TAIPEI— Taiwan
and political rival China are negotiating this week what could be their
farthest-reaching agreement ever after nearly eight years of warming relations.
But the deal to cut tariffs faces opposition in Taiwan, while China has turned
much of its attention to pacts with fellow exporters Japan and South Korea.
Trade
representatives from Beijing and Taipei are meeting in China from Tuesday
through Thursday for a 10th round of talks on an agreement to cut import
tariffs, potentially in thousands of key Taiwan sectors such as machinery and
flat panels. Talks may wrap up this year.
Liu
Yi-jiun, a public affairs professor at Fo Guang University, expects exporters
to push for passage of the deal despite opposition from Taiwanese distrustful
of China’s political ambitions.
“Don’t
ever underestimate the power on the part of the business sectors. World market
competitiveness has forced [the government] to take a more aggressive role in
pushing through this deal. So as far as businesswise, I think this is the year
this deal is going to pass, for sure,” said Liu.
Taiwanese
exporters want the agreement passed so they can pay lower tariffs to China, the
island’s No. 1 trade partner last year. Taiwan’s Bureau of Foreign Trade
said in a statement March 25 the island cannot afford to wait on the
trade-in-goods deal with China.
Its
statement came as China and Taiwan’s export competitor South Korea prepare to
sign their own free-trade agreement (FTA). The same pair and export giant Japan
have finished four rounds of talks on a separate pact.
But
Taiwan President Ma Ying-jeou’s Nationalist Party also worries about a voter
backlash when the island elects a new president in January. Taiwanese who
oppose stronger ties with China have influenced government decision making
since thousands of activists closed down parliament in March 2014 to block
ratification of a service trade liberalization pact signed with Beijing.
China has
claimed sovereignty over self-ruled Taiwan since the 1940s, but in 2008 Ma’s
government set aside political differences to discuss trade and investment. The
two sides have signed 21 economy-related agreements to date, a lift to Taiwan’s
half-trillion-dollar economy.
Yet many
on the island fear China will leverage the deals to push for political
unification as two-way trade passed $130 billion for the first time last year.
Andrew
Tsai, an economist with KGI Securities in Taipei, expects tariff-cut
negotiations to slow as Taiwanese officials try to reconcile business interests
and election pressure.
He said
the China-Japan-South Korea FTA will be confirmed for signing in mid-year and
of course that will put pressure on Taiwan’s exports or on its own trade deal,
possibly meaning they get left behind. Tsai adds that early next year Taiwan
has its presidential election and thinks that before the election diplomatic
negotiations are likely to meet a public opinion backlash, so it’s possible the
negotiations will be slowed down.
A
Nationalist presidential candidate is likely to run next year against an
opponent from the Democratic Progressive Party, which takes a more cautious
stance on China relations.
China
began showing signs of weariness with Taiwan last year after parliament
sidelined the service trade agreement. Analysts say Beijing is keener now on
tie-ups with South Korea and suspect the tariff deal being negotiated with
Taiwan has been thinned down, axing top export categories in machinery and
high-tech hardware. Joanna Lei, chief executive officer of the Chunghua 21st
Century Think Tank in Taiwan, said the pact with Taiwan is largely for show.
“I think
it’s just a gesture saying that cross-Strait trade negotiations haven’t
completely stopped, but it will not be very major in terms of opening huge
markets and lowering major industries’ tariffs,” said Lei.
Taiwanese
officials will not disclose which export categories are on the negotiating
table this week, but the foreign trade bureau said Beijing’s ties with South
Korea would be a focus of the negotiations.
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