well, never mind, you can figure that one out from the name.

UPDATE: It took me a while to find it, but while MAC claims 79% support for the SEF-ARATS mechanism, this March Global Views poll found....7.4%. While 65% said that ECFA should be signed under the WTO framework.
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Daily Links:

• Did China just win the Caspian Gas War? Yes, it did, and it also won the Iraq War and the War in Afghanistan. It is looking for the trifecta when we hit Iran. Please, can someone stop us before we invade again?
• Neil Wade with awesome Jade Mountain hiking pics.
• The Peking Duck gives two claws up to Formosa Betrayed.
• http://www.chinadialogue.net/ with special focus on environmental issues in China.

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[Taiwan] Don't miss the comments below! And check out my blog and its sidebars for events, links to previous posts and picture posts, and scores of links to other Taiwan blogs and forums!