Trade in Services Agreement (TISA)
Too Little Economics, Too Much Politics
China Times editorial (Taipei, Taiwan, ROC)
June 28, 2013
Summary: The terms of the Trade in Services Agreement (TISA) have been made public. They clearly favor the Taiwan side. It is yet another old-fashioned cross-Strait economic and trade agreement. It is obviously not a truly complementary, mutually beneficial trade agreement. It does not help Taipei become part of the trend toward international and regional economic cooperation. The two sides must review the agreement and make improvements down the line.
Full Text below:
The terms of the Trade in Services Agreement (TISA) have been made public. They clearly favor the Taiwan side. It is yet another old-fashioned cross-Strait economic and trade agreement. It is obviously not a truly complementary, mutually beneficial trade agreement. It does not help Taipei become part of the trend toward international and regional economic cooperation. The two sides must review the agreement and make improvements down the line.
The agreement is old hat. The truth is, the agreement pointedly underscores the benefits the Taiwan side secured. This is the result of Taiwan's vicious partisan political battles, and Political Correctness. To this extent, it reminds one of the 2010 cross-strait economic cooperation framework agreement (ECFA). The Ma administration underscored how the ECFA "early harvest list" granted the Taiwan side significantly higher tariff cuts than the Mainland side. This may have been what eventually quieted the uproar against ECFA. The ruling party deftly turned it into a key cross-Strait achievement. It won a series of important elections with it.
Such cross-strait economic cooperation agreements contain too much political content. The party in office obsesses over public perception. It avoids provisions that make the public feel they have been "suckered," and which may hurt the party at the polls. The substance of cross-Strait trade agreements signed with such a mentality can easily be compromised. Such agreements fail to provide a consistent template for similar future agreements with foreign governments. When foreign governments hold talks about economic matters with us, their sole concern is business, not currying favor with voters on Taiwan.
When cross-strait economic and trade cooperation began, the public on Taiwan expected and feared victimization. They deliberately demanded arrangements obviously favorable to the Taiwan side. This was understandable. It was a way of testing the waters. Today however, cross-Strait economic and trade cooperation has passed the trial period. It must be systematized and normalized. The waters have already been tested. The two sides must expand their common interests. Take the recent global financial turmoil. The two sides need an efficient cross-Strait economic and trade cooperation mechanism. Such a mechanism would substantially reduce the negative impact of such turmoil on both sides of the Strait.
The newly signed agreement on trade in services remains burdened with non-economic baggage. Our side hoped to maintain quasi-Free Trade Agreement status to underscore our status as a political entity. Therefore we were forced to accept Mainland demands to open our markets. As a result, the market segments we were forced to open to the Mainland, were food, clothing, housing, transportation, education, and entertainment oriented. These segments directly impact millions of small businesses and families.
The government made all sorts of public relations oriented political calculations. It erected all sorts of firewalls for the relevant sectors. It hoped to show that the impact on the relevant sectors was under control. It wanted the public to accept the opening without panicking. For example, the Mainland was permitted to invest in beauty parlors, but blue collar workers were not allowed to enter. For example, the Mainland is permitted to establish only three travel agencies on Taiwan, and only permitted to seek domestic tourism business.
These defensive arrangements were of course part of the TISA negotiations. They were approved by the Mainland. They became important "victories" for the Taiwan side. Before and after the agreement was signed, the government repeatedly underscored that opening the service industry to Mainland capital was entirely below the WTO (World Trade Organization) specified threshold. It underscored that we succeeded in raising the threshold for Mainland capital investment in Taiwan's service sector.
But deliberately raising the threshold cannot stem the tide of of trade and economic development. Mainland capital is permitted to invest in the hair salon and beauty parlor industry. Mainland labor is not permitted to enter the island. But the effectiveness of such provisions is short-term. The Mainland may one day produce technically proficient and sophisticated hair salon and beauty parlor experts who meet with the approval of Taiwan consumers. When that happens, people will do everything possible to introduce these experts to Taiwan. Conversely, if the level of proficiency in such sectors remains backward, the TISA restrictions will become a dead letter. Taiwan consumers will not patronize Mainland beauty salons. Such controls will be meaningless.
As we can see, cross-Strait trade and market liberalization has its own iron logic. That logic is economic. It is the iron logic of the marketplace. Wherever there is a demand, there will be a supply. WTO rules allow outsiders to operate such businesses. Therefore the two sides must open their markets to each other. It makes no difference how many sectors are opened. The degree of openness must be adequate. It must not be deliberately constrained.
We hope the two sides will review and revise the Agreement on Trade in Services. First they must reduce the political content. They must transform it into a genuine cross-strait economic link. Of course the Taiwan side is not the only side that must make changes. The Mainland side must not deliberately restrict the extent to which it opens up the Mainland. It too must make adjustments. Both sides must make an effort. Only then will the two sides find themselves on the high road to cross-Strait economic and trade cooperation.
社論－兩岸服貿協議評析 系列四 經濟帳過少、政治帳過多 開放未到位