Taiwan-China Relations: Debates over the Economic Cooperation Framework Agreement (ECFA)

Michael Chang, BASC Research Assistant

Since the ascension of the Kuomintang (KMT) and President Ma Ying-jeou into power in 2008, efforts to restore cross-strait relations in transportation, commerce and communications have been the subject of negotiations between the Communist Party of China (CPC) and the KMT. The Economic Cooperation Framework Agreement (ECFA), a limited free trade agreement between the two entities that has yet to be signed, marks another chapter in the development of Chinese-Taiwanese relations. Propelled by the global financial crisis and steep declines in economic growth, President Ma has actively pushed for the passage of the ECFA as the best option for reviving the Taiwanese economy. Moreover, in the face of increased bilateral free trade agreements between ASEAN nations and Japan, Korea, and China, Taiwan seeks to remain competitive in the global market. On the other hand, through the ECFA, China strives to develop a closer economic relationship with its Taiwan compatriots while enhancing its international reputation as a responsible economic player in the region.

The limited free trade agreement is not without controversy, particularly in Taiwan, where it touches on the country’s most volatile political issue: unification with mainland China versus political sovereignty. This issue is reflected in Taiwanese partisan politics. While the KMT supports eventual unification with the mainland through the “One China Principle”—which stipulates that the PRC and Taiwan are one unified country and that the ROC is its legitimate government--the party has moderated its position by advocating the status quo. On the other hand, its opposition party, the Democratic Progressive Party (DPP) favors a distinct Taiwanese identity and independence from China.

Debate about the ECFA takes place within this larger partisan debate about Taiwanese sovereignty. The DPP argues that the ECFA is a cover for unification with mainland China. Moreover, it argues for the negative impacts the agreement may have on the Taiwanese economy. Local businesses and workers may be harmed by the reduction of manufacturing jobs and capital outflow and brain drain of management and expertise brought on by the ECFA. The opposition party also fears that Taiwan may lose its sovereignty and be relegated to the same political status as Hong Kong and Macau.

Interestingly, the ECFA does not enjoy popular support among Taiwanese. On March 22, opinion polls published in the China Times, a pro-KMT establishment, revealed that less than 43 percent of people said they approved of the KMT’s plan to sign the ECFA with nearly 34 percent opposed and 24 percent unsure. Similarly, a DPP survey found that around 35 percent approved of passing the ECFA with a 45.8 percent disapproval rating. In addition, on May 17, 2009, a mass rally of approximately 600,000 demonstrators organized by the DPP demanded a national referendum about the ECFA, which was quickly rejected by the Ma administration and the KMT as unnecessary. Given this shaky support, the KMT and President Ma need to face the inconvenient reality that unless the administration can persuade the Taiwanese people of the ECFA’s necessity and ensure the political independence, the passage of the ECFA will be seen as illegitimate.

While President Ma has continuously pushed for the passage of the ECFA, it has often been vague about the actual content of the agreement. Moreover, its refusal of the nationwide referendum and open political debate with the opposition party may present the government with a potential legitimacy problem. Although the KMT and Ma argue that the ECFA is purely economic and would not touch on Taiwan’s autonomy, it refuses to openly debate the issue with the opposition party. Economic benefits can be cited; however, when a policy runs the risk of eroding Taiwanese political sovereignty, it will be fiercely challenged in Taiwan. A policy debate, which would better inform the general Taiwanese public, would be of utmost importance given the delicate political nature of the ECFA and its implications for Taiwanese economic and political sovereignty.

Given the precarious nature of the cross-strait problem since 1949, measures need to be taken to address the improved relations and undeniable economic ties between China and Taiwan—and while the ECFA may or may not allow Taiwan to remain globally competitive, it represents an attempt to address these important issues.