The Debate

Sorry, the Protests Have Undermined Taiwan’s Reputation

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The Debate

Sorry, the Protests Have Undermined Taiwan’s Reputation

The protests have had both economic and political implications for the island, argues Charles I-hsin Chen.

The effect the Sunflower student movement has had on Taiwan’s international reputation has been mixed. On the one hand, with a peaceful and rational ending, this 24-day occupation of Taiwan’s Legislative Yuan by mainly young student protesters has demonstrated to the world that Taiwan has a young, passionate civil society willing to take action to reform the country. On the other hand, however, Taiwan’s determination to participate in regional economic integration and the government’s ability to initiate liberalization reforms has been called into question.

The myth that Taiwan’s external economic relations can be completely decoupled from its economic ties with China seems to be growing. For instance, in a recent article in The Diplomat Michael Thim argued that Taiwan’s ability to join regional trade pacts would not suffer should it fail to ratify the Trade in Services Agreement (TiSA) with China, because the United States and Japan would not stop promoting their economic ties with Taiwan for this reason alone. Unfortunately, his observation appears to be superficial.

The truth is Taiwan’s reputation as a credible economic partner has been seriously damaged during this endless legislative impasse.

Although the U.S. government may not halt its current bilateral economic talks (on the Taiwan-U.S. Trade and Investment Framework Agreement) with Taiwan, which resumed last spring after a suspension for five years, its appeal to Taiwan to open up its market for American pork and beef offal actually represents a real challenge. It is well known that Taiwan’s service sector is much stronger than its agricultural sector. So the logic for American is simple: If Taiwan is reluctant to open its service markets, the chances of it opening its agricultural markets will be even smaller. So whether Taiwan can manage domestic opposition this time matters to the U.S. government, which may see this as an important indicator before engaging in further negotiations.

For Japan, the reason is more direct. One of the main reasons why Japan has been eager to strengthen its economic ties with Taiwan in recent years lies in the growing nationalist sentiment against Japanese products in China over the Diaoyu/Senkaku island dispute in the East China Sea. More Japanese enterprises now believe that this ideological resistance can be mitigated through collaboration with Taiwanese counterparts, who apparently receive much friendlier treatment from the Chinese. In this regard, the ratification and success of the service and commodity trade pacts between Taiwan and China becomes a decisive factor in encouraging further Japanese investment in Taiwan.

To avoid interference in Taiwan’s domestic affairs, the U.S., Japan and other countries will certainly avoid addressing cross-Strait issues in their economic negotiations with Taiwan. However, the credibility and capability of Taiwan government in committing to greater economic liberalization is a crucial factor for these potential partners in calculating whether it is worth strengthening economic ties with this island. In fact, the current failure to ratify the TiSA in the legislature has apparently already had a negative impact. According to Economics Minister Chang Chia-juch, some countries considering signing a free trade agreement (FTA) with Taiwan – including the Philippines, Israel, India and Indonesia – are starting to prefer a wait-and-see approach.

If there were no “China factor” all of these problems for Taiwan could be readily solved, but unfortunately this is not the reality. I was invited to pay an official visit to the European Union in Brussels in 2012 to try to identify the main obstacles for the EU in signing an FTA with Taiwan. The anonymous official in charge of the EU’s FTA strategy told me clearly that they would have to confirm there was no political interference from China before engaging in any substantial talks over an FTA with Taiwan.

This statement echoes the points made by Richard C. Bush III, director of northeast Asian studies at the Brookings Institution. In his latest report, he noted that in the international arena “there is a feeling you have to do it with China first before you can do it with the others.” Bonnie Glaser, a senior fellow in the Center for Strategic and International Studies, also told The Diplomat recently that China will not support Taiwan’s bid to join multilateral trade agreements such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP) before the TiSA is ratified. She argued, “China can use its influence to pressure one of the twelve TPP negotiating countries to not permit Taiwan to join.”

More importantly, if the TiSA is eventually defeated, the political impact may be greater than the economic impact. It will represent a significant step back in cross-Strait relations and will further shake regional stability in East Asia. In this case, it may be America that suffers most. Rupert Hammond-Chambers, president of the U.S.-Taiwan Business Council, wrote in the Wall Street Journal of his fear that if Taiwan’s debate over relations with China becomes radicalized, President Ma Ying-jeou may lose his ability to push new China initiatives. And Washington, remaining hugely vested in Taipei’s ability to forge peaceful cross-Strait relations, may risk seeing the Taiwan Strait again becoming the main flashpoint in U.S.-China relations.

In short, as Paul Wolfowitz, former president of the World Bank, noted on April 9, the real issue of this protest is not about trade or legislative procedure but “the reassurance of Taiwan’s free and democratic future.” He is right. It is apparent that the widespread fear toward China among Taiwanese people, particularly the younger generation, has become the biggest hurdle on Taiwan’s path to greater economic liberalization. This feeling may be one the most important legacies left by the Sunflower movement.

Charles I-hsin Chen PhD is a former spokesperson of the ruling Kuomintang Party in Taiwan and is a research associate at the Centre of Taiwan Studies at London School of Oriental and African Studies.