MAC official plays down ECFA fears

STAFF WRITER, WITH CNA

Mon, Mar 16, 2009 - Page 3

Taiwan must make efforts to sign free trade agreements (FTA’s) with countries such as the US and Japan, rather than inking an economic cooperation framework agreement (ECFA) with China, panelists attending a forum on cross-strait business cooperation said yesterday.

Citing the example of Hong Kong, National Taiwan University economics professor Kenneth Lin (林向愷) told the forum — hosted by the Taiwan Advocates — that once an ECFA with China was signed, more businesses would relocate to China, worsening the soaring unemployment rate and creating a “second wave of business exodus.”

It would also establish a “hub-and-spoke distribution network,” with China being the hub and Staff Writer, with CNA

The government’s proposed economic cooperation framework agreement (ECFA) with China will not trigger another mass exodus by Taiwanese industries to China, a Mainland Affairs Council (MAC) official said yesterday.

“The signing of the pact, similar to a free trade agreement, will help Taiwan build a wider and more solid basis for economic globalization,” Council Vice Chairman Fu Don-cheng (傅棟成) said.

Fu made the remarks in response to discussions at a colloquium held in Taipei by a number of academics who raised concerns that an ECFA would cause Taiwanese companies to relocate their investments or manufacturing operations to China on a large scale, which would increase unemployment and eventually drag the local economy down into a deeper quagmire.

He argued that the agreement could help to facilitate the globalization of Taiwan’s economy and attract more investment funds from abroad.

The pact would provide a better environment for Taiwanese businesses to globalize their operations and allow industries from the two sides to complement each other, so that Taiwan could gain a better position in the world’s economic landscape.

The possibility of signing an ECFA with Beijing has been fiercely discussed over the past few weeks, with the government saying that the proposal will not put Taiwan’s sovereignty at stake, saying that a trade agreement with China must be reached to maintain Taiwan’s economic competitiveness in the world market.

Fu yesterday said that after an ASEAN Plus One (China) agreement takes effect next year Taiwanese manufacturers, particularly petrochemical processors, will face much greater challenges, as China and the ASEAN states will be able to trade their products free from duty.

“An ECFA with China might provide a lifeline for Taiwanese businesses and we can say that without an ECFA, Taiwanese companies will probably move to China in a mass exodus,” Fu said.cargo and passengers going to multiple destinations passing through the hub, he said.

Lin said China was in no hurry to sign the economic pact, adding that it was seeking to denigrate Taiwan’s sovereignty during the negotiation process.

Wang To-far (王塗發), an adjunct professor of economics at National Taipei University, said it was wishful thinking that China would allow any member of ASEAN to sign an FTA with Taiwan. He did not believe Beijing would deliver on such a promise even if it made one, he said.

Despite the name change of the economic pact, Wang said the ECFA was “a contract to sell out Taiwan” and “a short cut to political unification.”

Wang said as Beijing has made it clear that the accord could be modeled on Hong Kong’s closer economic partnership arrangement (CEPA), Taiwan’s capital, technology and talent would rush to China, further hollowing out the local market.

Another panelist, Lu Shih-hsiang (盧世祥), said Taiwan’s sovereignty was unlikely to be safeguarded even if the economic pact Taipei and Beijing agreed upon followed WTO guidelines.

Lu, a veteran business reporter and adviser to the Taipei Times, said the ECFA the government sought to sign would pave the way for political integration of both sides of the Taiwan Strait.

While Beijing has clearly set “one China” as the precondition for inking the pact, the government self-deceivingly interpreted “one China” as the Republic of China, Lu said.

“It is very difficult to save someone who delivers himself into China’s hands,” he said. “The government has revealed its bottom-line even before both sides sit down and talk. It is like ‘catching fish in a tree’ to expect the administration to protect [Taiwan’s] national status and pride.”

Lu said while China’s suppression was the main reason behind the country’s failed attempts to sign FTAs with other WTO members, the government had turned to Beijing and proclaimed that China was the savior of the country’s economy.

“China will definitely make endless exorbitant demands,” he said. “They might dish out some small favors, but they are meant for bigger profits in the long run.”

Lu said there was no guarantee that Taiwan’s sovereignty and rights would be protected even if the agreement was signed under the framework of the WTO. Hong Kong signed a closer economic partnership arrangement with China in 2003, but the special administrative region enjoys little dignity or status, he said.

While Ma has dismissed public concern over the depreciation of sovereignty as “unnecessary anxiety,” Lu said Ma, as the head of state, was naive and short-sighted in making such remarks.

“It is what we call the ‘frog-boiling effect’,” he said. “By the time we realize the seriousness of the situation it’ll be too late.”