Moving forward

Few would deny that the trade agreement between Beijing and Taipei due to be signed next week in Taiwan is seen as a positive step for the governments on both sides of the strait.

President Hu Jintao will likely see the preliminary agreement, which will cover tax, fishing and investment issues, as a crucial step towards signing some sort of peace accord with Taiwan before he ends his second term of office in 2012. In the short term, next week’s accord is likely to lead to the signing of the full Economic Cooperation Framework Agreement (ECFA) next year, giving Chinese investors and banks unprecedented access to Taiwan’s economy.

Taiwan President Ma Ying-jeou, unlike his Beijing-based counterpart, has more than his legacy to think about. Ma’s initial popularity has waned in the face of Taiwan’s economic dire straits, and with elections coming up in 2010, he will be hoping the ECFA with China can reduce the island’s economic isolation and give the economy a well-needed boost.

While the two leaders are steering clear of the talks – sending instead their cross-strait spokesmen Chiang Pin-kung (Taiwan) and Chen Yulin (mainland) – they are unlikely to be a low key affair in Taiwan. The opposition Democratic Progressive Party (DPP), which was never going to pass up an opportunity to incite a nationalist furor at a time when Ma is already on the ropes, has promised three-days of protests and rallies.

Hsieh Ming-yuan, a former DPP legislator, told Taiwanese media that half of the island’s population opposes the ECFA, and that the agreement will downgrade Taiwan’s status to that of a region within China. But Hsieh and the DPP should be careful not to let political posturing and, dare we say, a smattering of electioneering get in the way of what is actually a hugely important step for Taiwan.

The island’s manufacturing industry is suffering from government policies that impose restrictions on the scope and scale of mainland operations, while a series of trade pacts signed between China and other Southeast Asian countries will make Taiwan’s exports to China relatively more expensive when they come into force next year. Many feel that it is time for the island to get into step with the rest of Asia, and realize that China plays an important, and growing, part in international trade.

And then there is the fact that, given the choice, major international players are reluctant to get into bed with Taiwan while the island is still at loggerheads with the mainland. As Lin Chien-fu, an economist at the National Taiwan University, told the Wall Street Journal on Thursday: “We can only make a breakthrough with other countries when our relationship with China is improved. Without the agreement with China, it means game over for Taiwan.”

Lastly, it is unfair for the DPP to portray Ma as unpatriotic as he exercises an increasingly open attitude to China. Ma, like so many other leaders in their dealings with China, has simply realized that pragmatism is far more valuable a tactic than provocation. At the same time there is already speculation that talks over economic affairs could lead to productive dialogue over more pressing issues, among them the Chinese missiles pointed at the island, and the release of prisoners held on espionage charges on both sides of the strait.

In the long term, Ma realizes that China and Taiwan will likely make much better friends than enemies.