20100120 ECFA debate should be refocused, academic says

ECFA debate should be refocused, academic says

STAFF WRITER, WITH CNA
Wednesday, Jan 20, 2010, Page 3

The proposed Economic Cooperation Framework Agreement (ECFA) between Taiwan and China will only benefit certain people and corporations and will intensify the left-right economic struggle, an academic told the Central News Agency.

The trade pact “is not an ­independence-unification issue, but a left-right economic social issue and the core concern is whether wealth would be re-­distributed,” said Lo Chih-cheng (羅致政), a political scientist at Soochow University.

“The predicted boost to GDP after the agreement takes effect may seem impressive and appealing on the surface. However, do all those numbers and indexes announced by the government reflect people’s concerns?” Lo said.

The ECFA, which Taiwan intends to sign with China to relax trade and financial regulations in the first half of this year, is expected to increase Taiwan’s GDP by 1.72 percent, Bureau of Foreign Trade Director-General Huang Chih-peng (黃志鵬) said in October.

Lo said that the ECFA, in essence a free-trade agreement, will only benefit certain sectors and large corporations while damaging the small and medium-sized business (SME) sector — the backbone of Taiwan’s economy — and the working class.

“Let’s say a large corporation secures a NT$10 billion [US$314 million] profit and the SMEs lose NT$90 million because of the cross-strait agreement. On paper, Taiwan’s economy grows, but the NT$90 million is ‘survival money’ for the SMEs and the thousands of families behind them,” he said.

The controversial agreement reflects a fact and a concern that, while large corporations are capable of lobbying and influencing government policies, SMEs and ordinary people are left out in the cold as “the rich get richer and the poor get poorer,” Lo said.

That is why Lo thinks it is a left-right issue rather than the Chinese Nationalist Party (KMT) versus the Democratic Progressive Party (DPP) or an independence-­unification issue.

“It’s all about making choices. A government is obliged to pursue the interests of the majority,” he said.

Lo said he saw some contradictory facts and mistakes in Taiwan’s negotiation process. While the government said the agreement is more of a framework with the actual content waiting to be formulated, he said, it announced a concrete GDP growth prediction at the same time.

Also, Taiwan has said on several occasions that it is eager to complete the deal in the first half of this year, which is against the basic rule of negotiation, he said.

“When you set a timetable before the negotiations, you tie your hands behind your back and put yourself at a disadvantage,” he said.

He said the government also needed to thoroughly explain different negotiations scenarios to the public and let people know what sacrifices they might have to make to secure which benefits.

The government said Taiwan is in danger of being marginalized and hollowed out after the ASEAN-China free trade arrangement went into effect because Taiwan-made products will have higher tariffs imposed on them.

Lo denounced that argument, saying that Taiwan’s biggest competitor is South Korea, not ASEAN countries, and the government has “intentionally magnified the impact of the ASEAN-China free trade agreement.”

On the contrary, not only will Taiwan-made products not enjoy easier access to the ASEAN countries, but more local businesses will relocate to China, he said.

An ECFA can neither solve the problem of unemployment and capital outflows, nor attract Taiwanese businessmen to re-invest in Taiwan, he said, unless Taiwan is equipped with fine-tuned policies on labor, industrial parks, environmental protection and tax incentives.

It is wrong to place the agreement with China at the focus of Taiwan’s national development strategy. Taiwan needs an alternative plan including industry upgrades and the establishing pioneering sectors, Lo said.

It is the government’s responsibility to identify what those sectors are and play a major role in fostering their development, he said.

“There’s not one country I know of that formulates its national policy on outbound investment. What Taiwan needs to do is to attract foreign direct investment and create jobs,” Lo said.

“Businessmen will always go for profit and short-term goals, and there’s nothing wrong with that. But a government has to look at this from a long-term perspective,” Lo said.

There is always the possibility that China is engaged in the negotiations for more than economic benefits, Lo said, adding that China would still eye the eventual goal of political gain.