Aug 09, 2012

Taiwan: Investment Protection Pact With China

The signature of the pact between Taipei and Beijing marks the implementation of a steady political dialogue, despite China’s refusal to include human rights clause in the pact.

Below is an article published by Focus Taiwan:

The future review and enforcement of an investment protection pact between Taiwan and China is more important than focusing on its possible limitations, local scholars said before the deal was to be signed Thursday [9 August 2012].

The pact's significance is that both sides of the Taiwan Strait were able to reach the greatest consensus possible and commit to making adjustments as the agreement is carried out, said Chang Wu-yueh, director of Tamkang University's Graduate Institute of China Studies.

"Cross-strait affairs are characterized by the fact that no goal is achieved in just one shot," Chang said, adding that more emphasis should be put on how the text will be interpreted and enforced in practice.

The pact, which had been stalled for two years by seemingly irreconcilable differences, is also a political symbol of the ongoing exchanges between the two sides and serves as a foundation for further discussions, Chang said.

The pact will offer multiple channels through which Taiwanese investors in China can settle disputes and also includes provisions protecting their personal safety, but questions have arisen over some of the terms because they did not meet the standards Taiwan's Mainland Affairs Council (MAC) had hoped to achieve.

Taiwan wanted the deal to stipulate, for instance, that disputes can be settled by international arbitrators, but China rejected the idea fearing that such a clause would tacitly acknowledge Taiwan's sovereignty.

China claims the self-ruled island as part of its territory.

Taiwan also insisted on a clause that if a Taiwanese businessman were arrested in China, Chinese authorities would be required to notify the individual's family members of his or her whereabouts within 24 hours, without exception.

That also hit a snag, however, because China's newly amended criminal litigation law stipulates that authorities do not need to inform family members of arrests of suspects involved in national security and terrorist acts.

"I don't know what we can expect from this blank check. It's a shame to the country," said William Kao, president of the Victims of Investment In China Association.

Tung Chen-yuan, who served as the MAC's deputy head from 2006-2008 under a Democratic Progressive Party administration, argued, however, that the pact is at least a step forward in that the two sides were willing to put forth tangible commitments on the issues in writing.

"The text of the agreement looks OK to me. The question is if China is willing to honor its words," Tung said.

Chen Te-Sheng, a research fellow at National Chengchi University's Institute of International Relations, suggested that periodic reviews should be conducted to see if lingering disputes are being resolved under the new pact.

"That would hold the authorities accountable and tell us if the agreement is really working," he said.

The investment pact, along with a cross-strait customs cooperation agreement, will be signed on Thursday by Straits Exchange Foundation Chairman Chiang Pin-kung and his Chinese counterpart, Chen Yunlin, president of the Beijing-based Association for Relations across the Taiwan Straits.