Two developments are making it clear that the Ma Ying-jeou (馬英九) administration and the technocrats who fill its ranks must not only shift gear on the economy, but shift into high gear before it’s too late.
First is the adoption earlier this week of maximum residue levels for the leanness-enhancement drug ractopamine by the Codex Alimentarius Commission, which is likely to result in a decision by the Democratic Progressive Party (DPP) to end its ongoing legislative boycott of a vote on the import of US beef products containing the agent.
The US side, which has made resolving the dispute over ractopamine a sine qua non for the resumption of long-stalled Trade and Investment Framework Agreement (TIFA) negotiations, is now hoping that the Ma administration will be able to pass the bill allowing the imports. Once this is out of the way, there would be no reason why TIFA talks could not resume, US officials have told this newspaper in private.
The other development is the continued deterioration of the nation’s economic indicators, epitomized by a revised GDP growth forecast for this year by Citibank, which trimmed its prediction to 2.8 percent, from 3.3 percent in May, saying the figure could be revised downwards again should the situation fail to improve. This is a pretty bad drop from the prediction of 4.51 percent GDP growth made a year ago and the gloomy economic prospects make the state of the economy during the Chen Shui-bian (陳水扁) era --— often the point of comparison for the Ma government — look healthy in contrast.
It is clear, therefore, that more drastic and imaginative economic policies will be needed to revive the economy.
However, accelerating the pace of economic liberalization with China, Ma’s turnkey approach to improving the economy, just won’t do. What is needed is for Taiwan to quickly realize that some of its economic policies are in dire need of modernization and that failure to address the problem will leave Taiwan well behind its regional competitors.
One important first step would be to quickly deal with the TIFA, which anyway is a relatively unambitious plan, and immediately aim for the real goal, which is the signing of a free-trade agreement (FTA) between the two economies.
If, as Ma argued, signing the Economic Cooperation Framework Agreement (ECFA) with China opened the door to future FTAs with other regional economies, one can only imagine how signing an FTA with the US would embolden other countries, including major economies, to follow suit.
Beyond those first steps, Taiwan must really start making the adjustments that will make it possible for it to become a member of the Trans-Pacific Partnership (TPP), which many analysts regard as the future model for regional, if not global, economic cooperation (for the time being, China has not been invited to join the yet-to-be-formed framework, mostly because it constantly violates the rules it had agreed to play by upon joining the WTO).
Ma’s recent comments on the possibility of Taiwan joining the TPP are disheartening and a sign that his administration has yet to fully appreciate the importance of the changes that need to be made. A little while ago, Ma said Taiwan would not be ready to do so for another decade; he has since revised that prediction to eight years. This is way too long and highlights a lack of willingness that Taiwan simply cannot afford. US officials, many of whom would be supportive of Taiwan’s entry into the TPP, are confident that Taipei could make the needed adjustments well before then. Some members of the US Congress have even gone on record calling for Washington’s support on the issue.
There could not be a better time for Ma, a president who made a revived economy a cornerstone of his administration, to take bold steps in that direction. The support is there — and the clock is ticking.
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