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Explanation of the Topics of the Third Chiang-Chen Talks and Follow-up Cross-Strait Talks

"Mainland Policy and Cross-Strait Negotiations" Symposium at Chi Yuan Hall, Feng Chia University, Taichung City

MAC Minister Lai Shin-yuan

April 7, 2009

Vice-Chairperson Gao and Vice President Yang of Feng Chia University, Friends from the Business, Government and Academic Circles of Central Taiwan, Ladies and Gentlemen, Good Morning!


1. The Mainland Affairs Council (MAC) is holding the "Mainland Policy and Cross-Strait Negotiations" symposium today at Feng Chia University. I am greatly honored and delighted to be able to invite representatives of the business and academic circles of central Taiwan, representatives of county, city and township governments, and friends from the media to attend this symposium. Taichung is where I grew up, and I have never changed my household registration in this city since birth. I am a bona fide Taichung native. So I feel a special sense of closeness and affinity when hearing the views of fellow hometown residents here in Taichung.

2. The MAC continuously seeks, through symposiums, informal discussions and other means, to broadly promote understanding of the government's Mainland policy and awareness of issues related to the Chiang-Chen Talks, as well as to directly hear and understand the public's views. For the venue of today's symposium, we have chosen Taichung. I would like to especially thank Feng Chia University President Chang, Vice President Lee, Vice-Chairperson Gao, and the many participating professors for their enthusiastic support. I would also like to thank my fellow colleagues and the students who have helped with the arrangements to ensure the smooth holding of this symposium.

Basic Thinking on Cross-Strait Policy

3. Cross-strait relations are undeniably very important to the survival and development of Taiwan. It has also long been an issue of deep concern in the international community. In Taiwan, it is also the sphere in which the differences of opinions are greatest and the public sentiment toward the issue has been strong. The government's cross-strait policy has a deep and lasting impact on Taiwan. Since the new government took office on May 20, 2008, cross-strait relations have entered a new era. The government has adopted new modes of thinking in the formulation of cross-strait policy. Under a global way of thinking, it seeks to normalize cross-strait relations and achieve cross-strait peace and development to safeguard Taiwan's prosperity and security and regional peace and stability. When it comes to the ROC’s Mainland policy, the government's position is very clear: The Republic of China (ROC) is an independent sovereign country. Under the framework of the ROC Constitution and the premise of "no unification, no independence and no use of force" and "maintaining the status quo," we will actively improve cross-strait relations, maintain peace and stability in the Taiwan Strait, and create conditions for regional co-prosperity and development. The highest guiding principle of the government in promoting cross-strait relations is to adhere to the principle of "putting Taiwan first for the benefit of the people." "Putting Taiwan first" refers to President Ma's insistence on the need to safeguard Taiwan-centric identity; and "for the benefit of the people" means that policy measures must be consistent with the interests of the people of Taiwan. Moreover, those interests must be shared by all of the people. The government will sequentially and steadily promote policy measures conducive to benign cross-strait interactions and normal contact. And it will pragmatically promote cross-strait negotiations and exchanges to usher in a new era of "mutual benefits, win-win outcomes, coexistence, and co-prosperity" in the Taiwan Strait.

4. As we are all aware, cross-strait negotiations and dialogue are the keys to resolving cross-strait issues. Since the two sides still have a sovereignty dispute, the promotion of cross-strait negotiations depends on an approach of shelving controversies and of mutual non-denial so as to pragmatically resolve the issues related to the interests of the people on both sides.

5. In terms of priorities, the government is fully aware that the economy is the lifeline for Taiwan's survival and development. Therefore, an urgent task at this time is to handle the ever-closer cross-strait economic and trade relationship. During the eight years of the Democratic Progressive Party (DPP) administration, cross-strait trade grew 2.8 folds, and the value of accumulated Mainland-bound investment by Taiwan enterprises grew by 3.8 folds. The Mainland is now Taiwan's biggest trade partner, biggest export destination, and biggest source of trade surplus. It is also the most important area for outbound investment by Taiwanese businesses. In the face of close cross-strait economic and trade relations, the government has an obligation to fundamentally adjust the unreasonable restrictions produced by past regulatory policies and resolve the various problems it has engendered. The government must also use institutionalized negotiation channels between the two sides to first resolve the various problems emerging from close cross-strait economic, trade cultural, social exchanges.

Resumption of Institutionalized Cross-Strait Negotiations

6. Therefore, since May 20, 2008, the priority policy objectives of the government have been to resume cross-strait negotiations and to normalize cross-strait economic and trade relations. Immediately after taking office, President Ma pushed for the resumption of the institutionalized negotiation channel between the Straits Exchange Foundation (SEF) and mainland China's Association for Relations Across the Taiwan Strait (ARATS) after a nearly 10-year hiatus. In June and November, the SEF and ARATS held high-level talks and signed six agreements, including agreements on weekend charter flights, Mainland tourist visits o Taiwan, cross-strait air transport, cross-strait sea transport, postal services, and food safety. On December 15, 2008, the two sides simultaneously launched direct cross-strait shipping links, weekday charter flights, direct flight paths without having to detour, and cross-strait direct postal service, realizing the long-awaited goal of direct sea and air transport links.

7. The six agreements are all policies that the DPP wanted to promote during the period of its administration. The Ma administration was able to complete it within a half year. This was possible mainly because of the previously established foundation for negotiations. The rebuilding of the platform for institutionalized cross-strait negotiations has had a catalytic effect on cross-strait negotiations. It also symbolizes the arrival of a new era in cross-strait negotiations.

Economic Benefits of and Public Support for the Six Agreements

8. All eyes are on the economic benefits that the six agreements bring for Taiwan. The average daily number of Mainland tourists visiting Taiwan has increased from 200 to 300 before to nearly 2,000 recently. This has markedly invigorated Taiwan's domestic tourism and travel market. Direct sea and air transport links not only help the public and companies save time and money. In addition, the implementation of direct transport links has helped Taiwan reestablish its strategic position in the economies of Asia and even the Asia-Pacific region. All of these are conducive to transforming Taiwan into an Asia-Pacific operations center for transnational enterprises and a global headquarters for Taiwanese businessmen, which will greatly enhance the international competitiveness of Taiwan's economy.

9. The public is also very satisfied with the government's promotion of cross-strait negotiations and exchanges. According to public opinion surveys, the overwhelming majority of the Taiwanese people express approval and support for the recent easing and stability of cross-strait relations, as well as the new government's approach to "working for the benefits of the people" in cross-strait exchanges. With regard to negotiations between the SEF and the ARATS, over 70 percent of the public support resolving cross-strait exchange issues through the institutionalized cross-strait negotiation mechanism. And 60 to 80 percent of the public support or feel satisfied with the six agreements.

10. The international community, including Taiwan's major allies—the United States, European Union and Japan, have welcomed and expressed strong approval for the improvements in the cross-strait situation and the safeguarding of regional peace and collective security. We can say that the situation in the Taiwan Strait and cross-strait relations have entered a new and unprecedented phase.

Outlook for the Third Chiang-Chen Talks

11. The two Chiang-Chen Talks firmly established a normalized operation mechanism for institutionalized cross-strait negotiations. The SEF and the ARATS have agreed to hold the Third Chiang-Chen Talks in the first half of this year. This round of talks will retain the main principle of negotiations on "normalizing cross-strait economic and trade relations," including the four major issues of regular cross-strait flights, cross-strait financial cooperation and Mainland investment in Taiwan, joint crackdowns on crime, and mutual judicial assistance. Experts of the competent authorities on both sides across the Strait have continuously engaged in communications about operational matters. We anticipate that after having discussed operational matters, we can proceed with the preparatory consultations for the Third Chiang-Chen Talks to make specific arrangements concerning the time and venue of the meeting and the signing of the agreement.

12. With regard to joint crackdowns on crime and mutual judicial assistance, the two sides will establish a mechanism for mutual judicial assistance in civil and criminal matters. They will also establish a normalized cooperation mechanism focusing on the fight against various types of crime, investigative cooperation, information exchange, and expatriation of criminals, so as to safeguard the rights and interests of the people on both sides and enable more efficient handling of judicial cases.

13. With regard to regular cross-strait flights, the two sides will normalize cross-strait air flights based on the existing weekday charter flights. Measures will also be taken to optimize flight paths and expand flights and flight points to fully upgrade the service quality and efficiency of air transport.

14. Regarding cross-strait financial cooperation, there are four sub-issues involved: The signing of three memoranda of understanding (MOUs) on supervision and management in the banking industry, securities and futures industry, and insurance industry; and establishment of a cross-strait currency settlement mechanism. The three MOUs are highly technical in nature. They also involve the different demands of various industries and a very broad scope of financial cooperation, including market access and financing for Taiwan businesses, which are key issues of deep concern to both sides. Therefore, according to current planning, the SEF and the ARATS will sign an overall financial cooperation agreement. Sections common to all three MOUs, along with the currency exchange and other financial cooperation issues, will be included within the scope of the agreement. In addition, the financial supervisory agencies responsible for each of the banking, securities, futures, and insurance industries will be entrusted to further arrange the details of the supervision and management cooperation and follow-up signing of the three MOUs. The signing of a cross-strait financial cooperation agreement will also symbolize the entry of new era in cross-strait finance contacts.

15. On Mainland investment in Taiwan, the main issue is to achieve two-way cross-strait investment to correct the distorted structures of the unidirectional flow of capital from Taiwan to the Mainland. Emphasis will be placed on communication and dialogue on the policies, laws and regulations, the approach to deregulation and investment items, and other aspects related to easing restrictions on Mainland investment in Taiwan's manufacturing industry, service industry, the i-Taiwan 12 Projects and real estate sector. After continued communication, the two sides have expressed a high level of interest in promoting Mainland investment in Taiwan. The Mainland side will also form a delegation to pay an inspection visit to Taiwan. Through various follow-up arrangements, Taiwan will gradually open up to Mainland investment so as to inject new momentum into Taiwan's economy.

Major Significance of Promoting an ECFA

16. Apart from the above-mentioned issues, the cross-strait Economic Cooperation Framework Agreement (ECFA) has probably attracted the most outside attention. The MAC has produced a brochure and position paper on the government's basic policy thinking and plans regarding the ECFA. I have brought these here with me today to distribute to you all for reference. I hope that these background materials will help increase your awareness and understanding of the ECFA.

17. On this occasion, I would like to make an additional explanation regarding several key points about the ECFA. First, it should be emphasized that the ECFA is by no means an “unequal” agreement signed to push Taiwan toward full economic integration with mainland China. It is also by no means a "miracle pill" that will allow Taiwan to stimulate its economy through dependence on the Mainland. Rather, it is a "roadmap to cross-strait economic and trade normalization." It is also a "stepping stone for Taiwan's return to the world stage."

18. Taiwan’s economy is export-driven. Exports account for over 70 percent of Taiwan’s gross domestic product (GDP). Exports and trade surplus are the main engines of Taiwan’s economic growth. Starting from next year (2010), the "ASEAN-China," "ASEAN-Korea," "ASEAN-Japan," and "ASEAN + 3" free trade areas (FTAs) will be established. The tariff-free treatment mutually enjoyed by the member countries of these FTAs will have a considerable impact on Taiwan's exports. The affect will be felt especially quickly on major export sectors such as petrochemicals, machinery, and auto parts. It could also potentially lead to an exodus of domestic industries and create unemployment problems. The government must immediately respond to this crisis and resolve it. On the other hand, we also consider the fact that the rapidly developing cross-strait economic and trade relationship has become the most important part of Taiwan's economy. In many areas, there are still no clearly written rules between the two sides and there is still a lack of systematic protection. On the one hand, the signing of an ECFA with the Mainland can set rules for normalizing cross-strait economic and trade relations so that Taiwanese and foreign enterprises can engage in cross-strait economic and trade activities in a stable and predictable manner. On the other hand, the vast improvement to cross-strait relations will also make other governments more active in signing FTAs with Taiwan. This will spare Taiwan from the threat of marginalization, link Taiwan's economy more closely with world markets, and expand the development space for Taiwanese businesses. That is why the ECFA can be considered a "roadmap for the normalization of cross-strait economic and trade relations" and a "stepping stone for Taiwan's return to the world stage."

19. Secondly, I also must emphasize that the ECFA does not involve the issue of sovereignty, nor does it have any bearing on the issues of unification versus independence. Since the Ma administration took office, the two sides have shelved controversies and signed six agreements on tourism, charter flights, air transport, sea transport, postal services, and food safety. The people of Taiwan can now travel across the Strait with greater convenience, and cross-strait transport costs have fallen sharply. At the same time, the import of Mainland products into Taiwan is subject to stricter customs, inspection and quarantine controls than before, and Mainland tourists still have to pass through customs when visiting Taiwan. There has been absolutely no compromise or change to the sovereignty of the ROC. In promoting the ECFA, the government is also adhering to a firm position and clear principles; namely, that the ECFA will only stipulate the rules governing cross-strait economic cooperation and absolutely does not involve the issue of unification or independence and sovereignty. The ECFA negotiations will adhere to the principle of "putting Taiwan first for the benefit of the people" and be carried out on the premise of "equality, dignity and mutual benefit." There absolutely will be no self-belittlement, nor will there be any political preconditions.

20. The ECFA issue also involves cross-strait negotiations. The Ministry of Economic Affairs and the MAC are intensifying efforts to domestically communicate and forge consensus on the ECFA. However, this issue is still not at the stage when cross-strait negotiations can be held. Nevertheless, the fourth Chiang-Chen Talks will definitely touch on the ECFA issue. Therefore, the ROC side will, during preparatory consultations or other suitable occasions, exchange views with the Mainland side on whether or not to include the ECFA issue in the Third Chiang-Chen Talks agenda. If there is a consensus, we will not exclude the possibility of making related arrangements. However, it must be emphasized that dialogue and negotiations are on two different levels. If the dialogue produces a consensus, the two sides must make preparations before the subject of the dialogue can become an issue for cross-strait negotiations. A lot of outsiders have intentionally misinterpreted that the two sides are already holding negotiations on the content of the ECFA. I must particularly clarify here today that these misguiding statements are entirely inconsistent with the facts.

Topics of Future Cross-Strait Negotiations

21. All the issues arising in the future from cross-strait exchanges can be included in the agenda by arrangement between the two sides and resolved by equal negotiations through institutionalized channels. Regarding issues not included in the Third Chiang-Chen Talks, especially issues of deep concern to Taiwanese businesses and other economic and trade issues, the two sides discussed during the Second Chiang-Chen Talks the prioritization of issues for follow-up negotiations. These include: Expanding food safety cooperation, cross-strait epidemic reporting mechanism, quarantine and inspection of agricultural products, cross-strait investment protection agreement, avoidance of double taxation, establishment of a mediation mechanism for cross-strait economic and trade disputes, cross-strait cooperation on standard inspection, measurement and certification, cross-strait intellectual property rights protection, cross-strait fishing industry labor cooperation and handling of fishery disputes, and cross-strait cultural, educational and media exchanges. Both sides believe that these issues can be prioritized in follow-up negotiations. At the same time, both sides have carried out related research and have gained an understanding of each other’s opinions through exchanges, with a view to facilitating the future arrangement of dialogue and negotiations through the SEF-ARATS platform.


22. I am delighted to have had this opportunity today to visit Taichung and explain to you the government's Mainland policy and the progress of cross-strait negotiations. I very much hope that in the future there will be more opportunities and more time to jointly discuss cross-strait relations and Mainland policy with business, government and academic leaders in central Taiwan so that the people of central Taiwan will have a greater sense of participation in cross-strait affairs, and also can truly enjoy the benefits brought about by various cross-strait measures. Finally, I wish you all success in all of your endeavors and good health!