T H E E. C. F. A.

The ECFA (Economic Cooperation Framework Agreement): Chance for Taiwan?

(Debate of ECFA during the Taiwanese Presidential Election)

The ECFA, which is referred to a bilateral preferential trade agreement between Taiwan (Republic Of China) and China(People's Republic of China), has recently become a debatable issue in Taiwan, because of the related political factors and background. Since the separation of the country in 1949 after the civil war, the two states have claimed each other's territory as its own and thus been hostile to each other. Political mistrust against China remains very strong in Taiwan, for the reason that Taiwan has been always “marginalized” by Beijing on the international stage, which led the island to a diplomatic and economic isolation. Despite the membership of “Chinese Taipei” within the WTO framework, Taipei realized the necessities of entering into the regional agreements with ASEAN while Beijing, on the other hand, uses its significant influence to impose the “One China Policy” by preventing ASEAN countries from signing free trade agreements with Taipei, so the latter is technically forced to accomplish the ECFA first with Pekin in order to be less oppressed in the economic fields.

After a long negotiation, the pact was signed in June 2010 between the two sides. The first concerned fields of the pact includes tariff concession mainly for the petrolines and manufactured products, which is estimated to have a positive effect of 13.8 billion dollars for Taiwan and the second step mainly consists of the tertiary sector, printed materials and agricultural products. Even though it is believed that Taiwan could have more economic profits from the ECFA than China does, nationwide protests and political debates have been amplified in Formosa. The DPP(Democratic Progressive Party), the biggest political opposition, criticized the KMT(Chinese National Party) for signing the pact before it had been sufficiently discussed. In fact, during the last decade, because of a series of Chinese economic policies, the isolated Taiwanese economy has become more and more dependent on China (especially Hong Kong) which takes up to 40% of the total exports, and to reduce the dependency, Taipei struggles to maintain its economic contacts with other countries. To realize this goal, the KMT hopes the signing of ECFA could alleviate China's oppression against Taiwanese economic contacts with others. However, the DPP describes the ECFA as a short-viewed economic pact without considering the pact would enhance the Taiwanese economic dependency on China, and reinforce the political intervention from Pekin to Taiwan's sovereignty.

The Taiwanese citizens also express their fear that their country would be interfered step by step from the economic intervention to the political annexation. As a democracy, the Taiwanese regard the opening of the printed materials market as a potential threat, and the low-cost Chinese labor will severely impact Taiwanese small-and-medium sized companies. Besides, the relocation of Taiwanese companies to China might cause unemployment and a “Westward Movement” of brain drain and capital.

However, some people believe the ECFA would bring in Chinese investment and thus create jobs.

Besides Taiwan has specialized competitiveness on the tertiary sector and agricultural products and thus would keep a predominant position, compared to China.

After all, Taiwan faces the same problem as other Asian countries do: The needs and the fears of China coexist. Taiwan needs to reduce its economic dependency on the other side of the strait in order to protect its sovereignty.Yet, Taipei still manages to balance deliberately between Washington, Beijing and Tokyo in a complicated area with more and more tensions.

omiyama dôki