Taipei Times (TT) : Regarding the service trade agreement that Taiwan signed with China on June 21, it seems the public remains worried about the deal and are not fully aware of the pact’s contents.
Wang Lee-rong (王儷容): Government officials need to come out to explain things clearly to the public. The government has to understand the public’s concerns.
TT: But what made people worried?
Wang: I think one cause is that the service trade agreement was signed by Taiwan with China, and the other cause is that the nation has not been under such huge pressure [to open up markets] for a long time.
My understanding is that those calling for the government to renegotiate with China about the service trade agreement seem unwilling to see Taiwan’s markets further liberated, because they are afraid to see local small and medium-sized enterprises (SMEs) suffer from intensified competition.
TT: That will bring up potential impacts, such as job losses to Chinese labor or acquisition of local firms by bigger Chinese firms, don’t you think?
Wang: These worries are all understandable, but that does not mean the country should therefore keep its market closed. Instead, the public should know that Taiwanese SMEs have strong competitiveness and there is no need for people to overreact to assumptions that the service trade pact would let Chinese investors take over domestic service sectors.
The CIER’s (CIER, 中華經濟研究院) research shows Taiwan’s service trade surplus is greater than its goods trade surplus and I believe service providers should take this opportunity to upgrade their services and gain competitiveness.
Take Taiwan’s automobile industry as an example. When Taiwan was planning to join the WTO about 10 years ago, local automobile makers opposed the move because most of them were afraid of diminished market share and competition with foreign car makers.
However, after joining the WTO, the foothold of these companies still stands firm and they continue making high-quality cars. That is proof of Taiwanese resilience in competitive marketplaces.
TT: Some critics have criticized the government for lack of contingency plans for the affected businesses and said the process to apply for government aid is too complex and time-consuming. What do you think?
Wang: I agree. The government needs to be prepared for the possible downsides of the service trade agreement in advance. As some academics suggested, legalizing the procedure for affected companies to apply for government assistance and helping them upgrade service quality are both important and necessary.
The government should ease rules for companies to apply for the NT$95.2 billion (US$3.18 billion) of rescue funds. Barriers for them to use the funds are too strict. It should be granted in a quick manner and not restricted by complex rules.
TT: In one of your recent newspaper commentaries, you wrote that the service trade agreement should not be reviewed by legislators article by article because the process is time-consuming and the results could delay Taiwan’s liberalization push, can you elaborate?
Wang: An indicator that can be used to prove my argument is the Global Financial Centres Index (GFCI), which is a ranking of the competitiveness of financial centers from around the world and carried out by surveys based on data from the World Bank, the OECD (Organisation for Economic Co-operation and Development) and the Economist Intelligence Unit, among others.
The latest GFCI showed that South Korea’s Seoul, as of March this year, was ranked the world’s 9th most competitive financial zone, while Taipei fell far behind at 36th. We have to ask why Seoul’s ranking could hit as high as sixth-place last year, but Taipei’s could only improve to 19th at its best in 2009.
My reasoning is that South Korea has signed a number of trade agreements with other countries such as the US and the EU over the past few years, and that has helped South Korea liberalize its economy and pushed its government to ease regulation on the country’s financial sector and thereafter raising Seoul’s ranking in the GFCI.
Even China has voiced its intention to join the Trans-Pacific Partnership, while Taiwan is still moving at a snail’s pace.
Everyone should keep in mind that Taiwan’s economy is limited by its small size and therefore needs to open up to welcome foreign investment.
If this country can reach a consensus that upgrading or transforming domestic industries is important, then it should further open up local markets and work to build platforms that can attract foreign investments and retain talent.