One day after Premier Simon Chang (張善政) took office, the caretaker Cabinet decided to resume talks with Beijing over a cross-strait trade in goods agreement.
However, the government — both the caretaker Cabinet and the incoming administration — should consider postponing negotiations until Taiwan joins the Trans-Pacific Partnership (TPP). The reasons are as follows:
First, there is a consensus in Taiwan that the economy has become too dependent on China. This over-dependence has discouraged businesses from making innovations or undertaking necessary reforms. Excessive investment in China has also slowed domestic investment. The Economic Cooperation Framework Agreement (ECFA), signed in 2010, further increased the attraction of China to Taiwan’s smaller economy, which is the main reason the nation’s economic growth rate dropped sharply, registering a mere 0.85 percent growth last year.
A cross-strait trade in goods agreement would consolidate the cross-strait integration set in motion by the ECFA and it would only make the economy even more reliant on China, causing it to deteriorate further.
Second, president-elect Tsai Ing-wen (蔡英文) has expressed her vision for Taiwan, saying: “Taiwan should first move toward the world, and then toward China through the world.”
The ECFA, a cross-strait service trade agreement and a trade in goods agreement are all part of an elaborate economic strategy planned by President Ma Ying-jeou’s (馬英九) administration and Beijing to bring about unification between Taiwan and China. Any talk about a trade in goods agreement at this time would go against Tsai’s vision and set the nation on the wrong course.
Third, Taiwan is in danger of being isolated from the international community by Beijing, but the TPP could be a solution to this threat. It is important to be clear about one’s priorities. The incoming government should first and foremost seek TPP membership; this is not the time to think about a cross-strait trade in goods agreement.
If such an agreement is signed before entering the TPP, that is, if integration with China happens first, joining the TPP would be meaningless, and no economic development plan would be able to save the economy.
Fourth, the Ma administration has said that unless Taiwan first signs the service trade and trade in goods agreements with China, Beijing would obstruct Taiwan’s accession to the TPP.
However, the exact opposite is true: Whether and when Taiwan should sign the two agreements are in fact among the few chips the government can use to its advantage when negotiating with Beijing. If the two agreements were signed before Taiwan’s entry into the TPP, China’s colonialist unification framework would become firmly established. Should this happen, it would be of no cost to China to oppose Taiwan’s TPP membership and it could even propose the view that China represents Taiwan.
Delaying the signing of the two agreements would give Taiwan considerable leverage in negotiating with China, and consequently raise its chances of joining the TPP. It is a leverage the government should not give away, and it is important to remember that signing the EFCA did not lead to Taiwan’s accession to a free-trade agreement, as the Ma administration falsely promised.
Telling China that if it were willing to show goodwill, Taiwan would seriously consider signing service trade and trade in goods agreements after joining the TPP is one of the few bargaining chips that the government has.
Taiwanese must remember that the Ma administration’s claim that free-trade agreements with other nations would only be possible after the ECFA was signed has been proven to be a lie.
Fifth, using the same line of reasoning as when the government was promoting the ECFA, Chang said that a trade in goods agreement with China is important for Taiwanese industry. The ECFA only benefited Taiwan’s panel and machine tool industry.
However, these industries were all on the priority list in Beijing’s 13th five-year plan and would enable China to make its own panels and machine tools in a few years.
The benefits Taiwan has secured through the pact are all short-term, lasting only two or three years. On the other hand, the 830 agricultural products that China wants to be allowed to export to Taiwan would be a permanent benefit. China wants to exchange short-term benefits for Taiwan for long-term benefits for itself. Would it really be worth signing such an agreement?
Taiwan’s panel makers and machine tool manufacturers, instead of promoting a trade in goods agreement, should focus on improving their products and strive to secure a larger share of international markets to remain competitive. In addition, the New Taiwan dollar should also be allowed to depreciate.
The government should harden its resolve and postpone signing a cross-strait trade in goods agreement until Taiwan enters the TPP — or, better still, not sign the agreement at all — to ensure economic sustainability and security.
Huang Tien-lin is a former advisory member of the National Security Council and a former Presidential Office adviser.
Translated by Yu-an Tu
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