ECFA: Opiate or Panacea?
United Daily News editorial (Taipei, Taiwan, ROC)
June 27, 2013
Summary: The "Trade in Services Agreement," signed in accordance with ECFA, has provoked an uproar. Two issues are involved. One. The administration failed to communicate properly in advance. Two. some local industries whose markets have been opened up may be at risk. Will ECFA and the service industry agreement become a case of "boiling the frog?" That remains to be seen. The key is awareness. We must realize that the pot is being warmed up, either by Beijing or by ourselves.
Full Text below:
The "Trade in Services Agreement," signed in accordance with ECFA, has provoked an uproar. Two issues are involved. One. The administration failed to communicate properly in advance. Two. some local industries whose markets have been opened up may be at risk.
These two issues are real. They must be dealt with appropriately. But if we concentrate exclusively on them, we may overlook the bigger picture, and a more serious problem. If Taiwan becomes addicted to Mainland China's concessions, we may cling to them for dear life, the way infants cling to their baby bottles. We may focus all our attention on cross-Strait trade negotiations, and neglect the larger battlefield of global trade that awaits. By the time we come to our senses and attempt to catch up, it may be too late.
Frankly the crisis is already here. Twenty years ago, Taiwan businesses moved to the Mainland in droves. The NT dollar was appreciating. We successfully invested it outside the island. Within a few short years, we vastly expanded the reach of Taiwan's economy. These opportunities were created through our courage and wisdom. But consider the situation today. The GATS agreement allows beauty parlors, printing shops, herbalists, and other traditional service industries to operate on Taiwan. This has provoked a massive backlash. The opposition DPP has accused the government of "forfeiting our rights and humiliating the nation," and of "selling out Taiwan." But the DPP is pointedly ignoring other, positive aspects of the agreement. Taiwan has retreated, from offense to defense. This is cause for regret. This is precisely why Taiwan is on a path of economic stagnation.
Two indicators reveal Taiwan's stagnation. One. Compare the present to the past. We have lost our momentum. Salaries have not increased for years. This is a key indicator. Two. Compare Taiwan with the Mainland. The gap between the two is rapidly narrowing. People are apprehensive about permitting the Mainland to invest on Taiwan. This is another key indicator. These indicators leave little room for self-deception.
Taiwan's economy has stagnated in recent years. But why? Is it really, as the opposition DPP alleges, because "ECFA is poison?" Taiwan External Trade Association figures show that this is not the case. Last year Taiwan's foreign exports amounted to 300 billion US. Exports to the Mainland amounted to 130 billion US, 43% of the total. Taiwan's imports amounted to 270 billion US. Imports from the Mainland amounted to 37 billion, a mere 14%. Taiwan enjoyed a trade surplus relative to the Mainland amounting to over 90 billion US.
Let us keep it simple. If Taiwan's stagnation was the consequence of opening up the Mainland market, our trade deficit would have been 60 billion US. Taiwan has long trumpeted itself "an economy built on trade." Such a figure is inconceivable. It proves that the allegation that "ECFA is poison" is nonsense. On the other hand, does this figure prove that ECFA was a magic pill that revived Taiwan's economy? Alas, the answer is also no.
Taiwan's stagnation has nothing to do with whether ECFA is good or bad, a poison or panacea. The problem lies elsewhere. Cross-strait issues dominate the thinking of ruling and opposition party politicians and even the public on Taiwan. This makes it impossible for them to see the bigger global picture. They may even reflexively perceive Taiwan's relationship to the world through the lens of cross-Strait relations. Doing so turns ECFA into a funhouse mirror. This makes it impossible for us to accurately evaluate our relationship with other trading partners. Becoming addicted to Mainland concessions is akin to becoming addicted to opiates. We mistakenly begin to think that this is a world without pain, and that everything we desire can be obtained cost free.
For years, Taiwan has harbored two contrasting perceptions of the Mainland. The first is that the Mainland market offers endless opportunities. The second is that the Mainland conceals endless threats. The perception of endless opportunities induced Taiwan businessmen to invest in the Mainland. The perception of endless threats induced Beijing to make endless strategically motivated concessions to Taiwan for the sake of reunification. But lest we forget, the endless opportunities and the endless threats are two sides of the same coin. Constant worry, fear, or complacency may lead to lost opportunities. Blind naivete without vigilance may lead to the threats coming true.
The GATS agreement has been signed. From the perspective of individual industries, trade-offs are inevitable. The government must respond. From the perspective of Taiwan's overall economic well-being, if the benefits outweigh the costs, if the opportunities outweight the threats, then the agreement is worth trying out. More importantly, we must not allow ourselves to become hooked on ECFA concessions. We must not fall into the trap of low standards for cross-Strait talks. We must not forget that the ROC must conduct bilateral negotiations with other countries. Global multilateral negotiations are proliferating. Taipei's diplomatic allies remain few, and on the fringe.
Will ECFA and the service industry agreement become a case of "boiling the frog?" That remains to be seen. The key is awareness. We must realize that the pot is being warmed up, either by Beijing or by ourselves.
2013.06.27 05:14 am