Brian Hioeby Brian Hioe
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Photo Credit: cathy lee/WikiCommons/CC BY 2.0
THE KMT HAS been criticized over proposals, which mostly stem from Kinmen legislator Chen Yu-jen, to establish a free trade zone in Taiwan’s outlying islands. This would take place through amending Article 18-1 of the Offshore Islands Development Act.
Article 18-1 of the Offshore Islands Development Act states:
To promote the development of offshore islands, prior to the comprehensive opening of transport links between the main island of Taiwan and the Mainland area, transport links between the Kinmen, Matsu and Penghu areas and the Mainland area may be opened on a pilot basis. Residents of the Taiwan area may, with due approval, use the pertinent entry/exit certificates, after checks, to enter the Mainland area from the pilot areas, or to enter the pilot areas from the Mainland area, and shall not be subject to the limitations prescribed in Act Governing Relations between the People of the Taiwan Area and the Mainland Area or other laws and regulations. Regulation on the implementation thereof shall be prescribed by the Executive Yuan.
Consequently, the proposal has been criticized as an attempt to allow Chinese goods to circumvent US tariff restrictions by posing as Taiwanese goods. This would be a form of product laundering, to circumvent the tariffs that the US imposes on China, or bans on certain Chinese products that the US has criticized China as attempting to flood the market with, by allowing these products to pose as Taiwanese.
By contrast, Chen has defended free trade zones as having been proposed by Taipei, Tainan, and Kaohsiung, though the DPP has suggested that the KMT is seeking to conflate different kinds of free trade zones.
In this sense, the DPP’s framing of criticisms of the proposal has been primarily about Taiwan’s relation to the US, at a time of great sensitivity about maintaining stable US-Taiwan ties. US President Donald Trump has criticized Taiwan for “stealing” the US semiconductor industry. Taiwan also faces long-standing charges of being a currency manipulator, which could also place Taiwan under US ire.
This is not the first time that similar proposals have been made. Outlying islands of Taiwan have, in the past, seen proposals that gambling be allowed, so as to establish casinos there. As such proposals were made during a time when Taiwan saw high numbers of Chinese tourists during the Ma administration, the idea would also be probably to strengthen China’s economic influence over outlying islands of Taiwan that are geographically proximate to China.
Last year, a bill by KMT Matsu legislator Chen Hsueh-sheng would allow Chinese companies to place tenders on public infrastructure projects on outlying islands of Taiwan. The bill would also lift limits on enrollment for Chinese students in universities in the outlying islands of Taiwan, without any quota.
The bill was compared by DPP legislator Puma Shen to the Cross-Strait Services Trade Agreement (CSSTA) that stoked controversy in the series of events that led to the 2014 Sunflower Movement. Shen stated that the bill, itself a free trade agreement, was “worse” than the CSSTA.
Namely, the bill would have allowed Chinese companies to bring workers and equipment to the outlying islands of Taiwan. Taiwanese companies would also be permitted to bring Chinese workers and equipment to outlying islands, a major risk regarding the invasion threat that Taiwan faces from China. The DPP has accused this of endangering restricted areas in Kinmen, but also serving as a means of bypassing restrictions on Chinese workers in Taiwan. The bill was further criticized as being a “Trojan Horse” for Chinese investment.
Likewise, pan-Blue politicians have called for infrastructure development between outlying islands of Taiwan and China. In the 2024 election cycle, TPP chair Ko Wen-je had proposed a bridge to be built between Kinmen and Xiamen. Ko claimed that electricity, water, and resource shortages would be solved through the construction of such a bridge, but the idea was similarly criticized as a Trojan Horse by the DPP.
The KMT may increasingly be seeking to use outlying islands as a loophole to allow for the strengthening of Chinese influence, then. China itself has signaled its priorities on using outlying islands as a means of influencing Taiwan, by first lifting restrictions on group tours for some outlying islands of Taiwan last year. Incidents such as the death of a Chinese fisherman fishing illegally in Kinmen territorial waters after a collision with a Taiwanese Coast Guard vessel that gave pursuit were also seized upon to increase grey-zone activity around Kinmen, including the harassment of Taiwanese civilian ferries.