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President Ma’s Remarks on the Cross-Strait Trade in Services Agreement

My fellow countrymen: Good morning.

I. The government is concerned for students as well as for the economy

In the last few days, our people’s attention has been focused on some students’ occupation of the Legislative Yuan chamber. Everyone has been paying close attention to the ongoing protest, and to discussions over the Cross-Strait Trade in Services Agreement. I am just as concerned, just as anxious, as you are. I am here today to make clear to you exactly what I think.

II. Youth concern for national affairs means the nation has a future

First, let me say to the students occupying the Legislative Yuan chamber: I understand you are concerned about the services agreement. I applaud your passion and your motives. When I was a student, and when I was studying in the United States, I too was concerned with national affairs, and participated in student movements. So I fully understand that, unless young people are concerned with and boldly involved in national affairs, the country would have no future.

III. Democracy and rule of law are hard-won, and not to be relinquished lightly

However, I must say that our democratic development and achievements have not come easy. In the past 20 years, we have seen all the seats of our national legislature put up for re-election, we have held five direct elections for the presidency, and we have amended our Constitution seven times. Taiwan is a model of democracy for all ethnic Chinese communities. The rule of law is the basis of democracy: Without the rule of law, there would be no democracy. A commitment to the rule of law is the founding principle upon which our country was established.

The services agreement is being reviewed by the Legislative Yuan. The process has not been completed, and the agreement has not yet been approved. Anyone who has an opinion concerning the agreement will have ample time during the ongoing review process to express his or her opinion. But students displeased with the review process in our legislature took it upon themselves to illegally occupy the Legislative Yuan chamber, paralyzing our legislature for five days. This has seriously affected the ability of our legislative, executive, and other branches of government to function. Let us reflect upon this calmly: Is this the sort of democracy we want? Must the rule of law be sacrificed in such a manner? Do we not take pride in our democracy and our respect for rule of law? As president of the Republic of China, I must act to defend democracy and uphold the rule of law in accordance with the Constitution. Without the rule of law, we cannot defend our democracy. This is a fundamental position on which this government cannot waver.

IV. Why Taiwan wants to sign the Cross-Strait Trade in Services Agreement with mainland China

Many members of the general public have been asking these past few days why the Legislative Yuan needs to pass the services agreement. It is my responsibility to tell you once again that this is entirely for the sake of Taiwan’s economic future.

As you know, Taiwan has a small and open economy. External trade accounts for 70 percent of our economic growth. Because of our diplomatic predicament, although many countries are perfectly willing to do business with Taiwan, they hesitate when it comes to signing a free trade agreement (FTA) with us. This is why we have signed only seven FTAs or ECAs. (And of these, only three were signed with major trade partners.) We lag far behind Singapore, the Republic of Korea, Japan, and mainland China. Tariffs are levied on our exports at rates that are 3 to 7 percent higher than those applying exports from these other countries. Therefore, we must try to sign more FTAs as soon as possible so that we will not be marginalized. My fellow countrymen, regional economic integration is an unstoppable global trend. If we do not face this and join in the process, it will only be a matter of time before we are eliminated from the competition. For the sake of the nation’s development, we truly have no choice. We can no longer sit idly by.

On March 11, the Republic of Korea and Canada announced the signing of an FTA. South Korea is the first Asian country to sign an FTA with Canada. About 97.5 percent of Korean goods, including cars, automobile components, refrigerators, and washing machines, will enjoy zero tariff treatment. But Taiwan’s exports to Canada are subject to tariffs. How then are we to compete with Korea?

The Republic of Korea is Taiwan’s main trade competitor. In the past decade, its ruling and opposition parties worked hand in hand under four different presidents, bringing the number of FTAs it had signed from just one to 11 at present. These FTAs, including those signed with the European Union (EU) and the Association of Southeast Asian Nations (ASEAN), cover more than 40 countries. Korean businesses enjoy market access and preferential tariff rates around the world. Our businesses, meanwhile, can only watch as they slowly become less competitive. We lag behind Korea by a decade, and can hardly catch up even if we start now. How can people keep saying that there is no need to hurry? A high-ranking official once said that if the Cross-Strait Trade in Services Agreement is not ratified, South Korea would be the happiest party. What is even more problematic is that the services agreement falls under the Cross-Straits Economic Cooperation Framework Agreement (ECFA), so if it is not passed, it will seriously damage our international credibility and cross-strait relations, and hamper our efforts to liberalize trade. And it will certainly affect our chances of joining the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP). Taiwan’s position in the international community will definitely become more difficult, and more isolated.

My fellow countrymen, the service sector is our economic mainstay. It accounts for about 70 percent of our gross domestic product (GDP), and nearly 60 percent of our workforce. However, our service exports lag far behind those of Singapore, Hong Kong, and the Republic of Korea. Taiwan’s innovative and high-quality service industry has high-caliber human resources. But it is unable to fully utilize this talent and expertise because Taiwan’s markets are too small. There just aren’t enough consumers. Mainland China is the world’s second largest economy and Taiwan’s leading trade partner, and it too is developing its service industry. Upon passage of the Cross-Strait Trade in Services Agreement, the mainland would further open its markets to Taiwan’s service providers, and offer them conditions better than those available to firms from other countries. Young people have big dreams. We should not confine them to Taiwan. We must support their efforts to enter bigger markets and be active throughout the entire world. In fact, mainland firms have been allowed to invest in Taiwanese companies for nearly five years now. More than 400 mainland Chinese firms have done so, and the companies they’ve invested in have hired 9,600 Taiwanese employees. Passing the services agreement would mean more job opportunities for our people.

V. Misunderstandings regarding the Cross-Strait Trade in Services Agreement

Currently many misunderstandings are circulating regarding the services agreement. For example, some say that if it is passed, there will be a large influx of labor and immigrants from mainland China; that Taiwan’s workers will lose their jobs; that Taiwan’s publishing industry will be dominated by mainland Chinese competitors; that the agreement only benefits large corporations, but not small and medium enterprises; that mainland China’s construction and telecom sectors will come and invest in Taiwan, affecting our national security; and that what the mainland would open up with regard to Taiwan is not comparable to what Taiwan would open up with regard to the mainland. I must solemnly inform everyone that none of these claims is accurate. We are in no way allowing labor, immigrants, or publishers from mainland China to come to Taiwan. In fact, investment from mainland China has been allowed in Taiwan for about five years. Our pre-investment screening and post-investment oversight are extremely rigorous. Mainland Chinese investors that violate the law are immediately fined or forced to withdraw from our markets. Included among the 80 sectors to be opened to Taiwan by the mainland are computer services, real estate, travel services, market research, photography, translation, and janitorial services. Taiwan’s small and medium enterprises are active providers of such services, so it cannot be said that the services agreement is designed only to benefit big corporations. Overall, the services agreement was signed in accordance with our principle of “putting Taiwan first for the benefit of the people.” For Taiwan, the benefits far outweigh the disadvantages. We hope that during the continuing legislative review of this agreement, agencies of the executive branch will clearly explain the actual situation.

All countries are confronted with opening up their markets, and all are concerned about the domestic impact of doing so. However, liberalization of Taiwan’s markets didn’t just begin today. As early as the 1980s the US service industry had already made inroads into Taiwan’s market. At the time, all of these concerns existed, but what was the result? McDonald’s, KFC, and Starbucks all entered our market, but our own sector quickly learned from their business models and developed Taiwan-style coffee shop franchises, such as 85˚C, and even created added value that is now marketed around the world. In fact, with the services agreement, Taiwan will open up 64 categories to investment from mainland China. Of these, 27 have been opened up for the past two to five years, including food and beverages, car rental, traditional Chinese medicine wholesaling, and book wholesaling and retailing, with quite limited effect on Taiwan’s markets. As for business sectors that could be affected, the government has budgeted NT$98.2 billion (US$3.2 billion) to deal with the impact in three ways: stimulus and guidance, structural adjustment, and damage relief. The services agreement contains clauses specifying emergency negotiations, national security exceptions, implementation reviews, and revision of regulations, to effectively respond to various situations that could occur.

VI. Review and vote on the Cross-Strait Trade in Services Agreement article by article

The students hope that the services agreement can be reviewed and voted upon article by article. The day before yesterday, the KMT caucus passed a resolution unanimously supporting this. I hereby call upon our young friends to withdraw from the legislative chamber as soon as possible and allow the Legislative Yuan to resume its normal functioning. This is a wish expressed by the majority of the public, since the other four branches of government depend on the Legislative Yuan to get their legislation and budgets passed. I also hope that President Wang Jin-pyng of the Legislative Yuan, and the ruling and opposition parties, can get normal deliberative procedures restarted as soon as possible for review of the services agreement so that it can be dealt with in the most appropriate manner.

My fellow citizens! Our nation must continue moving forward. Taiwan’s economy must not be marginalized. I hope that when debating the services agreement, everyone will put Taiwan’s future foremost, not partisan interests. My core principle in governing this country from the beginning of my presidency has been “putting Taiwan first for the benefit of the people.” I solemnly pledge to you that the services agreement and other free-trade pacts are all geared toward helping our people do business and increasing our competitiveness, so that the next generation will have a brighter future.

Thank you.

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