TAIPEI - Singapore has begun talks on a
free-trade agreement (FTA) with Taiwan, making the
city-state the first nation that doesn't recognize
Taiwanese statehood to dare such a move. The
hoped-for pact is pregnant with more political
than economic significance.
As bilateral
free-trade agreements strongly imply both
countries possess proper statehood, in the past,
no nation had risked to start FTA talks with
Taiwan for fear of hefty reprisals from China. But
to the Chinese leadership, Singapore is a much
trusted player.
"Singapore breached the
gap between China and Taiwan when it presented the
so-called 1992 Consensus," said Albert Shihyi
Chiu, an assistant professor
in Tunghai University's Department of Political
Science. "Beijing can be assured that Singapore
will engage Taiwan only as long as the Taiwanese
government doesn't use the process as a political
tool to imply Taiwanese statehood."
Taiwanese
President Ma Ying-jeou made the Economic
Cooperation Framework Agreement (ECFA), signed
with China in June last year, more politically
palatable to a public who view Beijing as a bully,
by emphasizing that if Taiwan signed a trade
agreement with China, then Beijing wouldn't stand
in the way of Taiwan signing FTAs with other
countries. Negotiations with Singapore mean Ma has
delivered on this promise.
Taiwan
currently has FTAs in place with Panama, El
Salvador, Honduras, Guatemala and Nicaragua - all
economically insignificant and all among the very
few countries with whom Taiwan maintains
diplomatic relations.
An aggressive FTA
strategy by South Korea, Taiwan's arch rival in
trade, has been causing significant anxiety in
Taipei. South Korea already has FTAs in place with
Chile, India and the Association of the Southeast
Asian Nations (ASEAN), of which Singapore is one
of the 10 members.
Furthermore, the Barack
Obama administration in Washington is working hard
to ensure passage of the mammoth United
States-Korea Free Trade Agreement (KORUS), and an
FTA with the European Union will come into force
on July 1. Negotiations on new FTAs with
Australia, China, Canada, Mexico as well as New
Zealand are being conducted by the Koreans.
By the calculus of Taiwan's ruling
Kuomintang (KMT), if the FTA negotiations with
Singapore proceed without Ma using the matter to
make the island look like a formal state, Beijing
will let other nations sign FTAs, and Taiwan will
then not only match up to Korea but also be
enabled to avoid excessive reliance on the China
market.
Through the FTA with Singapore,
Taiwan hopes to enter ASEAN's agricultural
markets, gain the access to India that the
city-state maintains through the Comprehensive
Economic Cooperation Agreement (CECA), and it also
wants to benefit from the opening up of
Singapore's financial sector, which otherwise
restricts foreign financial service providers.
As page-filling the political aspects of a
Taiwan-Singapore FTA arguably are, the purely
economic ones are negligible. The talks on the
Agreement between Singapore and the Separate
Customs Territory of Taiwan, Penghu, Kinmen and
Matsu on Economic Partnership (ASTEP), as the FTA
will likely be officially called, are said to
focus on tariffs, opening up the service sector
and economic partnerships.
"Singapore's
industries and Taiwan's industries are not in
direct competition with each other, but instead
complement each other," heralds an editorial on
the KMT's official website, and "It [ASTEP] can
create opportunities for Taiwan businesses in
India and ASEAN, by way of Singapore."
To
Hong Honigmann, professor at Taiwan's National
Tsing Hua University and expert on FTAs, these are
empty phrases.
"In 2010, imports from
Singapore, consisting mostly of intermediate
goods, made up a mere 3% of Taiwan's total
imports, while Taiwan's exports to Singapore
accounted for 4.4% of Taiwan's total exports,
making ASTEP somewhat insignificant in the first
place," Hong told Asia Times Online. "Because
Singapore is basically already a free-tariff city,
ASTEP is meaningless."
Asked about the
claim that Taiwan could gain access to ASEAN and
India with help of the Taiwan-Singapore FTA, Hong
isn't overly optimistic, "In my opinion, it is
just an imagination. Our officials are prone to
exaggerate the potential benefits of FTAs and
especially those of the ECFA," he said.
Tunghai University's Chiu shed light on
the matter why Singapore nonetheless makes for an
interesting FTA partner in the eyes of at least
some Taiwanese. "For many years, Singapore has
been a model for Taiwan to imitate particularly
because of the city-state's banking sector and its
relations to Western countries," explained Chiu.
"If Taiwan can follow Singapore's path in this
regard, we can benefit."
Chiu reckons that
Taiwan's high-tech companies will appreciate the
ASTEP as they could want to set up their
headquarters in Singapore to take advantage of the
liberal banking system. This prospect would not be
welcomed by the Taiwanese government, he said.
"Singapore's financial sector doesn't have
too many restrictions. One place [former
president] Chen Shui-bian washed his money at were
the banks of Singapore," Chiu jokingly said. He
nonetheless emphasized that Taiwan's traditional
industries wouldn't contemplate moving their
headquarters.
The 1992 Consensus is a term
describing the outcome of a cross-strait meeting
in 1992. It is portrayed by the Kuomintang as the
bedrock its current cross-strait policy is built
on and as the means that broke through the
deadlocked cross-strait negotiations of that time.
According to the consensus, both sides recognize
there is only one China that both mainland China
and Taiwan belong to, and that both sides may have
their own individual definition on what exactly
that China is.
Chiu brought yet another
intriguing aspect of the ASTEP into account,
explaining why Taiwanese pro-China factions,
including those within the KMT, like to see a
Taiwan-Singapore trade pact.
"Singapore's
leadership has always been arguing for a sort of
Asian democracy that differs from the Western one.
Some people in Taiwan think that's the way to go,"
said Chiu.
Yves Tiberghien, a visiting
associate professor at National Chengchi
University and an expert on China, believes that
there is indeed a basic approval by China on the
Singapore-Taiwan FTA negotiations.
"Singapore is seen as sufficiently
pro-China that the Singapore-Taiwan FTA will not
weaken in any way the Chinese case for Taiwan,"
said Tiberghien. ASTEP rewards Ma for moving
forward with the ECFA as Beijing allows some
benefit to Taiwan in expanding its trading
relations, while keeping the reward small enough.
"It is an experimental step that will have much
importance for future possible FTAs. Probably, we
can see it as a blueprint."
Although the
Taiwanese government's official line is that
Taiwan and Singapore have agreed not to say too
much before a consensus is reached, officials have
remarked that it's planned to sign ASTEP within
one year. To those familiar with Taiwan politics,
it would hardly be surprising if that year would
be shortened to seven months with the ASTEP deal
being struck coinciding with the run-up to
combined legislative and presidential elections
planned for January 14.
Huang Hua-hsi, a
Taiwanese legislative assistant, explained the
benefits the Ma administration could expect from
pulling the rabbit out of the hat in a timely
manner, "If Taiwan's sovereignty isn't seen as
damaged by the negotiations, and if Singapore
obtains China's approval, it will be a plus for
the KMT. Ma can use the ASTEP to formally declare
that his cross-strait policy has begun paying out
in stages, thereby attracting the important group
of centrist voters, the Taiwanese middle class,",
said Huang.
Jens Kastner is a
Taipei-based journalist.
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