This mutually beneficial pact should have been eagerly anticipated and welcomed with open arms, but it has triggered misunderstanding and controversy at home.
The scenario is nothing new, however. Reactions have been largely the same as following the signing of the Cross-Straits Economic Cooperation Framework Agreement (ECFA) and the setting of standards for US beef imports. Government bodies once again failed to explain what they were up to in the prelude to the signing, there was no overall or detailed evaluation of the expected benefits, and in particular no compensatory measures were announced to aid those going to be worst hit. These basic procedures could have prevented a reaction that threatened to spin out of control.
Rather than dismiss reaction to the pact with vague generalities, or engage in populist damage control, a closer examination of its root causes is needed in order to rescue Taiwan from this constant impasse.
The ostensible reason why the pact had such a strong adverse reaction this time, from legislators, opposition parties and civil organizations, was a lack of openness on the part of the signatory organizations. The response to this accusation from the chief negotiators from the SEF and ROC Ministry of Economic Affairs was not entirely unreasonable. They said that if they had first publicly revealed their position, it would be tantamount to laying their cards down, leaving them naked at the negotiating table.
A better way of solving the transparency problem would have been to first discuss matters with the parties concerned in the sectors they intended to open, so they could understand the potential effects and prepare themselves. The secrecy only made matters worse.
Negotiations for similar services pacts have in fact already entered a “deep water zone,” where Taiwan can no longer expect to receive unilateral preferential treatment, such as under the ECFA early harvest agreement.
During the course of negotiations, mainland China repeatedly said that mutual benefit could only be obtained through reciprocity and openness. Having reached this stage, Taiwan could no longer just take and give nothing in return.
Given the circumstances, it should have come as no surprise that domestic businesses in the service sectors bearing the brunt of the impact voiced their opposition. The government could have handled things better by making proper evaluations of the affected sectors and offering guidance and financial aid to those potentially affected.
The ultimate purpose of all of these economic and trade accords is to create business opportunities and boost competitiveness through opening up markets. But the net result of opening will be that the strong can boost their market share, while the weak face going to the wall, presenting the government with a dilemma.
Given that economic and trade liberalization is the global trend, protectionism is a poor alternative to a daring opening combined with necessary support and guided restructuring for less competitive industries.
Although the services accord is seen as integral to further deepening cross-strait trade cooperation, the bigger picture is an eventual cross-strait free trade agreement. This will enable Taiwan to deal with the likely impact of future FTAs involving the Association of Southeast Asian Nations and Japan, South Korea and mainland China; to work with other countries to establish economic arrangements similar to FTAs; and to join regional free trade blocs such as the Trans-Pacific Partnership. If the cross-strait services agreement fails to be ratified by the Legislature, all of these other agreements will be doomed to failure and Taiwan be further marginalized.
Nor is ratification of the accord by Taiwan’s legislature a simple matter. Because the Legislative Yuan was left completely in the dark during negotiations, legislators from all parties have voiced opposition, and the pact will only be able to pass after close scrutiny. But this kind of accord is by nature different from a normal bill concerning domestic affairs. It can be either passed or rejected as a whole. If the legislature were to insist on reviewing it article by article, it would be destroying the division of power between the legislative and executive branches of the government.
An accord that could have been hailed as a breakthrough has unexpectedly turned stale after all the recriminations. If matters continue in this vein, cross-strait relations can only become more difficult, and Taiwan’s future even more so. (SDH)
(This commentary first appeared in the Commercial Times June 26, 2013.)