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A New Opportunity for Peaceful Development in the Asia-Pacific Region – The Cross-Strait Economic Framework Agreement (ECFA)

2010 Asia-Pacific Security Forum speech in Brussels

Lai Shin-yuan

Minister of the Mainland Affairs Council, Executive Yuan

Chairman Tien, Friends from Academia, Distinguished Guests, Ladies
and Gentlemen:

First I would like to thank Dr. Tien for inviting me to take
part in this forum, and the Taipei Representative Office in Belgium for helping
to arrange it.

I feel greatly honoured to be able to come here to meet with
you all. Everyone taking part in this forum is an expert on Asia-Pacific regional
security issues, and I treasure this opportunity to exchange views with you.

The subject of my speech today is “A New Opportunity for Peaceful
Development in the Asia-Pacific Region – The Cross-Strait Economic Framework Agreement
(ECFA).” Its purpose is to explain what contribution the ROC government has made
to peace in the Asia-Pacific region.

In the late 1980s, the binary opposition of the Cold War system
fell apart, and the world entered the post-Cold War era in which emphasis was placed
on cooperation and security.

For countries in Asia, the end of the Cold War meant that the
US and the Soviet Union would no longer dominate or inhibit the politico-economic
situation in the Asia-Pacific region. Many new opportunities for cooperation, and
many regional conflicts, came bubbling to the surface. Regional economic cooperation
gradually came to the fore as a means for countries to take best advantage of the
new politico-economic environment.

This gave rise to the establishment of APEC, and the proposal
of the East Asian Economic Caucus or East Asia Economic Group. We also saw mainland
China and Japan competing to woo allegiance from the other countries of East Asia
as they vied for influence in the Asia-Pacific region.

The US, mainland China, Japan and ASEAN emerged as the main forces
shaping the Asia-Pacific region’s development in the post-Cold War era. That basic
situation has continued to the present day.

Now, APEC is no longer solely concerned with free trade, but
is also a platform for the US to discuss anti-terrorism cooperation and regional
security issues with the countries of East Asia.

Meanwhile, free trade arrangements within the region are developing
apace. The free trade agreement between ASEAN and mainland China already came into
full effect on January 1st this year. Japan is striving to keep pace by developing
its economic integration with ASEAN and also with Australia and New Zealand.

These are key trends of development in our region, and Taiwan
cannot afford to be excluded from them.

Unfortunately, the first few years of the 21st century saw an
escalation of political confrontation between the two sides of the Taiwan Strait.
Cross-strait relations became very tense, and we came perilously close to the brink
of war.

Despite the closeness of cross-strait economic and trade dealings,
the political deadlock between the two sides blocked Taiwan’s opportunities to participate
in regional economic integration. This put Taiwan in danger of being economically

At the turn of the century, there were only three free trade
agreements signed between Asian countries. By 2009, there were 58, and Taiwan was
not a party to any of them.

When President Ma took office in May 2008, he brought a new mindset
to the making of cross-strait policy. The swearing-in of his administration signaled
a new beginning for cross-strait relations.

In his inaugural address, President Ma said that the two sides
of the Taiwan Strait should "face reality, pioneer a new future, shelve controversies,
and pursue a win-win solution." This would enable the two sides of the Taiwan Strait
to strike a balance in pursuit of common interests. He pledged that Taiwan would
act as “a responsible stakeholder” in the Asia-Pacific region, and would also be
“a peacemaker.”

President Ma’s administration has fulfilled every word of these
pledges, giving ample demonstration of its boldness of vision and sincerity in pursuing
the improvement of cross-strait relations. Under the President’s guiding hand, we
swiftly restored the channel for institutionalized negotiation that had been cut
off for a decade, and the tension in cross-strait relations has been conspicuously

The ROC government is working step by step to lay the foundations
for mutual trust and common understanding between the two sides of the Taiwan Strait.
Our government are seeking to reduce friction between the two sides in the international
sphere, to stabilize cross-strait relations into a positive force for buttressing
peace in the Asia-Pacific region.

1. The policy thinking behind the government’s pursuit

Institutionalized cross-strait talks, based on the “1992 Consensus”
by which both sides recognize that there is one China, but each has its own version
of what that means, were resurrected in June 2008. In the two years and three months
since then, the ROC government has held five rounds of high-level talks with mainland
China. These talks have yielded 14 agreements, including the Cross-Strait Economic
Cooperation Framework Agreement (ECFA) and the Cross-Strait Agreement on Intellectual
Property Rights Protection and Cooperation that were signed on June 29 of this year.

These achievements have created cooperative links that will be
beneficial to both sides of the strait. It is a winning outcome for both parties.

Among these agreements, the one that has attracted most attention
in the world is the signing of ECFA.

ECFA is an economic cooperation agreement that complies with
the basic principles of the WTO, but has features particular only to the cross-strait
situation and will come into place stage by stage.

In negotiating this agreement, our government has been guided
by consideration of the tidal currents of globalization, and a sober recognition
of the reality of mainland China’s rise. We have sought to shape it as a vital facilitating
component of our overall economic strategy of “strengthening Taiwan, linking into
the Asia-Pacific, and positioning globally.”

There are a number of reasons why we needed to pursue the signing
of ECFA. The following are three of the most important:

(1) We needed to establish the systemization of economic and
trade ties with our biggest trade partner.

Mainland China stands second in the league of global trade rankings.
It has topped the list of Taiwan’s trade partners since 2003.

As a responsible government, we must establish systemic safeguards
for the high level of economic and trade activity that has developed across the
Taiwan Strait over past years. We need to provide a framework of rules for such
activity, to endow it with stability and predictability.

By giving such protection to both local and foreign businesses
engaging in cross-strait economic and trade activity, we can also better attract
investment in Taiwan from around the world. This can support our goal of establishing
Taiwan as an Asia-Pacific operations headquarters, to serve as a base for entry
into the mainland and world markets.

(2) We needed to establish a fair environment for trade competition

Asian countries have already signed 58 free trade agreements
with one another. They are gradually forming a single free trade market, giving
the majority of their products duty-free access to each other’s markets.

If Taiwan does not join in this tide of regional economic integration,
its exporters will still face high tariffs levied on their goods. This will undermine
the competitiveness of our exports, and pose a serious threat to our foreign trade.

Taiwan is a trading nation. In 2009, we ranked 17th in the world
in volume of merchandise exports. Hence, the signing of ECFA is essential for Taiwan
to begin building an environment in which it can compete on a level footing in international

(3) The signing of ECFA will serve as a catalyst for extending
the globalization of Taiwan’s economy

The signing of ECFA will further bolster the stable development
of cross-strait relations, and will greatly improve those relations. This will help
induce governments around the world to more actively consider making economic cooperation
agreements with Taiwan.

Concluding such agreements will enable Taiwan to avoid the threat
of economic marginalization. It will also help further the alignment of Taiwan’s
economy with world markets.

ECFA is a key step toward “bringing the world to Taiwan, and
taking Taiwan into the world.”

2. ECFA is a mutually beneficial agreement negotiated
in accordance with the principle of proportionality

ECFA has been the subject of many conjectures or interpretations
from different quarters. One of these is that mainland China traded economic concessions
for future political benefits. Nothing could be further from the truth!

I want to particularly stress here that ECFA is concerned purely
and solely with cross-strait economic and trade affairs – the same as the other
13 cross-strait agreements we have signed. It has absolutely nothing to do with
sovereignty or any other political issue. Nor is it subject to any political conditions.
It is a concrete exemplification of the two sides putting aside political disputes
in the conduct of institutionalized negotiations.

The ROC government’s highest guiding principle for engagement
in cross-strait negotiations is “putting Taiwan first for the benefit of the people.”
The sovereignty of the Republic of China certainly has not been, and certainly will
not be, in any way harmed or diminished by these negotiations.

ECFA consists of 5 chapters and 16 articles. Not a single word
of these carries any political condition or political commitment.

The ECFA negotiating process was very tough. It was tough for
Taiwan and it was also tough for the mainland. ECFA is not the result of any benefit
being conferred unilaterally.

Under ECFA’s early harvest program, mainland China will reduce
tariffs on twice as many items as Taiwan. Applied to each side’s exports to the
other, the value of these tariff reductions will be 4.8 times greater for Taiwan
than for the mainland.

So yes, Taiwan will certainly reap more benefit than mainland
China, but that exactly reflects the present actual status of cross-strait trade.
Taiwan’s exports to the mainland are currently worth some four times as much as
the mainland’s exports to Taiwan. Hence, the ratios of benefit to each side under
ECFA are the result of adherence to the principle of proportionality in the negotiations.

Within six months of ECFA coming into effect, the two sides will
conduct the follow-up negotiation of agreements on merchandise trade, services trade,
and investment. We expect the relevant negotiations to be conducted on a footing
of equality, with each side pursuing the outcome that best accords with its own
economic interests. Each side will make concessions, and each side will gain benefits.

It is hard to imagine that there will be any kind of unilateral
conferral of benefit by either party. And it is even harder to imagine that there
will be any question of exchanging economic concession for political benefit.

3. ECFA is a catalyst for Taiwan’s participation in regional
economic and trade integration

ECFA promotes the systemization of cross-strait economic and
trade relations. It will act as a catalyst for getting Taiwan’s main trade partners
to more actively consider negotiating and signing economic cooperation agreements
with Taiwan. It will also enable Taiwan to participate in regional economic integration,
and promote the peaceful development of our region.

In fact, ECFA has received unprecedented worldwide attention
ever since February last year, when our government announced that it was going to
pursue the signing of such an agreement. There have been more than 500 positive
reports about it in international media. Leading media in the US, Japan, Australasia,
Southeast Asia, Europe, and Central and South America have all closely followed
its progress.

The prospect of this agreement was greeted with enthusiasm in
business circles. It helped prompt the European Chamber of Commerce Taipei (ECCT)
to put forward a suggestion for Taiwan and the EU to sign trade enhancement measures
(TEM) with a view to strengthening bilateral cooperation.

On August 5 of this year, Taiwan and Singapore issued a joint
news release announcing that they had agreed to start exploring the feasibility
of negotiating an economic cooperation agreement under the framework of the WTO.
This shows that Taiwan is again moving forward in its quest for involvement in regional
economic integration.

In July of this year, WTO Director-General Pascal Lamy described
ECFA as an important step toward the objectives of Taiwan’s overall trade goals.
He said the WTO expected the agreement to considerably improve cross-strait relations,
and that it could be very important for ensuring the competitiveness of domestic
industries and further integrating Taiwan into the global economy. The WTO Secretariat
also noted that ECFA would help Taiwan negotiate and sign free trade agreements
with other major trade partners.

These remarks all clearly indicate that our government is following
the right course of action, and that the signing of ECFA is the best way for Taiwan
to go about securing its inclusion in region economic integration and promoting
regional prosperity.

In the field of international politics, there may be some people
who harbor suspicions that ECFA will cause Taiwan to lean towards mainland China.
They may worry that it will heighten mainland China’s political influence within
the region, cause Southeast Asia region to become sino-centric, upset the strategic
balance of peace in Southeast Asia, and trigger the weakening and marginalization
of US influence in Southeast Asia. But our view is exactly the opposite.

Cold War and “zero-sum” thinking have already been discarded
in the 21st century. It has been displaced by the recognition of negotiation and
win-win arrangements as essential forces for maintaining stability.

Our purpose in signing ECFA is to promote the internationalization
of Taiwan’s economy. There is no question of our tilting toward mainland China.

In actual fact, ECFA is based on game rules that are adhered
to universally. It sets up a framework for regulating economic and trade activity
across the Taiwan Strait. At the same time that it regulates Taiwan, it also regulates
mainland China.

The existence of ECFA will greatly reduce the possibility of
conflict between the two sides of the Taiwan Strait. It provides a key pivot for
turning confrontation and war into peace and prosperity. And it enables Taiwan’s
government to play the role of an important member of the Asia-Pacific community
in a responsible manner.

We have also noted that David Shear, deputy assistant secretary
for East Asian and Pacific affairs at the US Department of State, remarked in a
public address in early July this year that “the signing of ECFA is a positive development,”
and that “the United States is greatly encouraged by this, we are glad to see this
kind of development.” Such way of speaking happens to be very much in unison with
our government’s way of thinking.

4. Cross-strait conciliation and East Asian regional
prosperity are mutually complementary

Taiwan has already signed ECFA with mainland China, and is vigorously
marching toward economic integration with the Asia-Pacific region. ECFA is not only
an important milestone in advancement toward the systemization of cross-strait economic
and trade relations, but is also a foundation for bolstering mutual trust between
the two sides of the Taiwan Strait.

Nonetheless, Taiwan is also working vigorously to expand our
international participation beyond the economic and trade spheres. We want to establish
ourselves in the world, and we certainly need to maintain good relations on all

Therefore, during these last two years and more, Taiwan government
has also been continuously developing its foreign relations on every front. We have,
for instance, been doing our best to restore mutual trust and cooperation between
Taiwan and the US and Japan, and to bolster our relationship with the EU.

These efforts have gained us many concrete results. For example,
Taiwan health minister has been able to participate two years in a row in the World
Health Assembly convened annually by the World Health Organization (WHO). This is
our first return to a United Nations specialist institution since the ROC left the
UN 38 years ago, and carries great significance. Also, we have gained accession
to the WTO Agreement on Government Procurement, and the UK, New Zealand and Ireland
have granted visa-free treatment to our citizens. All of these gains have been aided
by support from EU members, and the EU itself is currently in process of extending
visa-free treatment to visitors from Taiwan. The ROC government is grateful to the
EU for all of these things.

Cross-strait relations and Taiwan’s external relations are mutually
complementary. The ROC government’s mainland policy is not only directed at improving
cross-strait relations. It is also framed from a globalist viewpoint, to build a
peaceful and stable regional security environment. We wish to extend cross-strait
rapprochement to international relations, to join in promoting the prosperity and
development of the East Asian region.

It is equally important for us to have healthy and orderly foreign
relations, and to maintain benign interaction and continuously build up mechanisms
for mutual trust across-the Taiwan Strait. These are both key essentials for ensuring
peace and security in the Taiwan Strait, and for bolstering stability and development
in the Asia-Pacific region. Those are the policy goals that our government is constantly


History has taught us that using gunboats and armies for economic
expansion will end up causing global catastrophe. Peace is the only sure foundation
for economic development.

The EU’s economic integration process stands as very vivid testament
to this. Since the union’s founding members signed the Treaty establishing the European
Coal and Steel Community in 1951, the EU has continuously developed and evolved.
In the economic sphere, it has step by step embraced the formation of a single market,
the issuance of a single currency, and active promotion of regional cooperation.

The main driving forces behind this have been the aspiration
to secure peace and prosperity within the region, and the determination to ensure
that its skies are never again darkened by the clouds of war.

Taiwan’s efforts to improve cross-strait relations are motivated
by exactly these same goals. Both initiatives are targeted at transforming the threat
of war into peace and prosperity.

The situation in the Taiwan Strait has already been fundamentally
transformed. Peace and stability now prevail where before we stood close to the
brink of war. This remarkable change has been brought about in just a little over
two years.

During this time, in my capacity as minister of the Mainland
Affairs Council, I have personally witnessed and experienced the toils, travails,
and tortuousness of taking this path. But I can say to you with absolute conviction
that this is the right path for us to take. The government of the Republic of China
will stay steadfastly on this path, no matter how tough the going may be. We will
stick to our course until we have set rock-solid foundations for cross-strait peace,
and are sure this accomplishment cannot be reversed.

Despite all the pitfalls along the way, President Ma’s mainland
policy has gone a great distance toward securing peace in the Taiwan Strait. What
has made this achievable, and taken us so far in such a short time, is the rightness
of the policy itself, buttressed by our people’s overwhelming support for institutionalized
cross-strait talks.

This achievement has already earned a place among outstanding
contributions to peace in Asian history. We will carry on doing our best to turn
this new page of history into a lasting chapter.

Ladies and gentlemen, thank you very much for your attention.
Now I will be very glad to hear your opinions and instruction.