Taiwan-China Ties to Cool
Image Credit: Office of the President of Taiwan

Taiwan-China Ties to Cool

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The seventh quasi-official meeting between Beijing and Taipei has been postponed due to a stalemate in negotiations over an investment protection agreement. The two sides disagree on the need for a third-party arbiter, with Taipei wanting a third-party mechanism, while Beijing prefers to have an arbiter on the mainland.

The dispute is a sign that it’s time for both sides to consider new ways of helping prevent a deterioration in cross-strait relations – and involving a third party in cross-Strait economic affairs would be a very good start.

The two sides’ differences ultimately revolve around sovereignty, a core issue that both sides have managed to avoid thus far by reaching agreements only on economic or functional issues. Although this has led to 15 agreements over the past three years, including an FTA-like ‘Economic Cooperation Framework Agreement’ (ECFA) in the middle of last year, the forward momentum in cross-Strait relations that has prevailed since mid-2008 is grinding to a halt.

Meanwhile, the benefits of closer cross-Strait economic ties, mostly on the Taiwanese side, are falling away. In the first half of 2011, the growth rate for investment flowing to the island from mainland Taiwanese enterprises shrank from 17.2 percent to 10.4 percent on the previous year. Taiwan’s employment, meanwhile, didn’t increase after implementing the ECFA, nor did President Ma Yin-jeou’s popularity rise. The number of Chinese tour groups coming to Taiwan is diminishing, while the number of mainland individual tourists – an option that was launched in June – hasn’t met expectations. For Taiwan, then, the current situation with the mainland seems to be as good as it will get.

Some might argue that this is a short-term slowdown resulting from Taiwan’s upcoming presidential campaign. Certainly, the neck-and-neck race between Ma and opposition hopeful Tsai Ing-wen makes both sides of the Strait hesitant to move forward. However, neither candidate can turn the clock back to 2008. If Ma wins, Beijing may well demand negotiations on political issues. If Tsai wins, Beijing might give Taiwan the cold shoulder because of her rejection of the ‘1992 consensus.’ Even if Beijing is willing to be patient with whoever is in office, relations are likely to deteriorate with all the ‘easy’ agreements having been made.  

The fact is that the honeymoon is over. Beijing has realized that its economic favours no longer appeal to many Taiwanese, with the number of people supporting unification remaining low.Yet scaling back those ‘favours’ would only worsen Beijing’s standing in Taiwan.And, although Beijing seems ready to put international or military issues on the table for political talks, Taipei has avoided such discussions.Whether the next Chinese leader will continue to be patientwith Taipei remains to be seen. For its part, Taipei has realized that Ostpolitik hasn’t improved its security, as China’s launch of an aircraft carrier and a PLA fighter jet crossing the middle line of the Strait has demonstrated.

In addition, Beijing’s objections to US-Taiwan arms deals have exacerbated Taipei’s concerns. Fear of losing US arms sales makes Taipei more reluctant to discuss difficult issues with Beijing, meaning that difficult bilateral negotiations are likely to stagnate.

My point is not to sound pessimistic about cross-Strait relations, but rather to avoid the kind of excessive optimism that has dominated thinking on both sides over the past three years. Remember the early-1990s détente between Beijing and Taipei? It ended in a crisis from 1995 to 1996.

The shadow of the two leadership transitions looming over both sides is creating even greater uncertainty. Aware of this, Su Chi, former secretary of Taiwan’s National Security Council, recently launched a think tank aimed at consensus-building within the island and across the Strait. Still, however necessary the move, it has likely come a little too late.

With all this in mind, then, Beijing and Taipei should consider the introduction of a third party in cross-Strait economic affairs. Given that both sides enjoy separate jurisdiction and legal systems, incorporating a third party guarantee seems both practical and reasonable. Singapore would be a good option as a third party, not least for its sound legal system and experience with cross-Strait affairs. A third party mechanism would help allay Taiwan’s concerns in interacting with a stronger party, encouraging Taipei to cooperate with Beijing on broader issues. Beijing, for its part, wouldn’t need to worry about ‘internationalizing’ cross-Strait affairs – no country is likely to challenge China on the Taiwan issue, meaning Beijing has more leeway to compromise on this issue than before.

Inviting a third party into cross-Strait economic affairs would be a breakthrough for China, especially if Beijing finally realizes that its position will actually be consolidated by other states’ recognition. It will also help alleviate other countries’ concerns. After all, the impact of developments in cross-Strait relations goes beyond the region. Sharing Beijing-Taipei peace dividends with other states could also provide an added incentive for the two nations to maintain a stable cross-Strait relationship and improve regional stability.

Nien-chung Chang Liao is a Ph.D. candidate at the Graduate Institute of East Asian Studies at the National Chengchi University, Taiwan.

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