Nelson Report on TIFA

Cucumber-like caterpillar

Below is from the Nelson Report:

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United States and Taiwan Hold Dialogue on Trade and Investment Priorities

Washington, D.C. - U.S. and Taiwan trade authorities concluded the tenth Trade and Investment Framework Agreement (TIFA) Council meeting under the auspices of the American Institute in Taiwan (AIT) and the Taipei Economic and Cultural Representative Office in the United States (TECRO). Ambassador Robert Holleyman, Deputy United States Trade Representative, and Wang Mei-hua, Taiwan's Vice Minister of Economic Affairs, co-led the discussions to enhance the longstanding trade and investment relationship between the United States and Taiwan. Other participants and contributors included AIT and the U.S. Departments of State, Agriculture, Commerce and the Copyright Office.

The TIFA is the key forum for trade dialogue between the United States and Taiwan authorities and covers the broad range of trade and investment issues important to U.S. and Taiwan stakeholders. The U.S. authorities welcomed the concrete steps taken by Taiwan after the conclusion of the 2015 TIFA Council meeting to follow through on important commitments related to intellectual property (IP) protection and enforcement. Taiwan authorities also highlighted progress in addressing technical barriers to trade and fostering transparency in matters related to trade and investment.

At the meeting, the U.S. authorities pressed Taiwan for expeditious resolution of agricultural trade issues, including removal of longstanding and unwarranted barriers to U.S. beef and pork, which is necessary for any deepening of our trade relationship. In the area of IP protection and enforcement, the TIFA talks took stock of progress on pharmaceutical IP protection and committed to strengthen engagement on Taiwan's intellectual property rights legislation, promoting the use of legitimate educational materials, and on enforcement cooperation.

Both sides welcomed the strong exchanges already conducted between the two patent offices and look forward to deepening this cooperation for the benefit of U.S. and Taiwan rights holders and patent applicants. The two sides also pledged to deepen dialogue to streamline time-to-market of medical devices and to improve transparency and procedural fairness in trade and investment matters. The Taiwan authorities provided updates on its regional and multilateral initiatives and highlighted its close cooperation with the United States on various initiatives in the WTO.

Background

The United States and Taiwan have a long-standing and vibrant trade relationship. Taiwan is our 9th largest goods trading partner and a top-10 destination for U.S. agricultural and food exports. U.S. goods and services trade with Taiwan totaled an estimated $86.7 billion in 2015. The TIFA, signed in 1994 under the auspices of AIT and TECRO, provides the principal mechanism for trade dialogue between the United States and Taiwan authorities to expand trade and investment links and deepen cooperation.

MIKE FONTE [DPP'S WASHINGTON DIRECTOR] COMMENTS:

Chris, thanks for the opportunity to discuss:

As noted by USTR, much progress to report on IPR protection and enforcement, addressing technical barriers to trade and fostering transparency in matters related to trade and investment etc. All good.

Ag trade issues remain a stubborn impediment at this point, particularly pork. The Tsai Administration has put together a food safety committee to discuss all food safety issues, issues which have been a significant problem with imports from China, Taiwan products, and the ractopamine problem. US officials have rolled their eyes a bit over this committee's announcement,
but the reality that ractopamine has been publicly touted, by many in Taiwan, as "poison" is one tough issue.

I believe this committee reflects President Tsai's overall governance approach - deal with problems a step at a time striving to be as transparent and communicative as possible. Bring the public along to a consensus position and then move.

The pubic in Taiwan is now feeling its oats on a variety of issues. A slow process, to be sure, but that's democracy. As our friend Winston Churchill noted, "Worst government in the world, except for all the others."

At the recent US-Taiwan Defense Conference, one US participant jokingly said, as we were discussing the decision making process in Taiwan, "Before we used to just pick up the phone and call Hau Pei-tsun and he'd get things done." Yeah, old Hau got things done alright, but with an iron fist. No more, thank Buddha.
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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!

Nelson Report: Additional Responses to Richard Bush =UPDATE=

I love these curves.

The Nelson Report sent this around, responses to Bush as well as other comments.

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UPDATE: Bush responded to the comments below in a subsequent issue of the Nelson Report:

BUSH:

To suggest that Tsai is misreading her adversary is not to "lament" (as some of your correspondents seem to feel); it's to suggest the need for realism. At that CSIS conference, I think Mike Green referred to "coercion", not "force". One could expand the list of issues (e.g. adding Hong Kong) by saying that in many/most cases, Xi has taken a hard line and expected the other side to back down and make concessions.

As to requests that I say what Obama should do...here's the last part of my essay on the Brookings blog:

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THE TAIWAN DEBATE...following on our Report last week on the excellent CSIS conference with keynote speaker Shelly Rigger, and our quoting former AIT president (and Cap Hill colleague) Richard Bush this week, two notes from the "green" side of the equation, bearing in mind that Formosan Association of Public Affairs, home of the first correspondent, is not the DPP, the political party now seen as a mortal lock to return to the presidency in January, which follows.

Richard is on travel and may get back to us on this later in the week:

GERRIT VAN DER WEES:

Dear Chris,

I saw you posted Richard Bush's piece on the return of the Taiwan issue to US-China relations. I would agree with the main point that Bush seems to be making through this article: for Beijing to exercise restraint, and "watch the walk, not the talk."

Where I have a problem with this piece is on the one hand the tone and tenor, where he explains/describes the Beijing position as a principled given fact, and on the other hand the quite often not so helpful description of events / positions on the Taiwan side, giving the impression that it is Taiwan / Tsai Ing-wen that will have to adjust their position.

In particular the phrase "Beijing isn't buying the vagueness" and his description of "radical populist groups" are setting the tone in a very wrong fashion: with Taiwan's blue-imbued press this can easily lead to distorted headlines such as "American academic says DPP policies are vague" or "US analyst says third parties are radical." Precisely because Richard is in such a prominent / sensitive / delicate position he should know to avoid statements like that.

Tsai Ing-wen has been as clear as she can be: she is for "a consistent, predictable, and sustainable relationship with China" (her CSIS speech in June). The ball is now in China's court: Xi needs to show he is a responsible stakeholder and is willing and able to maintain peace and stability in the Taiwan Strait. Relations would indeed improve significantly if he accepts Taiwan as a friendly neighbor. Clinging to vague anachronistic concepts such as the "92 Consensus" is not helpful. Even Lee Teng-hui who was president in 1992 has stated repeatedly there was never a consensus in 1992. So one needs to move to new concepts that are more sustainable.

And the description of Taiwan's third force groups as "radical populist" is not very helpful either. They are about as "radical" as the Brookings Institution itself is ... in the views of those on the right fringe of the US political spectrum.

So, Richard has correctly described that there is a new political landscape in Taiwan, but it would be good if main thrust of the argument would be more in the direction that this newly democratic Taiwan presents an opportunity for China to elevate X-Strait ties and work towards normalization of relations, instead of the gloomy specter of souring relations across the Strait that pervades so much of the "thinking" in the thinktanks in Washington.

Best regards,

Gerrit
Gerrit van der Wees
Editor Taiwan Communiqué www.taiwandc.org

MIKE FONTE, DPP rep here, brings in yesterday's NSC brief, which we sent out in full last night:

Chris:
Thanks for your reporting on conversations re. Taiwan and the possible DPP presidential and legislative victories in January. The CSIS/Brookings event provided much to chew on. In his Brookings post, Richard Bush, as always, did as well.

In front of the Xi Jinping visit, the Administration has reiterated its position re Taiwan and the upcoming elections. NSC Adviser Susan Rice was straightforward, as is her wont, on 9/21 at Georgetown: "Our fundamental interest is in peaceful and stable cross-Strait relations, and we oppose unilateral changes to the status quo by either side."

Dan Krittenbrink (9/22) expanded a shade on his boss' words:

First of all, we respect Taiwan's democratic process; we will not interfere in it. And as Ambassador Rice made clear yesterday, our longstanding position on cross-strait issues remains unchanged. The U.S. One-China policy based on both three joint communiqués and the Taiwan Relations Act remains unchanged. Our fundamental interest is in cross-strait stability. Those key elements there, those are our bottom lines. Those will not change. And any discussion on Taiwan cross-strait issues between our two presidents will take place along those lines.

Assistant Secretary of State Danny Russel added this note:

And we will always make clear when the issue arises that we place great importance on the maintenance of stability across the strait, that we respect, as Dan said, the right of the people on Taiwan to exercise democratic rights, and we'll continue to counsel restraint on the part of Beijing in order to maintain and to build trust and stability there.

The DPP presidential candidate, Tsai Ing-wen, made clear in her CSIS June speech that she is fully committed to a consistent, predictable, and sustainable relationship with China. She will push for the peaceful and stable development of cross-strait relations in accordance with the will of the Taiwanese people, based on the existing ROC constitutional order and the accumulated outcomes of more than twenty years of negotiations and exchanges.

Her finely wrought phrases show as much diplomatic finesse as the US position in the Communiqués where the US "acknowledges" but does not "recognize" the Chinese position that Taiwan is part of China.

Restraint is her middle name and she will not make any unilateral changes, all the while striving to build trust with China and its leaders.

I do not think much credence should be given to Ho Syu-yin's CSIS note that Tsai might be swept up in the "momentum toward Taiwanese independence" which he discerns or in Richard's worry that "small radical populist groups motivated by anti-establishment and anti-China sentiments" might move Tsai into a dramatic response to punitive treatment by Beijing.

As Shelley Rigger noted at CSIS, while there is massive public sentiment against unification with the PRC under any current political circumstances, the great majority of Taiwanese are well aware that pushing for legal independence would be futile, and so counter-productive to everyone interests.

The Taiwanese body politic and Tsai Ing-wen as DPP presidential hopeful are well aware of the potential dangers ahead but determined, at the same time, to keep their cool and explore the opportunities as well.

Mike
Michael J. Fonte
Washington Director
Taiwan DPP Mission in the US

On direct US-China policy regarding Taiwan, Loyal Reader Joe Bosco in Real Clear World
Hi Chris:

One more item for the president's agenda--I'm sure he'll welcome it.

Best,

Joe

http://www.realclearworld.com/articles/2015/09/23/obama_taiwan_deter_china_111455.html


...When Chinese President Xi Jinping comes to Washington next week, will U.S. President Barack Obama again miss an opportunity to permanently deter conflict with China over Taiwan, as he and his predecessors have repeatedly done?

Obama is proud of accomplishing things no other president could achieve: health care reform, recognizing the Communist government of Cuba, and negotiating the Iran nuclear deal.

A Landmark Decision
During Xi's visit, the president can unilaterally announce a landmark decision that won't require either the concurrence of the U.S. Congress (which would support him on this issue in any event) or reciprocal action by the government of China. On his own, Obama could declare publicly that the United States will defend Taiwan against aggression or coercion from China...

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Just a reminder on the claim of Richard Bush about "small radical populist groups motivated by anti-establishment and anti-China sentiments" -- those "small" groups had massive public support, not only in polls which showed support for the services pact hovering around 20%, but in the enormous public protest which was at least 400,000 by very conservative estimates, probably over 500K, and may have reached 700K. Word choice and framing are always interesting: the Sunflowers were neither anti-establishment nor anti-China, but pro-democracy and pro-Taiwan, so mainstream it was almost dull. With massive public support and peaceful methods, they were neither small nor radical -- radical is an interesting word choice, considering that they were opposed by individuals whose rise to power was aided by their party's use of state violence and coercion against pro-democracy groups. Those are never described using the term radical...
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ECFA Really so awesome?

Sympathetic magic as public policy: if we make the smokestacks cute, they won't be harmful.

I had a few minutes today so I thought I'd check out the trade figures for China pre and post ECFA, which I posted on several years ago. Then I said of the 2010-11 figures:

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

I spent some time today at the Bureau of Foreign Trade, which has a great database system which can be downloaded as Excel files.

First, here are the numbers for the total trade figures for China only from 2000 to 2014.

China Only Total Ex/Im	Imports from China	Surplus/Deficit	Annual Rate of Change
00 10,440,540,918	6,223,111,811	-2,005,682,704	0.819
01 10,798,076,970	5,902,784,486	-1,007,492,002	-49.768
02 18,495,033,007	7,968,294,793	2,558,443,421	-353.942
03 33,907,784,754	11,017,481,839	11,872,821,076	364.064
04 53,140,562,278	16,791,537,670	19,557,486,938	64.725
05 63,736,408,872	20,093,086,019	23,550,236,834	20.415
06 76,590,504,462	24,782,325,696	27,025,853,070	14.758
07 90,430,526,782	28,014,115,689	34,402,295,404	27.294
08 98,273,497,890	31,390,466,074	35,492,565,742	3.169
09 78,670,764,058	24,422,662,822	29,825,438,414	-15.967
10 112,879,654,027	35,945,078,516	40,989,496,995	37.431
11 127,555,177,571	43,595,777,610	40,363,622,351	-1.527
12 121,621,186,471	40,907,429,723	39,806,327,025	-1.381
13 124,376,057,324	42,588,412,443	39,199,232,438	-1.525
14 130,158,219,397	48,038,896,032	34,080,427,333	-13.058

It's a bit wonky, but you can see that our trade surplus with China only has been falling. In fact it is down 13.3% again the first three months of this year. ECFA was supposed to buoy our trade with China. Just the opposite has happened since it was signed.

The data below is for the China, Hong Kong, and Macao.

China, HK, and Macao  Imports Surplus/Deficit Annual Rate of Change
00   44,322,830,265   8,455,926,708   27,410,976,849  23.72
01    41,904,357,865    7,999,571,603   25,905,214,659   02    -5.493
02    53,689,295,915    9,914,356,923   33,860,582,069   04    30.71
03    67,025,011,837    12,964,443,215   41,096,125,407   21.369
04    88,696,335,831    19,133,872,975   50,428,589,881   22.709
05    100,237,776,611    22,235,386,509   55,767,003,593   10.586
06    116,139,937,773    26,688,448,674   62,763,040,425   12.545
07    130,642,313,459     29,866,598,811   70,909,115,837   12.979
08    132,890,050,715      32,912,808,344   67,064,434,027   -5.422
09    109,557,179,579     25,560,602,695   58,435,974,189   -12.866
10    152,632,897,958     37,591,908,057   77,449,081,844   32.537
11    169,546,957,259     45,290,463,268   78,966,030,723   1.959
12     162,388,783,057     43,579,102,256   75,230,578,545   -4.73
13  165,613,353,823     44,257,780,261   77,097,793,301   2.482
14  174,528,005,846     49,732,434,501   75,063,136,844   -2.639

Same general trend. Back in 2012 I noted that the trend was clearly showing a pronounced change beginning in 2010, as Fig. 1 below shows. Several things happened, among them ECFA, but also the Great Recession and the follow on austerity and other collective elite madness in Europe and the US.

Fig 1. Total trade with Hong Kong, Macao, and China. 2000-14 Data source: BFT

I just eyeballed the trend lines, so they are not exact. But they should be clear. The purple line beginning in 2010 is nowhere near as steep as the growth of the Chen Shui-bian era. If ECFA was supposed to make things boom beyond the dreams of the Chen Shui-bian era, it has been a total failure. Indeed, as the trade surplus numbers show, the surplus has fallen each year and returned to 2007 levels in 2014. In 2015 it will likely be smaller. Extrapolating from the first quarter, it will check in around $30 billion. There are many reasons for the shrinking surplus, but the numbers show that ECFA does not appear to have had any discernable effect.

It should also be obvious what will happen to the trade surplus with China if we sign that god-blighted services pact.
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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!

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!

ECFA's Early Harvest Toll on Taiwan

After the rain, I went to get some pics.

Commonwealth scores with another great piece on the ECFA early harvest list (kudos also to the translator for a very readable translation, all their translators are great). Another failed policy, which goes a long way toward explaining the widespread public opposition to the services pact. This piece is based on Chinese export data obtained by the magazine. Commonwealth notes:

On the surface, since coming into effect in 2011 Taiwan's exports of items to China on the early harvest list have grown by a sizable 35 percent, outpacing overall growth of exports to China of 6.3 percent. This seems to indicate that ECFA has had a positive impact on boosting the export of Taiwanese products to China.

However, increased sales cannot be equated with improved competitiveness. According to PRC Customs statistics obtained by CommonWealth Magazine through exclusive channels, the market share of the 539 Taiwanese cross-strait export items on the reduced tariffs list has declined in each successive year since ECFA, only showing a slight uptick late last year.

It then notes:

The situation is much different among the 267 items Taiwan opened to China on the "early harvest list." Although over the past three years the growth rate of China's exports to Taiwan (25.8 percent) is lower than the overall growth rate of Taiwan's exports to China, the market share of Chinese products in Taiwan has leapt from 24 to 30 percent since ECFA went into effect.

In other words, the critical truth behind all the statistics is that it is an unrealistic illusion to look for China to "yield benefits" to Taiwan via free trade. In the face of intensifying international competition, the lowered tariffs that free trade agreements bring have never been a panacea for "saving exports" or "rescuing the economy."

This is of course what many of us have been saying. The services pact will only exacerbate this problem. I'm getting a little tired of commentators 12,000 kms from my market saying how wonderful ECFA and the services pact are -- they don't have to shop in local markets and worry about giving toxic produce from China to their children. They don't talk to the taxi drivers and coffee shop owners who once ran their own factories.

Observers should also note that even though ECFA opened "more" of China's market to Taiwan than Taiwan's market to China, China gained by far the greater benefits. D'oh. You can't say the services pact opens X sectors to Taiwan but only Y sectors to China. It's hogwash to make primitive comparisons like that. You have to look at which sectors will be affected and how.

The article goes on to describe the effect of Chinese steel on the local producers (destructive, of course):

"A behemoth like Yieh United Steel Corp. (YUSCO, whose operations span mid- and upstream hot rolling and mid-stream cold rolling), with facilities abroad, is able to get by," an industry insider reveals. However, before Taiwan's anti-dumping bill was passed early in the year, a handful of mid-size, publicly listed cold rolling mills – whose capacity utilization rate plummeted at one point below 20 percent – "barely made it back from a tour in hell."

"Early harvest turned out to be early harm. To be honest, it was really unexpected," remarks Tseng Wen Sheng, director-general of the Kaohsiung City Economic Development Bureau. Stainless steel is a key industry in Kaohsiung, leading to expectations of a windfall from ECFA, however only the opposite occurred under the sweeping changes of the international and Chinese steel industries.

"To be honest, it was really unexpected." Not by this blog! The article also looks at the petrochemicals sector, deeply harmed by Chinese competition. Its decline may also explain why the naptha cracker in Changhua got killed -- it could never survive in the new business environment. Read the whole piece -- don't miss also how Taiwan's bread and butter machine tool and textile industries have been badly harmed by ECFA.

One of my favorite topics, grouper, also came up:

However, actually surveying the situation in Pingdong, where grouper aquaculture has been practiced for a quarter century, one does not see all the businesses benefiting and earning stacks of renminbi as once imagined. Rather, the "grouper kings" with their technology, large scale, political and business connections in China, and established distribution channels, dominate the sector. In the meantime, the average small- or medium-size aquaculture operation, lacking the key technology to open direct channels with China and facing a surplus of competition as operators swarm in looking to profit, is caught in the middle struggling to survive.

The article also covers the "political orders" of Taiwanese fruit, an issue I've linked to before. Chinese products sold in Taiwan are not ordered by the Taiwan government -- but Chinese orders of Taiwan fruit in many cases are simply orders made for political purposes, to support the Ma government.

Taking the example of oranges, a case of imported oranges sells for the wholesale price of around 35 renminbi in China. Even if oranges were acquired for free at the orchards in Taiwan, such a price would not even cover the cost of shipping to China. However, since China's Taiwan Affairs Office has budgeted subsidies for their wholesalers to purchase oranges from Taiwan, businesses still stand to make a profit. This has in turn led to the illusion of sales growth for oranges and other fruit in the wake of ECFA's passage.

Such a market will last only as long as the subsidy does.

You can see how this will play out. These subsidies for Taiwan fruit purchases can easily be rescinded in the case of Taiwan doing something that Beijing doesn't like, such as electing a DPP President, such actions being one of the many ways China can cause disruptions great and small to Taiwan's economy.
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Daily Links:

• Obama's half pivot to Asia/Kurt Campbell interviewed on the Pivot/An Aussie view: Obama is being tested
• A few thousand elderly showed up for "protest" in support of KMT in Taipei today. Pathetic. No link or pics. Just this overhead view. LOL.
• River tracing in Nantou
• Another developmentalist state scam, the Taoyuan Aerotropolis, now requires rivers too.
• This youtube link to George Carlin with Chinese and English subtitles (!). Sidebar has many other comedians, troll around to find Louis CK and Chris Rock, for example, with Chinese subtitles. 
• Ketty Chen reflects on the Sunflower Movement
• I linked to this a few days ago, but this KMT take on Okinawa is worth a second link just for the hilarity factor alone.
• Pettis shows why the claims that China's economy is bigger than the US by PPP are so absurd.
• Excellent: Jon Sullivan of CPI recommended this brilliant piece on the Disneyfication of China.
• My condolences to President Ma, whose mother passed away this week.

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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!

Discourse and Ideology in the Media and the Taiwan Student Protests

Charles grabs a photo on our coast ride the other day.

One thing that's really great about the recent student protest is that it is being covered in the international media. For example, the WSJ had an article on the student leaders' rejection of Ma's offer for talks this week. Yet.... and one thing that's really terrible is the coverage in the international media. Well, actually, that's not true. When you flip through lefty media sites, this protest against a neoliberal trade pact by students and the common people, against a pact opposed by the majority of the people, including occupation of the legislature and massive international coverage, what sound do you hear?

*crickets*

Way to go, fierce defenders of the people!

Today I read Banyan at The Economist. You can't expect too much from The Economist of course, since it is basically a helpless prisoner of its pro-corporate ideologies. But the interesting thing to me about the Banyan piece is how much the positioning of Ma and the students in the discourses swirling around the occupation of the legislature is guided by Establishment economic and social tropes and above all, by outright concealment of Ma's actual position. This has two complementary results: it makes Ma look more middle of the road than he really is, and it makes the students look more radical than they are. The reality is that the middle of the road democrats are the students, and the right-wing radical is Ma Ying-jeou. One way the Economist accomplishes this is by framing:

Mr Ma sees the pact as a reward for the more conciliatory approach to China that he has adopted since he became president. The students occupying the legislature, as well as opposition parties who back them, claim that the trade deal....

Ms "sees" but the students "claim". No bias there! Think of all the other words that could be used: Ma argues and the students contend. Etc. Uncorrected is Ma's error that the police don't think it worthwhile to clear out the legislature. They don't have the authority to do that, only the Speaker of the legislature can.

Naturally Banyan (and other mainstream media writers) will never make clear that Ma is a right-wing Chinese nationalist expansionist who did his thesis on how China owns the Senkakus and appears to believe China owns Okinawa -- note that the underlying issue of the political-annexation aspects of the treaty, so important in many discussions of it, doesn't appear in this article, which presents the whole affair from his position and treats him as a sympathetic character, while focusing solely on economics. The students understand this political context, but Banyan removes it from the reader's purview. This helps make the students appear more radical than they are. In fact in another piece sympathetic to poor put-upon Mr Ma, Banyan argues that Ma is -- no, really -- defending Taiwan:

But as Mr Ma sees it, cross-strait “rapprochement” is a first line of defence against Chinese aggression, since “a unilateral move by the mainland to change the status quo by non-peaceful means would come at a dear price”.

In a way that piece is even worse...awesomely, it accuses the students of resorting to undemocratic means (because protests are undemocratic?) but fails to take note of the KMT's behavior. Space is lacking. Anyway...

The Economist piece also unloads all the neoliberal tropes that are taken up in a piece by J Spangler over at The Diplomat. First, Banyan describes:

Three days after the students began their occupation, Mr Ma argued that failure by the legislature to approve the agreement “could have serious consequences” (see Banyan). Going back on the deal, he said, could result in Taiwan being “regarded as an unreliable trade partner” by China as well other countries with which the island wants to negotiate free-trade pacts.

This trope is really common, I've been hearing it from people who both support and oppose that dog of a services pact. It's the kind of zombie insight people come out with when their brains are on media autopilot. Jonathon Spangler over at The Diplomat today squeezed a whole piece out of it. Judging from the contents of my inbox, many who read it assumed that Spangler was a pro-KMT foreigner. So did I, the first time I read it.

But on second reading I realized that Spangler's alignment with the KMT's position on the treaty, right down to repeating its rhetoric, isn't the result of him cheerleading for the KMT (it's unlikely that someone who obviously cares so much about ordinary people could be pro-KMT) but rather, is a consequence of the way Ma and the KMT have deployed neoliberal trade rhetoric as a front for their annexation of Taiwan to China by slow economic strangulation. Spangler writes:

Yet the deleterious effects of failure to implement the CSSTA would not only be domestic or bilateral; the international implications would be equally grave. Taiwanese history over the past decades has represented an arduous struggle for diplomatic recognition. Indeed, it is the foundation upon which almost all of the island’s foreign policy depends. Reneging on a bilateral agreement, such as the CSSTA, would serve as a clear indication to the international community that the local government lacks the capacity to effectively engage in international relations. The logic runs like this: If Taipei cannot succeed in fulfilling an already signed trade agreement with its closest neighbor and most significant trading partner, the risks involved for other countries in deepening economic ties with Taiwan may outweigh the potential benefits. For better or worse, international image and reputation are key to diplomatic relations. Should Taiwanese lawmakers fail to push through the agreement at this late a stage in negotiations, they are shooting themselves in the foot.

Three issues here. First, Ma and the KMT have cloaked their sellout in neoliberal trade and political science rhetoric. By doing so, they can get others to forward their propaganda for them, since these ideas are widely subscribed to in the media and academia. Second, has anyone ever examined this idea to see whether it is in fact true by looking at the way countries behave in the real world? Finally, the logic of this argument runs like this: let's f@ck the 99% so that Taiwan can look "credible" when its 1% sits down and makes big business sellout trade deals with the 1% of other countries. That's neoliberal logic at its finest: the world's nations are so many game preserves and ATMs for the 1%... Aware of this, Spangler argues that Taiwan's ordinary people can and should be protected. Good luck getting any of that done....

Does having to renegotiate treaties and other treaty issues make one less credible on the international scene? Hmmm... how many times in your life have you ever heard anyone say "China tore up the 17 point agreement with Tibet! I'm not doing a trade agreement with them!" Or how about the SALT/START talks. Salt II never ratified by US, which withdrew in 1986 (wiki). Nevertheless, Russia and the US went on to negotiate the START pacts. In fact US non-ratification of treaties is normal, other countries still seek it out to do business with. If you think renegotiating, withdrawing, and unilaterally tearing up treaties and agreements means that other countries will stop negotiating pacts with you, I suggest you type the phrase "withdrew from the pact" in Google, or a similar phrase, and start reading. It's totally normal for nations to engage in such behavior and then to move on to cut deals in the future. Either humans have the memories of pocket calculators or maybe, just maybe, nations make deals with other nations based on current and future expected issues, and not on what such and such a state did with some other state at some time in the past. Can you imagine:

AIDE: Mr President, Chile promised Peru to hold a plebiscite in 1893, but failed to do so.
PRESIDENT: Scratch Chile. We obviously can't do business with them. What about Italy?
AIDE: Sir, after they changed governments in WWII, they left the Axis.
PRESIDENT: Who can trust them now? What about Thailand?
AIDE: It took them twenty years to negotiate a mere extradition treaty with India.
PRESIDENT: Is there anyone we can do business with?

Reality? Everyone knows that Taiwan's relations with China are special and no one is going to say: "Wow! Taiwan renegotiated a pact with China! OMG WE CAN'T DEAL WITH THEM!" The US isn't going to stop trying to include Taiwan in the TPP. N Zealand and Singapore aren't going to tear up their trade pacts. Other nations aren't going to stop sitting down to talk with Taiwan, unless Beijing puts pressure on them (did we get a promise in this pact for Beijing to stop that? Hahaha).

So, to cut to the chase because I know you are tired of reading, what is the function of the "sign the pact or else no credibility?" It's mere rhetoric to bully small nations into signing those unequal pacts with larger states. It's a form of shock doctrine designed to get the population to go along with a sell out by creating fear of being weeded out (another favorite trope of Ma's). It's a club wielded by Ma Ying-jeou to bash Taiwan's people into submission.

It's not inevitable that China will swallow Taiwan (in fact I am coming to the conclusion that China's rising power is making that ever less probable), but it will certainly become inevitable if academics keep forwarding these zombie insights exploited by the KMT that are completely untrue yet cannot be killed.
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Daily Links:

• RALLY ON SUNDAY on Ketegalen Blvd
• LiveStream from Inside the Legislature: thanks, Sean Su. You're awesome.
• Wen Chi-yu on Ma Ying-jeou's communications problem. At CFR no less, usually a bastion of anti-Taiwan Establishment writing, they've had a couple of really good pieces on the rallies. 
• Fumao Today: vids of the protest
• NYTimes: China reacts to the protests
• Tea Leaf Nation: social media and the student protests
• Why did the rally happen? Academic/Activist explains.
• NPR blog: why they stormed the legislature
• Water rationing in Tainan
• Haha. KMT plans counterrallies on Saturday.
• A Ma Ying-jeou DPP ad from a previous election gets an update.
• Hundreds of Hong Kongers publish ad in Liberty Times warning Taiwan to avoid dangers of Sinicization.
• Taiwan specialist Chris Hughes responds to a misleading article about him.
• CDC warns of scrub typhus among ticks while tomb sweeping.

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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!

ECFA to only benefit wealthy

In dog-bites-man news, the Cabinet released a report on ECFA that appears to confirm everything so many of us have been saying since Day 1 -- it could hardly have been any other way -- and throughout the long period of chameleon-like shifting of rationale for ECFA. The Taipei Times has the call:

People who possess large amounts of capital appeared to reap benefits from the Economic Cooperation Framework Agreement (ECFA), while those on the lower end of the economic scale absorbed the costs, a recently released report on the cross-strait trade pact signed in June last year suggested.

The report, conducted by National Sun Yat-sen University, was commissioned by the Executive Yuan’s Research, Development and Evaluation Commission in hopes of gaining a better understanding of attitudes in southern Taiwan toward the ECFA and making the government more aware of the causes of objection to the ECFA from people in the south.

Note: a Cabinet-level agency report commissioned by one of the most important (and Bluest) agencies in the government, specifically aimed at understanding why the South hates ECFA -- aiming at the south simply obscures other issues from China integration affecting the North, such as the Taipei housing bubble.

The report also mentioned a further outflow of Hong Kong’s manufacturing and production services after the signing of the CEPA. Hong Kong’s service industry also moved north into China, causing a second exodus of the territory’s industry, it said.

The effects of CEPA on Hong Kong were already old news when ECFA was signed, known to the business community in Taiwan as well. This was realized even before CEPA was signed. The Macao gov't noted in 2005:

Mr. Leung said he believed that Macao could benefit more than Hong Kong from CEPA: “ Firstly, Macao is a smaller economy. If Macao can make full use of its advantages within the framework of CEPA and take in the manufacturing industry moving out of Hong Kong, Macao can benefit more from CEPA. Secondly, easing the restrictions on Mainland tourists to Hong Kong and Macao was designed to help Hong Kong tackle its difficulties and generate more jobs for medium and low-income people. At the end of the day, the impact of Macao will be ever more beneficial. Macao’s tourism sector stands to benefit greatly even if only one in three Mainland tourists heading for Hong Kong choose to visit Macao as well.”

This single paragraph encapsulates the KMT's China policy under President Ma: moving industries into China while bringing tourists into Taiwan. These two policies are two sides of the same minted-in-Beijing coin: dulling working-class opposition by throwing tourist dollars at it while hollowing out the local economy -- and satiating investors with a convenient housing bubble. Yay!

I blogged on the income inequality effects of CEPA and their omens for ECFA in August of last year, quoting a news report:

The CEPA has also had a considerable impact on Hong Kong’s industries and labor market, gradually turning the majority of Hong Kong’s middle to lower-class workforce into marginal workers, those forced to “work more for less.” This is one of the main reasons for the increase in Hong Kong’s poverty gap.

A few examples might well shed a little light on these figures. The number of workers who earn less than HK$5,000 (US$640) a month has increased by more than 70 percent, from 307,000 in 1997 to 528,000 in 2006, and the number of workers who work 55 hours or more per week has increased by more than 80 percent, from 501,000 in 1997 to 934,000 in 2006.

The CEPA-ECFA mirror was also a theme in a legislative report from nearly three years ago that covered the same ground.

Of course, what day was ECFA signed? Yep, Taiwan News back in the day:

The most telling signal of this reality was the date and place of the signing, which occurred precisely on the seventh anniversary of the signing of the "Closer Economic Partnership Agreement" between the PRC central government and the PRC's Hong Kong Special Administrative Region" and the location of the ceremony in Chongqing, the location of peace talks between the late KMT autocrat Chiang Kai-shek and the late CCP Chairman Mao Zedong in August 1945.

These "coincidences sent the symbolic messages that the pact was a "party to party agreement" between the KMT and CCP and that the ECFA was parallel to the CEPAs signed between Beijing and Hong Kong and Macau.

Once more, with feeling: an acquaintance of mine passed around this witty Chinese tone drill from her father on Taiwan-China relations: The Four stages of Tong: 1 通, 2 同 , 3 統 , 4 痛
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Daily Links

• Chinese hackers reveal S Korean plan to buy US drones
• Frozen Garlic on re-districting in Taipei
• Water shortage threatens Hsinchu science park.
• TaiwanAirPower finds the old airfield on Dadu Mtn, now long gone. Incredible that something so substantial could vanish so quickly.
  

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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.

Greater US-Taiwan Engagement needed

A couple of recent articles serve as reminders of the issues ECFA is calling forth for the US and its Asian partners. The other day the Taipei Times reported on the remarks of Randy Schriver:

Former US deputy assistant secretary of state for East Asia Randy Schriver said that US President Barack Obama’s administration may be “on the verge” of changing its policies toward Taiwan and the Asia-Pacific region as a whole.

While not spelling out the possible change in detail, Schriver strongly hinted that it could result in a Taiwan arms sale freeze.

After reviewing some of the issues surrounding the missiles China points at Taiwan, Schriver argues:

“The Obama administration has gone to great lengths to deny a Taiwan arms-sales freeze is in place, perhaps protesting a bit too much,” he wrote.

“Why does the administration continue a fiction that Taiwan has not formally requested more F-16[C/D] fighters? Why do mid and junior-level officials within the Obama administration allude to instructions from ‘senior leadership’ to hold congressional notifications on Taiwan arms sales and not to expect another major sale in 2010?” he asked.

“Even after [the] ECFA, a strong and capable Taiwan remains a key ingredient to security in the region,” he wrote.

The go-slow on the F-16 sales is one of the many areas where the Obama Administration is pursuing the same policies as the Bush Administration. Schriver advises the US not to lose its nerve. Good advice, that. But many in policy positions have fallen victim to the Chinese game of using "tension" to manage the Beijing-Washington relationship. Essentially the Chinese claim you are "causing tension" when you oppose their goals, and "harmonious" when you serve them. Remember always that with China, "tension" is a policy choice to force others to make concrete concessions to China for the sake of "maintaining the relationship." They are likely to be a bit nerve-challenged....

Arms sales are an important symbol of US commitment to Taiwan and to the region. Despite the talk of peace, China recently upped its aggression level with the announcement that the South China Sea islands constitute a "core national interest". In response to the Chinese military build up and recent Chinese provocations, Japan has extended its air defense zone toward Taiwan. It will be extremely difficult for China to conduct offensive operations against Taiwan without violating Japan's air defense zone, as well as its territorial waters. Naturally the KMT government protested this.

Where is the US in all this? Well, Robert Gates' recent visit to China resulted in some exchanges on China's expansionism. Talk is nice, and tough talk is better. But some concrete expressions of US support for Taiwan would be great. One would be more weapons....

....the other would be closer economic relations. Rosen and Wang, whose recently published analysis of the results of ECFA has been widely disseminated in the media, are cited in a Taipei Times piece arguing that the ECFA agreement calls for greater US engagement:

“The economic cooperation framework agreement with China will fundamentally change the game between Taiwan and China and hence affect the regional economy and even the transpacific tempo for the US,” they said in the report, Deepening China-Taiwan Relations Through the Economic Cooperation Framework Agreement.

US engagement in Asian economic integration is important, they wrote, and Taipei and Washington could add to the balance in geoeconomic momentum centered on China by reinvigorating their trade and investment framework agreement (TIFA) talks, and by considering other opportunities for transpacific bridge-building that includes the US.

While Rosen and Wang's analysis is probably far too rosy, their call for closer economic relations is spot on. Closer US relations with Taiwan would be an important signal. Washington, however, appears to be split on how to handle China.

One issue not raised by either piece is the problem of Taiwan's own behavior. Again and again I have heard from foreign analysts and others with similar connections that the Taiwan side is "not ready" or "not serious" about upping its level of engagement with foreign nations. The idiotic beef flap, which not only peeved the US but caused many of its analysts to re-assess their opinions of Ma Ying-jeou, is only one example. I hope that some knowledgeable person will make public a critique of the Taiwan side in this discussion, so we can better understand what is going on.
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Daily Links

• Chinese students on ethnographic bicycle trip around Taiwan, that strange and exotic land
• Beijing's Canadian apologist
• This hilarious comic strip Charisma Man about foreign men in Japan (h/t YFFM)
  
• David Reid's excellent letter in the Taipei Times
• South Korean arms spending and Turkey: the coming superpower at the great website Foreign Policy in Focus
• Hilarious-not: Asia Times hosts vicious, ugly piece by Chinese author extolling Chinese expansion as "patriotism".
• David Kilgour, who has done so much excellent work on the suppression of Falun Gong in and out of China, calls for the expulsion of a Chinese diplomat for organizing Chinese students in Canada to suppress protests. But of course Chinese students in Taiwan will never be a political problem like this.
  

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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!

ECFA Agreement reached

Welcome counterfeiters and smugglers! ECFA is in the house! Media organs began reporting last night that negotiators for the CCP and the KMT had reached agreement on 200 items from China to Taiwan, and 500 from Taiwan to China. Bloomberg reports:

China and Taiwan said they reached a basic agreement on tariff reductions in a third round of talks to boost economic and trade relations.

“We are still working on details, but the basic agreement has been reached,” Tang Wei, head of Taiwan, Hong Kong and Macau affairs at China’s Ministry of Commerce, said late yesterday after talks in Beijing with Huang Chih-peng, director- general of Taiwan’s Bureau of Foreign Trade.

An agreement would lower tariffs on more than 200 items exported from China to Taiwan including car parts, petrochemicals and machinery, the officials said. The exact items have yet to be decided, and Tang said he hoped that Taiwan would export textiles and car parts to China. An accord would allow service providers to compete in the two markets, he said.

The report is entirely one-sided, but it does note that:

Any accord “will boost market sentiment and confidence,” Tony Phoo, an economist at Standard Chartered Plc, said by phone in Taipei yesterday. Still, “the preferred-tariff treatment won’t happen at least for the next one to two years.”

One to two years? Just like the financial agreements, the effects are in the future.

Kyodo, and this report above, also hint that the agreement is about having an agreement -- yesterday Kyodo said that negotiations remain to "confirm" the list. As AFP reports, negotiations had stalled. Further, the "early harvest" list had been dropped entirely. It looks like they agreed to simply announce an agreement, so the KMT wouldn't lose face, and then hammer out the details over time. Taiwan News reported:

The administration of President Ma Ying-jeou wants to sign the accord before the end of June, but Premier Wu Den-yih for the first time threw doubt on that timetable Saturday when he said the negotiations were stuck in differences over the early harvest list.

Taiwan’s chief negotiator, Huang Chih-peng, said at the start of the talks Sunday that both sides had largely agreed on the text of the ECFA and on the basic principles for the early harvest list. Taiwan and China had also largely agreed on other items such as measures to solve trade disputes, he said.

Huang is the director-general of the Bureau of Foreign Trade under the Ministry of Economic Affairs. His counterpart at Sunday’s talks was Tang Wei, the head of Hong Kong, Macao and Taiwanese affairs at China’s Commerce Ministry.

During the morning, negotiators discussed the wording of the accord itself, according to statements made to the media during the lunch break.

KMT officials had flown over to make one last desperate bid this weekend for an agreement after the early harvest negotiations collapsed. Looks like they succeeded in reviving an agreement. Or at least the appearance of one.

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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!

Please Washington, an FTA for Taiwan

As the Taipei Times reported today, a major event in Washington DC Thursday brought together 16 Taiwanese-American organizations to argue that ECFA is a bad idea. To wit:

A large group of Taiwanese-Americans have launched a three-pronged attack on an economic cooperation framework agreement (ECFA) between Taiwan and China, claiming that it is no more than “a fast track toward annexation of Taiwan by China.”

They have sent a joint statement to US President Barack Obama calling on him to urge Taiwan’s government to conduct a public and democratic referendum on an ECFA; they have organized a Washington conference for prominent academics to condemn an ECFA; and they have released a letter from 28 major US supporters of Taiwan to Legislative Speaker Wang Jin-pyng (王金平) asking him to make a critical review of the proposed agreement.

The joint statement to Obama, backed by 16 of the largest and most influential Taiwanese-American organizations, also asks the president to negotiate a free-trade agreement with Taiwan.

It says that because China may use an ECFA to take over Taiwan, the agreement would ultimately have a negative impact on the US strategic position in East Asia.

All the right points were hit, including the need for a US-Taiwan FTA. But such an FTA offer might be deeply offensive to China's leaders, and the US has shown great reluctance to offend them on a wide range of issues -- note the complete lack of public complaints about China's aid to Iran's nuke program, for example.

In the blizzard of press conferences recently President Ma Ying-jeou made a few comments about trade agreements with the US:

Taipei, May 20 (CNA) President Ma Ying-jeou reiterated Taiwan's intention to tighten ties with the United States under an established trade framework and continue to buy arms from Washington, at a press conference Wednesday to mark the second anniversary of his inauguration.

Ma told local and international media that Taiwan has opted to further develop trade and commercial ties with the U.S. under the Trade and Investment Framework Agreement (TIFA) , rather than pursue amore comprehensive free trade agreement (FTA).

He said both sides are trying to use a "block-building" format that would rely on a series of specific deals under the TIFA framework, such as a bilateral investment agreement and an agreement on avoidance of double taxation, to enhance cooperation.

Ma was responding to a question on how he viewed the statement by American Institute in Taiwan Chairman Raymond Burghardt that "Taiwan might not be ready for an FTA with the U.S." because it still wants to protect some local sectors.

Ma said Taiwan and the U.S. will not discuss an FTA because the Trade Promotion Authority, authorized by the U.S. Congress, has expired, adding that an enhanced TIFA will still be an effective tool for bilateral trade liberalization.

The existing TIFA framework has a long pedigree, and at present, Congress hasn't granted the authority to engage in FTA negotiations. Note the normal modus operandi for Ma: soothing comments wouldn't it be great to have an FTA with the US but -- oh, too bad we can't and then the instant return to the status quo: well, we still have this TIFA thing. We can just operate under that, like we always have. Ma again referred to the F-16s -- it's been how many years since he was initially Chairman of the KMT and promised to get that done? Yet here we are years later and the F-16s are like the Zeno's Paradox of Weapons Deliveries, always on their way, but never quite arriving.

ECFA is going to come into existence. Opposition to it is important because it forces the Ma Administration to make at least cosmetic concessions to the needs of the island, like its belated commitment to a crackdown on smuggling from China (whoopee, a whole 15 minute crackdown), but the opposition, at least in the US, needs to move into a new phase of pushing Congress to grant Trade Promotion Authority and then moving for the US to negotiate an FTA with Taiwan. This may not actually result in anything happening -- I suspect the same mysterious sluggishness we've seen with the F-16 sale will also occur with the US-Taiwan FTA which similarly will gather "strong support" and "positive reviews from experts" etc etc etc but will somehow never happen. But is important to keep pushing so as to make room for other FTAs and to keep the pressure on the CCP and the KMT. And who knows, perhaps the horse will learn to sing....
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Daily Links:

• How will an ECFA affect Taiwan? Check out this piece from January on Indonesia's request to renegotiate its FTA with China due to the destruction of many of its industries.
• Taiwan News with a fabulous editorial on the Racialism of Ma's policies and ECFA:
  

  About the only promise made by Ma on his handling of cross-strait relations that we may take seriously is his promise that there will be no "unification" talks as such a formal exercise will be unnecessary.
  
  All that is needed is for the KMT regime to accept in substance the suzerainty of the CCP and for the Beijing regime to reciprocate by mercifully allowing a vassal KMT regime to continue to use the "Republic of China" name within Taiwan only, just as Beijing did with the traditional Tibetan government in the early 1950s.



• For amusement purposes only: this incredibly wrong piece in the Edmonton Journal on how pragmatic Taiwan is compared to Canada in its China relations.
  
• China's war plans against India: the Peaceful Riser^© takes Arunachal Pradesh in 48 hours.
• Taiwan What's Up latest issue out.
  

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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!

Rounding up ECFA (=Exploiting China to Forego Annihilation)

Today, in our electricity bill, the government was kind enough to include this pamphlet exhorting us to support ECFA. Note the use of the HSR to invoke visions of modernity and progress. Sorry, DPPers, but you can't complain -- remember when you hung those UN for Taiwan banners on government buildings? The Ma government is trying harder to persuade the public that its suicide pact ECFA will be good for the island.

The 'sign or die' theme that dominates the government's approach to ECFA was on display in this recent piece from the CNA on the island's petroleum products industry and ECFA, highlighting an interview with the head of the island's synthetic resins industry....

In a move to support a proposed economic cooperation framework agreement (ECFA) with China, Hong said that if Taiwan's petrochemical industry does not receive zero-tariff treatment under the trade pact,it will not be able to survive.

One year later, after petrochemicals were included on the ECFA early harvest list, Hong still has concerns about the progress of signing the trade deal.

"If Korea and Japan -- Taiwan's two biggest competitors -- sign free trade agreements with China ahead of us, China will no longer need to place their orders in Taiwan, so there will be no room for us to survive," Hong said in a recent interview.

At present, Taiwan's petrochemical exports to China are subject to a 6.5 percent import duty -- already higher than the 5.5 percent import duty for Korea and Japan. However, the latter two will be granted zero-duty treatment from 2012.

"If we cannot grab the moment to secure the market, we are sending ourselves to the mortuary," said Hong.

Apocalyptic language notwithstanding, further down it is noted:

Hong, who has also served as president of the Formosa Chemicals & Fibre Corp., pointed out that while China's imports of petrochemicals were up to about 25 million tons a year, the country was also developing its own petrochemical industry to meet its growing domestic demand.

China's demand will remain strong in the next few years, said Hong, explaining that the per capita consumption of plastic materials in the country is only a few kilograms but is expected to grow to about 20 kg in the future, compared to Taiwan's per capita consumption of around 100 kg.

However, he predicted that China will slowly reduce its dependency on imports. "We don't have much time left," Hong said.

In other words, Hong argues that we should sign the ECFA immediately to save an industry which China is going to largely take over in any case -- the Taiwan version of trading permanent gains for China for temporary concessions to Taiwan. It's easy to see where this will go -- first the zero tariffs, then those won't be enough, and demands for even more subsidies will follow.

Meanwhile pressure from Beijing is growing to open the market to Chinese agricultural goods, move that would devastate local agriculture.

Last week, a high-level meeting started between Taiwan and China to hold talks on a proposed Economic Cooperation Framework Agreement (ECFA). The Library Times informed that China asked the island to open its market to the banned agriculture items in these talks.

While talking to reports, Vice chairman of the agriculture council Hu Hsing-hua talked about the ECFA and the potential effect on Taiwan’s farmers.

Hu said, “This is in fact a hypothetical subject.”

Further, Hu said, “ECFA does not take Taiwan's farmers into account. We must first see the benefit for the farmers before we discuss the subject. Whether or not to proceed also must be decided by the people. We also hope the people can oversee the agricultural imports together.”

There are also concerns that China will flood the market with its agricultural goods via a third country. Smuggling of agricultural products is already underway -- the island has been dependent on garlic imports from China for years. The Liberty Times reported the other day that KMT think tanks are starting to float trial balloons for the lifting of the ban on agricultural products -- remember too that the first trial balloons for the importation of Chinese labor date back two decades. It's all coming down the pike, probably in Ma's second administration.

Pan-Green Academics warn on signing ECFA, as they have for the last two years....

At a forum hosted by the group Taiwan Advocates yesterday, Taiwan Thinktank chairman Chen Po-chih (陳博志) said the director of China’s Taiwan Affairs Office, Wang Yi (王毅), had stated that after Taiwan signs an ECFA with Beijing, there would be few cross-strait economic issues left for both sides discuss, so dialogue on political issue would be unavoidable.

Soochow University political science professor Luo Chih-cheng (羅致政) said the Chinese Nationalist Party (KMT) government has expressed its hope to sign an ECFA this May. If that happens, Luo said, Taipei and Beijing would start talk on political issues from the middle of this year, and that political dialogue would possibly include signing a peace treaty with Beijing.

Luo said that a Democratic Progressive Party (DPP) victory in the 2012 presidential election might be too late if President Ma Ying-jeou’s (馬英九) signs a ­political treaty with China during his term.

2011 is the hundredth anniversary of the founding of the ROC.

...and as far as China's promises are concerned, there are quite a few complaints that China is not keep its side of bargains (like here, for example).

Finally, it should be noted that the recent arms sale to Taiwan, the subject of several awful commentaries in the US media recently, has had no effect on ECFA, according to Beijing.

The second round of negotiations will be delayed until late February or early March as Beijing has said there is "no way" to send negotiators to the island earlier, the Taipei-based China Times newspaper reported on Thursday.

Taiwan's China policymaking body confirmed the estimated dates but said they did not represent a delay in talks.

Taiwan's acceptance of a $6.4 billion package of U.S. weapons has had "no effect" on trade talks despite Beijing's outrage toward Washington, said a media relations officer at Taiwan's Mainland Affairs Office, a government body.

But look at that opening sentence of the article, which appears purposefully written to convey the idea that the arms sale and ECFA postponement are related : "China has postponed a second round of free trade talks with Taiwan until after the Lunar New Year holiday amid US plans of arms sales."

This article points to a central truth about the arms sale complaints of China: if China really wanted to stop Taiwan from purchasing weapons from the US, all it has to do is punish Taiwan. But it never punishes Taiwan though it has myriad ways of doing so; instead, it always attempts to transfer the costs back to the US-Taiwan relationship by hacking on the US. The goal, of course, is to chip away at US support for Taiwan. This was difficult even a decade ago, but now China's rise has spawned a whole class of commentators who argue that the US should sell out the island in order to reap the big bucks from China, making China's job that much easier -- surely the ultimate realization of the US habit of making permanent concessions to China for temporary gains....

UPDATE: A friend notes in the comments that FCC already has two petrochemical plants in China.
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Daily Links:

• Ben Goren with excellent piece on government's approach to ECFA.
• The Jamestown China Brief has several strong articles on China.
• Philip Bowring with another good one in the NYTimes on US-China confrontation.
• Consumer prices on the rise here.
• Taipei Times editorial argues ECFA is driving Taiwan's insane housing prices.
• SHOCKER: Taiwan whisky beats Scottish whiskys in blind taste test.
  

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