The Nine in One Elections are not just Local Elections
China Times Editorial (Taipei, Taiwan, ROC)
November 20, 2014
Executive Summary: The nine in one elections are not just local elections. They are a choice between two paths. Voters motivated primarily by economic factors must set the agenda, and help everyone make the right choice during the elections.
Full Text Below:
In the wake of the Sunflower Student Movement, the green camp embraced a clearly anti-economic integration, anti-free trade, and anti-business policy path. It clearly distinguished its path from that of the KMT. One might say that the nine in one elections is a choice between two paths that will determine Taiwan's economic future. Taiwan has enjoyed a glorious economic past but faces a grim economic present. Given Mainland China's economic rise and the pressure of regional integration, voters motivated by rational economic considerations must make themselves heard.
Taiwan has a small scale free economy. A mere 36,000 square kilometers of land area must support 23 million inhabitants. Two-thirds of the land area is mountainous. Only one-third is flatland suitable for agriculture or urban habitation. Natural resources are scarce. Following World War II, poor farming communities created an economic miracle. During the 1980s, Taiwan became a model for economic development. The main factors were an industrious people and liberal government economic policies.
Liberal economic policies are the opposite of closed door "self-sufficiency” policies adopted by nations such as the Philippines. President Ferdinand Marcos of the Philippines considered the Philippines economy “big enough.” He imagined that with proper development, self-sufficiency would not be a problem. Therefore he implemented protectionism, fostered domestic industries, forbade the entrance of foreign companies, and refused to develop export industries. By contrast, those of us on Taiwan seized the opportunity to participate in the international market. Our exports earned foreign exchange in the international arena. This led to economic development. Taiwan's industries thrived and our economy grew. Protected industries in the Philippines on the other hand, became perennial losers. By the year 2000, Taiwan was well ahead of the Philippines.
The problems encountered in the past few years on Taiwan, are of course not the same as those encountered by the Philippines back then. But the results have been the same. Beginning in 2000, Taiwan fell victim to internal friction.
Governments the world over valued the Mainland market. Taiwan was closest to it. But heavy government restrictions neutered our industries by prohibiting normal dealings with the Mainland. The government at that time opposed direct links, opposed Mainland tourists coming to Taiwan, opposed Taiwan banks opening branches on the Mainland, opposed raising the ceiling on Mainland investments any highter than 40%. This prevented cross-Strait exchanges. Only the electronics industry survived. Almost all other sectors were devastated. Only when Ma Ying-jeou took office was Taiwan's cross-Strait policy finally turned around. Only then was a financial cooperation memorandum of understanding (MOU) signed with the Mainland authorities. Only then was the cross-Strait economic cooperation agreement (ECFA) signed. Only then was the early harvest list advanced. But opposition green camp obstruction mired the subsequent STA in the legislature and prevented passage. Substantial agreement on the MTA had already been reached, but nonetheless it could not be introduced.
PRC-ROK FTA negotiations have been completed. South Korea FTAs now cover 62.66% of the globe. Exports from Taiwan and South Korea overlap by nearly 70%. Substitute products are easy to find. Once the PRC-ROK FTA goes into force, Korean exports to the Mainland will enjoy large tariff cuts and sharply enhanced competitiveness. By then our exports to the Mainland will be severely affected. The PRC-ROK FTA was a one step process. In addition to trade in merchandise, it also includes trade in services. These services include finance, computers, and communications. Domestic demand on the Mainland is growing rapidly, driving service sector growth. The STA was a golden opportunity for Taiwan. Now that opportunity may be ceded to Korea. The impact of the PRC-ROK FTA will not be limited to the short term. It will disrupt Taiwan companies’ strategic plans. Customs duties and lost opportunities will force Taiwan companies to set up factories on Mainland China or elsewhere. The effects of industry uprooting will be long-term.
The world marches on. The Mainland authorities will not wait for Taiwan to come around. On the 17th, the Mainland authorities announced the completion of substantive negotiations over an FTA with Australian authorities. Once the PRC-Australia FTA goes into force, all Mainland products will be tariff free, and 95% of Australian products will be tariff free. Australia can then use the STA portion of the bilateral FTA to gain access to Mainland service sector opportunities. Australian universities can recruit students on Mainland China. More Australian hotels can enter the Mainland market. Australian health and aged care providers can enter the Mainland market. The PRC-Australia FTA will have an impact on our service sector. Taiwan companies on Mainland China will face increased competition. Taiwan's economic problems are interlinked. Income distribution, wage stagnation, high prices, an aging population, an unclear industrial policy, all need to be resolved. We on Taiwan can no longer afford to delay. We must reverse the status quo. We must break through these transitional difficulties. The key is voters motivated primarily by economic considerations.
Late last month, global competitiveness guru Michael Porter came to Taiwan to take its competitiveness pulse. He noted our salary stagnation, an indicator of stalled industrial competitiveness. He suggested that Taiwan and the Mainland form a joint industrial settlement to spur growth and international competitiveness in specific areas. More importantly, he urged us not to allow political troubles to retard economic growth on Taiwan.
The nine in one elections are not just local elections. They are a choice between two paths. Voters motivated primarily by economic factors must set the agenda, and help everyone make the right choice during the elections.