INTERVIEW: ECFA will help Taiwan catch up with Asia: Ma

President Ma Ying-jeou spoke with several ‘Taipei Times’ reporters in an interview at the Presidential Office on Thursday, expounding on his government’s plan to sign an economic cooperation framework agreement (ECFA) with China. He tried to allay public qualms over the proposed pact, while emphasizing that an ECFA would be a crucial lever that would allow Taiwan to sign free-trade agreements with other countries

Sat, Jan 23, 2010 - Page 3

Taipei Times: Mr. President, when you first assumed the presidency, you termed yourself a “people’s president” (全民總統). Do you still consider yourself a “people’s president” now that you double as the Chinese Nationalist Party (KMT) chairman? Especially in light of what happened recently on the legislative floor [the push to pass an amendment to the Local Government Act (地方制度法)], there has been criticism that you’ve now dragged in partisan interests and become more of a “pan-blues’ president.

Ma Ying-jeou (馬英九): I am still a people’s president. The decisions I make represent the Republic of China, and the plans I promote are based on the principle that they are beneficial to the country and the people, and not just for the KMT or a political party. Take the amendment to the Local Government Act as an example. I have no control over who wins the special municipality elections. I want to give the country a stronger competitive edge by remapping the districts. I am doing this for the country and the people, not for a party.

TT: What about the proposed economic cooperation framework agreement (ECFA)? You said Taiwan would benefit by signing an ECFA with China. Will you include different voices from the opposition parties?

Ma: I will, and it is because of the opposition parties’ opinions that we made some changes in how we negotiate and how we communicate with the public. We will present a report to the legislature after holding formal negotiations with mainland China, and will also explain the matter to the public, so that people will understand what ECFA is.

The Ministry of Economic Affairs and the Mainland Affairs Council toured the country last year to explain the ECFA to the public and helped people from all walks of life know what kind of problems they would encounter. For example, the petrochemical industry wants us to sign an ECFA as soon as possible, so that it can enjoy export tariff cuts.

As to whether the textile industry should be included in the “early harvest” list, I visited King Fu-lung Corporation in Shetou (社頭), which produces silk socks for the famous Huagui brand. The company’s president said the industry was willing to be on the list. I told him that if we put the industry on the list, they will receive a reduction in export tariffs, but the imports from China will also receive tariff cuts. Textile companies said they should be able to handle the situation.

The Ministry of Economic Affairs also discussed the issue with the towel and bedding industries, and they do not want to be on the early harvest list. We will either exclude them from the list or extend the grace period. The government will communicate with those who will be affected by an ECFA so that people will have a better understanding of what they need to plan for in the future.

TT: You said the towel and bedding companies could be excluded from the early harvest list, but an ECFA is, after all, a mere transitional mechanism, and in the end, the country will still have to open for tariff concessions and more liberal trade. How will the government provide the needed assistance and help with industry transformation?

Ma: There are several ways to do it, including giving short-term assistance or helping businesses to transform themselves and increase their competitiveness. In the process of industrial development, Taiwan went from exporting agricultural and textile products to exporting electronics. Some industries must experience transformation in the process; this is a normal situation in the course of industrial development.

The government will spare no efforts to reduce the damage to local companies. The Ministry of Economic Affairs is planning on appropriating a NT$95 billion [US$2.9 billion] budget over 10 years to help local businesses. Why do we spend so much money and why don’t we just stay where we are? Because we will fall behind if we maintain the status quo.

We have already fallen behind in the process of regional economic integration among Asian countries and things will worsen if we don’t change the situation. The country has suffered a decline in export orders in our major markets, including the US, Europe, South Korea, mainland China and ASEAN, and I am very concerned about the situation.

We cannot count on the ECFA to change everything, but it is a beginning, and hopefully our export orders will increase soon.

TT: Mr. President, you just mentioned that signing an ECFA is just the beginning. Can you tell us exactly where it will eventually lead Taiwan? Is it an interim agreement to a free-trade area? If so, then in accordance with the WTO, an open market for free trade and labor needs be set up within a 10-year time period. Wouldn’t that then contradict your promises to ban the import of more agricultural products and workers from China and more toward some kind of "one China market?"

Ma: First, we have to ask ourselves this question: Can we afford not to sign an ECFA? Ten years ago, there were only three FTAs [free-trade agreements] in Asia, but the number jumped to 58 last year. The only two countries in Asia that do not have FTAs [with other Asian nations] are Taiwan and North Korea.

Taiwan has signed FTAs with five of its diplomatic allies in Central America. Although they have increased bilateral trade, the amount of the increase has been small.

So when we sign FTAs, we can do it with our major trading partners, such as mainland China, Japan, the US, ASEAN countries, the European Union, South Korea and Singapore.

However, we have encountered various obstacles over the past years. We launched FTA negotiations with Singapore about 10 years ago, but many factors made the attempt unsuccessful.

TT: What factors? Would you say China was the main factor?

Ma: That’s correct. And because of this, we want to talk with mainland China first.

TT: China has never promised that we could sign FTAs with other countries after we ink the ECFA with it.

Ma: Their position in the past was against it and we know it. But we cannot stop developing our relationships with other countries simply because the Chinese Communists are against it.

We want to participate in UN activities, and we still have to make an effort despite the Chinese Communists’ opposition. Our efforts have paid off. We managed to participate in the World Health Assembly [WHA] and join the Government Procurement Agreement [GPA]. Where there is a will, there is a way.

Mainland China has signed more than 10 FTAs. Once we ink an ECFA with the mainland, ASEAN countries will not reject the idea of talking with us.

TT: The thing is, none of these countries has made such a promise. Don’t you think you are being overly optimistic?

Ma: That’s true, but Taiwan cannot simply depend on somebody else’s promise to survive in this world.

TT: Judging by your words, you seem to suggest that we would be limited to signing FTAs only with those countries that have signed FTAs with China.

Ma: I heard that’s mainland China’s view. But when we negotiated an FTA with the US, China did not have an FTA with the US. The Chinese Communists and Singapore did not have an FTA when we began negotiations with Singapore.

So it shows that mainland China’s policy does not affect us. Our foreign policy and international relationships are independent.

If we sign an ECFA with mainland China, the pressure and obstruction to our effort to sign FTAs with other countries will be reduced.

The reason why we want to sign an ECFA is not other countries. If we don’t sign one, other countries will enjoy zero tariffs when they export products to China, while our products will lose their competitiveness because of higher tariffs.

TT: So that brings us back to our original question. Exactly where will the ECFA lead Taiwan, if it’s just the beginning?

Ma: First, it will help us catch up with the pace of economic integration in the region. There are 58 FTAs in Asia, but Taiwan has none. We have FTAs with our diplomatic allies in Central America, but we must remove the obstacles and sign more with other countries. The solution is to sign an ECFA with Beijing.

Cross-strait trade in 2008 exceeded US$130 billion, but there was no mechanism in place to institutionalize the trade. If there is such a mechanism, it will not only reduce obstructions to our effort to sign FTAs with other countries, but also increase the ratio of our products in the Chinese market.

An ECFA is conducive to Taiwan, but some local businesses will pay a price at the same time. We have conducted studies on the issue and held countless meetings to integrate opinions.

But it seems all of your questions presume that signing an ECFA will be negative to Taiwan. Do you think it’s better not to sign it?

TT: But Mr. President, you still did not answer our question: Where will the ECFA lead? Will the two sides [of the Taiwan Strait] eventually become a free-trade area or form a customs union?

Ma: Basically, the tariffs will be lower under an ECFA. A customs union is unlikely because both sides will have uniform tariffs. That will be impossible.

TT: So it will eventually be a free-trade area?

Ma: Something similar to a free-trade area, and that is in the spirit of the WTO. But I want to emphasize the WTO does not require any member to open its labor market and there are grace periods for the opening the market to some businesses.

TT: But GATT [the General Agreement on Tariffs and Trade, the WTO’s predecessor] stipulates that the contracting party must fully open markets in 10 years.

Ma: Yes, but some countries can explain to the Council for Trade in Goods if they believe 10 years is not sufficient. So such a regulation is not absolute.

TT: So can we then define the ECFA as an interim agreement to form a free-trade area?

Ma: An FTA or any similar trade agreement can have many forms. Some are called FTAs and some are called economic partnership arrangements, but they are all regional free-trade agreements under the WTO.

When two countries sign an FTA, the accord applies the most favored nation treatment to only the contracting parties.

When we entered the WTO, we wanted to piggyback on the multi-lateral trade negotiations and FTAs signed between two countries. However, the Doha talks hit a snag so we are back to square one and have to engage in bilateral negotiations, which are unfavorable to Taiwan.

We wanted to negotiate an FTA with the US, but they have their own problems. Japan and South Korea did not dare to talk with us because they are afraid of the mainland. So we begin with the mainland, hoping to negotiate a mechanism to institutionalize bilateral trade. Once we sign an ECFA with the mainland, we will have more opportunities.

TT: Have any of these countries made any promises?

Ma: None of those countries have diplomatic ties with us. It’s very hard for them to make any promise.

TT: You earlier said our questions seemed to presume that signing an ECFA would be negative to Taiwan. But it seems to many that your presumptions about an ECFA appear overly optimistic. Don’t you think you may be indulging in wishful thinking?

Ma: No. Since I took office [May 2008], cross-strait relations have improved. I said in my inaugural speech that if Taiwan continues to be isolated internally, cross-strait relations would be hard to develop.

In the past, the Chinese Communist Party spared no effort to entice our diplomatic allies, but over the past 20 months our diplomatic relations have remained quite stable.

So when the cross-strait ties are stable, our international space also increases. We finally participated in the WHA after 12 years of trying. The GPA took four years and there have also been concrete achievements in our participation in APEC.

These are not outstanding, but at least we have made some breakthroughs, thanks to the improvement of cross-strait relations. The policy has received recognition from the international community.

Of course, some people who are doubtful may say you are too naive or it’s too risky. But what other strategy can we use? We already know what will happen if we adopt a belligerent approach on the diplomatic front. We secured three new diplomatic allies, but lost nine.

TT: Some people have proposed that when we negotiate an ECFA with Beijing, we ask it to stop obstructing us from signing FTAs with other countries, or demand the ECFA take effect in tandem with FTAs signed with the US or Japan.

Ma: I will convey your opinion to the Mainland Affairs Council and the Ministry of Economic Affairs.

TT: That’s not our opinion, but reflects the doubts some others have on the planned pact.

Ma: I know. That’s why I said I would let the government agencies deliberate on the proposal.

There may be remedies for diplomatic isolation, but economic seclusion will hurt our muscles and bones. So we must find a way out. That is why most businesses support signing an ECFA, especially foreign investors in Taiwan. You are an English-language newspaper, so you must have read the White Papers released by the American Chamber of Commerce and European Chamber of Commerce. Before 2000, every year they urged the administration to open direct transportation links and liberalize cross-strait trade. We didn’t make them write those White Papers, you know.

TT: These groups obviously had their own interests in mind when they penned their White Papers. During the Democratic Progressive Party [DPP] administration, they said direct transportation links would help Taiwan secure a FTA with the US. The two sides now have broader direct transportation links since you took office, but there are still no FTAs.

Ma: That’s because we just resumed the talks. It will take some time.

As for the ECFA, the two sides completed their individual studies last year and a joint study was just made public (on Wednesday). The conclusion is that the ECFA will benefit both sides. It will boost Taiwan’s GDP by 1.6 percent to 1.7 percent and increase employment by some 200,000 people. The negotiations will take time.

It took Singapore and the US three years to negotiate an FTA and about 10 years for ASEAN countries and mainland China.

TT: Given that, why the rush to launch official negotiations on an ECFA with China this month and to sign the pact in May?

Ma: Because we are already falling behind. If we don’t catch up now, we won’t be able to catch up in the future because we are already 10 years late.

TT: It is a common understanding that signing an ECFA will deepen Taiwan’s economic reliance on China as exports to China, which are already massive, will increase as a result. And we all know the risk of putting all our eggs in one basket. How will your administration manage this risk?

Ma: Exports to mainland China fell slightly recently, from making up more than 40 percent of Taiwan’s overall exports in the past few years. Taiwan, however, is fast losing its share of the Chinese market to its competitors because they have made more of an effort.

Besides, we did not forget to diversify into other export markets. The Taiwan External Trade Development Council [TAITRA] is expanding our business in India and other countries.

Aside from diversifying export destinations, our approach is to encourage local firms to reduce their risk by broadening their product lines and focusing more on their own-brand business.

But, as mainland China is our biggest trading rival and trading partner, we have to formulate certain regulations for both sides to follow. This mechanism, if set up, will help safeguard the interests of Taiwanese companies with operations in mainland China.

In addition, we will not limit the ECFA talks just to relaxing imports. We will talk about opening the service sector, protecting local investors and intellectual property rights [IPR]. A lot of Taiwanese have had their IPRs infringed by Chinese. They are unable to seek legal protection because of the absence of related regulations.

TT: The US beef import protocol triggered massive controversy and raised serious concerns about the negotiating skills of government officials — and that was a negotiation with a democratic country. Do you have the confidence that Taiwan’s interests will be fully safeguarded during the ECFA talks, which are with an authoritarian regime?

Ma: That is a good question, but the protocol on the liberalization of imports of US beef products into Taiwan is different from an ECFA. A protocol can be reached between two sides’ administrations. But, the signing of an ECFA needs the approval of the Legislative Yuan because the pact will require changing existing rules, especially in relation to the reduction of tariffs. This why we are trying to disclose to the pubic just how the talks will proceed. We want to make the whole procedure transparent and allow the public to understand this pact.

We have learned a lot from the US beef issue experience. In other words, before putting the ECFA agenda to the Legislative Yuan, we think it would be better to let the public know how they will benefit or suffer under such an agreement. And we will try to help those who could suffer from the pact.

TT: In numerous speeches you’ve often spoken of “listening to the people’s voice and letting the people be the boss.” Given that, will you reconsider holding a referendum to approve the signing of an ECFA, since a referendum is a way to directly reflect public opinion, as opposed to through the legislature, which is indirect democracy, especially in the wake of the ruckus over the amendment to the Local Government Act. That uproar suggested that KMT lawmakers were merely supporting the party’s decision instead of conveying the opinions of the voters in their districts.

Ma: We have enacted a lot of laws and pushed for the signing of agreements with other countries by winning the approval of the Legislative Yuan.

Referendums are a good approach and are a form of direct democracy, but they cost too much. And there are limitations. Not all government policy can be formed this way. As long as we can have good communications with the pubic and have sufficient discussion with legislators, I think this is normal and a way to follow most other democratic countries, which receive the approval of their congresses to ink pacts.

Costa Rica is an exception because its congress has collapsed. Joining the European Common Market, or adopting the euro are different things and will have a bigger influence on people’s lives so they [European nations] held referendums to make the decision.

To solicit support from the public, we are sending government officials around the nation, including remote areas, to promote the ECFA. We are making an extra effort to explain clearly to those people who may suffer from the trade agreement about the possible impact. I think what we are doing should meet the requirements of a democratic country.

Most countries around the world are adopting the same approach when it comes to signing similar agreements.

TT: If an ECFA is signed, will both sides sign it under their status as WTO members? Will Taiwan register the signing of the ECFA with the WTO?

Ma: Yes. Only under the WTO framework can we offer tariff reductions just to mainland China. Usually such tariff cuts would have to apply to other countries as well. The signing of an ECFA will certainly meet the essence of the WTO.

TT: Does Taiwan have any countermeasures against the possible cancellation of the proposed ECFA by China, which could use it as a tactic to obstruct Taiwan’s efforts to enter into free-trade agreements with other countries?

Ma: This is merely an assumption. This also leads back to my previous assertion that we should develop Taiwan’s foreign affairs and its relations with mainland China at the same time. We hope to make it a positive cause-and-effect. If Taiwan is isolated on the international stage, it will be difficult to achieve further progress in cross-strait ties. Taiwanese will feel they are losing their dignity since they cannot have a say in national affairs. This will harm cross-strait relations.

In the future, we will seek free-trade agreements by selecting countries that are easier to approach, as it will then be easier to make progress. We have been trying for many years. Taiwan has a small handful of trading partners. We will put them on our priority list because it will be less meaningful than signing free-trade agreements with other [non-allied] nations. But, we do not have to sign such agreement with all of them. We will be selective. We do not have to ink a trade pact with countries where it could have negative impact on some Taiwanese sectors, such as agriculture.

If we can take our first step now, however, it will help a lot. People may ask me: What is the haste? We have lagged behind our Asian peers for 10 years and we have to catch up, or our situation will worsen. Others might say that ‘ASEAN-plus-one’ will not pose a threat to Taiwan anytime soon. But, we have to be well prepared for their expansion to ASEAN-plus-two, or ASEAN-plus-three. As a political leader, I have to look at what Taiwan will face in next 10 or 20 years.

Signing an ECFA will also help Taiwan hit three major goals — being the world’s innovation center, the economic and trade hub of Asia and the headquarters of Taiwanese businesses. The trade pact with mainland China will strengthen Taiwan’s role in becoming the economic and trade hub in Asia as more countries will be interested in investing in Taiwan in light of its closer trade ties with the world’s No. 2 economy, mainland China [sic].

COMMUNICATION

Taipei Times: Lately, you have adopted different approaches to administrative affairs. First you took over as the KMT chairman despite your promise before the presidential election not to do so, and then you invited King Pu-tsung (金溥聰) back from the US to serve as KMT secretary-general. Your doubling as KMT chairman reminds people of the time when “a party leads the government” (以黨領政). What’s your opinion on that?

President Ma Ying-jeou (馬英九): I took over as KMT chairman on October 17 last year to improve the efficiency of the government through closer cooperation between the party and government bodies. As the KMT takes the reins of the government, the administrative body, and especially the more than 70 legislators from the legislative body, come from different backgrounds and share different views on public policies, and so integration of opinions becomes extremely important.

I realized that we didn’t do the job well, and it was necessary to enhance the [integration of opinions]. I didn’t have much time to tackle this issue when taking over as the chairman last year because of the elections, and so I expected us to demonstrate closer party-administration cooperation in handling major policies after [the legislative by-election] on Jan. 9.

It had worried me that the legislature failed to pass the amendment to the Local Government Act (地方制度法) during the legislative session, and it was not about saving our faces. We had to pass the amendment during the extraordinary legislative session because the special municipality elections would face great problems if the proposal failed to clear the legislature.

There are structural reasons behind the tradition of fistfights in the legislature, and I mentioned to legislators [on Wednesday] that we wouldn’t be able to fix the problem by making adjustments in regulations in a short time. Instead, we should do our homework and integrate different opinions within the party before negotiations.

Discussing putting the proposal to a vote helped unite party legislators and resolved differences from within the party. Hopefully the KMT caucus would adopt the same method in the future when seeking to pass major bills: Have lots of communication within the party before presenting the bills.

TT: The KMT has taken a tougher approach in handling the passage of the amendment to the Local Government Act and the Environmental Protection Administration’s (EPA) planned policy to fine people who smoke while walking or driving. You’ve said the party was merely communicating with government bodies about policies via the party-­administration platform, but there is still concern that the KMT’s clout is growing over the government.

Ma: I think that’s far from the truth. Let me ask you, what role should a political party play? In democratic politics, the job of a political party is to help a group of people reach consensus and convey that consensus. Political parties are election machines to help members hold on to the reins of government. In modern society, however, it is also important for a political party to be involved in legislative affairs and policy coordination after coming into power.

[In the case of the planned smoking policy,] King called Executive Yuan Secretary-General Lin Join-sane (林中森), not EPA Minister Stephen Shen (沈世宏). It is perfectly normal and proper for the KMT secretary-general to communicate with the Executive Yuan secretary-general to convey public opinions to his Executive Yuan counterpart, and he should do so often. The Executive Yuan ­secretary-general is also a member of the KMT’s central standing committee. He attends weekly committee meetings and the Zhongshan meetings, and talks to King constantly.

TT: But it gives an impression that the proposal was adjusted because of one call from King and there was no discussion.

Ma: The EPA did not change the proposed policy, and it is still under review. When King called Lin to complain about the policy, Shen was in Lin’s office at the time. Shen and King were colleagues and they know each other well. They call each other by nicknames.

King conveyed public opinions to Shen over the phone, but Shen did not completely agree with his comments. They even had some argument about the issue. King also called Premier Wu Den-yih (吳敦義) later, suggesting that the executive branch should consider public complaints about the proposal before turning it into policy.

I think that this kind of ­communication is good, and [the party and the government] should have this kind of communication to make a policy comprehensive.

TT: True, it is normal that the secretaries-general of the Presidential Office, the KMT and the Executive Yuan would communicate with one another. However, what happened was later the same day that King called, the EPA announced it would hold off on the planned policy. Supposedly the proper process would be that the EPA minister reports to the Executive Yuan, has a discussion on the matter at the Cabinet’s meeting and awaits the premier’s directive.

Ma: Shen did report to the Executive Yuan. The premier gave him instructions later.

TT: But that’s because King made the call in the first place.

Ma: Yes, King made a call to Premier Wu, and Wu asked Shen to reconsider the proposal.

TT: Basically King’s one phone call prompted the EPA to change the policy.

Ma: The EPA didn’t give up on the proposal.

TT: It seems like you support King’s actions and agree that he can convey public opinion.

Ma: There’s nothing wrong with the procedure.

TT: If you agree King can address public needs, why don’t you name him premier?

Ma: It’s unnecessary to jump to this conclusion. As the party’s secretary-general, King heard about people complaining about the proposal when visiting cities and counties to promote party policies.

He should convey those opinions to the government, and he conveyed public opinion through the proper channel by telling the Executive Yuan’s secretary-general. What’s wrong with that? What mistakes did he make if there’s nothing wrong about reporting the opinions and the ­channel he used?

He made a call to Premier Wu after talking to the EPA minister, and suggested the Executive Yuan think about the proposal. The premier took King’s advice and instructed the EPA to reconsider the proposal. Although the EPA conducted a poll on the issue, sometimes poll results do not necessarily reflect public opinion. It’s not a bad thing to be more cautious. Presenting a policy without gathering enough opinions from the public would sometimes attract criticism from the people and accusations that the government is making policies behind closed doors.

King didn’t demand the EPA stop pushing for the policy. He merely told them that the policy might be too rigid.

TT: In addition to communicating with government bodies, King also took over the party secretary-general post to help the KMT secure election victories. However, the party has suffered several setbacks in recent elections. Will King or any top party officials take responsibility if the KMT is defeated in next month’s legislative by-­elections or in the special municipality elections in December?

Ma: The party has experienced so many elections, and there are responsibilities to be taken indeed. However, the factors behind victory or defeat in elections differ with the locations and environments where the elections are held.

I invited King back to enhance the functioning of the party. Former party secretary-general Chan Chun-po (詹春柏) continues to serve as the party’s vice chairman. He represents the “old stern” in the party, and hopefully the party can be more powerful by combining the force of the “old stern” and the “new branches.” So far local members agree the party is moving in the right direction, as the party is more energetic and more sensitive to public opinions.

This is an excerpt of the interview with the president conducted by staff reporters Charles Cheng, Huang Tai-lin,

Ko Shu-ling, Mo Yan-chih and Lisa Wang.