China-ASEAN FTA: What stand in the way of Taiwan?
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How will the coming FTA between China's mainland and ASEAN provide Taiwan with new issues to consider? How will the civil mechanism in Taiwan react and achieve balance in politics? This research examines the externality of the FTA and the fact that Taiwan has to make some adjustments in its policies. Obviously, the interior factors that affect Taiwan's attitude will focus on the party politics in Taiwan that will dominate the issue in the accelerating economic integration, with considerations also for the future of economy and society in Taiwan.
The relationship between the mainland and Taiwan has evolved further in the economic field in the last ten years, though politically the two sides still seem a bit antagonized. In 2008, the mainland replaced the U.S. as the first overseas market of Taiwan and accounted for 40 percent of Taiwan's total exports. Trade across the Taiwan Straits reached 43.91 billion US dollars in the first four months of this year, up 21.7 percent year-on-year, according to the Ministry of Commerce (MOC).
In 2010, ASEAN will begin to offer zero tariffs on Chinese products in accordance with the FTA arrangement. However, Taiwan is beyond this bond and will be put in an unfavorable position. Obviously, the FTA between China and ASEAN has an unmistakable externality in Taiwan's case. Concretely, the externality is that if Taiwan does not join the current economic integration in East Asia, it not only faces serious challenges from surrounding economic bodies such as Hong Kong, South Korea and Singapore, but also its civil economy stands to lose the grand market in Asia, which may force Taiwan deep into recession in both the economic and societal aspect. How the externality will influence the uncertainty between the mainland and Taiwan would then become the hot issue, which would also be one of the key factors in cross-Straits relations.
Regarding the FTA between China and ASEAN, Taiwan should have more impetus in building a broad economic bond with mainland. However, hot debates are brewing at present and arouse a series of quarreling issues. In fact, it involves how international organizations influence civil politics. Theoretically, international factors affect national policies by way of their direct effect on the domestic political economy. This effect may take place by restricting the set of feasible policies by constraining domestic institutions, by altering domestic information, or by changing the preferred policies and behavior of domestic actors (Frieden 2002).
First, the Ma Ying-jeou administration insists that Taiwan should sign an economic cooperation framework agreement (ECFA) with mainland so that Taiwan would be on the brink of regional economic integration. It also hopes to create a new mechanism for dealing with the relations with the mainland. It is under the condition of smooth cross-Straits relations that Taiwan has the opportunities to sign a quasi-FTA with other states in East Asia. With an ECFA in place, the Kuomintang (KMT) would have no extra obstacles to negotiate with the Communist Party in the mainland; the KMT would also go back to power in Taiwan. This new political situation has led to a decrease of tension between both sides, making a declaration of independence, or war, something unlikely.
Second, the DPP (Democratic Progressive Party), Taiwan's biggest opposition party, contends that signing an ECFA would equate to surrendering "Taiwan's sovereignty," which just reflects the DPP's stand on Taiwan's independence. The DPP maintains their proposition that an ECFA would downgrade Taiwan's sovereignty, have more detriments than benefits, and bring more people to lose jobs created by the DPP. This gained them some support from southern Taiwan. The DPP maneuvers this to be an independence issue, which has long been in existence in Taiwan's election politics as well as a pseudo-issue on native Taiwanese attitudes towards mainland immigrants.
Nevertheless, Taiwan's interest cannot continue to be based on its so-called "sovereignty," but rather must be rebuilt on the base of other interests. The KMT is trying to avoid the "delay," which occurred during the self-consuming period of Chen Shui-bian's administration, and go back to normal society. The key problem is that political maneuverability stands in the way to Taiwan's development.
Therefore, this is the externality of the FTA between China's mainland and ASEAN, forcing both parties to make some adjustments. Also, it explains how Taiwan's changes happen in identity, strategic policy and attitude toward the mainland through the potential transformation of surrounding outer factors. This will need a multi-level analysis, such as benefit-costs, threats, decision-making and so on in Taiwan civil society.
Furthermore, it will provide the desired effects for handling the relations with the mainland in other areas, such as cultural communication and political talks. More relevantly, it may arouse a transformation in East Asia because the issues surrounding the Taiwan Straits have been the most hotly debated, not only in their immediate area, but in the world as well. The FTA between China and ASEAN will accelerate the economic integration of East Asia. However, the civil quarrel about the "sovereignty" of Taiwan drains the island's economy and energy, and the effect will be intensified if Taiwan cannot find its position in the background of regional integration.
More specifically, Taiwan's engagement would lend itself to a new scratch line and the future of East Asian comprehensive integration. With financial crisis spreading from the United States, various questions, such as where East Asia will go and what challenges this financial swamp will bring to East Asia, are put forward again. Moreover, East Asia has been continuously working harder at this field. The coming FTA between China's mainland and ASEAN will open up a new stage for regional integration.
Mr. Shi Weicheng is a Ph.D candidate at School of International Relations and Public Affairs of Fudan University.
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