Under the trade in services agreement, originally negotiated and signed in June 2013 between Beijing and officials from Ma's ruling Kuomintang, China would open 80 services-related sectors to cross-strait investment and Taiwan would open 64. The Ma administration claims that the pact will provide a new and much larger market for Taiwanese services firms and would boost gross domestic product by nearly 1 percent annually. Further, the administration says the pact would pave the way for a more ambitious cross-strait trade-in-goods agreement with the mainland. Perhaps most important, Taipei believes the deal would bolster Taiwan's efforts to join regional free trade agreements such as the U.S.-led Trans-Pacific Partnership, which is still in the works, or the Regional Comprehensive Economic Partnership.
From the start, the services agreement met stiff opposition from Democratic Progressive Party legislators. These lawmakers, citing representatives of small Taiwanese businesses in sectors such as the entertainment and food industries, claim that the agreement will pit small and medium-sized Taiwanese firms in an unbalanced competition against deep-pocketed Chinese competitors, which often are affiliated with or controlled by the state.
The opposition has called for a line-by-line examination of the agreement. The lawmakers point to what they see as the Ma administration's failure to consult with opposition and industry representatives during negotiations over the pact with Beijing in 2013. They claim that the agreement, as currently structured, unduly favors larger enterprises — many of which maintain close ties to Kuomintang. The Ma administration has resisted a line-by-line reading because the whole deal would be voided if any single part of it is voted down. The deal's failure would jeopardize Taiwan's broader agenda for trade talks with China and, Ma argues, would undermine Taiwan's international reputation and its regional economic position.
This forms the backdrop for events in Taiwan's Legislative Yuan over the past week and a half. Negotiations over the services agreement ground to a halt as soon as they started March 12, when a fight in the Yuan left two Democratic Progressive Party members injured. During a two-minute morning session the following day, legislators managed only to pass minutes from the previous day; that afternoon, the Legislative Yuan adjourned after seven minutes, having passed the morning's minutes. Likewise, no new discussions were held March 14 before the day's sessions were terminated on procedural grounds. On the morning of March 17, however, Kuomintang legislators moved the agreement to the floor for immediate approval, utilizing a legislative measure that allows a bill pending for three months to be automatically submitted for approval. One Kuomintang leader declared later in the day that the bill had passed.
This move reportedly triggered the protests. Demonstrators gathered outside the Legislative Yuan on March 18 before forcibly occupying the legislature later that night. Protesters, under the leadership of representatives from a self-described civil society organization called the Democratic Front Against Cross-Strait Trade in Services Agreement, turned back at least two attempts by police forces to reclaim the legislature, reportedly injuring 38 police officers in the process. On March 19, the protesters released a statement detailing their intent — to protect the country's small businesses and young entrepreneurs — and demanding rejection of the pact. It is unclear how long the protesters will occupy the Legislative Yuan, but one representative said the occupation would last at least through March 21.
Taiwan's Political Currents
The political currents surrounding Taiwan's trade agreements with China — and the political and popular reaction to them — are complex and varied. The agreements tap into the central themes that define contemporary Taiwanese geopolitics. Chief among these is the island's struggle to bolster its de facto political sovereignty by reaching bilateral economic agreements and positioning itself as a player in regionwide trade agreements such as the Trans-Pacific Partnership, while simultaneously ensuring that Taiwan does not lose ground to regional competitors, such as South Korea, in the growing Chinese market. As the Ma administration has argued, Taiwan's ability to cement successful trade deals with China may be critical to convincing other regional partners, in particular the United States, that it has the institutional capacity and political will to carry through other trade agreements in the face of domestic political opposition — something that has not been the case in prior trade agreements between Taiwan and the United States.
At the same time, the services pact showdown points to social, political and economic fault lines within Taiwanese society, most notably the country's growing socio-economic stratification. Northern Taiwan, which includes the country's political and financial center in Taipei, the core power base of Kuomintang, is increasingly split from the industrial and agricultural south — the Democratic Progressive Party's traditional power base. Layered onto these questions are the competing political interests of Taiwan's two leading parties, and in turn their efforts to exploit the divides in Taiwanese society as national elections approach in 2016.
The Pact's Chances in the Legislature
The legislative opposition and student protests will not likely derail the passage of the trade in services agreement entirely. Kuomintang holds 64 of 113 seats in the Legislative Yuan, so the party could pass the bill without broad support from the opposition if its legislators do not break rank. More important, both parties seem to recognize the ultimate importance of the agreement as, at the very least, a gateway to future, similar agreements with China and other countries. Still, the opposition will cause continued delays.
Taiwanese media have been quick to point out that the student protesters do not represent the majority national opinion or even the views of most students. A recent survey conducted by the Democratic Progressive Party itself showed much higher general approval for the ruling party's policy toward China than the policies of the opposition. Approximately 44 percent of respondents supported Kuomintang's policy toward China. By comparison, only 25 percent supported the position of the Democratic Progressive Party.
The coming days and weeks will provide a much better sense of the trajectory and potential impact of legislative opposition to the pact and of the student protests. Even if the latter fail to undermine or significantly alter the services trade pact, they could well reshape how the Ma administration pursues further trade agreements with China later this year.