Cross-strait pacts may violate WTO rules: Taiwan's ex-envoy

Preferential treatment under CECA will result in anger in WTO, says Yen

Taiwan's former permanent representative to the World Trade Organization (WTO) Yen Ching-chang said yesterday that the signing of a Comprehensive Economic Cooperation Agreement (CECA) between Taiwan and China may not be consistent with WTO principles.Yen made the remarks at an academic conference organized by the Ministry of Foreign Affairs (MOFA) and the Ministry of Economic Affairs (MOEA) to discuss Taiwan's WTO experience.
"Despite the current improvement in cross-Taiwan Strait economic relations, the Taiwan government should fulfill its commitment and responsibility as a WTO member before considering a CECA with China," Yen suggested.The "clever design" of a CECA with China seems to be feasible for two reasons, Yen said.Firstly, the CECA would be a lot more practical than a Free Trade Agreement (FTA), in light of the fact that FTAs are signed only between nations, and China is not likely to choose any option that would imply Taiwan's statehood, Yen said."Secondly, a CECA differs from a Closer Economic Partnership Arrangement (CEPA) in the sense that it would not downgrade Taiwan to the level of a local government by following the Hong Kong and Macao model," he added.However, although the two agreements are called by different names, their contents are basically the same, he cautioned.According to Yen, if China gives Taiwan preferential treatment under a CECA and excluded other WTO members, it would surely result in anger and alienation in the WTO, as Taiwan, unlike Hong Kong and Macao, accounts for 1.65 percent of the global trade volume and as of 2008 was the 17th largest economy in the world.In addition, Yen expressed skepticism over a recent proposal for China and Taiwan to sign a memorandum of understanding (MOU) that would pave the way for financial services firms from both sides to operate in each other's markets, saying this would impact on Taiwan and China's responsibilities and commitments to the WTO.
The United States, the European Union, Japan, Canada and other WTO members have long complained about the lack of openness in the Chinese financial market, he noted.
"I do not think such a memorandum would materialize, as it is unlikely that China would betray its commitment and responsibilities to the WTO by offering Taiwan preferential treatment and open access to its financial market," Yen said.It is of paramount importance that the economic cooperation between Taiwan and China be consistent with the regulations and principles of the WTO, he stressed, urging that both sides should not seek mutual economic benefits through agreements that are inconsistent with WTO regulations.