ECFA talks wrap up at Grand Hotel

‘FAMILY’ MATTERS: The ‘early harvest’ list contains 539 items from Taiwan and 267 from China, with Taiwan enjoying an about five-to-one ratio in export value

By Ko Shu-ling, Vincent Y. Chao and Flora Wang  /  STAFF REPORTERS

Fri, Jun 25, 2010 - Page 1

Taipei and Beijing wrapped up the final round of negotiations on an economic cooperation framework agreement (ECFA) yesterday, with Taiwan including more than 500 items on its “early harvest” list and China about 250.

The early harvest list refers to goods and services that will be subject to immediate tariff concessions or exemptions, which are expected to form the backbone of the proposed deal.

The pact constitutes an early harvest list in traded goods and another in trade in services. Detailed items were not released yesterday, but both sides promised to make them public as soon as the trade pact is signed next week.

On traded goods, there are 539 items in Taiwan’s early harvest list, with an estimated value of US$13.8 billion. They take up 16 percent of the China-bound export volume and cover six categories.

China will have 267 items in its early harvest list, accounting for US$2.86 billion, or 10.5 percent, of its Taiwan-bound exports. It covers five categories including upstream raw materials such as petrochemicals and synthetics.

China agreed not to export more agricultural products or workers to Taiwan. It also agreed to do its best to spare 17 Taiwanese businesses categories listed as “disadvantaged.”

While some were concerned the promise would be short-lived, Deputy Chairman of China’s Association for Relations Across the Taiwan Strait (ARATS) Zheng Lizhong (鄭立中) said “Taiwanese compatriots” should rest assured that they would keep their promise.

He also dismissed speculation that Chinese businesses complained about the “unbalanced” early harvest program, saying they were willing to do so because both sides are “a family.”

Some petrochemical products Taiwan wished to place on the list, such as PE and PVC, did not make it to the list, but both sides agreed to resume negotiations within six months after the trade pact takes effect so each side can open their individual market “as soon as possible.”

However, the pact did not specify when or how much both sides should open their markets. Nevertheless, the trade pact would specify “substantial trade” liberalization, Taiwan’s Bureau of Foreign Trade Director-General Huang Chih-peng (黃志鵬) said.

Early harvest items that will enjoy immediate zero tariffs are those with 5 percent tariffs and less. Products with tariffs between 5 percent and 15 percent will have the rate reduced to 5 percent the first year and zero the next year. Those with tariffs higher than 15 percent will see it decreased to 10 percent the first year, 5 percent the second year and zero the following year.

On trade in services, there are 11 business categories on Taiwan’s early harvest list, including financial industry and non-financial services.

On the financial industries, Taiwanese banks that have set up branches in China for a year and made profit for one year will be allowed to provide services in the yuan. Taiwanese banks will enjoy speedy approval of their applications if they opt to upgrade their representative offices into branches in western and eastern China.

Taiwanese insurance companies can establish insurance firms in China if the group or joint venture has capital of more than US$5 billion, operate for 30 years and establish an office in China for two years.

Asked by media whether China would ask Taiwan to pay back its “economic favor,” Zheng said they never thought about it and that it was not an issue.

“Since we already made the offer, there is no such thing as asking it back,” he said. “We are a family. Please don’t worry.”

Zheng said they would “never change the policy toward Taiwanese compatriots,” adding that if there was anything they wanted in return, it would be to jointly “upgrade the economic competitiveness of the Chinese nation in the world.”

While the pact contains a termination article, Huang said it was a defensive mechanism “put aside for possible use in the future.” Should such a scenario arise, both sides would try to resolve the problem with negotiation before resorting to the final solution, he said.

Zheng was evasive about whether China would block other countries from signing free-trade agreements (FTA) with Taiwan after an ECFA is signed, saying the matter would be “properly addressed.”

Huang said he did not ask China to refrain from blocking other countries from FTAs with Taiwan during the negotiation process, but added he “knew in his heart” that both Taiwan and China have the right to sign FTAs with other WTO members and that Taiwan had the economic power to do so.

Outside the Grand Hotel where the meeting was held, fears that dozens of people would protest later proved unfounded.

Shortly after 10am, only one Democratic Progressive Party (DPP) Taipei City councilor candidate and an assistant had appeared.

Driving in a campaign vehicle, the pair were immediately met by police at the road entrance to the hotel and turned away, only to arrive again in a taxi that took them straight to the main gates of the luxury hotel.

The candidate, Tung Chung-yan (童仲彥), and an assistant from another DPP candidate’s campaign office attempted to persuade police that they were going to the hotel to buy a cup of coffee.

“Why can’t we head to the hotel? Is [Taiwan] under martial law? Why are we prevented from going up the mountain?” Tung asked.

Joining their protest shortly after were four members of the pro-independence Taiwan Nation campaign who held an impromptu press conference at the gates to the hotel after being told by police that they wouldn’t be able to enter the venue.

Taiwan Nation chairman Peter Wang (王獻極) said the government had exaggerated the benefits of the trade pact, which would lower cross-strait tariffs and did not take into account Beijing’s political ambitions toward Taiwan.

He deployed anti-ECFA banners on the ground in front of the gate and laid a Chinese flag on the ground. Popping a large balloon on top of the flag, he said it represented his intention to “pop” what he alleged to be the government’s lies.

No scuffles took place at the scene yesterday. All six protesters later departed after meeting police representatives. Traffic heading to the hotel, a popular destination for Chinese tourists, was not affected.

At a separate setting yesterday, Legislative Speaker Wang Jin-pyng (王金平) lauded the results of the negotiations, saying the early harvest list would benefit the nation.

However, Wang said the ECFA would not be really beneficial to Taiwan unless it continues to enjoy as many benefits as the initial early harvest lists show during the cross-strait negotiation scheduled to take place six months after the ECFA is inked.

Wang said he expected to call a meeting on July 5 with the three legislative caucuses to decide how to review the ECFA during the planned extra legislative session if the trade pact is signed on Tuesday, as planned.

Later yesterday behind closed doors, Premier Wu Den-yih (吳敦義) and Cabinet officials briefed the speaker on the negotiations.

On his way to the briefing, Wu said Taiwan did not entirely get what it wanted and should make extra efforts in future negotiations.

“My greatest comfort is we’ve managed to defend what is more important — no additional [Chinese] agricultural products will be allowed to enter Taiwan and no [Chinese] laborers can work in Taiwan,” he said.

Also See: EDITORIAL : How healthy will ECFA be?

Also See: SEF says ECFA to be signed on June 29