GROUNDED:：The government denied reports the delay in an aviation pact with Tokyo was due to Chinese interference. Japan just said that it wasn’t ready to sign
By Jason Tan, Shih Hsiu-chuan and Chris Wang / Staff Reporters
Fri, Sep 23, 2011 - Page 12
Taiwan and Japan yesterday signed an investment protection accord, signaling a breakthrough in economic cooperation that could lead to the signing of a free-trade agreement one day.
After more than a year of negotiations, Taiwan and Japan signed the “Arrangement for the Mutual Cooperation on the Liberalization, Promotion and Protection of Investment (投資自由化、促進及保護協議),” which is expected to take effect by the end of the year pending legislative approval.
Taiwan and Japan already enjoy close business ties despite the lack of an investment protection accord. With the signing of the agreement yesterday, both countries will have a set of guidelines to safeguard mutual investment activities, Vice Minister of Economic Affairs Hwang Jung-chiou (黃重球) said.
“Japanese enterprises are conservative and prudent in investing overseas. Now that we have a government-level pact, it will entice more small and medium-sized Japanese companies to invest in Taiwan,” Hwang said.
Potential investments span petrochemicals, chemicals, machinery, biotechnology and digital content, he added.
Minister of Economic Affairs Shih Yen-shiang (施顏祥) said Taiwan has actively sought FTAs with other economies for the past three years, adding that its improved regional economic status, especially after the signing of the Economic Cooperation Framework Agreement (ECFA) with China last year, had led to the signing of the bilateral investment pact with Japan.
Another factor that accelerated the pact signing was Japan has been trying to find a backup overseas production base after the devastation wrought by its March 11 earthquake and tsunami, Shih said.
Such a production base will help Japan weather supply chain disruptions if disasters were to strike again in the future.
There has been a surge of interest from Japanese firms inquiring about the investment climate in Taiwan after the disasters, Shih said.
The investment pact was signed by Taiwan’s Association of East Asian Relations Chairman Peng Run-tsu (彭榮次) and Japan Interchange Association Chairman Mitsuo Ohashi.
Ohashi hailed the pact as a milestone in Japanese and Taiwanese relations and expressed hope that it would deepen future collaborations.
Under the pact, Taiwan and Japan agreed to settle trade disputes via international arbitration agencies. Further liberation of investment sectors will be discussed by the establishment of a commission when the pact takes effect, according to the Ministry of Economic Affairs.
Despite signing the ECFA, Taiwan and China have yet to sign an investment protection accord as both parties have not failed to agree on an arbitration mechanism in the event of disputes.
After China, Japan is Taiwan’s second-largest trading partner and it is the fourth-largest foreign investor in Taiwan. Bilateral trade totaled nearly US$70 billion last year, government data showed.
Meanwhile, plans to sign an open-skies agreement as well yesterday were delayed because negotiations are still under way.
The open-skies agreement would allow Taiwanese airlines to offer flights to Japanese airports, except those in the Tokyo area because Narita Airport has an agreement with local residents to limit arrivals and departures.
If the agreement is signed, Japan will be the third country to sign an open-skies accord with Taiwan, following the US and Singapore.
Local media reported yesterday that Japan had called off the scheduled signing of the aviation pact because of political interference from China.
Su Qi-cheng (蘇啟誠), the vice secretary-general of the Ministry of Foreign Affairs’ East Asian Relations Commission, said he had no comment on the reports, but confirmed that the delay was a last-minute change by Japan.
“We were told [by Japan] that [Tokyo] wished to reschedule the signing because it was not ready, without providing further information,” Su said by telephone.
It was a “pity” that the open-skies deal wasn’t signed together with the investment protection arrangement yesterday since both sides have completed negotiations over the text of the aviation pact, Su said.
Foreign ministry spokesman James Chang (章計平) said the aviation pact was not signed because both parties had not finalized the text of the agreement, adding that “we haven’t heard of any pressure from any party as reported that led to the cancelation.”
Unconvinced, Democratic Progressive Party (DPP) lawmakers accused China of interfering with the negotiations with Japan.
DPP Legislator Tsai Huang-liang (蔡煌瑯) said the wording of “arrangement” instead of “agreement” suggested behind-the-scenes Chinese pressure.
President Ma Ying-jeou’s (馬英九) administration should not be complacent about a “simplified free trade agreement,” he said, as the would still like to push for a full-fledged FTA with Japan.
Whether the deal would have positive impact on bilateral trade and investment relations and whether it would provide protection for Taiwanese investment in Japan remains to be seen, DPP Legislator Huang Wei-cher (黃偉哲) said.
“However, Chinese intervention has been clear,” he added.