Former MAC chief: Cross-Strait peace will be affected if China suspends ECFA

Brussels, May 31 (CNA) — A former Taiwanese government official who was once in charge of cross-strait policy said Friday that China should consider the consequences before suspending the Economic Cooperation Framework Agreement (ECFA), as it would affect peace on both sides of the Taiwan Strait.

Speaking at a forum hosted by the Centre For European Policy Studies in Brussels, Chiu Tai-san (邱太三), chairman of Taiwan’s Mainland Affairs Council (MAC) during the administration of Tsai Ing-wen (蔡英文) of the Democratic Progressive Party (DPP), said the ECFA should help ease tensions between Taiwan and China and bring benefits to people on both sides of the strait.

Chiu said any attempt by China to suspend the free trade agreement signed in 2010 under the rule of Ma Ying-jeou (馬英九) of the Kuomintang (KMT) would lead to a deterioration in relations between Taiwan and China.

“China should carefully consider its actions because suspending the ECFA will impact economic cooperation and the peaceful development of bilateral relations,” Chiu said.

After China’s Ministry of Finance had already decided to suspend tariff concessions for twelve Taiwanese products at the end of last year, it announced on Friday that it would suspend concessions for a further 134 Taiwanese products with effect from June 15.

The 134 items include base oils for lubricants, racing bikes and textile products.

China’s decision to suspend tariff concessions came shortly after Lai Ching-te (賴清德) of the DPP was sworn in as Taiwan’s president on May 20.

Before Friday’s announcement, China launched two days of large-scale military exercises around Taiwan on May 23.

Political observers said the military exercises and the continued suspension of ECFA tariff concessions were intended to express China’s displeasure with Lai’s inaugural speech.

In his speech, Lai quoted the Constitution of the Republic of China (Taiwan’s official name) and said, “The Republic of China and the People’s Republic of China are not subordinate to each other.”

Chiu pointed out that exchanges between Taiwan and China have been taking place since 1991, but that he felt that the progress made had now been wiped out by Beijing’s actions.

He said that over the past three decades, Taiwan, like other countries, had expected to be able to trade with China, but that hope evaporated when Chinese President Xi Jinping (習近平) escalated his military aggression.

“If Taiwan and China stop economic exchanges, only social exchanges will remain,” Chiu said.

Alicia García-Herrero, a researcher at Bruegel, an economic think tank in Brussels, said at the forum that some had claimed that the ECFA’s tariff concessions covered more than 400 Taiwanese products and that the suspension could be a “killer” for Taiwan’s economy. She disagreed.

The scientist said that the agreement has now become “less important” due to Taiwan’s changing economic structure.

“But if you look at trade flows, Taiwan exports more to the US than to the (Chinese) mainland,” the scientist said, adding that the same is true for South Korea and Japan.

She said that such a trend emerged partly after the revolution in the development of artificial intelligence.

In addition, the export controls on high-tech products imposed by the USA on China are “less relevant” for Taiwan, South Korea and Japan.

At a time when global supply chains are changing, the scientist said, Taiwan is placing more emphasis on the US market than the Chinese market.

More opportunities are also planned for the European market to attract Taiwanese investment, she said.

In response, Chiu said Tsai’s government, which came to power in 2016, had stepped up efforts to reduce its economic dependence on China.

Chiu said exports to China currently account for less than 30 percent of Taiwan’s total exports (down from a peak of 45 percent), and there are only 70,000 to 80,000 Taiwanese investors in China (down from a peak of 111,000 to 120,000).