Sun, Jan 30, 2000 page8

• Editorial: THSRC agreement unprincipled

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  That Eurotrain should take the Taiwan High Speed Rail Corp (THSRC) to court to try and prevent the supposed-to-be builders of Taiwan's Taipei-Kaohsiung high-speed rail link negotiating with Japanese rivals Shinkansen -- builders of the famous bullet train -- is the latest development in a story that has long beggared understanding.

  For reasons which have far more to do with making certain people rich through land development along the route than any pressing need for 300,000 Taiwanese a day -- the projected passenger volume of the line -- to travel between these two cities in 90 minutes, the government wanted to build a high-speed rail line. Realizing that it couldn't afford to do it itself, it decided to put it out to tender as a build-operate-transfer project. Two local groups eyed the project hungrily the Taiwan High Speed Rail Consortium, now a corporation, and the Chung Hwa High Speed Rail Consortium. Both organizations had to come up with a plan for building the railway and the government would decide who got the project. An essential part of the government's judgement of the proposals for the two groups was to evaluate the rail systems they intended to use -- Eurotrain for THSRC and Shinkansen for Chunghwa. Price alone was not to be the deciding factor.

  THSRC beat Chunghwa to the post by offering to build the line with no government funding whatsoever. Shortly after the project was awarded in 1997, THSRC said that it might use the Shinkansen system instead of Eurotrain. The story ceases to make sense right at this point. Having won the tender with a plan based on Eurotrain, how could THSRC have the freedom to choose Shinkansen instead? Basically THSRC was awarded the project under false pretenses. Why was bidding not reopened?

  Because evaluation of the train system to be used was part of the criteria on which the project was awarded, each consortium had to have an agreement with a rail systems provider to fulfill the tenders' technical requirement. THSRC, when it was a consortium bidding for the project rather than a legally constituted corporation developing the line, signed an agreement with Eurotrain. As we understand the issue now, THSRC's case is that an agreement with the principle members of the THSR consortium is not legally binding on the THSR corporation founded by those members later.

  It is quite possible that the court will throw out Eurotrain's request for an injunction on THSRC and Shinkansen and have solid legal grounds to do so. But we cannot but help think that THSRC's use of Eurotrain to win the contract for the line and then switching to Shinkansen seems underhand. It might be found to be legal to the satisfaction of many in Taiwan, but outside Taiwan this will be taken as proof that Taiwan's legal system and justice are only tangentially related to each other.

  But, someone might want to argue, this is Asia. Eurotrain lost out to Shinkansen because the personality-driven Japanese knew how to negotiate here and the contract-driven Europeans didn't. Not to mention the political dimensions of a US$3 billion contract. Do you give it to your friends, or to those who seem to want to be friends with your enemy?

  All these factors have certainly played a part in the high-speed train issue, now so hopelessly politicized. But it is difficult not to think that once again Taiwan has sullied its good reputation for playing by the rules and will appear internationally in a less than wholesome light. And in a world where Taiwan's main weapon against China is the decency of its society contrasted with its totalitarian foe, that is not clever at all.
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