The meeting between Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung (江丙坤) and China’s Association for Relations Across the Taiwan Strait (ARATS) Chairman Chen Yunlin (陳雲林) was postponed to next month after the Dalai Lama’s recent visit to Taiwan. The negotiations on an economic cooperation framework agreement (ECFA), originally scheduled for the middle of last month, have also been delayed repeatedly. On Nov. 1, China alarmed Taiwan when Taipei was suddenly informed about the cancelation of talks in Beijing. Fortunately, Beijing quickly sent Deputy ARATS Chairman Zheng Lizhong (鄭立中) to Taipei to prepare for the Chiang-Chen meeting and ease tensions.
The Chiang-Chen meeting was delayed by political factors, while the ECFA negotiations were delayed for economic reasons. The two sides have constantly argued over whether cross-strait talks should put economics before politics or focus on both, but now it seems there are both economic and political problems.
Politically, the problem is quite serious. It is not the Dalai Lama’s visit or the screening of the documentary about Rebiya Kadeer. Rather, the problem is Ma’s three conditions for political negotiations that he proposed indirectly through Foundation on Asia-Pacific Peace Studies chairman Chao Chun-shan (趙春山).
The first condition is finalizing a cross-strait financial memorandum of understanding (MOU) and signing an ECFA. This places business before politics, something that China does not like.
The second is a domestic Taiwanese consensus; since mainstream opinion supports Taiwanese independence, China is not pleased.
The third is international approval, which not only overturns Ma’s own promise that cross-strait relations override diplomatic concerns, it also invites foreign forces to interfere in what Beijing sees as China’s domestic affairs. This is even less acceptable to China.
Business talks will not be any easier. The biggest argument is not the controversy over importing Chinese towels or agricultural products. These represent a relatively small sum of money, and China could make a great display of goodwill by relenting on these requirements.
The real problem involves setting up financial institutions. Beijing insists on different entry thresholds for Taiwanese firms in China and Chinese firms in Taiwan, and it also wants to be allowed to invest in 8.5-generation flat screen plants in Taiwan using Taiwanese technology and personnel, but it refuses to promise not to block Taiwan from negotiating free-trade agreements with other countries.
These problems mean that Taipei has finally encountered Beijing’s most ambitious attack against Taiwan’s core strategic sectors, and this conundrum will not be easily resolved.
With political and economic problems appearing at the same time, the two governments are trying hard to maintain smooth exchanges on the surface to avoid damage to their prestige. However, it will be difficult to cover the fact that the cross-strait honeymoon was a result of Ma’s excessively pro-China policies.
Ma’s pro-China policies are based on four points of wishful thinking, and all four points are now looking problematic.
First, Ma believes Taiwan can survive the economic problems caused by the US financial crisis simply by strengthening economic and trade relations with China through direct links. This is a complete miscalculation. Despite the opening of the three links and China’s purchase of Taiwan-made home appliances for rural areas, Taiwanese exports to China and Hong Kong dropped by US$16.7 billion in the first three quarters of the year. This decline exceeded the decrease in exports to the US, which fell by US$4.8 billion during the same period.
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