Taiwan Panorama: Is the ECFA a free trade agreement (FTA)? Does it conform to the spirit of an FTA?

Hsu: We don't call it an FTA, but the ECFA certainly adheres to the spirit of the World Trade Organization's definition of a regional free trade agreement.

The WTO says the essence of a free trade agreement is this: WTO members may sign reciprocal free trade agreements in the interest of further liberalizing trade. The trade benefits that accrue to the signatories don't necessarily have to conform to the WTO principle that "most favored nation status must be extended to all other members without prejudice." The WTO provides this exception to avoid the kinds of multi-year impasses that bilateral FTAs would otherwise give rise to within the complex web of WTO member relations. A future ECFA between China and Taiwan would in essence be a WTO FTA.

Taiwan Panorama: The impression that the government is currently giving the public is that China is asking for little but giving up a lot with the ECFA, so it seems to lack the reciprocity of an FTA, and some analysts are worried that the mainland thus is treating Taiwan like Hong Kong in this process. What are your thoughts?

Hsu: Naturally, we're going to be seeking the greatest possible benefits for our side in the negotiations. But there's also a process of give and take. The issue everybody's concerned about is which industries will be designated as sensitive and which will suffer. This is the key issue on the table. We can't reveal too much before the agreement is finalized, but the government does have a plan and the Industrial Development Bureau has been communicating with industry. We won't ignore any industry's interests.

The WTO also requires that FTA signatories include substantially all trade and substantially all sectors in their agreement. However, there is as yet no specific rule on what percentage constitutes "substantially all." Instead, that percentage is determined by the signatories. It is therefore possible for one party to give a little more a little more quickly, and the other party to give a little less and more slowly.

Taiwan Panorama: Are the government's preparations complete? Has it already developed associated measures?

Hsu: The government has laid down four lines of defense for industries likely to be negatively impacted. The first two involve designating industries that need protection as "highly sensitive" and "moderately sensitive" industries to gain appropriate adjustment periods. The third is establishing protective mechanisms for both sides' products. For example, if imports of a given product increase by a large amount, you can conduct a dumping investigation and impose anti-dumping levies, or open up discussions in which you request that the other side reduce its exports. The fourth line of defense involves providing guidance and other measures that facilitate the transformation of severely affected domestic industries. Having four lines of defense represents pretty thorough security.

Taiwan applied to the WTO in 1990 and was admitted in 2002, spending 12 years in between in international negotiations. Since being admitted, it has been a participant in other countries' negotiations for admission. Taiwan has also engaged in FTA talks with its five diplomatic allies in Central and South America, and bilateral negotiations with still other nations. All of which is to say that our colleagues have abundant real-world experience. I urge people from all sectors to have confidence in our nation's negotiators. We will maximize Taiwan's interests in this agreement.

Taiwan Panorama: But mainland China is a unique adversary. What must the government most watch out for in negotiations?

Hsu: Strategies naturally vary depending on who is sitting on the other side of the table. Take negotiations with Japan, for example. The Japanese really dig into all the details. We just go along with their approach, and don't try to hurry them. We spent more than a decade negotiating the ATA Carnet we just signed.

The government naturally has a firm grasp of how to orient itself for talks with mainland China, too. You can imagine the tremendous pressure the negotiators are under from both within and without Taiwan. The lead negotiators have to be able to bear up under this pressure and remain focused on their objectives.

Taiwan Panorama: Some scholars have suggested that the government is seeking too much from the ECFA, and have argued that it should instead pursue multiple tracks and prioritize preferential trade agreements for a few key industries before gradually moving ahead with FTA talks. Is that feasible?

Hsu: The WTO's most favored nation rules are such that other nations would protest if, rather than Taiwan and the mainland wrapping their relationship in a framework agreement like an FTA, the mainland instead offered trade benefits to Taiwan alone.

It is important to bear in mind that the cross-strait economic and trade relationship has existed for more than 20 years and has already grown from simple investment and trade to include virtually every kind of economic cooperation. As this relationship continues to develop, wouldn't it behoove us to have a systematic agreement that lays down comprehensive rules and guarantees? On issues like intellectual property rights and investment guarantees, we must have a transparent platform in order to avoid situations where you're suspicious of me and I'm protecting myself against you, and in order to more easily resolve cross-strait administrative issues and disputes. This agreement will benefit Taiwan. To foreign firms using Taiwan as a springboard to the mainland, greater transparency and predictability in cross-strait relations mean a greater sense of security and greater willingness to invest.