Wed, Mar 20, 2002 - Page 8 News List

Balancing economics and security

By Nat Bellocchi 白樂崎

When Taiwan joined the democratic club in the last decade, a careful observer would discover similarities in problems or issues with those of the other democracies. That continues even today.

For Taiwan, the hot issue of the moment seems to be whether or not to allow the emigration of eight-inch wafer manufacturing to China.

The principle is a familiar one in Washington and, I suppose, in other democracies as well. It is the balance of priorities between the economy and security. The Clinton administration placed economics first and the Bush administration security.

The difference between the US and Taiwan on this issue, however, has to be kept in mind. For Clinton, economics was the first priority because no one could challenge the US after the Cold War was over. Security became the first priority with the present administration after Sept. 11. Taiwan, however, was, and remains, in what amounts to a cold war situation. Which priority should come first?

Clinton's decision to put economic matters first in the US relationship with Taiwan was a disappointment for me. Democracy was breaking out and it was therefore the most opportune time to "normalize" the conduct of the relationship.

Democracy brought such major changes to Taiwan's political system that it would have been natural and more easily justifiable, both in the practical sense and in demonstrating to the international community, US support for democratization.

This not only didn't happen, but the sensitivity level in the US-China relationship went up and made any meaningful "normalization" even harder.

Despite the high priority being security, including the positive moves made in the US-Taiwan relationship, in the Bush admin-istration there is still great impor-tance given to support for China's involvement in the WTO and international economic issues generally.

US business can invest and trade as it will. But there are here, once again, very great dif-ferences between businesses in the US and those in Taiwan in terms of economic interchange with China.

On some security-related goods, the US does have effective restrictions on trade and investment in China and sanctions when the use or export of certain products violate agreements.

Furthermore, US business places much greater weight on the risk factors in doing business with China. US business has gone through more than one "China fever" and the experience has made them at least a little more cautious.

American investment in China has grown to be sure, but even today, five times more money is being invested in Japan by US companies. For US companies, there is full understanding that they are on their own should they fail in their businesses abroad. Only if clear discrimination against US firms is practiced by a foreign country does their government intervene.

I recall last year writing about the intense pressure being put on Taiwan's government by much of the media and business community. There were, however, different motivations: some for profit, some for national-identity objectives and some simply for political reasons. The purpose in generating this pressure was to loosen or even eliminate the barriers to direct economic interchange with China The justification that was generally accepted by many was that it was the only alternative for reviving the economy.

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