Hong Kong shows CEPA bad for Taiwan
Taiwan News | 2008-10-21
Hong Kong shows CEPA bad for Taiwan
In the wake of the resumption of cross-strait dialogue, officials of both Taiwan’s restored right-wing Chinese Nationalist Party (Kuomintang) government and the Chinese Communist Party-ruled People’s Republic of China have touted plans for the signing of a "closer economic partnership agreement" (CEPA) between the two sides.
PRC Vice Minister of Commerce Jiang Zengwei on September 8 proposed the signing of a cross-strait CEPA, a call followed by the statement by PRC State Council Taiwan Affairs Office spokesman Li Weiyi that the proposal would be negotiated by Taiwan’s quasi-official Strait Exchange Foundation and China’s counterpart Association for Relations Across the Taiwan Strait in the near future.
Although Mainland Affairs Council Chairwoman Lai Shin-yuan denied that Taiwan would sign a CEPA with mainland China during an interpellation by a Democratic Progressive Party legislator last week, SEF Chairman Chiang Pin-kun asserted that a so-called "Comprehensive Economic Cooperation Agreement" (CECA) with Beijing would allow Taiwan to avoid "economic marginalization" by easing PRC opposition to Taiwan’s entry into free trade agreements with other nations. No matter what the notion is named, it is certain that Jiang’s proposed CEPA and Chiang’s CECA share a common ideological adherence to "free" (but not necessarily "fair") trade, a vision of a "great China economy" and the goal of removing all of Taiwan’s barriers between it and the PRC market.
Hong Kong and CEPA
Largely absent from the debate has been concrete discussion of the experience of Hong Kong, a special administrative region of the PRC, with its CEPA with China which was signed in June 2003 and took effect on January 1, 2004.
First, it is evident that the CEPA has not helped improve income distribution in Hong Kong as the territory’s Gini coefficient, an internationally accepted measurement for income inequality, increased from 0.483 in 1996 to 0.500 in 2006 as an official survey of household income issued last year showed a widening gap in employment income with managerial and technical staff scoring gains and the incomes of the vast majority of employed persons on a relative decline.
Therefore, even though unemployment rates have declined in the last three years (but risen again in third quarter of this year), labor conditions and wages have worsened for most workers, according to the Hong Kong Federation of Trade Unions.
Taiwan employees and workers could face a similar fate as the CEPA concept also deprives Hong Kong from crucial defenses against dumping, such as the right to impose countervailing duties.
While Hong Kong does not have much domestic industry or agriculture to be protected, the loss of such a defensive "barrier" could well spell disaster for Taiwan farmers and manufacturers and their workers and a wide range of cultural workers, peddlers and other employees in numerous industrial and service sectors if a CEPA or CECA opens Taiwan’s doors to the importation of foodstuffs, goods, publications and even movies "made in China" under vastly different and structurally unfair conditions, including far lower wages, standards for work safety, environmental protection and consumer protection.
Indeed, the CEPA also requires Hong Kong to accept the validity of the PRC’s product safety and health inspections, a fact which allowed melamine contaminated "Made in China" toxic milk powder and dairy products to freely enter Hong Kong and trigger a panic among Hong Kong consumers even greater than that suffered by Taiwan consumers last month.
Moreover, the benefits of CEPA to Hong Kong firms is also a matter of dispute, especially in high technology areas.
For example, a research report commissioned by the Internet and Telecom Association of Hong Kong concluded that the benefits brought by the CEPA to Hong Kong telecom service suppliers and operators were "not as much as claimed" and noted that the CEPA did not eased the risks of Hong Kong investment into the PRC, including the PRC’s own substantive non-tariff barriers to its domestic market.
Moreover, the most fundamental point which Chiang and KMT heavyweights fail to mention is that simply agreeing to the "special privileges" dangled by a proposed CEPA would tacitly acknowledge that Taiwan, like Hong Kong, is only a PRC "special administrative region" since WTO rules dictate that privileges that are not transferable to other WTO members under the most-favored nation principle are impermissible except within countries.
Acceptance of this subordinate status would make it highly unlikely that Beijing would agree to allow Taiwan to enter into any regional or free trade pacts except as a subordinate entry of the PRC itself and the chances of KMT negotiators daring to challenge such inequities are also slim, as shown by the Ma government’s cravenness in SEF-ARATS talks so far.
The result of a CEPA between Taiwan and the PRC would be a loss of economic dynamism and a rise in unemployment, income inequality, health risks and social tensions and a loss of political autonomy and an erosion of free speech and human rights that will ultimately erode Taiwan’s global value as a catalyst of democratic change in the PRC itself.
