Legislature Should Oversee Cross-Strait Talks
In this exclusive interview, the former DPP chairwoman and presidential contender argues for greater caution and broader responsibility in the pursuit of trade agreements.
Legislature Should Oversee Cross-Strait TalksBy Uidy Kao, Jung-Shin Ho
From CommonWealth Magazine (vol. 527 )
Ever since Taiwan's admission to the World Trade Organization, two of the country's international negotiators with the greatest experience and vision have been former vice president Vincent Siew on the ruling party side and former DPP chairwoman Tsai Ying-wen on the opposition side.
Addressing this summer's session of the CommonWealth Economic Forum, Siew advised that Taiwan should consider the Economic Cooperation Framework Agreement (ECFA) and the recently signed Cross-Strait Agreement on Trade in Services (CATS) from an entrepreneurial perspective and "view it as an opportunity rather than a threat."
Tsai, meanwhile, is not necessarily opposed to signing economic and trade agreements with China, but she believes that the signing of the CATS involved no overall strategy, was in effect putting the cart before the horse, and that it was an "irregular negotiation" that undermined the authority of the Legislative Yuan.
As Tsai sees it, the poor performance of President Ma Ying-jeou's administration fueled a desire to raise the president's prestige by securing concessions from China through the CATS negotiations, but ultimately resulted in a fall into China's strategic orbit and losing controlling authority over cross-strait trade.
"The whole world knows China is adept at using its economic power to achieve its political ends," Tsai says.
Legislative Authorization Should Precede Negotiations
What most baffled Tsai was how the Ma Administration had locked the Legislative Yuan out of the negotiation process.
"The people and the legislature are your greatest leverage when conducting external negotiations. Why would you throw away your leverage?"
As the Legislative Yuan prepares to address the Cross-Strait Agreement on Trade in Services, Tsai is advocating passage of "cross-strait negotiation oversight legislation" that would require legislative approval of trade negotiations such as wielded by the U.S. Congress.
Tsai is also calling on the Ma Administration to convene a national economic affairs conference to discuss cross-strait trade negotiations, pension system reform and other key issues.
Below are highlights from CommonWealth Magazine's interview with the former DPP leader:
Q: In your view what has been the biggest problem with the Ma Administration's handling of this round of negotiations?
A: He (President Ma) had no overall strategy. During the course of all negotiations, there are going to be winners and losers in business. WTO negotiations went on for a decade and we had clear strategic objectives, so the negative impact on Taiwan was minimized.
Negotiation Procedure: Cart before Horse
The procedure in this round of negotiations put the cart before the horse. As a developing nation's economy grows and it begins to enter into international negotiations, industrial goods must be addressed first, followed by commercial goods and, finally, the service industry.
As the service sector is the last to develop, it is subordinate to the agricultural and industrial sectors. But with the signing of ECFA, the sequence has been turned on its head, with the service sector coming first. It did not progress from the industrial to the service sectors, nor from the powerful to the vulnerable. The sequence is wrong.
Additionally, priority should be accorded free trade agreement negotiations with advanced nations first or with those nations that are relatively economically complementary with your own nation. You don't want to prioritize negotiations with those who are preparing to be your direct competitors. South Korea first sought FTA talks with the U.S., the E.U. and ASEAN.
The biggest problem with the CATS was that Taiwan conducted the negotiations with China in the same way it would have negotiated a free trade agreement with any other country, with absolutely no consideration given the peculiarities of the cross-strait relationship, or the massive discrepancies in scale, degree of liberalization and legal framework of the two economies involved, resulting in more harm than benefit for Taiwan.
President Ma has been inadequate in his handling of domestic affairs and has lost the public trust. He believes his only achievements lie in the area of cross-strait relations. As his domestic political situation has deteriorated, the only salve that may soothe and revive his political fortunes lies in cross-strait trade agreements. A key ingredient in that salve are concessions he hopes to wring out of China.
China Concessions Fail to Impress
But when you sign a commitment to liberalize, you're turning the sword against yourself. As long as China chooses not to move against Taiwan, the situation in Taiwan still appears quite peaceful. But if they ever choose to make a move, Taiwan will soon be finished.
Q: The Communist Party of China has consistently professed a "conciliatory" stance toward Taiwan. Is that really the case?
A: China entered the WTO under the status of a developing nation, so its degree of market openness was far below that of Taiwan. Consequently, even if Taiwan manages to secure some preferential considerations relative to other nations, that can hardly be called a concession.
Although China talks openness, there remain numerous regulatory obstacles and hidden, non-trade barriers, enabling it to control exactly to whom its market is open.
The most beneficial thing the Ma Administration could have done for Taiwan's service industry would have been to secure normalization of Chinese tourists transiting in Taiwan and transshipment of Chinese air-sea cargo in Taiwan, but they didn't. What's more, they have been completely ineffective in dealing with China's efforts to attract Taiwanese service professionals and the restriction of preferential conditions to certain designated areas in China.
Q: What impact can Taiwan expect from the CATS?
A: As regards the opening of Taiwan's service market to China, there are three things we must be wary of: first, Chinese companies using their size advantage to take control of key Taiwanese industries, for example banks, telecom firms and other businesses with significant national security implications; second, China seeking to exercise social and political influence over Taiwan by swamping the private sector through its advantage in sheer number of companies; and third, the influence Chinese nationals coming to Taiwan in large numbers to invest in the local service industry may have on Taiwanese society and its job market.
Q: But the Taiwanese government has insisted there will be stringent checks on that.
A: I often used to be the "bad guy" at the Mainland Affairs Council. But ever since the Ma Administration took power, no agency dares to play the bad guy. They're unwilling to be the bad guy, ultimately leaving it to the president to put up a resistance. But the president has his own political agenda, and even he won't resist.
Legislative, Citizen Oversight Needed
Q: How should the Legislative Yuan supervise cross-strait talks? How can the necessary transparency be achieved?
A: I favor passage of a "Cross-Strait Negotiations Supervisory Act" prior to the Legislative Yuan's line-by-line reading of the CATS. The controversy has been so great over this issue because there has been no oversight. The executive branch cares only about their own political stance, and the legislature is definitely not able to harden itself to put up a fight. So the supervisory framework must be grounded in new legislation. Aside from legislative supervision, the business community and citizens' groups must be afforded an opportunity to air their views.
In the U.S., for example, a mechanism for Congressional authorization of the executive branch to act as trade negotiator gradually took shape starting in 1934. Congress may pass authorization for the executive branch to negotiate, but may stipulate the duration of that authorization and the chief negotiating objectives. Lawmakers are involved in the negotiation from the initial proposal and formulation of the negotiation principles through the entire process.
For instance, five members of Congress act as consultants to the Office of the United States Trade Representative, and Congress is empowered to dispatch additional members based on the circumstances of the negotiations at hand.
Q: The process of liberalization is always a win-some, lose-some proposition. How might Taiwan continue down that path?
A: In countries with relatively small economies, the government must have clear ideas on its economic development and its strategy for international competitiveness. Taiwan must do its utmost to seek a level playing field through the multilateral international trade system.
Taiwan can also engage in multilateral talks, including cross-strait talks, aimed at gradually overcoming barriers to its participation in groupings such as the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. Given that Taiwan in the near-term will be unable to enter into many free trade agreements, it could use the interval to guide the upgrade of domestic industry. The government could stand to pay more attention in this area.
Q: How do you think cross-strait relations will progress during President Ma's second term?
A: President Ma believes the signing of cross-strait agreements to be his greatest political achievement, so he has a tendency to rush into them without weighing any consequences. This sort of cross-strait agreement – talking for the sake of talking, signing for the sake of signing – is increasingly harmful to Taiwan's overall interests and only serves to whet China's appetite, hastening the inevitable pressure to enter into political negotiations. There will always be a political price to be paid for the economic agreements we sign with China.
Translated from the Chinese by Brian Kennedy