Aiming for FTAs that would help Taiwan

By Michael Danielsen  / 

Fri, Jan 22, 2010 - Page 8

A world of free-trade agreements (FTA) will open to Taiwan and the nation will enjoy greater international space if it just signs an economic cooperation framework agreement (ECFA) with China. At least, that’s the pipe dream the government is trying to sell.

Here’s a reality check: The government will only be pursuing FTAs with countries that have already inked FTAs with China.

This is the impression President Ma Ying-jeou (馬英九) gave when he said, according to a report in the China Times on Jan. 12: “As long as other nations have already signed FTAs with the mainland, Beijing will have no objections if these countries wish to discuss similar deals with Taiwan.”

China’s acceptance is apparently key — this is not the same as allowing Taiwan more international space. On the contrary, it seems to reduce Taiwan to a province of China.

Thus, this policy fits well with the grand strategy of unification. The time is simply not ripe yet for unification, the KMT says. Nevertheless the government seems to be headed unfalteringly in this direction and hoping that time is on its side.

The consequences of a China-leaning FTA policy will not only hurt Taiwan’s sovereignty, but also its economic development. International experience shows that the most effective economic integration is done between countries at an equal development stage. An FTA between Taiwan and the EU, for example, would benefit both parties.

Taiwan would be able to improve its already competitive services in the finance, business and engineering sectors, while the EU would benefit from technological cooperation.

This would advance Taiwan’s knowledge economy.

Danish consultancy firm Copenhagen Economics estimates that an FTA would generate 20 billion euros (US$28 billion) over 10 years for the EU, while Taiwan’s GDP would grow 1.2 percent.

China trails Taiwan in industrial sophistication, so linking Taiwan’s economic freedom to FTA agreements China has signed with other countries would not necessarily advance the competitiveness of Taiwanese industries.

China and the EU have no FTA, and therefore, Taiwan would not be allowed to enter into negotiations with the EU. Nor does it help that the Chinese Nationalist Party (KMT) seems rather uninterested in the EU. This, despite South Korea’s recent FTA with the EU and the announcement that Singapore and the EU agreed to start negotiations on an FTA.

This KMT policy will exacerbate Taiwan’s isolation and its disappearance into a coming cross-strait market envisioned by the KMT, which will easily become a Greater China Market including China, Hong Kong, Macao and Taiwan.

This will be a “one country, four systems” model.

Taiwan will not be able to escape this fate if it signs an unstrategic agreement bound by Chinese tunnel vision.

An ECFA with China is not necessarily a bad idea, but it all depends on the content and the room for maneuver that it leaves Taiwan in terms of seeking deals with other countries.

There are countless reasons to be pragmatic when dealing with China. There is no reason to be irresponsible and short-sighted.

The 2012 presidential election will not only concern economic and political integration with China but also the nation’s international status and democratic future.

Taiwan’s democracy would not survive political integration with China.

Michael Danielsen is the chairman of Taiwan Corner.