Wed, May 18, 2005 - Page 8 News List

Beijing sets up a trade dilemma

By Lai Ling-ju and William Vocke

The Taiwanese government faces a real challenge. Chinese Nationalist Party (KMT) Chairman Lien Chan (連戰) has visited China in a trip that is historic because it ends decades of hostility between the Chinese Communist Party (CCP) and the KMT.

While some media outlets described Lien's visit as high-profile and icebreaking, Lien dubbed his trip as a "journey of peace," and his main concern was "to exchange views with the Chinese leaders on major issues concerning peace, economic, trade and cultural exchanges across the [Taiwan] Strait."

Among the major issues, Lien emphasized greater access for Taiwan's agricultural exports. Chinese officials responded by offering Taiwan various gifts, including a pair of pandas and proposals regarding a Closer Economic Partnership Arrangement (CEPA). The CEPA would lead to exemptions on import tax for Taiwanese produce, an arrangement that Chinese analysts view as a gesture of goodwill.

However, Taiwanese officials are very skeptical about the ramifications of the opposition leaders' visits to China, and are especially suspicious of the agricultural and transportation proposals offered. There is genuine concern over this matter, and -- if only for domestic political reasons -- it is fundamentally dangerous for the government not to adopt an extremely cautious approach.

The Democratic Progressive Party (DPP) gains its strongest support from central and southern Taiwan. Most analysts agree that southerners have the strongest convictions and have been the most faithful group in supporting the political aspirations of President Chen Shui-bian (陳水扁). It is fair to say that the large numbers of supporters in the rural south have firmly anchored the DPP's electoral position. Some say that these people, mostly native Hoklo (also known as Taiwanese) and Hakka farmers, are the crucial reason Chen was re-elected president last year.

Usually, southerners "resent the Mainlanders" and care even less about escalating tensions between Taiwan and China. The DPP, when pursuing its agenda, has always been confident of keeping the southerners' unconditional support. However, this situation is starting to change, and appears very unpredictable.

Ever since Taiwan joined the WTO, farmers have come under considerable pressure. As Taiwan fulfills its WTO commitments to open its markets and eliminate protectionist trade measures, farmers are becoming more and more desperate as they struggle to make a living. Prices of foreign goods are so low that farmers often find it impossible to compete with them and maintain their current income.

When China offered its agricultural and transportation deals, the farmers were placed in an invidious position, and they may take up China's offer.

From a realist's perspective, there is a danger to Taiwan's national interest if economic ties with China become more intimate.

The Mainland Affairs Council (MAC) recently warned that China's offer of greater agricultural access to the Chinese market was only part of Beijing's "united front" strategy. The MAC believes that Taiwanese agriculture could get "backed into a corner by China."

Once the farmers start to depend on China's vast market, they will be influenced by Beijing's policy shifts. The original hope of engaging with China may soon become a nightmare of national interests coming under threat.

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