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Post-election Cross-strait Relations

Window of Opportunity or Pandora's Box?


A new storm of "Mainland Fever" is brewing in Taiwan, as the election of Ma Ying-jeou heralds a grand opening of relations. But what will the pace and the paradigm of this opening be? And how can Taiwan keep a cool head?



Window of Opportunity or Pandora's Box?

By Hsien-Shen Wen
From CommonWealth Magazine (vol. 394 )

At the top of the cross-strait relations agenda following the May 20 inauguration of president-elect Ma Ying-jeou will be trade-related measures, including the opening of direct air and sea links with China, admitting mainland tourists, authorizing the exchange of Chinese currency at local banks, relaxing the investment ceiling on Taiwanese enterprises' investments in China (currently set at 40 percent of net asset value), and relaxing restrictions on mainland investment in Taiwan.

Although during its time in power the outgoing Democratic Progressive Party (DPP) was unable to realize these measures, this coming first wave of breakthroughs in cross-strait relations actually comprises the less controversial aspects of relations with China. Indeed, as Shao Qiwei, director of China's National Tourism Administration acknowledges, six rounds of talks in 2006-2007 in Macau between tourism-related "civic groups" from the two sides hammered out details including the size of tour groups, documentation verification, tourist charters, market procedures, establishment of representative organizations, and even a limit of 1,000 per day on mainland Chinese tourists visiting Taiwan, with a maximum stay of 10 days.

Politically, at issue is the question of the nature of cross-strait tourism: whether it shall be deemed "domestic tourism" on "domestic air routes" or "overseas tourism" on "international air routes." The political mistrust between the DPP administration and authorities in China blocked any form of final agreement between the two sides.

The dispute over whether such tourism is "domestic" or "international" can be expected to be quickly resolved once Ma takes office, given the willingness of both sides to accept the more neutral classification of  "cross-strait routes," thus reducing air and sea transport costs and creating new sources of tourism revenue, which could directly benefit Taiwan to the tune of NT$100 billion annually.

Ma's Vision More Far-reaching

Examining the positions of the two sides, perhaps most surprising is that Ma advocates reaching an agreement that is in many respects more far-reaching than that of his mainland counterparts.

On the numbers of Chinese tourists permitted to come to Taiwan, mainland authorities favored an initial limit of 1,000 per day, while Ma hopes for a broader package that would permit 3,000 per day and gradually open seven ports of entry to mainland tourists, exceeding expectations from the other side.

As for currency exchange, despite Hong Kong having already reverted to Beijing's rule, Chinese authorities have initially adopted a step-by-step approach, establishing a system for clearing currency transactions between the two sides as China has yet to permit its currency to freely float on the international market. Ma hopes to "fully open" local financial institutions to renminbi exchange transactions by the end of the year at the latest, far exceeding the plans of Chinese authorities.

It is unclear whether China will fully agree with Ma's far-reaching proposals, not necessarily because Chinese authorities wish to impede cross-strait relations; rather, given the experience of past cross-strait hostility, there is concern that an overly hasty opening could provoke unforeseen circumstances and hostility that could prove detrimental to the further stable development of cross-strait relations. On this point, it is clear that Chinese authorities wish to adopt a much more cautious approach than Ma, who appears to be in a great hurry to achieve immediate results.

Meanwhile, as Taiwan asks for greater opening in China, the Chinese authorities can be expected to reciprocate with demands of their own, including relaxation of restrictions on mainland Chinese imports, establishment on Taiwan of representative offices for mainland Chinese shipping companies and airlines to share in the benefits of direct transport links, and allowing state-run mainland Chinese banks to open offices in Taiwan in exchange for allowing Taiwanese banks to develop their business in China.

Cross-Strait Talks to Soon Go Political

Following Ma's inauguration, the second wave of development in cross-strait relations will see a resumption of high-level negotiations between Taiwan's Straits Exchange Foundation (SEF) and China's Association for Relations Across the Taiwan Straits (ARATS), which will evolve from strictly economic issues to much thornier political issues.

Talks between the SEF and the ARATS were suspended during the Lee Teng-hui era, due to Lee's insistence that relations between the two sides amounted to a "special state-to-state relationship." But they can be expected to quickly resume, given that Ma and Chinese president Hu Jintao have both expressed willingness to resume cross-strait negotiations between the two organizations on the basis of the "1992 consensus."

The so-called "1992 consensus" refers to the two negotiating bodies' agreement in Hong Kong in 1992 to handle their dispute over the "one China principle" in vague terms. Both sides agreed to accept the "one China principle" while recognizing that each had a different interpretation of what "one China" actually meant. Although China later expressed disagreement with Taiwan's stated position of "one China, each side with its own interpretation,” in reality, the 1993 talks between SEF chairman C.F. Koo and ARATS chairman Wang Daohan essentially went ahead based on the two sides' agreeing to disagree on this point.

The essence of the "1992 Consensus" – a willingness to agree to disagree – was fully demonstrated when it served as the basis of a 2005 joint communiqué issued after meetings between former KMT chairman Lien Chan and Hu Jintao, acting in his capacity as Chinese Communist Party secretary general.

The text of the joint communiqué, hammered out in meetings between the leadership elites of the two parties and the highest-level political document between the two sides since the Koo-Wang talks, never once mentions the "one China principle, "referring merely to the "1992 consensus."

Five Key Points of Lien-Hu Communiqué

With the KMT set to take full control of the reins of government in Taiwan, each of the five key working points of the Lien-Hu Communiqué, encompassing virtually every aspect of the current stage of cross-strait political and trade relations, will soon set the stage for the opening of political dialogue between the governments of the two sides. As such, a re-examination of the content is of particular practical importance. The main points of the communiqué are:

1.    Resumption of equal negotiations based on the "1992 Consensus" to discuss issues of mutual concern and problems concerning one or the other side.

2.    Promoting a formal end to cross-strait hostilities through the conclusion of a formal peace agreement and constructing a framework for the peaceful and stable development of cross-strait relations. This would include establishing a confidence-building mechanism between the militaries of the two sides to avoid armed conflict.

3.    Promoting the opening of full cross-strait economic cooperation and the establishment of close economic relations (something similar to the CEPA agreement concluded between Hong Kong and China to further economic cooperation). This would include the establishment of comprehensive, mutual and direct trade, transport and communications links between the two sides; strengthening investment and trade flows and guarantees thereupon; cooperation in the farming and fishing industries; resolving issues regarding the sale of Taiwanese agricultural products in China; and cooperation in fighting crime. Moving ahead, the establishment of a stable mechanism for economic cooperation would set the stage for prioritizing discussions regarding establishment of a cross-strait common market once negotiations resume.

4.    Promoting the discussion of Taiwanese participation in international events, following the resumption of talks. This would include prioritization of discussions regarding Taiwanese participation in the World Health Organization. Both sides agreed to work to create the conditions necessary to reach a final resolution to these issues.

5.    Establishment of a regularly scheduled platform for party-to-party communications, inviting the participation of individuals from all sectors of society.

Chinese authorities are aware that Taiwan's political reality is such that the development of cross-strait relations cannot proceed without DPP participation. Hu himself hinted as much at the 11th National Committee of the Chinese People's Political Consultative Conference in Beijing in March.

In a statement posted on the Chinese Communist Party's internal "Cross-Strait Relations Advisory Webpage," Hu advised relevant authorities in China that: "[We must] also work to secure unity with those who once embraced delusions of Taiwan independence, advocated Taiwan independence or even engaged in Taiwan independence activities. They need only return to the correct path of promoting the peaceful development of cross-strait relations to receive our warmest welcome in the spirit of sincere mutual esteem. It is only through the realization of a grand unity that major development in cross-strait relations can proceed."

Securing DPP Support

The remarkable part of that statement, aimed squarely at the pro-independence DPP and its membership, is that it demands only that those who have previously engaged in Taiwan independence activities "return to the correct path of promoting the peaceful development of cross-strait relations," without demanding recognition of "one China."

In other words, regardless of what the outcome of the March 22 election was to be, Chinese authorities had already decided to "seek unity" with those within the DPP who advocated the peaceful development of cross-strait relations.

In accordance with Hu's directive, when the DPP moves into the opposition after May 20, a grand push to draw in DPP members will ensue, from the central government down to local governments, from political, economic and academic affairs to civic organization exchanges, seeking to "warmly welcome" them in "the spirit of mutual esteem."

Before any of the more prickly issues return to the forefront, Taiwan is destined to go through a phase of searing China fever.

After the May 20 inauguration, the giant pandas Tuan Tuan and Yuan Yuan are expected to arrive in Taiwan, as harbingers of days to come. Under 24-hour media bombardment, "panda fever" will be unstoppable.

Treatment for China Fever

Airlines from the two sides will soon be shuttling passengers between various cities on both sides of the strait and mainland tourists will before long be appearing on the highways and byways of Taiwan. And it won't be long before renminbi exchange rates are posted in Taiwanese banks.

As investment by mainland enterprises and banks in Taiwan develops and limits on investment in China by Taiwanese enterprises are relaxed, cross-strait joint investment and cooperation will rise in pace with growing cross-strait economic interdependency, and gradually a more intimate "yours, mine, ours" relationship will take shape.

For Taiwan, it won't be easy to maintain a cool head amidst the scorching heat of the coming China fever. But it is an absolute necessity if the right choices are to be made.

Translated from the Chinese by Brian Kennedy

Chinese Version: 520後兩岸關係新局