20100419 Working like a broken calculator

Working like a broken calculator

Monday, Apr 19, 2010, Page 8

It didn’t take President Ma Ying-jeou’s (馬英九) administration long to fall foul of public opinion after a catalogue of errors early on. It seems that nothing Ma does is enough to restore his reputation to its former glory.

If you were to look for an explanation, you could do worse than putting it down to the government’s apparent indifference to what the public wants: To give up on its pro-China strategy; to do more to support local industry; and to create jobs.

Ma seems to be content just to snuggle up to China and mouth banalities while blaming the previous administration and the current international situation for his failings. There is a Taiwanese saying that goes, “men over 40 are like a broken record” — which admirably sums up the current administration. It’s right on the money. And although this broken-record government might be fooling some for the time being, everyone is bound to see through it before long.

And just like a broken record, you’re not going to hear anything from this government but the same old arguments it tenaciously clings to. Ask it to do something concrete to create jobs or support industry and you’ll get little by way of response. If, however, you are to suggest fawning over China or giving away more than you have to, the government cannot control its excitement.

Because the government is incompetent and obsessed with face and spin, it immediately reacts negatively when its incompetence and lies rise to the surface, preferring to fly into a tantrum rather than actually admitting that the fault might be its own. This exaggerated reaction is merely bluff and bluster to cover up its guilt and it causes it to lose even more of the public’s trust and respect.

The government thinks nothing of alarming the public in its efforts to promote an economic cooperation framework agreement (ECFA), claiming earlier this year that Taiwan’s economy would be marginalized after the ASEAN-China free trade zone had come into effect. Ministry of Finance figures regarding exports to ASEAN countries in the first quarter of this year have shown those claims simply do not hold water. Not only has the volume of exports not fallen, it is actually the second-highest figure for this quarter in any year since data began to be recorded.

Clearly, rumors of Taiwan’s ASEAN-induced marginalization are greatly exaggerated. This is an objective fact borne out by hard statistics; we’re not massaging the numbers to arrive at a desired conclusion. Tell that to the officials of this broken-record government, who insist that Taiwan’s export competitiveness is declining, citing the fact that over the past nine years the growth rate of Taiwanese exports to ASEAN countries has fallen relative to those of our competitors, China and South Korea.

Minister Without Portfolio Yiin Chii-ming (尹啟銘) threw in his own two cents, even though he is no longer minister of economic affairs, pointing out that during that same period, from 2001 to last year, Taiwan’s exports to ASEAN merely doubled, compared with those of China, which increased almost five-fold.

Yiin published an article to support his point. When the ASEAN-China free trade framework agreement was signed in 2002, he wrote, it included an “early harvest” list, with the signatories enjoying the gradual introduction of tariff reductions, the effects of which were felt some time ago. It wasn’t as if the benefits only started when the agreement came into effect this past January.

Taiwan, he went on to explain, is only taking one step forward while the other countries are taking three. He used this point to highlight the necessity of inking an agreement with China.

Frankly, Yiin and the pack of Ministry of Economic Affairs officials are misreading the figures.

First, the real danger to Taiwan’s economy is the fact that we have seen a lot of our industry moving over to China in the last decade, which has both slowed down foreign trade growth and made us over-reliant on China. This has nothing to do with the signing of a free trade agreement.

Second, it really comes as no surprise that South Korea’s export volume to ASEAN countries has grown more than Taiwan’s. South Korea’s economy has really taken off in the past few years. It should also be pointed out that the fact that China’s export volume to ASEAN countries has increased 4.7 times within nine years does not necessarily prove a link between this increase and the 2002 signing of the free trade framework agreement.

Cheap Chinese labor and Beijing’s control of the yuan’s exchange rate have meant that it has been able to increase trade with countries all over the world. China’s foreign trade went up from US$471 billion in 2000 to US$2.56 trillion in 2008, more than five times the 2000 figure.

Against that backdrop, the 4.7-times increase of export volume with ASEAN countries no longer looks so remarkable. And if you look at the foreign trade figures for the US, you get an increase of 4.9 times over the nine-year period from US$74.4 billion in 2000 to US$365.9 billion, last year.

The picture painted here shows that there is nothing special about the growth in China’s export trade to ASEAN countries and it has little to do with the operation of the ASEAN-China free trade zone.

Our objection to an ECFA is based on considerations of what is in Taiwan’s interests as a whole and has nothing to do with ideological bias: It is based on objective facts and statistical evidence and not subjective preferences run amok.

We therefore call on the government, if it insists on going through with signing the pact, to do it in a responsible way, and give the public the whole story. We believe it should allow the fate of an ECFA to be decided by a referendum.

If the government wants to go about it in an underhanded way, using lies and spurious claims to get the people to accept it, the whole process may backfire and ultimately incur the public’s rejection of the agreement.