Features | Economy | East Asia

Ma’s Backdoor China Embrace

The trade deal between China and Taiwan is about much more than economics. China admits it, so why won’t Taiwan’s president?

Ma’s Backdoor China Embrace
Credit: Office of the President of Taiwan

Pushing through a landmark trade deal with a country that wants to annex you—surely only a wildly popular leader would feel he had a mandate for this?

If you’re Taiwanese President Ma Ying- jeou, then the answer’s apparently no. Ma rode a wave of frustration with his unpopular predecessor Chen Shui-bian and romped to victory in March 2008 promising to reinvigorate the Taiwanese economy. Yet his approval rating has tumbled from highs of 79 percent in the days following his election to a lowly 28 percent in a Global Views poll taken earlier this month. The ruling Kuomintang party (KMT) has also been on the back foot in local elections, losing out to the main opposition Democratic Progressive Party in a string of legislative by-elections and local polls this year.

To be fair, Ma has actually had some success in persuading the public of the merits of the Economic Cooperation Framework Agreement (ECFA), which is being signed today in the Chinese city of Chongqing. The idea was first floated about 18 months ago, to little excitement. Since then, however, polls have found public support for the pact exceeding opposition, while a rally against the deal in Taipei over the weekend fell well short of attracting the 50,000 to 100,000 it had hoped for (though police still estimated a turnout of about 32,000 in heavy rain).

Ma claims that the pact is essential for Taiwan’s future growth prospects, and pledges to lead the island into a ‘golden decade,’ noting that the number of free trade agreements signed that involve Asian nations has jumped from three in 2000 to almost 60 in 2009.

And it seems it’s not just the KMT that sees the economic benefits of the deal. Analysts from the Washington-based Peterson Institute for International Economics have estimated that the pact could boost Taiwan’s GDP by as much as 5.3 percent by 2020, with the authors arguing in a policy brief released this month that: ‘We can think of few (if any) other policy reforms available to Taipei that could deliver such gains.’

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The KMT already has some form delivering on the economy—this week consumer confidence hit a 6-year high, while the jobless rate last month fell to its lowest level in 17 months as export orders in the same month surged by 34 percent.

But support for the deal hasn’t been universal among analysts, including National Taiwan University Prof. Kenneth Lin, who argues that China has deliberately left the ECFA as the only trade avenue for Taiwan.

Writing in a policy paper earlier this year Lin argued: ‘After signing ECFA with (China), then Taiwan, ASEAN and (China) will form the hub-and-spoke framework, that is, the preferential trade arrangement only exists between Taiwan and (China) and between ASEAN and (China), but there is no preferential trade arrangement between Taiwan and ASEAN.’

I asked Taipei-based blogger Leonard Chien if there were concerns among the public about the economic impact of the deal. Perhaps not surprisingly, he highlighted a by no means Taiwan-specific fear of an influx of cheap labour (fears that would have found a sympathetic audience with British worried a few years ago about Poles massed on their borders). But Chien also said there are concerns about what comes next in the multi-staged negotiations, with some worrying that some time in the near future Taiwan will be requested to open up its services or financial sector.

But even supposing the deal is clearly in Taiwan’s interests, why didn’t Ma take the option of the political cover of a referendum (after all, the public has been strongly in favour of one, even after Ma’s superior performance in a televised debate with the opposition leader over the pact in April).

And, as Taiwan-based analyst J. Michael Cole noted to me yesterday: ‘In good old Chinese Communist Party style, most of the negotiations were conducted behind closed doors and only very recently were the “early harvest” lists—the items from each side that will be receiving preferential tariff treatment—made public.’

Cole also noted the accelerated negotiation timetable—about six months—and the curiously specific deadline for the deal’s signature, which as he says is never a good sign. But more than this is the issue of Taiwan negotiating with a hugely powerful neighbour that simply doesn’t recognize its right to exist as an independent entity, and it’s this fundamental point that makes this more than just another free trade agreement. And it should be giving Taiwan pause over the apparently sweet concessions that China appears to be offering now.

One of my favourite quotes is one by Confucius: ‘It does not matter how slowly you go so long as you do not stop.’ I believe this goes to the heart of how China views the annexation process of Taiwan.

China has been upfront about the fact that it sees the trade deal as a step toward greater political integration. If Ma believes that this is the best path for Taiwan, he should have the courage of his convictions and take a deal that clearly has political implications to the people. In the meantime, though, he should remember that he was elected president of Taiwan, not governor of China’s 23rd province.