Western Economics regards free trade as an important facilitator of both human welfare and the improvement of society. Free trade promotes more efficient application of resources, and information and technology can be broadcast and disseminated anywhere on the globe.
Free trade also encourages competition in terms of both quality and price, not only allowing cheaper and better products to be made, but also the continual advancement of society. Globalization has meant that the idea of free trade is no longer just accepted in the West: it is gradually being adopted throughout the world.
Unfortunately, despite the fact that the value of free trade is universally recognized, the actual realization of the idea is proving to be more problematic. The failure of the WTO meeting in Cancun showed that nations were sacrificing the long-term benefits of free trade for what they could milk out of each other in the short term. This was somewhat frustrating to advocates of the concept. It was this state of affairs that induced some to place their hopes for free trade in the establishment of free trade areas (FTAs). If an FTA is open to other states and can retain the conventions of the WTO, it can attain the ideal of free trade -- albeit with a few side effects.
With the stagnation of access to the WTO, even countries such as the US and Japan, which have consistently advocated the freeing of trade with a multilateral trade network, are rethinking their positions and beginning to join in free trade area agreements.
Another problem is that the majority of decisions to join in free trade agreements are in the hands of the various nations' strategists and financial experts, resulting in a process that is rife with schemes and calculations. As each FTA has relatively few signatories, there are a correspondingly large number of items to agree on. The countries involved start calculating which free trade partner will give them maximum benefit, and rank them accordingly.
What nations don't seem to realize is that their calculations are based on short-term benefits. In fact, the real benefits of free trade only become apparent only in the longer term. With this perspective, any ranking according to per-ceived benefit becomes irrelevant. Any country that applies itself to the practice of free trade will reap the overall benefit in the long term.
In practice, the process of signing free trade agreements has already descended into a kind of game in which players scramble for maximum gain. Strategists have begun to wield free trade as something with which to barter for what they want, be it securing peace at national boundaries, procuring material resources, buying friendly relations or even obtaining weapons. The ideal of free trade -- which can be a universal benefit to the human race -- is repeatedly being sold off below its worth.
What's more, during the course of this bartering process free trade's worth is being consistently devaluated. If this attitude of "if you want us to reduce tariffs, you'll have to pay the price" becomes the norm, how can we expect the WTO to make any progress?
So what of those who truly want to practice free trade: those extremely rare countries which really believe that free trade is an end in itself and not just a bargaining chip? In their attempts to achieve trade without barriers they have to deal with other countries which want something else in exchange. Is Taiwan among this small group of countries? The answer is yes, but unfortunately Taiwan, like many other nations, has found itself at the wrong end of this "exchange culture."
There is no doubt that Taiwan always seems to be beating its head against a brick wall when it comes to establishing simple free trade relations with other countries. The main reason for this is that the countries they seek to sign the agreements with favor other options involving countries from which they can glean some other kind of benefit. For the most part these same countries have traditionally supported the ideal of free trade, so this somewhat contemptuous attitude comes as quite a surprise. I would like to call for the abandonment of this misconceived idea of "free trade for sale," and have free trade taken for what it is.
Finally, I would like to turn to the FTA between the US and Taiwan. At present, there has been no appearance of the bartering of free trade in exchange for other benefits as discussed above. America's four main requirements regarding Taiwan are basically concerned with the nature of the free trade they are to agree on, and not any extraneous demands for added benefits. From this perspective, US-Taiwan free trade discussions are still quite healthy. Recently, however, the US side has cast doubts on the progress of talks due to significant differences in points of view that exist between the two countries.
Despite these differences, it is important that neither side falls into the trap of trying to secure short-term benefits. If they look to the long-term advantages they can gain from free trade, these differing opinions will be of little importance, and easily overcome.
After all, what could possibly be easier than two advocates of free trade establishing mutual free trade relations?
Chao Wen-heng is an associate research fellow at the Taiwan Institute of Economic Research.
TRANSLATED BY PAUL COOPER
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