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April 25, 2010 ECFA Debate Transcript part 1

President Ma Ying-jeou (馬英九,asking question): Chairperson Tsai, in a speech at National Tunghua University on March 15, you mentioned that the DPP had performed well in recent elections because the party appealed to voters that are feeling insecure. Two years ago, the DPP stressed that if I were elected president, Taiwanese men would find no job, women would find no husband and our children would perform military service in Heilongjiang [in China]. Chairperson Tsai, have any Taiwanese men performed military service in Heilongjiang in the past two years?

The DPP also said the Ma administration would allow people from mainland China to participate in local exams and get certifications in Taiwan. Chairperson Tsai, have any Chinese people entered exams and received certificates as lawyers, certified accountants or architects?

Former president Chen Shui-bian (陳水扁) promised to open the country to direct cross-strait flights and allow Chinese tourists into Taiwan during his two presidential campaigns. However, when we started promoting the two policies after taking office, you accused us of bringing a Trojan Horse into the country. Don’t you think that is ridiculous?

The DPP said on April 6 that 3.21 million white-collar workers will be affected after an ECFA is signed and the number jumped to 5 million five days later. You see yourself as professional; is exaggerating such numbers professional? Let me ask you, Chairperson Tsai, do you still want to continue scaring people by preying on their insecurities?

DPP Chairperson Tsai Ing-wen (蔡英文): People’s sense of insecurity does exist and no political party can create public insecurity. The DPP had no budget and no resources. We can only appeal to the public with what the voters fear the most and speak for them during elections. A political party cannot create public fear where there is none.

During the two years since you took office, people have shared a sense of fear, and not only pan-green supporters, but pan-blue supporters also share those fears. In several polls conducted by the DPP, between 40 percent and 50 percent of people from the pan-blue camp said they are anxious about the issue of nationality. The anxiety about nationality exists across party lines and continues to exist.

You never persist in Taiwan’s sovereignty and always refer to Taiwan and China as the “Taiwan region” and “the Mainland region.” When [Association of Relations Across the Taiwan Strait Chairman] Chen Yunlin (陳雲林) visited Taiwan, the government treated him with the utmost respect and suppressed the people. You also failed to let people feel your persistence on sovereignty when negotiating with China and the US. You are not a dependable president to the people.

The DPP laid the foundations for cross-strait direct flights and we did not adopt a “closed-door” policy. Instead, the DPP made steady progress in cross-strait relations, and we did not say no to Chinese tourists. It is the DPP that laid the foundations. The remarks you just made were inappropriate. A president should not use those things as examples to threaten the people in a debate on national policies.

We never saw the early-harvest list and we don’t know the timetable for tax reductions and the opening of the market. The only thing we can do is to calculate the number of laborers who will be affected based on the 2,300 banned items. The impact of an ECFA, be it an increase in unemployment rates or lower salaries, will affect people deeply. However, the Chinese Nationalist Party (KMT) has not dared to face these issues and never let the public see its research and studies. Are you facing the possible impacts [of an ECFA] with honesty? How can you accuse the opposition parties of threatening the people if the president never faced the impacts of an ECFA with honesty?

Ma (asking follow-up question): We’ve signed 12 agreements, and each one of them was signed while stressing dignity and sovereignty. Which agreement cost us on sovereignty? Our approach is to develop cross-strait and international relations at the same time. We proceeded with cross-strait negotiations, and participated in the WTO’s Government Procurement Agreement (GPA), as well as attending the WHA.

International scholars and experts, including Paul Krugman, Michael E. Porter and Japan’s Kenichi Ohmae, the American and European chambers of commerce all agreed that an ECFA would bring more advantages than disadvantages. Why does the DPP continue to intimidate people by exaggerating the negative impacts of an ECFA when foreign experts and associations believe that Taiwan will benefit from an ECFA?

You said the DPP allowed Chinese tourists into Taiwan, but the opening of Chinese tourists did not begin until we came to power. If we did not do it, the DPP would never open up to Chinese tourists even now. I don’t think the public would expect the DPP to allow Chinese tourists into Taiwan.

Tsai: I’d accept what you said if you were an economic expert. However, you are the country’s president, and you need to take political and social costs into consideration when you open a nation’s market.

On April 16, WTO Secretary-General Pascal Lamy said in a speech that opening up trade is not a panacea for a country’s economy. Only with comprehensive policies, such as public infrastructure and a healthy market, can the opening of trade bring benefits to a country.

He also said a government has the responsibility to handle the issue of the distribution of interests brought by increased trade. It’d be illegitimate if only vested interests benefit from the opening of trade.

Signing an ECFA with China will cause the largest scale of redistribution of wealth in Taiwan. President Ma, what measures do you have in place to combat the huge impact of an ECFA on local industries? I understand that you budgeted NT$95 billion (US$2.9 billion) [to help local industries], and I also understand you promised to ban Chinese workers. But, what can you do with NT$95 billion? Anyone can run the country if money can solve all the problems.

Those economic experts have no political responsibility, but you have political responsibility as a national leader. Do you only listen to those experts and foreign chambers?

You said you insisted on national dignity. However, in cross-strait agreements on aviation rights, we failed to get major rights. Why didn’t you get the fifth freedom of the air? In the case of poisonous milk powder, the government didn’t demand compensation from China.

Tsai (asking question): You mentioned that you visited a machine tool manufacturer and that he supported an ECFA because he would be able to export his products to China with lower tariffs. You always said that Taiwan’s exports to China are subject to about 9 percent tariff. However, according to statistics from the Ministry of Finance, the average tariff rate should be 1.95 percent. Of course we should help medium and small businesses, but does it ever occur to you that big enterprises in the machine tool industry also invest in China. Those big companies also export their products to China under zero tariffs, and those small companies could lose their markets.

I want to ask the president do those experts ever think about the impact of a zero-tariff policy on local businesses when large amounts of Chinese products are imported into Taiwan?

Ma: I visited the owner of the machine tool factory, a very small place with only six employees, and he sells his products to a company in Taichung. He told me that the tariff rate for importing his products to China is 8 percent, rather than the average 1 percent. It’s meaningless to discuss average tariffs because each industry has different rates. The information industry, for example, does not have a tariff.

You mentioned the problem of small businesses, and like I said, big companies and small companies are like a string of zongzi (粽子, rice dumpling). If the thread is cut and the top rice dumpling falls, then nobody has business.

Chairperson Tsai, you should visit those medium and small businesses and gain a better understanding of their conditions. Big companies and small businesses are not at odds like you said. Instead, many medium or small businesses are satellite factories to big enterprises.

Besides, you said that bilateral trade would not solve all the problems. Of course I know that, and that’s why an ECFA will not only include trade, but also investment protection and intellectual rights protection. The early-harvest list covers trade and the service industry, which conforms to WTO regulations.

If you want to talk about impact, wasn’t the impact of joining the WTO bigger? However, the value of our agricultural products has increased from NT$350 billion to NT$410 billion. Of course there were impacts, but you forget that Taiwanese people are brave and practical. Not everyone is as pessimistic as you. Taiwanese people are not easily scared. You allowed the import of Chinese agricultural products and other products, and we handled the aftermath, including the poisonous milk incident.

My administration does not talk only to mainland China, but also tries to sign economic agreements with other counties. Our goal is to strengthen Taiwan and connect with Asia and other foreign countries. It’s very strange that you exclude China in your [view of] globalization. The DPP has stalled cross-strait relations for eight years, how many more years are you going to delay?

Tsai (asking follow-up question):Does the machinery industry face any discrimination in terms of tariffs in China? The industry already received most-favored-nation treatment in the WTO, and what you want is to get slightly lower tariffs. However, how long will it last? Taiwan’s machinery industry is not being discriminated against in China, so why do you still ask for privileges from China?

In the short term, the machinery industry got a tariff reduction, but it is a waste of time in the long run. The industry will not be able to raise its competitiveness. Tariff reduction is not the only way to increase the competitiveness of local industries. Why doesn’t the government help the industries hone their skills and increase credibility?

The protection of intellectual property rights and a agreement on investment protection are within the scope of the ECFA. Your administration included those items in the list even though you can still do those things without an ECFA or free trade agreement (FTA).

Ma: Those people would cry after hearing you accuse them of ‘enjoying privileges’ by asking for lower tariffs from China. What they ask for is equal rights because ASEAN members enjoy zero tariffs when our companies don’t. It is like two shops, one has to pay tax while the other one doesn’t. Which shop would you choose?

Their hearts are bleeding when you describe such an unfair environment as a privilege. These are our people, and we should not do this to them. I think you are distanced from the grassroots. You should listen to people more. You said the average tariff rate is only 1 percent. The truth is the machine tool industry is paying 8 percent, which is six to seven times more than you said.

You mentioned that we are not transparent enough. As a former negotiation adviser to the Bureau of Foreign Trade, you should know that information should not be made public during negotiations. We will make the information public after negotiations.

In the two formal cross-strait negotiations, we reported to the Legislative Yuan before and after the negotiations. The DPP refused to attend the session, and you blamed it on us. When we hold the third formal cross-strait negotiations, please ask the DPP legislative caucus members to listen to our report, ok? It’s not very rational if you don’t attend the meeting.

I am very aware of the strategic and political effects an ECFA would bring, and [signing an ECFA] with China is not a hasty decision. Chairperson Tsai, the DPP has stalled the process for eight years. Other Asian countries have already begun [economic integration], and Taiwan made no progress. I think you owe the people and Taiwan an apology for saying the time is not ripe and wanting people to wait.

The government is setting up a framework, and we are not trying to reach the end goal all at once. We are making steady progress. I never said we will open to all products. The items in the early harvest list account for a small portion. The government has finished the urgent part, which is small and necessary, and we will move forward step by step and let local industries know that we will solve problems by negotiating step by step.

The former DPP government did nothing but wait, and only carried out direct charter flights during the Lunar New Year. How many people could take advantage of those flights? What the DPP did fell short of public expectations.

Why did I speed up the pace immediately after taking office? I am running against time because Taiwan can not keep up with Asia and the world if we continue falling behind. How can I face my supporters otherwise? As a politician, I know deeply that I need to respond to public opinion. Both small and big companies want openness because it is difficult to compete with other countries. There is only ASEAN now, but Japan and [South] Korea will join regional economic integration in the near future. The South Korean president is getting worried, so how is it possible that we are not worried?

Signing an ECFA is necessary and urgent. However, we will follow the procedure and take steady steps, rather than making a giant leap. We will take every step with caution and ensure the rights and interests of Taiwan in the process.

Ma (asking question): Chairperson Tsai, you’ve always claimed, falsely, that we would allow [more] imports of agricultural produce [from China] and affect the agricultural sector [in Taiwan], but the fact is that under the DPP government, 936 categories of [Chinese] agricultural products were allowed to be imported, but I haven’t allowed even one [more] agriculture product to be imported since I took office. The tainted milk, for instance, was the result of your policy; on the other hand, my government signed a cross-strait agreement to safeguard food safety.

Tsai: You have been talking about this issue throughout the past half a year, President Ma. We’ve responded to it several times, but apparently you didn’t listen. [Out of the 960 agricultural products allowed to be imported,] more than 400 were allowed under the government of your party [before the DPP took power in 2000]. The rest were allowed in in accordance with WTO regulations, and we selected more than 400 products that we do not produce and thus would not have an impact on our agricultural sector — such as snakes and horses. In other words, the market for foreign producers was affected, not our own. The rest of the agricultural products are more sensitive ones and thus were blocked. In fact, when the DPP was in power, the production value of the agricultural sector increased.

When I served as chair of the Mainland Affairs Council, I clearly remember that many Chinese Nationalist Party (KMT) lawmakers continuously pressured me to allow imports of agricultural products from China, but I refused.

If you sign an ECFA — which is considered a free trade agreement (FTA) by the WTO, you are required to open up 90 percent of the market within 10 years. This would mean that only about 200 of the more than 2,000 agricultural products on the banned list can remain on the list. That is, more than 600 sensitive products we didn’t agree to import would be allowed to be imported.

How can you promise to not allow imports of sensitive agricultural products without violating relevant international agreements? Why does China want to concede interests to us? If China is willing to do so, what would our other trade partners think?

Ma (asking follow-up question): I’m glad you finally admitted that you have allowed more than 900 agricultural products to be imported. You said it’s because of the WTO, or because we don’t produce these products — whatever the reason, the point is that you allowed it, not me. So if your party, think tanks affiliated with your party or media outlets make any more false accusations, would you clarify it? When we joined the WTO, we were worried that it may have an impact on our agricultural sector, but instead, the production value of the sector increased. So it may well be proven that an ECFA would not have such a big impact on our agricultural sector after all.

You mentioned the 10-year issue in FTAs, but in fact, there are 23 countries in the world that signed FTAs with an opening-up period of more than 10 years — the longest one being 24 years, and the FTA we signed with Nicaragua has a period of 15 years.

Tsai: I think you, as a president, should pay attention to some more important issues, rather than spending so much of this precious debate time clarifying things. We’re not blaming you for lifting the ban on imports in the past, but are blaming you for what you plan to allow for import in the future. When we negotiated WTO membership, we did not consider the Chinese agricultural factor at all, we only considered the impacts that agricultural products from the US, Japan, Europe, Australia and New Zealand may have. In fact, the impact of importing agricultural products from these countries is not as big, because their products are very different from Taiwan’s, and they have a different culture. However, it still took us 15 years to adjust. Mr President, do you think we can solve the impact of Chinese agricultural products within 10 years after signing an ECFA?

Taiwan is a small country, but a very competitive one, that’s why we’re asked to follow the highest standards when joining the WTO, we’re asked to open up at least 90 percent of our market by other countries. The WTO has a set of very strict monitoring measures and requires transparency.

Tsai (asking question): Right now, three quarters of the public still don’t know what an ECFA is, but the president tells us that we have to sign it. All we get is brain washing and unrealistic propaganda. China knows a lot about the ECFA, but the government will not disclose most of the information to its people. Many businesses are worried that they are on the list of industries to be opened up, but they don’t know, and so cannot express their opinions. When are you going to give the information to the public? You said you would give it to the legislature after signing an ECFA, but what if lawmakers are not satisfied with the agreement? Are you going to reopen the negotiations? Something like this has already happened with the controversy over importing certain US beef products.

Ma:I’m happy that you are giving me this opportunity to clarify. You talked about opening up 90 percent of the market, but it’s not a set rule. For example, the US and Canada did not open up so much of their markets to each other under the North American Free Trade Agreement (NAFTA). We’re not going to open up to the Mainland over night, we’re doing it gradually. You said it’s not time yet, but how long should we wait? You said you’re worried about allowing 90 percent of agricultural products from the Mainland to be imported within 10 years, well, do you mean that we shouldn’t sign [an ECFA] for 10 years? This is the biggest problem with the DPP — you always refuse to face reality.

The list has not been finalized yet, that’s why we can’t show it at the moment. We try to keep everything behind closed doors during negotiations, but we will make the results public. I promise that I won’t only publicize the list when it’s sent to the legislature. The 17 traditional industries that would be affected will actually be contacted by the Ministry of Economic Affairs. Economic cooperation agreements among Asian countries are a challenge that Taiwan must face, what else can you do? Can Taiwan really keep on delaying everything? Have you ever thought about the disadvantages that may arise if we delay the process?

Tsai (asking follow-up question): Taiwanese businesses relocating their plants to China is the main reason why made-in-Taiwan products are being replaced by those made in China. After you sign an ECFA, many small and medium businesses will have to move to China. There’s not a rule that you have to keep everything secret during negotiations, and only publicize the information after the negotiations are complete. Would public opinion do any good at that stage? Would you reopen the negotiations?

The WTO has passed stricter rules on transparency in FTAs, but many people are saying that KMT officials have economic interests in China. Would you openly announce that you will check the economic interests of all your party or government officials in China to avoid conflicts of interest during negotiations?

Ma: You said that the decline of Taiwan’s market share in the world is related to opening up to the Mainland, but why didn’t you do anything back in 2002 when the government — under the DPP — opened up to the Mainland? Why didn’t you do anything as MAC chairperson? How can you blame it on us? We only took over government less than two years ago. In 2000, only 24 percent of Taiwan’s international business was with the Mainland, but in 2008, the number was 40 percent. Since I was inaugurated, the increase from 2008 to 2009 was only 1 percent. How can you blame it on us?

When you imposed tight restrictions on cross-strait relations, Taiwanese businesses were reluctant to come back, now when we loosened it up and allowed direct cross-strait flights, well, many businesses investing in the Mainland, like Tinghsin, Want Want and Natural Beauty, are coming back. We understand what businesses want, they want free movement, so when it’s easier to move around, they’re coming back. In the past, people said that there were only Taiwanese tourists going to the Mainland, well, now Mainland tourists are coming to Taiwan too — more than 1 million visited Taiwan last year. Opening cautiously is what a responsible government is supposed to do.

As to whether people participating in negotiations have conflicts of interest, well, we welcome anyone to report it to us if that happens. I have higher expectations about the cleanness of officials than the previous governing party. Signing an ECFA is not for personal gain, but for the benefit of the entire country, for Taiwan’s long-term benefit.