Wednesday, October 6, 2010

"Maritime Spat" Make-up Backstory: Maintaining neoliberal integration in East Asia on schedule (historic China-Taiwan trade pact & more)

Besides Tokyo's need for China to resume its temporarily halted exports of rare earth to Japanese manufacturers, the desire of both parties to stay on track with plans to deepen East Asian neoliberal integration boded that Japan (with or without U.S. assistance) would not come to military conflict with China over the Senkakus, but, instead, would quickly end its fishing boat collision theatrical run.

Meanwhile, media furor over the historically inconsequential "maritime spat" eclipsed the far larger story about the movement of Beijing, Tokyo and other East Asian governments towards deepening neoliberal economic integration.

The historic pact (Economic Cooperation Framework Agreement) China and Taiwan signed this summer (after concerned Taiwanese lawmakers injured themselves understandably brawling over it) is already bringing a wave of U.S., Japanese, Chinese, and European investors to Taiwan:
Taiwan signed agreements with 27 foreign firms on investments totaling NT$108.25 billion (US$3.42 billion) in the island over the next two years, mostly in the optoelectronics and panel-making sectors, the Ministry of Economic Affairs said Tuesday.

(Photo: AF/Peng Peng)

The deals came shortly after Taiwan and China signed a landmark trade agreement that went into effect Sept. 12. The Taiwan government believes the pact, which removed most of the barriers to cross-strait trade and investment, as well as warming ties between the two sides will boost the island's economic growth.

The majority of the investments will come from the U.S., the ministry said in a statement. Eight U.S. companies, including Hewlett-Packard Co. (HPQ), Qualcomm Inc. (QCOM), Corning Inc. (GLW), Applied Materials Inc. (AMAT) and Super Micro Computer Inc. (SMCI), will invest a total of NT$72.2 billion over the period, it said.

A spokesman at the ministry, who asked not to be named, said earlier Tuesday H-P would invest US$114 million on research and development in Taiwan, without giving further details. H-P wasn't immediately available for comment.

The other investors are from Japan, China and Hong Kong, Germany, the U.K., Australia, the Netherlands, Spain and Belgium.

Japanese companies account for the second-biggest group of investors, with companies inclduing Canon Inc. (7751.TO), Nippon Electric Glass Co. (5214.TO) and Asahi Glass Co. (5201.TO) pledging a total of NT$29 billion, the ministry said.
As with the U.S., Japan, and Australia, China is now Taiwan's largest trading partner. Exports from Taiwan to China total over $80 billion. A million Taiwanese work in China managing Taiwanese multi-billion dollar investments in China.

AFP reported that the pact has been "widely characterised as the boldest step yet towards reconciliation between the former rivals, who split after the end of a civil war in 1949." In 2009, in an ancillary move towards harmonizing cross-border legal procedures, China and Taiwan signed a criminal judicial cooperation pact.

This China-Taiwan pact follows the May 25, 2010 Washington and Beijing "pledge for trust & peaceful co-existence" in their "Concluding Joint Statements at U.S.-China Strategic & Economic Dialogue" held at the Great Hall of the People in Beijing:
In the dialogues we further discussed the building of the positive, cooperative, and comprehensive relationship in the 21st century. We believe that it is a relationship of -- between cooperative partners, instead of between rivalries and enemies. It is the cooperation of peaceful coexistence, instead of being on guard against each other, or (inaudible) each other.
In the statement, Beijing, the top U.S. foreign financier, called upon the Obama administration to "accommodate" its policies on Taiwan and Tibet.

The China-Taiwan pact also follows the Third Japan-China-South Korea Trilateral Summit Meeting (during which North Korea (because of the Cheonan incident), not wayward Chinese fishing boats, was deemed the source of East Asian instability) when the nations discussed trilateral cooperation in these areas: economy, security, environmental protection and cultural exchange.


According to Kyodo, the three countries began a "joint study involving the private sector, government and academia as a step toward launching government-level negotiations on realizing a trilateral free trade agreement."
This time, the three will sign a document on the establishment of a permanent secretariat in South Korea in the hope of further facilitating their regional cooperation.
Wen and Kan ended their "maritime spat" in time to allow another round of handshaking later this month at a planned follow-up meeting between Beijing, Tokyo, and Seoul (to be held concurrent with the ASEAN + 3 in Hanoi in late October) to conclude the agreement and other plans for further trilateral neoliberal integration.

Not a part of the maritime make-up backstory, but definitely part of the planned neoliberal grand scheme: the Obama administration is pushing for a NAFTA-style free trade agreement with South Korea (and also Columbia, and Panama). Christine Ahn and Martin Hart-Landsberg urged " Forget the FTA Fix, Just Say No" on Oct. 1 at Foreign Policy in Focus:
The free trade push has begun again. Both U.S. President Barack Obama and South Korean President Lee Myung-bak are calling for ratification of the U.S.-Korea Free Trade Agreement, which was signed by the two countries’ trade representatives in April 2007 but has yet to be approved by either the U.S. Congress or the South Korean parliament. Aware of how unpopular the agreement remains, President Obama wants the U.S. Congress to delay the approval vote until after the mid-term elections in early November but before the mid-November G-20 meeting in Seoul...

Not surprisingly—after all, it’s called a “free trade agreement”--media and popular attention have focused on the agreement’s potential impact on trade. If implemented, the agreement will eliminate most industrial and non-industrial tariffs and also encourage greater trade in services. In broad brush, this deal represents a trade in interests: Korean manufacturers want greater access to the U.S. market and they are willing to sacrifice their country’s agricultural and (financial and health) service sectors to get it. U.S. agricultural and service sector businesses see it the same way and are content with the deal. No wonder the U.S. auto industry is largely alone in the corporate community (joined only by the beef industry) yelling for renegotiation.

This trade-off holds no promise for workers or small farmers in either the United States or South Korea, and this doesn’t change even if the auto and beef industry succeeds in forcing a renegotiation of the agreement.

Opening markets only mean more intense competition and downward pressure on worker wages. The experience of past decades of trade liberalization should be proof enough. A case in point: both U.S. and Chinese workers have seen their working and living conditions deteriorate while dominant transnational corporations and their national allies in both countries have gained enormous profits.
Read all of Ahn's and Hart-Landsberg's analysis here.

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