Straight News: Mr. Liu, how do you interpret the Ministry of Commerce's determination that Taiwan's trade restrictions against the mainland constitute trade barriers?
Special Commentator Liu Heping: Actually, the Ministry of Commerce issued Announcement No. 11 on April 12 this year, deciding to conduct an investigation into trade barriers on Taiwan's trade restrictions against the mainland. On October 9, the case was postponed again, extending the investigation deadline to January 12, 2024. Since January 13 next year happened to be the voting day for the election of the leader of the Taiwan region, the green camp media and "Taiwan independence" politicians at that time generally smeared and interpreted this from the perspective of conspiracy theories, saying that the mainland chose to announce the results of the survey the day before Taiwan's 2024 election, in order to influence the voting intentions of voters on the island, that is, to guide voters to vote for the KMT rather than for the DPP. Now it seems that the mainland Ministry of Commerce announced the results of the investigation "ahead of schedule", and this conspiracy theory is self-defeating. This shows that the mainland's investigation of trade barriers to Taiwan is actually going at its own pace and has not been affected by the island's elections.
Another point worth noting is that since the two sides of the strait launched the "three links" of opening up economic and trade exchanges 30 years ago, and especially since the signing of the "Cross-Strait Economic Cooperation Framework Agreement," which is commonly known as the ECFA, cross-strait economic and trade opening-up has always been in a state of serious asymmetry; as of November this year, Taiwan has unilaterally banned the import of a total of 2,509 products from the mainland, which is more than the 2,455 items when the investigation was filed. This not only violates the ECFA agreement between the two sides of the strait, but also violates WTO rules. However, for a long time in the past, the mainland did not pay much attention to this; on the one hand, it was because the mainland's economy was far larger than Taiwan's, and the mainland did not care about unilaterally making some profits to the Taiwan compatriots, and on the other hand, it was because for a period of time Ma Ying-jeou and the Kuomintang were in power on the island, who agreed with the "consensus of '92." Now that the mainland has not only launched an investigation into trade barriers to Taiwan a long time ago, but has also come to the conclusion that Taiwan has trade barriers to the mainland, this means that after eight years of listening to the words and deeds of Tsai Ing-wen and the Democratic Progressive Party (DPP), who refuse to recognize the "consensus of '92" and stubbornly adhere to the "Taiwan independence" stance, the mainland has decided not to tolerate it anymore and has begun to demand reciprocity and normalization of cross-strait economic and trade exchanges. This also shows that the curtain of the cross-strait game in the economic and trade fields has been officially opened.
Straight News: The Ministry of Commerce has determined that Taiwan's trade restrictions on the mainland constitute trade barriers, and what impact will it have on the island's economy and cross-strait relations?
Special Commentator Liu Heping: I think that there must be a cause and an effect, and since the mainland has determined that Taiwan's trade restrictions against the mainland constitute trade barriers, there will definitely be countermeasures in the future. Moreover, the countermeasures that the mainland may introduce include the following levels: First, punitive tariffs are only imposed on Taiwan's special individual products, such as the mainland's announcement in July this year that Taiwan's exports to the mainland have anti-dumping behaviors, and the imposition of punitive tariffs of 16 to 22 percent, etc.; second, the tariff reduction of all early harvest list commodities stipulated in the ECFA agreement will be terminated; and third, it is possible to completely terminate the ECFA agreement, which is also the most severe of all the punitive measures. In the face of possible countermeasures by the mainland, since the institutionalized communication and exchange channels established by the two sides of the strait on the basis of the "consensus of '92" have all been cut off, the Tsai Ing-wen authorities do not even have a way to negotiate with the mainland on this issue, which means that they can only "resign themselves to fate," and at the same time, those enterprises on the island that rely too much on exports to the mainland to make a living can only "lie down and be shot."
We know that Taiwan is a small, open economy that is highly dependent on foreign trade to drive economic growth, and its total exports account for 65% of GDP. Last year, Taiwan's total exports to the mainland and Hong Kong amounted to $183.6 billion, accounting for 38.3 percent of total exports, and Taiwan's surplus from the mainland was as high as $156.5 billion last year. Under such circumstances, once the mainland takes countermeasures against Taiwan, especially the complete termination of the cross-strait ECFA agreement, it will have an unprecedentedly severe impact on Taiwan's economy, and may even lead to a major recession in Taiwan's economy.
Therefore, the 2024 election is not only a choice of "war and peace" for Taiwan, but also a choice of "prosperity and recession". Moreover, in the past few years, cross-strait economic and trade relations have played a role as ballast for cross-strait relations to a certain extent, and once cross-strait economic and trade ties are interrupted or greatly regressed, it will be even more difficult to maintain peace and stability in the Taiwan Strait.
Straight News: On December 14, local time, following the U.S. Senate, the U.S. House of Representatives also passed the "National Defense Authorization Act" for fiscal year 2024, which authorizes the U.S. Secretary of Defense to establish a comprehensive training program for Taiwan's military. What do you think about this?
Special Commentator Liu Heping: To be honest, the National Defense Authorization Act passed by the US Congress a few years ago contains quite a lot of thunderous clauses, including a request for the White House to invite Taiwan to participate in the RIMPAC military exercise, a request for the Pentagon to send warships to dock at a military port in the Taiwan region, and a call for a higher level of so-called "official exchanges" between the US and the Taiwan authorities. It's just that the risks and costs after the implementation of these provisions are too great, not only the Tsai Ing-wen administration "can't stand this supplement", but even Sino-US relations can't withstand this impact, so these provisions have basically been locked in a drawer by the two presidents Trump and Biden.
Perhaps because we have accepted the lesson that most of the Taiwan-related clauses in the "National Defense Authorization Act" in the past few years have ended up being useless, this time the "National Defense Authorization Act" passed by the US Senate and House of Representatives no longer fires empty guns and has become somewhat "pragmatic," and the main provisions of the Act are only authorizing the US Secretary of Defense to establish a comprehensive training program for Taiwan's armed forces. We know that since the US military withdrew from Taiwan more than 40 years ago, the US Pentagon has never interrupted its plan to train Taiwan troops, but this has been done in secret. The introduction of this clause is tantamount to making the secret training work in the past completely public, and upgrading it from partial training to comprehensive training in the past. But whether this provision can be implemented or not is still in the hands of President Joe Biden.
Author丨Liu Heping, special commentator of Shenzhen Satellite TV's "Live Hong Kong, Macao and Taiwan".