Fri, Jun 27, 2014 - Page 8 News List

Pilot zones badly planned: analysis

By Jang Show-ling and Chen Chi-chung 鄭秀玲,陳吉仲

The government has recently been pushing its proposal for free economic pilot zones, saying that it would help the economy get back on its feet. True to form, however, the government is only talking about the potential benefits of the proposal, but is keeping quiet about any possible negative impacts.

For this article, the National Taiwan University Department of Economics invited a dozen or so experts, including Koo Foundation Sun Yat-sen Cancer Center president Andrew Huang (黃達夫), to explore the potential advantages and drawbacks of the proposal, should the special regulations for free economic pilot zones (自由經濟示範區特別條例) be passed in the legislature.

According to Article 13 of the special regulations, in addition to free-trade zones, agricultural biotech parks, export processing zones and science parks, local governments could also choose to designate other areas as pilot zones.

These, together with the “shop in the front, factory in the back” model and others, mean an awful lot of pilot zones of one type or another would pop up around Taiwan. Article 18 outlines how private land for the pilot zones could be obtained through a range of methods, including agreed purchase prices, expropriation and zone expropriation. Local governments would be able to buy land from private individuals at low prices and then sell it on to developers.

The benefits for politicians and companies would be huge, but where are the safeguards for private property owners? We are still waiting for the outcome of the Taoyuan Aerotropolis project the government is pushing, an enterprise that has been engulfed in scandal, yet it still wants to set up pilot zones throughout the nation.

Article 38 would allow for the automatic exemption of import duties for commodities, so that other countries would not need to sign trade-in-goods agreements with the nation, as they would not in any way feel obliged to reduce tariffs on Taiwanese goods.

This would have a huge impact on the competitiveness of Taiwanese exports in diverse industries, such as petrochemicals, LCD screens and machine tools. In addition, this same article, together with Article 42, would further deregulate agricultural imports and exempt 830 currently restricted Chinese agricultural products from any import tariffs, something unprecedented in similar agreements around the world.

Most nations do their utmost to protect the farming sector. When the US signed a free-trade agreement with South Korea, for example, import tariffs were not exempted on US beef until 15 years later. The huge influx of agricultural products set to come from China and other countries will be extremely bad for Taiwan’s farmers, as well as negatively impacting food security and the environment.

Article 42 would also allow certain agricultural products from China to enter Taiwan to be used in food processing. With peanuts, for example, after they have been processed, any restricted goods such as peanut oil would be sold overseas, while non-restricted goods like peanut butter could be sold domestically.

If all of these cut-price Chinese goods, many of dubious quality, started to flood Taiwan they would replace our own farm produce, having a huge impact on the domestic farming sector. Processed food could then be shipped off overseas branded as made in Taiwan, without having been subjected to quality control checks.

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