Wednesday, July 21, 2010

Air controversy shows many hurdles in wake of ECFA signing

Controversy this week surrounding an increase in the number of direct cross-strait flights has created an uncomfortable atmosphere for both sides of the Taiwan Strait and has added to the complexity of bilateral negotiations surrounding the recently signed economic cooperation framework agreement (ECFA).

Due to differing interpretations and understanding of a deal signed in May, Taiwan called off 36 flights Tuesday, while China put the stops on 31.

This can be seen as a sign that while the ECFA has won praise for long-overdue trade liberalization between the two former rivals and for reducing cross-strait tension, there are still many hurdles to clear.

The government is convinced that the ECFA will boost Taiwan's economy by eliminating tariffs, relaxing regulations and allowing more access to each other's markets.

However, the opposition Democratic Progressive Party (DPP) and Taiwan Solidarity Union (TSU) have claimed repeatedly that the deal will increase Taiwan's dependence on China and jeopardize local employment and small and medium-sized businesses.

Even though the agreement has already been signed, consensus on how the pact should be reviewed by the legislature is still lacking, and the DPP walked out of a July special session of the Legislative Yuan when the ruling Kuomintang (KMT) refused to accede to the opposition's demand that the agreement must be reviewed clause-by-clause rather than as a whole.

Nevertheless, the pact is expected to clear the legislature in an August special session as the ruling Kuomintang (KMT) holds a majority of over 60 percent of the seats.

According to the opposition, the public should have the final say on an agreement as important as the ECFA through referendum. However, its referendum proposal was thrown out by the Cabinet's Referendum Review Committee June 3 on the grounds of "a conflict between the reasoning and the question itself." The opposition followed that rejection with another referendum drive, which is currently being screened.

Another challenge comes from Article 11 of the ECFA, which stipulates that Beijing and Taipei must establish a cross-strait economic cooperation committee to handle negotiations, as well as the implementation and interpretation of the ECFA or disputes arising from it.

The opposition suspects that this will create a supra-governmental body without accountability, while the government has given its assurance that the committee will be monitored, since most of its members will come from different government agencies. To date, the committee members have not been named.

In addition to the ECFA's positive effect on Taiwan's economy, whether Taiwan will be able to pursue free trade agreements (FTAs) with its major trade partners is seen as one of the barometers of the deal, with the government insisting that such deals are vital to prevent Taiwan from being marginalized in the ongoing regional economic integration.

China has said publicly that it acknowledges Taiwan's wish to negotiate FTAs with its partners, but has refused to guarantee that it will not interfere with Taiwan's attempts to do so.

How the World Trade Organization (WTO) is expected to handle the trade pact has also ignited domestic debate. The government has pledged that since both parties agree that the ECFA was negotiated "under the spirit of the WTO" and that both Taiwan and China are WTO members, the full text of the deal in English will be submitted to the WTO's Committee on Regional Trade Agreement as a required notification.

The opposition has raised concerns about the translations for certain words in the English version, including the name that will be used to designate Taiwan. It has also expressed concern over the signatories of the agreement.

Taiwan joined the WTO in 2001 under the name "Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, " but the WTO often refers Taiwan as "Chinese Taipei." Meanwhile, the ECFA was signed by the heads of the Straits Exchange Foundation and the Association of Relations Across the Taiwan Straits, unofficial organizations set up by Taiwan and China, respectively, to handle cross-strait negotiations in the absence of official ties.

Taiwan and China are scheduled to hold further rounds of talks every six months to build on the ECFA through a "block-building" process. Both sides have agreed that second "early-harvest" lists could be included in such talks.

Under the June 29 agreement, the two sides will phase out tariffs on a number of items and services -- 539 on the Chinese side and 267 on Taiwan's -- by January 2013. With the extensive domestic debate and attention paid to the first "early-harvest" lists, further public discussion on future rounds of talks are likely to take center stage again. By Chris Wang CNA Staff Reporter ENDITEM/J