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Talk of the Day -- Both applause, doubts greet investment pact

2012/08/09 22:37:52

After many twists and turns, the two sides of the Taiwan Strait finally signed an investment protection agreement in Taipei Thursday.

Will the accord truly protect Taiwan's industrial talent and intellectual property rights? Or may it only serve to further undermine Taiwanese manufacturers' competitive edge vis-a-via their Chinese counterparts?

While some analysts hailed it as a new landmark in cross-strait engagements, others said the agreement contains few new initiatives to provide better protection for Taiwanese investors or businessmen operating in China, better known locally as "Taishang."

The following are excerpts from a special report on reaction to the new pact in the Thursday edition of the United Evening News:

Many Taishang and commercial law experts said the newly signed cross-strait investment protection pact basically symbolizes both sides' goodwill and determination to promote bilateral investments and improve investor protection.

Most of its articles codify existing rules and practices rather than offer brand new protective measures, they said.

In their views, P2P provisions prescribed in the agreement alone cannot protect Taishang.

Whether Taiwanese investors or Taishang can see their interests better protected will hinge on improvement in China's judicial transparency and faithful legal enforcement, they noted.

Hon Hai Group, the parent company of China-based Foxconn Technology Group which is the world's largest electronics contract manufacturer, said the biggest flaw in the agreement's P2P regulations lies in the requirement of prior consent of both parties involved in a commercial dispute if either of them wants to seek arbitration.

According to a Hon Hai executive, China does not uphold rule of law and its local governments, public security offices and judicial authorities may not necessarily obey its central government.

Hon Hai, whose annual sales exceed NT$3 trillion (US$100 billion), has waged judicial battle against China's BYD Group for more than six years, accusing BYD of stealing many of its commercial secrets.

The lawsuit has so far not yet been settled even though Hon Hai has presented evidence to back its accusation against BYD.

During the period, BYD has emerged as Hon Hai's strong competitor in contract smartphone or mobile phone manufacturing.

AU Optronics Corp. Chairman Lee Kun-yao said an exodus of technology talent to China has led to a steady decline of Taiwan's high-tech industry.

Commercial espionage is an even more serious problem, Lee said, adding that Chinese flat panel makers' luring away a large number of Taiwanese engineers in the field has allowed them to catch up with Taiwan's and South Korea's technological level in five years.

If the government cannot better protect Taishang's interests through the newly signed pact, Lee said, Taiwanese technology firms will face serious challenges and even a crisis.

Some Taiwanese businessmen with interests in China said the most effective way to protect Taishang is incorporating a provision into the new pact that would pave the way for creating a "cross-strait commercial dispute settlement commission" to serve as the highest arbitrary institution.

The commission can be formed by a same number of arbitrators from each side and be authorized to review and arbitrate cross-strait business disputes, they suggested.

On P2G disputes, analysts said it will depend on enforcement rules to be employed to substantiate goals of the new pact.

They also expressed the hope that personal safety protection clauses prescribed in the agreement can be faithfully implemented. In the past,

family members of a Taiwanese businessman did not know their loved one had been jailed in China for more than a year until they were informed of such a sad fact by an inmate who had shared a prison cell with him.

Meanwhile, the Cross-Strait Agreement Watch, a private watchdog, said it sees no substantive concession from China in the investment protection pact.

Nor does the pact provide any fresh measures or initiatives to better protect Taishang's business interests in China, the watchdog body said.

In contrast, Hsu Sheng-hsiung, head of the Taipei-based National Federation of Industries, said the pact offers useful protection for Taiwanese operations in China, especially small- and medium-sized enterprises.

In the past, Hsu said, Taishang can only seek arbitration in China, which left them in a disadvantaged position.

Under the new pact, Taishang will be able to apply for arbitration in Hong Kong, Taiwan and China.

"With more choices, our businessmen will be able to get fairer arbitration," Hsu said. (Aug. 9, 2012).

(By Sofia Wu)