The media have reported that in February of this year Shenzhen Harbor's container traffic surpassed that of Kaohsiung Harbor, and Kaohsiung's container traffic dropped to sixth place in the world. Although Shanghai and Shenzhen depend on China having become the world's manufacturing center, the added value of incoming and outgoing containers is not great. They earn only slim profits from shipping fees.
Recently, legislation establishing free trade ports has been passed in the spirit of taking over transit port services now handled by Hong Kong and Singapore. By complementing these services with Taiwan's manufacturing expertise and opening up port regions for processing work, manufacturers will be enticed to set up shop and create a source for goods. This could create added value for import-export container traffic, and in a way that makes the most of Taiwan's comparative advantages.
One question remains, however. After Kaohsiung harbor becomes a free trade port, will it really be restored to its past glory?
Taiwan's industries have advantages of manufacturing know-how and marketing skill. The government has also dedicated itself to developing the hardware and software infrastructure for port facilities. Nevertheless, because goods and people still can't freely and rapidly flow between the two sides of the Taiwan Strait, free-trade ports fall short of their potential.
Because of the curse of "one China," we are always one step short of setting up direct links across the Strait. And due to the lack of direct links, Taiwan is unable to become the portal by which firms from all over the world enter China. In fact, a situation has been created in which more foreign businesses leave Taiwan every year.
We can understand that our national leaders reject the "one China" principle out of a desire to protect Taiwan's sovereignty. We can see the wavering and hesitancy of government authorities caught between economic inter-ests and national sovereignty. But political biases are swallowing up Taiwan's room for survival.
Perhaps turning Kaohsiung harbor into a free-trade port is a starting point for transforming economic and trade relations across the Strait, but it will be necessary to cleverly resolve the deadlock over direct links. On the basis of Kaohsiung's status as a special municipality, the city should be allowed to become a special zone for interaction between Taiwan and China.
Disputes over sovereignty that the central government is unable to avoid should be sidestepped, and direct city-to-city links should be opened with cities in China using a local-government-to-local-government model. In this way, the fear of full-scale direct links might be mitigated. Moreover, a starting point would be provided for normalization of cross-strait economic and trade relations, and a channel for Taiwan to take advantage of the China market would be opened up.
Taiwan's position on the international stage is a uniquely difficult one. Thus we will require a particularly flexible strategy to break through China's blockade. Turning Kaohsiung harbor into a free-trade port won't suffice to turn the situation around. Raising Kaohsiung's status to that of a special zone in order to break free of the shackles of "one China" and using the city as a site to test direct links might be a way to simultaneously look after the nation's sovereignty and economic interests.
Free-trade ports without direct links are like an eagle with clipped wings. No matter how it might flap its wings, it can't soar into the sky. Let's see how the authorities break free of constraints by letting Kaohsiung harbor lead Taiwan back to prosperity.
Cheng Chieh-yi is a researcher at the New Taiwan Foundation.
Translated by Ethan Harkness
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