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Talk of the Day -- Consensus finally reached on investment pact

2012/07/28 21:30:02

Taiwan and China have finally come to terms on a long-stalled investment protection agreement, according to local media reports.

Barring any unexpected development, the reports said, the agreement will be sealed at the eighth round of a high-level cross-strait meeting scheduled to open in Taiwan Aug. 9.

Once the agreement takes effect, the reports said, Taiwan's arbitration institutions will team up with their Chinese counterparts in dealing with investment disputes between individual Taiwanese investors, also known as Taishang, and Chinese authorities (P2G).

Under the agreement, investment disputes between Taishang and their Chinese partners (P2P) can be arbitrated by organizations in a third country agreed upon by the two parties at the start of their joint venture projects.

The following are excerpts from a special report on the issue in Saturday's edition of the Taipei-based China Times:

The eighth meeting between Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung and his Chinese counterpart, Chen Yunlin, president of the Beijing-based Association for Relations Across the Taiwan Straits, was originally scheduled to take place in the first half of this year.

The meeting was postponed to August because the two sides failed to sort out their differences on how to resolve P2G and P2P disputes until late July.

According to officials of the Mainland Affairs Council (MAC) and the Ministry of Economic Affairs, the cross-strait investment protection agreement will not cover government-to-government (G2G) disputes between the two sides, which will instead be dealt with based on the existing Economic Cooperation Framework Agreement (ECFA).

As to P2G disputes, Taiwanese investors in China at present can only seek arbitration or remedies in line with China's administrative or judicial procedures when disputes arise between them and Chinese government agencies.

Taiwan originally wanted to include an international arbitration mechanism in the agreement to authorize major international institutions such as the World Bank to deal with P2G disputes.

Chinese authorities, however, resolutely opposed Taiwan's suggestion as China feared such a move could imply recognition of Taiwan's statehood.

After long negotiations, MAC sources said, China finally agreed that Taiwanese investors could introduce Taiwan-based organizations to arbitrate such cases.

But as the word "arbitration" implies sovereignty, China insisted that the agreement should use the term "mediation" to replace "arbitration," the sources said.

As for P2P disputes, only China's arbitration organizations are allowed to handle investment disputes between Taiwanese investors and their mainland partners at present.

After the investment protection pact comes into effect, the two parties can name a mutually agreed institution on either side of the Taiwan Strait or in a third place to arbitrate their disputes. But arbitration agencies in third areas cannot implement the results of the arbitration proceedings, MAC sources said.

During the negotiations, Taiwan also strongly argued that the agreement should include clauses that provide better protection for Taiwanese investors' personal security.

Taiwan demanded that Chinese authorities should inform the families within 24 hours if any Taishang are arrested or detained.

Chinese negotiators reportedly disagreed to codify such provisions in the agreement but instead agreed to endorse such a provision in a separate document.

MAC officials reportedly have briefed opposition Democratic Progressive Party legislators, including Chen Chi-mai, Lee Chun-yi and Yao Wen-chih, on major contents of the cross-strait investment protection agreement.

The officials said the accord will definitely include a "Taishang personal safety protection provision."

Moreover, they said, a separate document will be signed to outline concrete steps to be adopted by Chinese authorities in case any Taishang is arrested or detained.

The investment protection pact was originally scheduled for signing in the seventh Chiang-Chen talks held last year, but the two sides failed to sort out their differences during that round of talks. (July 28, 2012).

(By Sofia Wu)