Fri, Aug 24, 2007 - Page 8 News List

Ma, Siew's economic policies are not viable

By Lin Cho-shui 林濁水

Chinese Nationalist Party (KMT) vice presidential candidate Vincent Siew (蕭萬長) has come up with a rather mystifying special remedy for the economy: The plan advocated by KMT presidential candidate Ma Ying-jeou (馬英九) to make all of Taiwan a free-trade zone.

This plan of his works like this: Nobody wants to negotiate a free-trade arrangement with Taiwan, so in order to avoid being pushed into the periphery, we unilaterally create a free-trade zone as an incentive.

This is a notion completely detached from reality. Does implementing a free-trade zone for others and lowering or even removing import taxes on all kinds of products, mean that others must do the same in return?

Every economic policy has its benefits, but it is also sure to have its costs.

Take for example China dropping the import tax on Taiwanese fruit. The objective of this is to woo Taiwanese farmers but farmers in China are not happy with this policy.

Another example is England abolishing the Corn Laws in the 19th century. The objective of this move was to bring down the price of corn, allowing capitalists to lower their workers' wages, so industry could grow faster.

Industry benefited from the abolishing of this law, but it was at the price of sacrificing English farmers.

Policies on trade all involve such a redistribution of the benefits of industries and people working in them. Some will benefit from the policies but others will have to pay for them.

There are serious obstacles to cross-strait trade, but blocking the huge amount of trade that is going on would mean a serious blow to Taiwan's industry and job market, even in a political landscape where the north leans to the pan-blue camp and the south to the pan-green.

If trade is liberalized, this will of course have a big impact, let alone if it is done unilaterally.

Hence, when promoting free trade, a responsible government has to anticipate and take appropriate measures to address changes in industry and the job market, and that's also why the two sides should talk all aspects of the arrangement over clearly.

A country should never implement free trade unilaterally, let alone implement it overall. This is also the reason Beijing, which keeps saying Taiwan is a province of China, has only opened up trade of 15 kinds of fruit.

KMT financial and economic experts like Siew keep coming up with ideas that are not sensible, such as a common market for China and Taiwan, or making all of Taiwan a free-trade zone.

These proposals are backed by Ma, showing he is willing to support anything.

Why is it that Ma and Siew exaggerate and take no account of reality when it comes to economic matters? It seems to be more than that they don't have a very strong sense for the economy.

Their actions might be the result of years of pent-up fear stemming from being pushed into the margins by China.

When the Democratic Progressive Party recently proposed a referendum on joining the UN under the name Taiwan, Ma and Siew put forward their own proposal. Although it was not perfect, they should be commended for their courage in standing up to China.

But when it comes to the economy, why do they keep coming up with policies that only seek to draw Taiwan closer to China?

Lin Cho-shui is a former Democratic Progressive Party legislator.

Translated by Anna Stiggelbout

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