Tuesday, December 7, 2010

Why the delay: Possible reasons behind the postponement of ARATS-SEF summit

l  The semiannual summit meeting between China's Association for Relations Across the Taiwan Straits (ARATS) and Taiwan's Straits Exchange Foundation (SEF) was originally planned to take place in Taipei during December 15-17. Both sides had hoped that ARATS President Chen Yun-lin and SEF Chairman Chiang Pin-kung would sign an agreement on mutual investment protection and another one on health and medical cooperation during the two-day meetings. However, differences over the dispute resolution mechanism, particularly the option of settling disputes in an international arbitration tribunal, forced a last-minute postponement until, at the earliest, the end of December.

l  Since the signing of ECFA in late June, Beijing and Taipei have primarily been negotiating two agreements—one each on mutual investment protection and medical and health cooperation—in the hope that they can be signed at the December’s ARATS-SEF summit. Though the prospects are not particularly bright, the substantive negotiations in the coming months will crucial to how, and if, the remaining differences between the two sides can be resolved in time for the signing to take place at the next summit, possibly scheduled for late spring 2011. Besides patience, the success of these negotiations will depend largely on if both Beijing and Taipei are prepared and ready to address, at least indirectly, the sensitive issue of sovereignty and political status of each.

l  As the sixth cross-Strait summit since President Ma Ying-jeou assumed power in May 2008, Chen and Chiang had originally planned to review cross-Strait relations since the signing of the “Economic Cooperation Framework Agreement” (ECFA) in June and identify the priority issues for future negotiations until, at least, Taiwan’s next presidential election in March 2012. Though both Beijing and Taipei are trying to downplay the unexpected postponement, differences between the two sides are getting more difficult to resolve since non-economic considerations have, and will continue to, assumed more importance.

l  For the mutual investment protection agreement, for example, Beijing disagrees with Taipei's proposal to designate the International Center for the Settlement of Investment Disputes (ICSID) under the World Bank as the arbitration organization for cross-Strait economic and trade disputes. This is primarily because the ICSID is designed to address disputes between private investors and foreign governments, and applying such a mechanism in the cross-Strait context would invariably imply that Taiwan is a sovereign state. Similar considerations also apply to the negotiations over health cooperation agreement since sovereignty issue is also involved when it comes to the recognition of each other's drug certifications. As Beijing had repeatedly stated in the past, any plans or steps to perpetuate the appearance of “two Chinas” or “one China, one Taiwan” internationally is simply unacceptable.

l  The signing and the implementation of ECFA was, of course, a historic breakthrough in cross-Strait economic relations. However, as both sides are intensifying efforts to expand exchanges and deepen cooperation in the post-ECFA period, China and Taiwan will inevitably touch upon highly sensitive issues like sovereignty and political recognition. Though this may not be a priority for the ruling KMT following the disappointing showing at the metropolitan elections on November 27, how to broaden domestic consensus and formulate a strategy in future cross-Strait negotiations will continue to demand attention from political leaders of both political parties in Taiwan, especially since the once-considered “easy matters” are no longer easy as cross-Strait relations intensify.

l  Finally, in spite of the summit delay, the format and structure of the proposed “Cross-Strait Economic Cooperation Committee” (CSECC, 兩岸經濟合作委員會), which will operate under the ARATS-SEF framework, is expected to be formed and operational by mid-December. The CSECC will be headed by a vice-ministerial economic official each from China and Taiwan, with primary responsibilities in addressing problems related to the implementation of ECFA and other trade-related disputes.

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