Thu, Jul 08, 2010 - Page 8 News List

ECFA just can’t stand up to scrutiny

By Julian Kuo 郭正亮

President Ma Ying-jeou (馬英九) has insisted that the legislature screen the Economic Cooperation Framework Agreement (ECFA) as a whole, instead of reviewing it clause by clause as the opposition has demanded. Aside from being afraid of offending China, Ma has rejected the opposition’s demand because the ECFA is so flawed it can hardly stand up to scrutiny. If the opposition has its way, the agreement jointly concocted by the Chinese Nationalist Party (KMT) and the Chinese Communist Party (CCP) will be exposed for the fraud that it is.

Let’s go through the various points here.

First, the two parties have intentionally refused to reveal the timeline for the removal of trade barriers. The ECFA clearly states that the majority of tariff and non-tariff barriers will be removed gradually, but fails to specify when this might happen. The Mainland Affairs Council even ran a newspaper ad decrying the claim that Taiwan would have to remove tariffs on 90 percent of Chinese imports within 10 years of signing the ECFA, describing it as misinformation. Misinformation? Talk about the pot calling the kettle black. We’re going to make ourselves an international laughing stock.

To prevent countries from recklessly signing free-trade agreements (FTAs), the WTO Committee on Regional Trade Agreements passed a resolution in April 2002 stating that an FTA shall not be recognized unless tariffs on 80 to 95 percent of the items covered by the agreement are removed within 10 years — unless the countries involved request that the WTO take their individual case into consideration, citing specific reasons. Moreover, this would have to have been done in advance of the signing.

To date there have only been two kinds of FTAs without a deregulation timeline. The first was when developed countries wanted to sign an FTA that gave developing African countries an advantage. The second was the Closer Economic Partnership Arrangement (CEPA) between China and Hong Kong that slanted the balance in favor of Hong Kong.

Taiwan, however, is a developed country, while China is a developing one — at least as far as the WTO is concerned. The first format, then, is out. The only way to avoid having the 10-year restriction is by going the CEPA route, which will mean the ECFA is viewed as a domestic agreement.

Second, the cross-strait negotiation committee responsible for follow-up negotiations will have too much power. There has been no mention of who will comprise this committee, how negotiations will be conducted and what kind of oversight will be in place. If the committee is to have total control over these negotiations, transparency should be a prerequisite. Otherwise, once the KMT and CCP have set up the political and commercial framework, anyone wishing to get tariff reductions or exemptions will be obliged to pander to the two parties if they are to be included on the list.

Finally, there is the so-called termination clause. Termination clauses usually have a stated timeframe in which either party is required to give notice, after which period the termination comes into effect. This is not the case with the ECFA’s termination clause. Although it only requires a unilateral notification of intent to terminate the agreement, the two parties are still expected to enter into negotiations within 30 days after the termination of the agreement and discuss its consequences. The problem is that the ECFA does not make clear what is to happen should these negotiations break down. If they do, is the agreement still valid?

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