Time to Confront Economic Reality

Time to Confront Economic Reality
China Times Editorial (Taipei, Taiwan, ROC)
A Translation
December 15, 2014

Executive Summary: Cross-strait economic relations involve both cooperation and competition. The Mainland and Taiwan both face problems of economic transformation and upgrading. Time waits for no man. The ruling and opposition parties must not delay. Something must be done to help society overcome difficulties. People need to understand that international trade is not something remote and far away, but has a direct bearing on our jobs and income.

Full Text Below:

ARATS chief Chen Deming is currently visiting Taiwan. He said that substantive negotiations on the PRC-ROK FTA were concluded last month, and that the agreement will take effect within two years. When it does, trade in goods between the two countries will be almost 90% tariff-free.The STA grants quasi-citizen treatment. Meanwhile, during its December 12th executive meeting, the State Council decided to establish three free trade zones in Guangdong, Tianjin, and Fujian. How should Taiwan respond to the impact of these major developments?

Chen Deming once served as Minister of Commerce. He was responsible for negotiating global bilateral and multilateral free trade agreements. He is now dealing with Taiwan-related affairs. He revealed that South Korea, Mainland China, and Australia were aggressively negotiating FTAs at a rate that surprised even the Mainland. By contrast, the STA has remained stalled all year. The MTA may follow in its footsteps. He expressed concern over the future of Taiwan. He stressed that over the next two years, the Mainland will take part in regional economic integration with the United States, South Korea, Australia, Singapore, and even Japan. The Mainland has decided to adopt an FTA web consistent with global standards. Taiwan must not miss out on this opportunity. He hoped that Taiwan would allow ECFA follow-up agreements to be completed as soon as possible and take effect before the PRC-ROK FTA, and avoid being marginalized by global integration. Everything he said was straight from the heart. The public should not assume that his words were mere hot air.

Taiwan and South Korean exports have a high degree of overlap. The Mainland is the largest export market for both. Seventy percent of their export products overlap. One side's products can easily be substituted with the other's. Taiwan and South Korea are clearly competitors in the Mainland market. Unfortunately, many in the Green Camp still think the PRC-ROK FTA has yet to take effect. Some items, such as flat panels and machine tools, have not been included in the tariff reduction program. Therefore many in the green camp assume that the government has exaggerated the impact of the PRC-ROK FTA on Taiwan. They say government agencies should not use the PRC-ROK FTA to intimidate the public on Taiwan.

This is self-deception. It is highly adverse to Taiwan's growth, elections, and politics. The nine in one elections are over. The counties and municipalities have already gone from blue to green. The 2016 legislative and presidential election is likely to lead to a change in the ruling party. The Green Camp really ought not disrupt cross-Strait economic and trade policies. The ruling and opposition parties should sit down and talk as soon as possible. They should seek countermeasures against the impact of the Mainland's economic liberalization and FTAs.

Shanghai established a free trade zone more than one year ago. It is a precedent that can be copied, and a practice that can be generalized. The Tianjin, Canton, and Fujian free trade zones will change the legal provisions based on local conditions as well as introduce new provisions. The free trade zones will lead to new patterns of competition. They will promote a new round of high-level liberalization that will help the Mainland grow.

Tianjin has adopted the Beijing Tianjin strategic initiative. The Tianjin Free Trade Zone includes a Binhai New Area. It has also compiled a check list of obstacles to free trade that it will eliminate. It will facilitate investment and financing, allowing financial leasing businesses to develop the Northeast Asian market. The Free Trade Zone in Guangdong is aimed primarily at Hong Kong, Zhuhai, and Macao. It will introduce Hong Kong's advanced financial technology in order to promote high finance. The Free Trade Zone will become a pool for offshore renminbi and accelerate RMB internationalization. Fuzhou, Xiamen, and Pingtan have announced a tripartite free trade zone. This will help the Haixi Economic Zone enjoy rapid growth. It may also strengthen cross-Strait economic and trade relations.

By contrast, now look at Taiwan. Our pwm FEPZ has been crippled by Green Camp obstructionism. This has hampered industrial upgrading and restructuring. Free trade zones are beneficial to the two sides' industrial upgrading. They are a mutually beneficial win-win proposition. But competition will have a magnetic effect. Ever since the establishment of a free trade zone in Shanghai, Taiwan companies have shown great interest. Currently 153 Taiwan companies have signed on. The magnetic effect of a future Fujian free trade zone may be even greater.

The STA and MTA must go through. Otherwise Taiwan's major trading partners will refuse to sign free trade agreements with us. Taiwan will then pay a heavy price in foreign trade. Faced with tariffs and trade barriers, our export industry has only two means of survival. Reduce costs, reduce profits to win contracts, or rely on the government to increase price competitiveness through currency devaluation. The former would clearly hurt exporters. business owners, and employees, all of whom will be knocked for a loop. If this proves untenable, companies will eventually have to close down. The latter approach is somewhat smarter. It shifts the problem from individual companies to the government. Forcing the entire nation to bear the burden. Depreciating the NTD however worsens the terms of trade, increases the cost of imports, and reduces the purchasing power of the NTD. It is highly detrimental to economic growth and social stability. When the above two roads prove impassable, as they have in the past, companies will vote with their feet. They will migrate abroad or to the Mainland. Those unable to relocate, i.e., workers, will be denied job opportunities. The impact on Taiwan's growth will be extremely negative.

Cross-strait economic relations involve both cooperation and competition. The Mainland and Taiwan both face problems of economic transformation and upgrading. Time waits for no man. The ruling and opposition parties must not delay. Something must be done to help society overcome difficulties. People need to understand that international trade is not something remote and far away, but has a direct bearing on our jobs and income.

社論－格局已定，該誠實面對經濟困局了
2014年12月15日 04:10
本報訊

大陸海協會長陳德銘一行正在台灣訪問，他曾談到中韓自由貿易協定（FTA）上月完成實質談判，將在兩年內啟動，屆時兩國貨貿近9成零關稅，服貿則給予準國民待遇。與此同時，12月12日大陸國務院常務會議決定，將在廣東、天津、福建特定區域再設3個自由貿易區。台灣在這些大趨勢衝擊下，應該如何自處？

陳德銘擔任過商務部長，曾經負責大陸的全球雙邊與多邊自貿協定談判，現在以會長身分處理涉台事務。他也透露韓、澳兩國與大陸洽談FTA的積極程度，令大陸驚訝，對比兩岸服貿協議卡關1年、貨貿可能步上後塵，他對台灣未來十分憂心。他也強調，大陸在未來2年內，將與美國、韓國、澳洲、新加坡甚至日本，進行區域經濟整合。大陸已決定走向全球高標準的自貿區網路，台灣不應錯過這個機會。他希望台灣能趕在中韓FTA生效前，讓ECFA後續協議盡速完成，以免在全球整合過程中被邊緣化。他所說的全是肺腑之言，社會不應把他的諍言當成馬耳東風。

台灣與南韓出口高度競爭，大陸是雙方共同的最大出口市場，7成以上出口產品相同，替代性很高；台韓在大陸市場上的競爭不言而喻。很不幸的是，台灣綠營及不少人認為中韓FTA還沒有正式生效；且其中有一些重要的產品項目，例如面板和工具機等等，不一定會放在降稅項目中，因此中韓FTA對台灣的影響，是被政府誇大；政府部門不應該用中韓FTA來恐嚇台灣人民。

這樣的論調是掩耳盜鈴的說法，實在不利台灣的發展，選舉前或有其政治效應，九合一選舉已經結束，縣市執政版圖藍天已經變綠地，2016的立委與總統大選極可能也會變天。綠營實在不應該，也不需要再阻擾兩岸經貿政策了。朝野應該盡速坐下來會談，針對FTA與大陸經濟自由化兩大趨勢謀求對策。

上海自由貿易試驗區設立1年多來，已形成了一批可複製、可推廣的經驗作法。津粵閩的新自貿區會結合地方特點，進行相關法律規定調整，充實新的試點內容；但自貿區將開啟競爭模式下的新格局，推動實施新一輪高水準對外開放，來幫助大陸進步。

天津承接京津冀戰略，天津自貿園區除了為濱海新區的發展定位，也借此推廣負面清單、投融資便利化，及金融租賃業務來開拓東北亞市場。廣東的自貿園區主要對準港珠澳，引進香港先進金融技術，發展高端金融，將該自貿園區變成境外人民幣的回流池，加速人民幣國際化戰略。福建自貿區由福州、廈門、平潭三地聯合申報，來幫助海西經濟區迅速發展，也希望藉此加強兩岸經貿關係。

反觀台灣，我們的自由經濟示範區，因為綠營的杯葛，目前推動嚴重受阻，不利我國產業升級轉型。兩岸自貿區雖有利於兩岸攜手促進產業升級，實現互利共贏。但競爭部分也會產生磁吸的效果。值得注意的是從上海自貿區設立以來，台灣企業展示濃厚興趣，目前新設的台灣企業就已達到了153家。未來福建自貿區的磁吸效應可能更大。

兩岸服貿、貨貿若無法突破，台灣與主要貿易夥伴簽訂自由貿易協定注定寸步難行，我們可以預知，台灣在對外貿易上將付出沉重的代價。面對關稅及貿易障礙，我國出口業者為生存計只有兩條路可以走，不是減低成本、減低利潤搶奪訂單，就是靠政府貨幣貶值增加價格競爭力。對於前者，明顯的會對出口企業本身的傷害很大，企業主、員工都將打落牙齒和血吞，若無法堅持下去，最後還是關門大吉。後者稍微聰明一點，是把自己的問題，轉給國家，由社會一起承擔。但新台幣貶值，貿易條件惡化，則進口成本增加，新台幣購買力減低，對整體國家的發展，社會的穩定都相當不利。當以上兩條路都走不通，長久以往，企業將也將在地理上重新布局或用腳投票，遷移到國外或大陸，不能遷移的，就是勞工，受減少就業機會之苦，對台灣的發展相當不利。

兩岸經濟存在著既合作又競爭的關係。大陸與台灣都面臨著經濟轉型升級的問題。時間不會等我們，朝野不能以拖待變，必須有所作為，帶領社會突破困境。民眾更該理解，國際貿易問題並非遠在天邊，而是和你我的工作權及薪水有關的。