Straits Exchange Foundation chairman-designate Chiang Pin-kung (江丙坤) said that Taiwan must normalize its economic relationship with China and quickly establish a common market. Otherwise, if Taiwan keeps waiting to sign free trade agreements (FTA) with other countries, it would face marginalization in the international market.
It is quite likely that a common market will be on the agenda of talks that Chiang has with officials in Beijing when he visits China next month.
In light of China’s common market policy, the new administration should consider several issues.
First, the statement issued after the April 29, 2005, meeting between Chinese President Hu Jintao (胡錦濤) and former Chinese Nationalist Party (KMT) chairman Lien Chan (連戰) set out these goals: “Promote the unfolding of all-round cross-strait economic cooperation and establish close economic and trade cooperation ties, including all-round, direct and two-way ‘three links,’ open up direct sea and air links, strengthen investment and trade exchanges and guarantees, carry out agricultural and fishery cooperation, resolve the problems of selling Taiwanese agricultural products in China, improve the exchange order and crack down together on crime, proceed to build a stable economic cooperation mechanism and promote priority discussion on the question of a cross-strait common market after cross-strait consultations are resumed.”
In other words, Taiwan and China must first “build a stable economic cooperation mechanism” before promoting “priority discussion” on a “cross-strait common market.” But until now China has not offered concrete proposals on an “economic cooperation mechanism.”
Second, under the Closer Economic Partnership Arrangement (CEPA) framework, Hong Kong and Macau are defined as “separate customs territories” of China. Would China be willing to negotiate with Taiwan on the basis of the so-called “1992 consensus” or “one China with each side having its own interpretation,” or would it want to follow the CEPA model under the pretext of the “one China” principle?
Third, a common market arrangement would not belong to the “one-way benefits” CEPA model. In this case, the impact of a common market would far surpass that of the CEPAs that China signed with Hong Kong and Macau. Much more time for negotiations would be needed to work out how talks would take place and what sectors to open for a regional trade agreement.
Fourth, with regard to Taiwan, normalization or systematization of the economic relationship must take place before heading in the direction of a common market. Besides removing restrictions on the import of Chinese products, Chinese capital and currency exchange, it is particularly important to establish normalized multilateral, regional and bilateral negotiation mechanisms. Besides adopting a gradual approach to opening the market, anti-dumping and import defense mechanisms must also be established.
Finally, Taiwan expressed its hopes to restart FTA talks with Singapore, which in turn said that it was willing to maintain good relations with Taiwan under the pretext of the “one China” policy. This shows that China’s insistence on the “one China” principle on the international stage has not changed. This will not leave much room for the upcoming administration’s “flexible diplomacy” policy to maneuver. Under the new administration’s active promotion of cross-strait economic exchanges, the signing of an FTA with Singapore and expanding Taiwan’s international role will be its biggest challenges.
Tsai Hong-ming is the executive secretary of the Chinese National Federation of Industries.
Translated by James Chen
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