Tangled trade and territory troubles



The “Sunflower Movement” in Taiwan started with the occupation of the national parliament (Legislative Yuan) in Taipei on 18 March. The occupation was a movement organised by local activists, the majority of whom are students, protesting against the Cross-Strait Service Trade Agreement – a trade pack that opens up trading opportunities for service sectors between Taiwan and China. Subsequent protests were organized following the occupation, with the rally at Ketagalan Boulevard on 30 March being the most significant. The controversial agreement was signed in June 2013 but has yet to be ratified by the legislature. 

Ambiguous political status of Taiwan

Taiwan, full name being the Republic of China (ROC), has been separated from China – People’s Republic of China (PRC), since the Chinese Civil War in 1949. While China came under the rule of the Chinese Communist Party (CCP), the Kuomingtang (KMT) fled to Taiwan and became the ruling party of the island. In 1986, the Democratic Progressive Party (DPP) was formed as the first opposition party, thus ending the country’s single-party political status.

Taiwan is not officially recognised as an independent sovereign state in international community. A lot of countries that have formerly established diplomatic relations with Taiwan switched recognition to China since the two parties split. There are currently only 22 countries that recognise Taiwan as a sovereign state, with Vatican being the only European country among them. Countries such as the United States, the United Kingdom and France have reduced their ties with Taiwan and switched recognition to China. The island is also unrecognised by major international institutions such as the United Nations, the World Trade Organisation and World Health Organisation. These institutions address Taiwan as Chinese Taipei, which is defined as a province of China.

Different reasons to protest against the agreement

Relations between Taiwan and China grew tense during the presidency of Chen Shui-bian from 2000 to 2008. Chen, who was the chairman of the DDP, supported the idea of the “Independence of Taiwan”. In his presidential speeches, he repeatedly stressed that Taiwan is an independent sovereign state and claimed that there is only one Republic of China, which is Taiwan, and he denied the political status of China. The current President Ma Ying-Jeou is on the other hand, known for advocating a closer relationship with its powerful neighbour. In 2010, President Ma signed the Economic Cooperation Framework Agreement (ECFA) with China, aiming to reduce tariffs and commercial barriers, and to achieve economic benefits for both sides. The trade pack that sparked protests and the occupation movement this time is part of the framework of ECFA.

As claimed by President Ma and some of the trade pack supporters, the pack would bring benefits to the sluggish economy of Taiwan, thus boosting growth in the service sector. In addition to an increase of investment, by establishing a closer relationship with China, Taiwan can obtain a greater participation in global economic cooperation, in order to avoid being “marginalised” by the international community.

However, scholars such as Jang Show-ling, Professor of the Department of Economics of National Taiwan University, argued that the service pack is an unequal agreement that endangers the survival of the local tertiary industry. She initiated a campaign with 17 other Taiwanese scholars protesting for a renegotiation of the pack, and prepared a 60-slide proposal of guidelines and recommendations for a fair renegotiation to be carried out. The main arguments of anti-pack scholars are that firstly, Taiwan is opening up more items than China does, which puts Taiwan in a disadvantaged position. Secondly, the pack allows Chinese investors with a large amount of capital to join the local industry and jeopardises the survival of small and medium size local enterprises.  Taiwanese entrepreneurs are also worried that the difference in business culture would be an obstacle to achieve a fair trade partnership. In a programme that discussed the pros and cons of the service pack for Taiwan produced by PTS, the public television service in Taiwan, businessmen expressed that in order to successfully build up a business in China, it is important to establish an extensive personal network and contacts (Guanxi), while laws and regulations are generally not valued and not respected.

Student activists, on the other hand, protested against the agreement for another reason. They claimed that the pack was signed without a proper consultation and they demand a transparent procedure for the rectification of the agreement. They also demand a review of the pack clause by clause. Student leaders such as Lin Fei-fan and Chen Wei-ting argued that the way the parliament ratified the agreement is an undemocratic move and an exaggeration of the presidential power.

The conspiracy theory

Another major concern about the agreement is a conspiracy theory. With Hong Kong as an example, anti-pack supporters suggest that China is using its soft-power – economic – to regain control over the de facto independent state. Protesters held banners with the phrase “We don’t want to be the next Hong Kong” during the parliament occupation and rallies.

Taiwan’s close neighbour, Hong Kong, signed the Closer Economic Partnership Agreement (CEPA) with Mainland China in 2003. Since the implementation of the agreement, China has gradually taken the position as the main trading partner of Hong Kong. In 2012, over 36 per cent of its exports were sold to China. At present, the majority of Hong Kong’s inflow of investment comes from China.

Hong Kong has gone through economic turmoil because of the 1997 Asian financial crisis and SARS in 2003, but has recovered in a remarkably fast speed due to CEPA. However, this former British colony has also seen the bad sides that come along with the agreement: an increasing dependency on China as its source of income, as well as a rising tension between local residents and “mainlanders” because of cultural differences. Seeing its neighbour becoming more and more susceptible to Chinese influence, Taiwan fears that the trade pack would initiate an easy way for Beijing to insert its control over the island, and it will be turned into the “next Hong Kong.” This, despite all the political and cultural confrontation, has to be “open” to the economic giant.

The conspiracy theory does not only come from the example of Hong Kong, but also from the terms of the trade pack that they agreed on. Under the terms of the agreement, industries such as publishing, printing, telecommunications, advertising would be open to Chinese investment. The CCP can easily spread its propaganda by encouraging state-owned enterprises to invest in Taiwanese businesses.

More than an economic deal

Signing trade agreements and opening up the economy for foreign investment is always a give-and-take decision. In order to minimise influences on local businesses, the Taiwanese government can provide incentives and subsidies for small and medium sized enterprises. However, since Taiwan and China have been historically engaged in a controversial and ambiguous relationship, the trade pack means more than pure economic cooperation. It entails diplomatic implications. Also, putting aside Beijing’s intention, that the Ma’s government rushed and pushed the agreement through the plenary session in parliament without going through appropriate legal procedures is a violation of democracy. This is the biggest motivation that draws the Taiwanese public to take to the streets.

By Chan Cheuk Yin



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