CHAPTER 2 TAIWAN’S CASE
2.3 ECFA AND ITS RATIFICATION PROCESS
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2.3 ECFA and its ratification process
President Ma started to depart from the promise of the “three noes” to Beijing, when he agreed to pursue the most comprehensive agreement in the history of Taiwan-China relation. President Ma gave the impression of now following the line of thought of rapprochement that ruled the KMT since Beijing created the ASL. In order to justify this new strategy in cross-strait relations, president Ma pointed to the massive proliferation of Free Trades Agreements (FTAs) in the Asia-Pacific region during 1998-2008, as “clear sign” that Taiwan had to catch up quickly before it got excluded from the international trade. This argument was based on the fact that in the same period of time Taiwan had only signed 4 symbolic FTA’s with its Latin American allies that only accounted for less than 0.2% of Taiwanese exports, which did not provided a real benefit for its exports oriented economy44 (Hwang, 2012). This idea spawn strong critics over the veracity of President Ma’s claims.
President Ma defended that the only way to avoid exclusion was to get closer to the PRC and keep developing the “three links and four exchanges”. Therefore, it was decided that SEF and ARATS would meet to begin the negotiations that would bring about the signature of 18 different agreements between the PRC and ROC45. Overall the agreements have the objective of opening direct air and sea transportation, and postal links in the strait.
Additionally now more Chinese could visit Taiwan. Furthermore, the agreements set a new level of cooperation stretching to: judicial assistances, financial and banking businesses, agricultural products, food inspection and others. Fifteen new agreements were signed during these negotiations. The most important one would be the Economic Cooperation Framework Agreement (ECFA) that was signed on June 29, 2010 in Chongqing.
44 Sixty percent of the Gross Domestic Product of Taiwan comes from exports. (Hwang, 2012)
45 The total number of agreements singed reached of 15 s and three memorandums of understanding (MOU) by May 10, 2011. (Hwang, 2012)
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ECFA is divided into the following five chapters: 1) general principals, 2) trade and investment, 3) economic cooperation, 4) early harvest, and 5) various other provisions46. In these chapters it is contemplated that both parts are interested in liberalization of trade in goods, services and further investment. Due to its spectrum, ECFA has six sub-negotiations in the areas of trade in goods, trade in services, investment, dispute settlement, industrial cooperation, and maritime customs. Therefore, at the time of the signature in 2010, the only section that was finished was the one denominated “early harvest” (which is intended to liberalize certain goods and services). This section is constituted by a list of 539 goods that gradually lowered their tariff starting January 1, 2011 till January 2013, when they reached a zero tariff. The rest of the sections had to be negotiated, including the two most important ones, which are the dispute resolution mechanism47 and the character of the agreement48.
The signature of ECFA, a series of eight rounds of negotiations would bring about the signature of the “Cross-Strait Investment Protection and Promotion Agreement” on August 9, 2012. One year later, the signature of the “Cross Strait Services Trade Agreement” will follow on June 2013. Shortly after the CSSTA would be sent for its ratification. This section of the agreement would generate the strongest reactions. In part this would be due to the sensitive topics it were addressed in the section and also because already different groups in the society did not agree in the way the ratification the agreements predating ECFA was handled.
The increasing level of concern about Ma’s intentions started with the signature of the fourteen agreements and three MOU’s preceding ECFA. The Executive Yuan (EY) allowed SEF and ARATS to agree on establishing effective date clauses that put into force the pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre- pre-
46 For further information please refer to the Appendix that contains a complete summary of ECFA’s five chapters.
47 Since the PRC and Taiwan were recognized as members of the WTO in December 11th, 2001 and January 1st, 2002 respectively, the PRC has denied using WTO’s dispute resolution process with Taiwan as it would entail its recognition as an independent international person. (Hwang, 2012; The World Trade Organization, 2015; The World Trade Organization, 2015)
48 The discussion is centered over the nature of the agreement. Bearing in mind that both regimes do not recognize each other as independent sovereign countries, this agreement has yet to be defined if it is an interim agreement or an international one. The first case implies that Taiwan is a province of China, but in the second case Taiwan would be an independent and sovereign country. If defined as an international, for instance, the ECFA agreement has to be reported to the WTO. If not the PRC would have a “de jure” claim of the “one-China” policy and the ownership over Taiwan.
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ECFA treaties without the Legislative Yuan’s approval. Therefore, the sixteen pre-ECFA agreements would become effective following 7 to 90 days after their signature whether the Legislative Yuan had a copy or time to read them. As Jau-Yuan Hwang argues, the EY was moving along a not well-defined regulation, in which it is still not clear if the real duty of the LY is to provide its approval for these kind agreements or not (Democratic Supervision of Taiwan-China Agreements: On the ECFA and Beyond, 2012).
According to Juan-Yuan this problematic lies in a series of legal structural deficiencies defining the role of the LY. Juan-Yuan explains that in 1991 the constitution was amended to define China as “Mainland Area” and Taiwan as “Taiwan Area”. In July 1992 the LY passed the Statue Governing Relations between the Taiwan and Mainland Area, also known as “Taiwan-China Relations Statute” or “TCR Statue”. In the article 2 of this statute it is established that the Mainland is part of Taiwan but does not confers any further legal status for cross-strait agreements. This divided the opinion of those who think that cross-strait relations should be consider as “intra-China” (but do not explain which law to apply the on in the PRC or ROC), and others who think that these agreements are international. The Constitutional Court would have to intervene in 1993 just after the Koo-Wang talks in Singapore that led to the four initial treaties between the PRC and ROC. The Constitutional Court provided the interpretation No. 329 to establish the following:
“Agreements concluded between Taiwan and mainland China are not international agreements to which this interpretation relates. It should also be noted that whether or not these agreements should be sent to the Legislation Yuan for deliberation is not include in this interpretation” (Hwang, 2012, p. 18).
Finally in May 1997 the LY would amend the TRC Statute to instate a congressional supervision. Therefore in article 5, paragraph 2 provided that any cross-strait agreement in case it required to amend laws or legislations it would be submitted to the LY for its discussion. In 2003 a revised version under DPP would rearrange the same article 5 and paragraph 2, but still leaving the description unclear as it appears here:
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“Where the content of the agreement requires any amendment to laws or any new legislation, the administration authorities of the agreement shall submit the agreement through the Executive Yuan to the Legislative Yuan for consideration within 30 days after the execution of the agreement; where its content does not require any amendment to laws or any new legislation, the administration authorities of the agreement shall submit the agreement to the Executive Yuan for approval and the Legislative Yuan for record, with confidential procedure if necessary” (Hwang, 2012, p. 19).
As Juan-Yuan argues, it seems the LY should intervene when agreements take place.
Nevertheless, it is inconclusive when should an agreement amend the laws or legislations.
Moreover, the power of the LY is still not well grounded and this was clear when in 2008 the Agreement on Air Transportation and Agreement on the Sea were signed by SEF and ARATAS. As Juan-Yuan argues, the situation became a clear reflection of what the article 95 of the TCR Statute states:
“The competent authorities shall request the consent of the Legislative Yuan before permitting direct business transactions or direct sea or air transportation between the Taiwan Area and the Mainland Area, or permitting the people of the Mainland Area to enter into the Taiwan Area to work, and if the Legislative Yuan fails to adopt any resolution within one month after the request during its session, the consent is deemed granted” (Hwang, 2012, p. 20)
Therefore, the LY is compelled to adopt a resolution within a short period of time (considering the administrative work and negotiation process), but if it does not do so in the designated time it is completely irrelevant, because the agreements will by authorize anyway. Hence, EY limited to provide a copy of the pre-ECFA agreements on November 2008, which were going to take force less than a month. Nevertheless, the LY still provided a resolution on December 4, 2008. Although, there is one process that provides the LY an indirect say on the agreements, which is the amendment of the laws and legislations. If there are no amendments none of the agreements can be fully be enforced, as it happened with the Air Transportation and Sea Agreement case. The proper domestic and
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taxation laws were not modified immediately. Unfortunately for those people worried about Ma’s intentions, ECFA did include an effective date as it is stated in article 15, which reads as follows:
“After the signing of this Agreement, the two Parties shall complete the relevant procedures respectively and notify each other in writing. This Agreement shall enter into force as the day following the date that both Parties have received such notification from each other” (Hwang, 2012).
In this case, the EY sent the document immediately after to the LY, but clearly if there was not a careful reading of the document, it could endangered Taiwan’s position because it would immediately be enforced. The DPP side of the LY argued that more time was needed and at least a three-reading procedure had to be done. The KMT, based on the resolution No. 329, rejected the idea. The debate between DPP and KMT was strong, but at the end the KMT won establishing a two-reading procedure to approve ECFA. Finally, on August 17, 2010 it was approved, immediately after SEF notify ARATS and the agreement became officially active on September 29, 2010 (Hwang, 2012). Again, the EY pushed the LY through the KMT party in the LY to follow the desires of Ma’s policy, which clearly reflected the lack of a division of powers and the erosion of the democratic process in Taiwan.