Counting the costs of Taiwan's student rally

HONG KONG - The students have won. But has Taiwan lost?

Tomorrow, Taiwan's Occupy Parliament movement to oppose a service trade pact with China will come to an end.

By 6pm, the students will furl the posters poking fun at President Ma Ying-jeou, pack up their sleeping bags and vacate the legislature building that they have occupied for more than three weeks.

Their departure will conclude one of Taiwan's most dramatic political episodes in recent years.

But it is not over for Mr Ma's government. The 23-day movement may not ultimately stop Taiwan's march towards closer ties with the Chinese behemoth. But in the short term, it will have to find a new way forward in two affected areas: the economy and cross-strait relations.

The most significant concession that led the students to end their occupation was a pledge by Speaker Wang Jin-pyng of the Kuomintang (KMT) to put the controversial services pact on ice, until the passage of a new law to monitor all cross-strait accords - a move some KMT members lambasted as a "betrayal".

What it means is that the current pact - 10 months in the signing and which Mr Ma had hoped to have ratified by the legislature by June - will be delayed indefinitely until the oversight law, contentious in itself, is hammered out by the various political parties. Already, the parties are locked in intractable politicking in the run-up to this November's local polls and 2016's presidential election.

Professor Wu Yu-shan, director at the Institute of Political Science of Academia Sinica, does not mince his words, saying: "Society has been blackmailed and Parliament held hostage, with the demand that the government produces solutions that satisfy them.

"The services trade pact is doomed."

This, in turn, could slow any recovery of Taiwan's stagnant economy. The pact aims to open up 64 and 80 service sectors in Taiwan and China respectively, ranging from beauty salons to banks.

While the students believe the pact will hurt Taiwan's small businesses, its advocates say it represents an overall boost for the economy. Merrill Lynch forecasts that the economy will grow by 2.9 per cent if the pact comes into force, but just 2.5 per cent otherwise. Mr Ma has said it could create 12,000 jobs and is "a guarantee of Taiwan's future competitiveness".

Other things are riding on it, including a pending goods trade pact with China, which now buys 40 per cent of Taiwan's exports. South Korea, its main rival, meanwhile is going full steam ahead in negotiating a free trade agreement with China.

"There are overlaps in some of our export goods such as motherboards and other electronic components," says Dr Ku Yin-hua of the state-funded Chung-Hua Institution for Economic Research. "If Korea gets there first, we will be in a very disadvantaged position."

Some mainland observers such as Professor Chu Jintao of the Chinese Academy of Social Sciences believe Beijing can be sympathetic to Mr Ma's difficulties and liberalise its markets first.

"We can let the Taiwanese companies come in first. After all, we believe it is part of the country, so why not give them the benefits to help them see the positive side of things?" says Prof Chu.

But such blatant giveaways will just cement popular misgivings in Taiwan about China's motive - to absorb it. In that sense, Mr Ma faces a difficult task - to try to revive the island's economy by engaging with the largest regional economy, and yet contend with suspicions about drawing closer to it.

Looking ahead, his work will be made harder by the fact that his standing with Beijing would have dropped as well, as a result of his handling of the saga, says Prof Wu. Cross-strait ties which have warmed under Mr Ma's tenure since 2008 will also be put on ice.

While some such as Professor Shaw Chong Hai from China Culture University believe relations will not be affected - "China has invested six years in this; it will not backtrack because of this," he says - others think otherwise.

Already, there is collateral damage. A trip by China's top official in charge of cross-strait relations Zhang Zhijun - he had hoped to visit in the first half of this year - has been postponed. Provincial delegations' trips have also been put off, observes Professor Chao Chien-min, deputy chairman of the Mainland Affairs Council during Mr Ma's first term.

Contrasting the chips on both sides of the Taiwan Strait, Prof Wu says that Chinese President Xi Jinping, despite his anxiousness to move on cross-strait ties, has until 2022 to play the game out. Mr Ma has just two years to go before the next election - which the opposition Democratic Progressive Party (DPP) seems poised to win - and is pretty much "a lame duck".

"The whole process has been torpedoed, and it will take more effort to resume the trust between Taipei and Beijing," he says.

For the students and their supporters, their victory has propelled a drive to train much-needed transparency on all future cross-strait talks. Both governments have also been put on notice on the need for far more public discussions in an area that generates polarising concerns.

Prof Chao, for one, thinks it is time to bring back an inter-ministerial body that has to conduct public forums on various cross-strait issues.

"Cross-strait relations is a two-pronged effort - with Beijing, and with the Taiwanese public as well. We need to refocus on the second prong too."

xueying@sph.com.sg

This article was published on April 9 in The Straits Times.

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