Former WTO envoy warns Taiwan against rushing to sign economic pact with China

Taiwan's first envoy to the World Trade Organization yesterday warned President Ma Ying-jeou and his Kuomintang government against rash signing of a "comprehensive economic cooperation arrangement" or a "economic cooperation framework agreement" with the People's Republic of China.
Speaking at a forum sponsored by the Shadow Government Forum on "CEPA, CECA, ECFA - Prelude to the One China Market" at the National Taiwan University Alumni Center, Yuanta Financial Holdings Chairman and CEO Yen Ching-chang, who served as Taiwan's permanent WTO representative from 2002 to 2005, also cautioned that the process of realizing any cross-strait economic cooperation agreement "would inevitably have political content."
Yen related that a "comprehensive economic cooperation agreement" was essential a "free trade agreement" and noted that Article 24 of the General Agreement on Tariffs and Trade permits free trade agreements that offer more mutual benefits to each signatory country and exclude other countries.
But Yen added that the WTO imposes "strict conditions" on such pacts that require mutual benefit and reciprocity and notification to the WTO Secretariat for review.
"A framework agreement effectively acts as a letter of intent and explains what the concrete content and issues to be negotiated for a CECA would be, how the negotiations would proceed and when they would begin and end," the former WTO envoy stated.
Yen cited the "Framework Agreement on Comprehensive Economic Cooperation
Between the Association of South East Asian Nations and the People's Republic of China" signed in Phnom Penh on Nov. 4, 2002 which set out the principles and measures for "comprehensive economic cooperation" and listed issues for negotiation in trades in goods, trades in services, investment, tariff reduction and elimination and other areas of cooperation.
Noting that President Ma had shifted from advocating a cross-strait CECA to calling Friday for a ECFA without concrete content in the face of widespread doubts in society, Yen said that he "could have a positive attitude" toward Ma's adjustment.
Unusual logic
However, the former WTO envoy related that he was "very surprised" to see news media reports that stated that the Ministry of Economic Affairs estimated that the signing of a ECFA could add as much as 3.3 percentage points of growth in gross domestic product since "an ECFA has no concrete content."
Yen also questioned the claim by KMT government officials and business groups that the signing of such a pact was "urgent" or could solve all of Taiwan's economic problems.
"If it is so urgent or magical, then why waste time with a ECFA and not directly sign a CECA?" the former WTO representative and former finance minister asked.
Yen also noted that WTO regulations require that the conditions of a FTA be "reciprocal" and cannot be unilateral and said the government was responsible for clearly telling the people what reciprocal market openings Taiwan would have to make to China in a future CECA.
Yen also noted that Taiwan currently bans the importation of 170 agricultural produce categories and 822 00 industrial product categories and thus does not yet grant the PRC equal treatment with other WTO members, in part because the PRC has refused to negotiate tariff conditions with Taiwan in the WTO.
Yen said that "it would be a huge innovation" in FTAs to jump from WTO-less treatment to a "WTO-plus" economic cooperation agreement and stated that "it would be difficult to proceed to a CECA" without market - opening commitments in agriculture and industrial categories which Taiwan has opened to other WTO members but not to the PRC.
Regarding statements by government officials that a ECFA or CECA "only involves economic issues," Yen also observed that "any major trade or economic cooperation involves political content" including the acceptability of various different domestic sectors and interests favorably or negatively affected.
Moreover, Yen related that even though the United States and South Korea mutually respected each other's sovereignty and territorial integrity in their FTA negotiations, the signing of a FTA was still very difficult in part because the "political feasibility of South Korea's allowing imports of U.S. beef became a major problem."
Yen also noted that the November 2002 China-ASEAN framework agreement was signed by then PRC Premier Zhu Rongji and the heads of state or heads of government of the ASEAN members.
"When and where and who will sign will fully manifest whether Taiwan and China are on an equal footing," commented the former WTO ambassador.
"In this process, it is not reasonable for the government to only stress the expected benefits from a ECFA or a CECA or a FTA and it should instead take the initiative to let all the people clearly and fully understand the costs and benefits and not wait until people start asking questions," Yen said.