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Chen seen tackling rising risks

Chiou denies U.S. rejected three versions of president's New Year speech

Chen seen tackling rising risks
A senior presidential staffer yesterday rebutted as "entirely wrong" a report in the United Daily News which claimed that Washington had rejected three drafts of President Chen Shui-bian's (陳水扁) New Year's Day address and was "dissatisfied" with its final version.

Speaking at an unscheduled news conference at the Office of the President, National Security Council (國家安全會議) Secretary-General Chiou I-jen (邱義仁) stated that the final version of the address was offered to the United States for review, but only 30 hours before it was delivered.

"It is impossible for the U.S. side to take such action and it would be impossible for the Taiwan government to accept such actions," declared Chiou, who added that "the process of dialogue with the U.S. side before and after the speech has been smooth."

U.S. concerns

Regarding U.S. concerns over the issue of a new constitution and referendum, Chiou related that "we clearly stated that a major difference was that the president had referred to a 'civil' draft of a new constitution that would be formulated through a 'bottom-up' and 'outside-in' process" that could be the subject for a referendum.

"As a government, we need to accept the referendum law enacted by the Legislative Yuan and that it will be very difficult to attain the necessary support of a three fourths majority of legislators to send a draft constitution for ratification by referendum," the NSC chief of staff stated.

Chiou stressed that the president's address was not the result of "one person policy-making." Instead, the speech went through several drafts which incorporated the input of his staff and the opinions of political, civic and business leaders that Chen met with following his party's setback in local elections last December 3, Chiou said.

Besides rebutting the United Daily News report, Chiou strongly defended the president's shift toward a policy of "proactive management and effective opening" in economic dealings with China.

He said the change in principle was a response to the intensification of political, military and economic risks in Taiwan-China relations, especially after the PRC's enactment of a so-called anti-secession law passed last March.

Many observers believed that cross-strait relations had "moderated" after the successive visits to the PRC last spring by then Kuomintang Chairman Lien Chan (連戰) and People First Party Chairman James Soong (宋楚瑜), Chiou said, during which Beijing offered pandas to Taiwan and tariff-free treatment for Taiwan agricultural products.

Chiou stated, however, that the Executive Yuan and National Security Council "view the 'anti-secession law' very seriously and believe that its impact on Taiwan will become increasingly grave."

Chiou specifically pointed to the intensification of domestic tensions in Taiwan in the wake of the "anti-secession law," the Lien-Soong visits and moves by the PRC to "marginalize" Taiwan's government and deal directly with the KMT and PFP opposition leaders.

"We need to let international society and China understand that intensifying polarization and antagonism in Taiwan domestic society is not favorable for cross-strait relations," Chiou stated.

The NSC chief of staff cited the case of the proposed visit by PRC State Council Taiwan Affairs Office director-general Chen Yunlin to attend a KMT- sponsored conference on cross-strait relations.

Chiou related that the government wanted to have some "private" contacts with Chen Yunlin during his visit," but said the PRC official had "clearly and categorically refused to have even private contacts with Taiwan's elected government.

"If we allowed him to come to Taiwan under such circumstances, we are only making it easier for him to further this strategy of de-governmentization," Chiou stated.

"That is why President Chen stated that we can place no illusions or hopes in China," Chiou said.

"Since we believe that they will continue this strategy and refuse to have any dealings with Taiwan's elected government through 2008, we need to adjust our cross-strait policy," the NSC secretary-general added.

Chiou indicated that Taiwan was pleased with the appeals made by U.S. President George W. Bush and other U.S. government officials beginning last May to urge Beijing to have direct interaction with "Taiwan's duly elected government."

However, Chiou noted that "to the present the PRC has not accepted this appeal" and said that the likely refusal of the PRC government to deal with the Taiwan government before 2008 was a major reason why Taipei needed to adjust its own strategy.

On economic issues, Chiou said the basic position adopted by President Chen is that Taiwan cannot neglect the Chinese market, but that "we cannot lock all of our economic and trade resources in China or become excessively dependent on China."

Micro-profitability

The NSC chief-of-staff related that Taiwan's merchandise exports had entered a period of "micro-profitability" in the wake of the spread of the system of "taking orders in Taiwan and producing goods outside Taiwan," under which 36 percent of the goods to fill Taiwan export orders are now made in China.

Moreover, Chiou related that estimates by Taiwan's Board of Investment of the Ministry of Economic Affairs indicated that over US$50 billion in Taiwan capital has been invested in the PRC, but the amount of funds or profits remitted back to Taiwan was not even 10 percent of this sum.

Taiwan also had to face a problem of structural unemployment generated by companies moving production to China, Chiou added.

He indicated the government had remained "passive" in regulation or review of investments to China largely because of a widespread mentality which assumed that "it is impossible to go against 'market rules' or that investment to China was 'impossible to stop."

"I cannot accept such a dangerous logic,"

declared Chiou, who said that "if we base everything on 'market rules' we would not need the Ministry of Economic Affairs or the government or any economic policy."

Citing regulatory frameworks on sensitive technology and investments in other nations, Chiou said that it was not impossible to engage in regulation or management of investment, technology or trade, particularly through mutual dialogue with companies.

Chiou said the government could set up a consultative system in which companies could discuss their business and financial plans for China-bound investments. Such a system, he said, would be beneficial for both the future development of the concerned enterprises and for the government's role of controlling the risks to society of Taiwan-China economic interaction.

"Such management will have its difficulties and costs, but we need to compare them with the overall cost to the country of not regulating," he said