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EDITORIAL: Good and
bad should be assessed
Under ordinary circumstances, it would be welcome news that Taiwan¡¦s recently
signed service trade agreement with China might help local financial
institutions, healthcare suppliers, construction companies and e-commerce firms
to expand their business across the Taiwan Strait. More business opportunities
would also follow if other local companies in the service sector could seek to
explore the huge potential of China¡¦s market, at a time when their home market
has become increasingly saturated.
The problem is that it is under extraordinary conditions that the pact of June
21 will take effect. While companies in Taiwan¡¦s service sector are mostly small
and medium-sized enterprises, their Chinese counterparts are generally bigger
and far more aggressive in their pricing strategy. Furthermore, Taiwan¡¦s
regulations for Chinese investment under the service trade pact could lead to
more immigration by Chinese investors, while China¡¦s laws still do not offer a
level playing field for Taiwanese businesses. Examples are the printing and
publishing industries.
Compare the economic cooperation agreement between Taiwan and New Zealand signed
on Wednesday last week that both sides have agreed meet their country¡¦s needs.
The Agreement between New Zealand and the Separate Customs Territory of Taiwan,
Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC) is considered less of
a threat to Taiwan¡¦s economy than similar free-trade pacts because economic
structures and trade relations between the two countries are more complementary
than competitive. There is also a consensus that the free-trade agreement bears
high symbolic importance, being the first Taiwan has signed with a developed
nation that is not a diplomatic ally.
The agreement is a major milestone in battling the threat of trade
marginalization, helping Taiwan pave the way for similar trade pacts with
Singapore, Chile, India and Switzerland, among others, in the near future.
Taiwan could then seek New Zealand¡¦s support to join the Trans-Pacific
Partnership, of which New Zealand is a member state.
Yet this should be just one of the government¡¦s efforts to retain long-term
economic competitiveness. The goal should still be to attract international
investors, help businesses develop foreign markets and raise Taiwanese living
standards. Policymakers still need to revive the nation¡¦s economy, increase
household income, stem the brain drain and restore people¡¦s trust in the
government. However, the service trade deal with China ¡X which the government
claims will establish a precedent for more free-trade agreements and membership
in regional economic blocs ¡X is likely to fail to meet its goals if people¡¦s
worries remain unresolved.
The decision to enter into a free-trade agreement with other countries requires
rigorous assessment and skilled negotiation because of the huge potential
impacts. Dialogue between advocates and opponents needs to be comprehensive, and
painstaking scrutiny of the details of the deal is essential.
Yet with the cross-strait service trade agreement, government officials have
only touted the so-called benefits, and have not addressed the potentially
negative repercussions, nor have they said how the government would negotiate
with China to address possible investment barriers.
All in all, it would be a grave mistake for the legislature to be hasty with a
pact that could severely affect Taiwanese businesses and people¡¦s daily lives in
the long term.
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