Taiwan and China recently signed a new economic agreement, but on the island across the 100-mile Taiwan Strait from the mainland, a political debate is under way over just how close is too close for comfort.
The Economic Cooperation Framework Agreement (ECFA), signed last week in Chongqing, China, will improve economic ties between the longtime rivals. However, many in Taiwan are protesting the potential political impact of the deal and are calling for a referendum to be held on what both Beijing and Taipei do not formally recognize is an international pact.
The ECFA focuses China-Taiwan interaction on economic issues and has been debated in Taiwan for months. If approved, it will take effect in 2012.
Business supporters of the agreement in Taiwan say it will help firms gain access to the mainland's booming economy. The ECFA will remove tariffs on $14 billion of Taiwan's exports and $3 billion of Chinese imports.
Taiwan's opposition Democratic Progressive Party (DPP) and some Taiwanese labor organizations are protesting the deal that the ruling Kuomintang Party (KMT) is working to implement after approval by the legislature.
Bi-khim Hsiao, director of the DPP's department of international affairs said the economic agreement will draw Taiwan deeper into China's circle, putting it closer to China politically.
"It's never just economic for China," she said during a Skype interview last week.
On June 26, the DPP held a street protest in Taipei that included 30,000 to 40,000 people who called for a nationwide referendum on ECFA.
The KMT and DPP are currently negotiating the terms of ECFA's formal approval, which will be further reviewed during a special session of the legislature July 7. If a referendum is approved, it would require a majority of registered voters to approve the agreement.
"Not only parliament, but the public should be allowed to have a say in this," Ms. Hsiao said.
However, Frank Wang, director of the Taipei Economic and Cultural Representative Office's (TECRO) press division, said the KMT "is determined to ratify ECFA during the special session." TECRO is the Taiwan government office in Washington.
Ratifying the agreement presents political problems. Both China and Taiwan do not formally recognize each other and thus do not regard the ECFA as an international treaty.
According to Drew Thompson, the director of China Studies at the Nixon Center, the agreement has not been signed by either head of state, and is being handled by quasi-governmental organizations affiliated with their respective political parties.
Indeed, according to Parris Chang, president and CEO of the Taiwan Institute of Political, Economic, and Strategic Studies and former DPP official, President Ma Ying-jeou is not allowing parliament to modify ECFA, as it would an international treaty, but has limited its response to a "yes" or "no."
Similarly, China is treating the ECFA as it would a domestic trade deal with Hong Kong, said Patrick Chovanec, a professor in China and former businessman, over a Skype interview from China.
John Tkacik, a retired U.S. diplomat who was chief of the State Department's China intelligence unit during the Clinton administration, said "neither Beijing nor Taipei desires any international attention to ECFA's 'domestic' legal status."
Chris Nelson, senior vice president of Samuels International Associates who writes a daily Asia-focused report, said the political implications of the deal are a "legitimate concern for Taiwanese citizens."
"The mainland is trying to tie Taiwan closer and closer to them," he said, but added that ECFA is hardly reunification in itself.
Many Taiwanese businesses, however, see no other choice. Under the DPP administration from 2000 to 2008, the Taiwanese economy suffered from some isolationist policies - one reason the KMT won the 2008 elections.
Dissenters such as Mr. Chang maintained that the benefits will be limited to "a few fat cats" in Taiwan, but many experts say ECFA is largely in Taiwan's favor, predicted to boost the island's economy by 4.5 percent by 2020.
"There's no question that this is a good deal for Taiwan's domestic economy," Mr. Nelson said.
Without a pact with the mainland, on the other hand, Taiwan fears that it will be cut off from the rest of Asia's economy, especially with the free trade agreement China recently signed with six nations in the Association of South East Asian Nations (ASEAN).
"The businesses are thinking: If we don't [sign ECFA], then what are our prospects?" Mr. Chovanec said. As an island, he added, Taiwan can only grow so much.
Different views on Taiwanese independence also contribute to the confusion. When the KMT party fled to Taiwan in 1949, it continued to see itself as the legitimate government-in-exile of China.
"There are still significant differences between the Kuomintang and the CCP, but they do agree that there is one China," Mr. Chovanec said.
However, according to Mr. Tkacik, most ethnic Taiwanese do not see Taiwan as a part of China, including the DPP, and have reservations about the KMT's policies.
"We fear that [President] Ma will sell out to China," Mr. Chang said.
With the upcoming legislative elections, however, Mr. Chang pointed out that the people of Taiwan will have a chance to voice their discontent.
"Taiwan is a vigorous democracy, and the people will speak up if they think the government has gone too far," Mr. Nelson also said.
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