Taiwanese seem generally willing to support free-trade agreements that include China, indicating that the public is concerned about economic growth and able to parse out economic integration from political integration.
The last decade in Taiwan has seen contentious debate over free-trade agreements (FTA) and trade agreements in general. Going back to the implementation of the Economic Cooperation Framework Agreement (ECFA) in 2010 between the People’s Republic of China and Taiwan, the agreement saw widespread debate mainly centered along party lines. The Democratic Progressive Party (DPP), for instance, criticized the agreement for the lack of transparency in the development process as well as failing to provide many of the economic stimuli it was promised to bring. More recently, Taiwan’s hoped-for entry into the now seemingly moribund Trans-Pacific Partnership (TPP) was called into question over a failure to adequately consider a wide range of potential impacts the deal would have on Taiwan, from altering legal standards to actual economic conditions. These debates highlight the fact that, even as the Taiwanese government continues to consider expanding its trade framework, the issue of trade continues to draw debate domestically.
Moreover, the issue of greater economic integration within the region, and in the case of Taiwan with specific emphasis on China, runs into two conflicting viewpoints. On the one hand, the past several decades have seen an increasing level of economic integration and a decreasing level of overt military conflict in East Asia. On the other, and echoing the specific debate surrounding ECFA, the extent to which Taiwan is and should be reliant on economic relations with its neighbor continues to be a matter of contention (see, for example, here and here).
Recent survey data show the extent to which Taiwanese focus on economic issues. In particular, nearly half of respondents (45.54%) in the recently released Taiwan’s Election and Democratization Study (TES2016_PA12) from National Chengchi University (available here) identified economic development as the most pressing problem that President Tsai Ing-wen should handle, compared to only 16.46% identifying cross-Strait relations. In addition, roughly a fifth of respondents (22.38%) named economic development as their second priority.
Our previous research highlighted the importance of framing in shaping public support for the TPP. The results showed that highlighting the arguments of opponents to the agreement, even when balanced with competing claims from supporters, led Taiwanese be to less supportive of the agreement, a pattern that endured when factoring demographic (age, gender, education, income) and partisan factors. With U.S. President Trump’s withdrawal of support for the TPP, the future of the TPP remains uncertain. However, future FTAs are likely to emerge, and although the Taiwanese public is unlikely to directly influence their passing (e.g. through a referendum), public support or opposition can potentially sway support among political parties.
We wanted to identify to what extent two related issues would influence support for a FTA. One is whether the potential outcome of such an agreement was presented as a gain or loss. According to economic theories of rationality, individuals should be able to assess the probabilistic likelihood of gains or losses. For example, individuals would be expected to support something with a 60% likelihood of gains and a 40% likelihood of losses, assuming a proportional magnitude of both. However, research in social psychology such as prospect theory would suggest that individuals commonly weigh the likelihood of losses more heavily, even if the expected utility would be positive. Even if presented as the same utility, for example a 50 percent chance of gain versus a fifty percent chance of loss, prospect theory would suggest greater support for the former than the latter.
Secondly, we wanted to identify whether the potential local or national impact of a FTA mattered more. Politicians often claim that “all politics is local” and intuitively one would presume that presenting free trade as affecting your local area, and implicitly the individual directly, that this would influence perceptions more than focusing on national level gains or losses. However, in a “small” country such as Taiwan, the distinction between local and national economic evaluations may not clearly separate in the public’s mind.
In a “small” country such as Taiwan, the distinction between local and national economic evaluations may not clearly separate in the public’s mind.
Through a web survey conducted in early March through PollcracyLab, we randomly assigned 504 people to receive one of five prompts regarding Taiwan joining a regional FTA, asking respondents to then evaluate on a five point scale (strongly disagree to strongly agree) their support for joining. The first version just asked if they felt that Taiwan should join such a trade agreement, which we used as a baseline. The other four added additional information. Version 2 asked if they would support if there was a 50 percent chance it could result in noticeable job loss in their district, Version 3 pitches the fifty percent loss at the national level. Version 4 presents a free trade agreement with a possibility of a 50 percent chance at job growth in the district, with Version 5 switching the geographic focus on the country as whole.
If respondents are viewing the risks rationally, we should see no difference between the versions pitched as a 50% chance of loss versus a 50% chance of gain, as these are, for all intents and purposes, equivalent statements (ignoring that the agreement could have no effect). However, according to prospect theory, framing the issue in the domain of losses versus gains should influence perceptions, even if the expected loss or gain is the same.
Our findings largely support prospect theory. The figure below shows the percentage of respondents who agreed or strongly agreed with Taiwan joining a regional FTA. Marginal difference emerges among the baseline and Versions 4 and 5 that highlight potential gains, with roughly two thirds of respondents in support. Such results suggest that Taiwanese in general view free trade agreements in a positive manner. Meanwhile, less than 40 percent of respondents receiving either of the loss versions (Versions 2 and 3) supported a regional FTA. Furthermore, our evidence suggests that the locale of the loss — locally versus nationally — does not seem to matter.
Regression analysis finds that the two versions that suggest losses (Version 2 and 3) negatively correspond with support, significant at .001, whereas the versions suggesting gains do not reach statistical significance. The results endured after controlling for age, education, gender, income, partisanship, support for ECFA, and broader economic evaluations. The pattern also endured when controlling for population size and density at the country/municipality level.
We also randomly assigned respondents to receive a question about a support for a hypothetical regional FTA, one version that said China would be included while the second would exclude China. This wording was chosen in part to play off the TPP, which noticeably excluded China. Those receiving the first one were overwhelmingly supportive (80.16%), while less than a third were supportive without China as a member (31.75%). However, we asked this question after our first experimental question and if Taiwanese respondents were already primed to view a potential free trade agreement in terms of losses versus gains, this too should influence perceptions of whether China should be in such agreements.
Here we initially see evidence consistent with prospect theory. Those who initially received a loss version in the survey in the first randomization and then later asked about joining a regional FTA that included China were less supportive than those that received the baseline or the gain version of the first randomization. However, less consistent findings emerge among those that were asked about a regional free trade agreement that excluded China. Less than a fifth of respondents who received the baseline in the first randomization supported joining a FTA that excluded their larger neighbor. Meanwhile, little distinction emerged between those who received either loss version or the local gain version, with the highest support (44.23%) among those who received the national gain version.
What does this all mean? First, the broad support for the baseline (Version 1) would suggest that the Taiwanese public, bereft of any negative coverage, would be supportive of a FTA. However, the significant drop from the negative versions would suggest that any attempt at framing a free-trade deal negatively would significantly tank support. That this drop remains even after controlling for partisan identification suggests the broad susceptibility of negative framing. Relatedly, the findings would suggest that should the Taiwanese government seek to enter into a free trade agreement, it would behoove them to cast such agreements in potential gains.
With regards to the results from the China question, this can also be put into the context of the oddly shifting rhetoric roles of China and the U.S. As previously noted, President Trump’s withdrawal from the TPP, as well as rhetoric on bilateral trade deals, would make it seem less likely for Taiwan to quickly sign a deal including the U.S. Additionally, the Chinese government’s position, at least rhetorically, has shifted to one of defending trade and globalization. It is more likely, then, that the Taiwanese government will have to look to regional partners for further trade deals rather than the U.S. This could be a problem, for example, if the opinions on including versus excluding China suggest an aversion to dealing with China. However, the results here suggest a general willingness to support FTAs that include China, indicative of a public concerned about economic growth and able to parse out economic integration from political integration.
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