China Services Trade Deal Suffers Backlash In Taiwan

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By: Rakan Alsheikh

In what could be the biggest challenge facing Taiwan in improving its diplomatic & trade relations with China, hundreds of Taiwanese students stormed the parliament on Tuesday morning and blocked the entrance gates with piles of chairs in protest against the services trade deal with the mainland. The deal was already signed last June and is in the process of being ratified by MPs, but the action by the students comes right after a trade review was concluded by a joint committee.

The legislature had already reviewed the deal extensively, but students are calling for the deal to be reviewed once again, as one student leader puts it “The trade pact must not be approved without careful deliberation and scrutiny in parliament.” 

Opponents to the deal are arguing that the agreement would cost tens of thousands of Taiwanese jobs, and would give China an opportunity to place the island under its control.

Experts however, are claiming that the trade deal would actually benefit Taiwan even more than China. The deal would allow the two nations to invest in one another’s services industry. Taiwanese companies would benefit from opening up wholly owned subsidiaries (instead of the traditional JV model), and from expanding away from the saturated Taiwanese market (banks, travel agencies, hospitals, etc…) , a benefit that is definitely much larger compared to Chinese companies, which are expected to enter into an already saturated service market.

Additionally, China had so far opened up 80 services industries, compared to Taiwan’s 64, which means that at least so far, Taiwanese companies definitely have the bigger advantage, particularly when it comes to competitive Taiwanese firms in financial services and securities.

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The nationalists -Taiwan’s ruling party KMT- control 65 of the 113 seats legislature, and are the proponents to the deal as well as improving relations with China, whereas the Democratic Progressive Party-the more radical group DPP- are opposing such measures and have briefly joined the student protesters in their call for another review. But observers believe that the deal should be expected to go through despite popular opposition, given the nationalists dominant position in the legislature.

This deal follows the 2010 ECFA (Economic Co-operation Framework Agreement) between the two nations,  in which significant tariffs were reduced between the two countries. These deals are part of President Ma’s efforts to improve relations with China, and had the backing of his party -The KMT- in both agreements.

On the other hand, the DPP are attacking the deal and claim that the ECFA was not beneficial to the economy since recovery is still sluggish after four years. The DPP wants to declare formal independence from China, and its Chairman, Mr. Su, has clearly tried to fuel the situation as he claimed that “This is a key moment for Taiwan’s quarter-century-old democracy, the party would do whatever it takes to protect it”

The political, economic, and social significance seem to be intertwined whenever it comes to China-Taiwan issues, and the struggle for securing this agreement seems to be just one more big aspect surrounding this unique relationship.

References:

http://www.washingtonpost.com/business/china-pact-opponents-occupy-taiwan-legislature/2014/03/18/3f049e50-af02-11e3-b8b3-44b1d1cd4c1f_story.html

http://www.channelnewsasia.com/news/asiapacific/experts-say-taiwan-has/1042840.html

http://www.economist.com/blogs/banyan/2014/03/politics-taiwan

http://www.taipeitimes.com/News/front/archives/2014/03/19/2003586009

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