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Toward the Creation of a "Cross-Strait Common Market" |
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Why Do I Advocate a Cross-Straits Common Market? |
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A Cross-Straits Common Market - Working Together to Build Prosperity in the Asia-Pacific Region | ||
A Cross-Straits Common Market --
Working Together to Build Prosperity in the Asia-Pacific Regionby
Vincent C. Siew
17th Annual Joint Conference of
the ROC-Australia and Australia-Taiwan Business CouncilsGrand Hyatt Taipei
September 11, 2001
I am grateful to the ROC-Australia Business Council for inviting me to attend this 17th Joint Conference of the ROC-Australia and Australia-Taiwan Business Councils. Two months ago, I visited Australia at the invitation of the Australia-Taiwan Business Council. It was my first visit to Australia since leaving government office. The warm reception I enjoyed in Sydney and Brisbane is something I will always remember with the deepest pleasure.
When I look back on my long career in public office, especially my years as Director-General of the Board of Foreign Trade, as Minister of Economic Affairs, as a Legislator, and finally as Premier, I feel very glad that I was able to make some concrete contributions to the development of trade and economic ties between Taiwan and Australia.
Australia-Taiwan Trade and Economic Relations
While I was at the BOFT in the mid-1980s, we opened our market to imports of Australian beef. In March 1991, Taiwan's representative office in Australia changed its name to the Taipei Economic and Cultural Office, or TECO. At the same time, TECO gained approval to set up an office in Canberra, your capital. Later on, the Australian Commerce and Industry Office (ACIO) in Taipei became one of the three biggest "non-official" organizations representing foreign countries in Taiwan. Only the American and Japanese offices were larger.
When Taiwan and Australia signed a direct flights agreement in 1991, it signified a new milestone in our bilateral relations. From 1991 to 1998, our bilateral trade grew at an average annual rate of 10.25%. Moreover, during the 1990s, our countries concluded a number of important agreements. These included the signing of memorandums on investment promotion and technology transfer, the protection of industrial property rights, bilateral arbitration agreement, avoidance of double taxation and prevention of tax evasion, competition and fair trade law coordination, and technical cooperation.
Last year, Taiwan was Australia's 8th largest trading partner. Australian exports to Taiwan amounted to well over 5.5 billion Australian dollars, up 33% from the previous year, making Taiwan Australia's 7th largest export market. Taiwan was the 10th biggest supplier to the Australian market, accounting for more than 3.5 billion Australian dollars, up 18% from 1999. According to Australia's 2001 Trade Report, Taiwan is the 21st largest source of foreign investment in Australia, and is also the 21st largest recipient of Australia's overseas investment. The report put Taiwan's cumulative investment in Australia at 615 million Australian dollars, and that in the other direction at 452 million Australian dollars. These figures show clearly that our trade and economic ties are growing with plenty of vigor and are drawing the bonds between us ever closer.
Turning to the subject of cross-straits relations, we fully understand that their status is a focus of attention all over the world. That is because they not only affect Taiwan's security, but also have a vital bearing on Asia-Pacific stability and the smooth flows of global trade. The huge mainland China market offers potential that no country can afford to ignore. Taiwan is not alone in having so much at stake in planning its moves on this front. I believe that Australia, too, has a great interest in seeking its own best foothold in this vast and tricky terrain.
At the recently convened Economic Development Advisory Conference, I proposed that our businesses should set their sights on "staying rooted in Taiwan, spanning the Asia-Pacific, and bringing together global resources." That, I suggest, should be the main goal for Taiwan and its people to work hard toward. It was echoed by President Chen at the close of the conference in his call to "Till Taiwan deeply, position globally" as the guiding vision for our national economic development in the new millennium.
The Background to the Establishment of a Cross-Straits Common MarketEarly this year, after attending the inauguration of President Bush, I accepted an invitation to speak about cross-straits trade and economic affairs at the American Enterprise Institute in Washington. In proposing the concept of a cross-straits common market, I was gratified to draw a highly positive response from the experts and scholars in attendance. The idea was also warmly received back in Taiwan. With strong encouragement and backing from friends in Taiwan's business community, three months later we set up the Cross-Straits Common Market Foundation to actively promote this idea.
Why have I put forward this idea? Because from the currents of political and economic development in the international sphere, I have seen both a promising possibility for cross-straits relations and a new direction for Asia-Pacific cooperation: that is, the concurrent trends of globalization and regional cooperation.
In the 20th century, political factors made it impossible for cross-straits trade and economic links to be settled on a proper and satisfactory basis. But now we have entered a new and different phase. In the face of the two powerful trends of globalization and regional cooperation, and taking into consideration the imminent admission to the WTO of both Taiwan and mainland China, cross-straits trade must in the future be conducted within a broader international multilateral framework. This represents a turning point for cross-straits reconciliation. It also marks the start of a new stage in the economic integration of the Asia-Pacific region. It is my belief that establishing a cross-straits common market is now the way forward most in keeping with the interests of the Asia-Pacific as well as both sides of the Taiwan Straits.
The Spirit of a Cross-Straits Common MarketThe concept of the cross-straits common market is basically modeled on the example of the European Union, with economic integration gradually leading to political integration. After World War Two, the countries of Europe progressed in stages from the European Coal and Steel Community to the European Common Market to today's European Union. Their experience tells us that, if we can first succeed in putting aside political issues and seek economic cooperation, then and only then will we be able to establish mutual trust.
Under the rules of the WTO, cross-straits trade will be able to cast off the restraints of political forces and advance another step toward the development of a cross-straits common market. It will enable both sides, observing the principles of peace, security, equality, and mutual benefits, to reduce trade barriers and costs, and to move to establish systems and norms that bring substantive benefits to them both. Within the scope of such arrangements, cross-straits conflicts and contradictions can be gradually reconciled, enabling the two sides to develop together, prosper together, share benefits, and form a kind of political and economic virtuous circle. And so the two sides will be able to march forward along the path of long-term stability and peace.
The Special Characteristics of a Cross-Straits Common MarketI advocate adherence to the following principles:
1. Emphasis on "open" economic integration. Economic integration across the Taiwan Straits should initially progress in an "open" and "natural" manner. A cross-straits common market should be established within the framework of economic integration in the Asia-Pacific region. It should be compatible with the WTO, by following WTO rules and standards in establishing bilateral trading mechanisms. Economic integration will develop naturally and more speedily where there is complementarity in economic conditions and similarity of cultural and social backgrounds, to open the way for gradual formation of a common market. At the same time, both sides must remain in step in opening their markets to other countries, so that during the process of integration they can each accommodate broader regional division of labor and international cooperation. Moving along this path will enable each side to share economic benefits with neighboring countries.
2. Emphasis on market cooperation. The cross-straits common market should, of course, move toward market opening and the free movement of factors of production. The establishment of a cross-straits common market should place special emphasis on market cooperation that allows the economies of Taiwan and mainland China to complement each other, which will help secure the prosperous development of markets on both sides of the Straits as well as in the whole Asia-Pacific region. For example, Taiwan's mature managerial, manufacturing and logistics capabilities, especially in the information industry, can be combined with mainland China's market potential to develop regional and global operations and logistics centers.On the other hand, mainland China can use Taiwan as its window for speeding up connection to international markets and attracting inward investment, to help it develop its inland economy, especially in the mid-western region. In addition, Taiwan's experience will be useful in the reformation of China's state-run enterprises and village industries, enabling the mainland to further accelerate the modernization of its economy.
The Mode and Substance of a Cross-Straits Common MarketThe implementation of a cross-straits common market should be carried out in several gradual steps, through the systemization and normalization of economic integration. We envisage its main stages of development as follows:
(1) First stage - Promote the normalization of cross-straits trade and economic relations.
In establishing a cross-straits common market, an initial pressing task is to promote the normalization of economic and trade relations between the two sides. In the past, Taiwan adopted defensive "siege mentality" policies for its trade and economic dealings with the mainland. In the new economic environment, these policies must be thoroughly adjusted in order to establish mutual trust and enable normal trade relations to develop.
On the production side, I propose that the division of labor should take cross-straits technical cooperation as its starting point, to create a more favorable basis for the cross-straits economy. Future cross-straits technical exchanges could be multi-faceted and multi-channeled, including personnel exchanges, interflow of funds, technology sharing, harmonization of standards, and marketing cooperation.
During this stage, the governments on both sides of the Straits should also act as speedily as possible to set up a mechanism for regular, official interaction and negotiation, with a view to enhancing mutual trust, speeding up the normalization of economic and trade relations, and making provision for the orderly lifting of restrictions on cross-straits direct trade and investment.
(2) Second stage - Harmonize the economic systems on both sides, and establish a cross-straits free trade area (FTA)
As cross-straits economic and trade relations move toward normalization, the two sides can make progress in removing tariff and non-tariff barriers, harmonizing economic regulations, establishing common standards, and narrowing the differences between their respective economic systems. At the same time, both sides can increase their level of economic cooperation, for example, in conducting joint R&D in the high-tech sphere, jointly developing special economic zones, cooperating on labor affairs, and so on. During this stage, the two sides should negotiate and sign a free trade agreement, to enable more effective implementation of economic harmonization and standardization measures.
(3) Third stage - Comprehensive economic integration: the realization of a cross-straits common market.
Once the establishment of a cross-straits common market has reached a certain point of economic integration, the two sides can embark on initiatives such as currency union, tax-system collaboration, and so on.
ConclusionAustralia and Taiwan completed consultations on bilateral market-access issues related to Taiwan's WTO admission back in 1996, and Australia hopes that Taiwan can gain membership of the world trade body by the end of this year. Taiwan's WTO accession is expected to give Australian exports to Taiwan the benefit of tariff reductions averaging 40%, while Australian firms will also gain advantage from the further liberalization of our service sector. Apart from these, the workings of a cross-straits common market will open up possibilities for Australia, Taiwan and mainland China to form three-way cooperative trade links.
According to the latest reports, the two sides of the Taiwan Straits could be admitted to the WTO as early as this November. Taiwan is ready to meet all new challenges that this and other changes will bring.
At the recently convened Economic Development Advisory Conference, on the question of how to improve cross-straits trade and economic relations, Taiwan's ruling and opposition parties reached the following consensus:
(1) Under the precondition of assuring Taiwan's security and global status, to set a course toward cross-straits economic integration, with a view to promoting beneficial interaction and stable cross-straits relations.
(2) To implement adjustments to cross-straits trade and economic policy on the basis of "active opening, effective management", including:
l Promptly undertaking rational modification of the "no haste, be patient" policy, clearly defining the standards for active opening and procedures for effective management.
l Speedily implementing the opening of Taiwan to visits by mainland Chinese tourists.
l Swiftly opening Taiwan's land and real estate markets to investment from mainland China.
l In line with accession to the WTO, opening up direct trade and investment.
l Quickly setting up a new structure for cross-straits financial interchange.
l Launching direct transport links stage by stage: giving priority to implementing customs clearance through the Offshore Shipping Center; and taking a strong and active approach to holding negotiations with mainland China on implementing direct transport links.
Thus, Taiwan has already removed every impediment to cross-straits cooperation within its control, and the only problems that still remain lie firmly on mainland China's side. I believe that, if mainland China's leadership is truly desirous of improving the well-being of people on both sides of the Straits, then they ought to support my idea and allow it to come to fruition one day. For the cross-straits common market is a new structure fashioned especially for our new world -- a structure under which Taiwan, mainland China, Australia, and other partners in the Asia-Pacific region can cooperate all the more closely to enhance our common prosperity and expand our common wealth.
A cross-straits common market will be a bridge of peace across the Taiwan Straits. It will also be a cornerstone for Asia-Pacific and global peace. At the same time, it will give Australia new opportunities to prosper and develop. I hope that our Australian friends can gain a fuller understanding of what it entails and join together with us in setting it up - for the greater peace and prosperity of the Asia-Pacific region.