Sat, Nov 22, 2014 - Page 8 News List

Agricultural reforms needed badly

By Lee Wu-chung 李武忠

China and South Korea have recently completed substantive negotiations for a free-trade agreement (FTA) that they plan to formalize next year. However, as soon as this news got out, South Korean farmers’ organizations stood up to voice their opposition. Since the agreement needs legislative approval before it can go into effect, it is not certain when it will do so.

When the deal between China and South Korea is up and running, it will have an impact on the economies and trade figures of both Taiwan and Japan. Research carried out by the Japan External Trade Organization indicates that the FTA will cause about US$5.3 billion of Japanese exports to be replaced by South Korean goods.

As for Taiwan, Deputy Minister of Economic Affairs Bill Cho (卓士昭) says that the completion of the FTA will have a very big impact on the economy, to the measure of NT$260 billion to NT$650 billion (US$8.45 billion to US$21 billion) within three to five years. The Chinese Nationalist Party (KMT) predictably followed Cho’s comment by laying the blame on the Democratic Progressive Party and other opposition parties, accusing them of maliciously boycotting proposed trade measures, thus causing Taiwan to “leave itself behind.”

Once again, the KMT is calling for speedy approval of an oversight mechanism for cross-strait agreements on trade in services and goods, but it has done nothing more to resolve its differences with the opposition. This approach may well make these measures an issue in the approaching elections, but it will do nothing to help the laws in question get passed.

The free-trade negotiations between China and South Korea and those between the US and Japan over the Trans-Pacific Partnership both involve South Korea and Japan having to make concessions on agricultural issues, and Taiwan faces the same sort of quandary when it engages in regional trade talks.

Apart from the China factor, this is probably the most urgent issue that the government has to deal with. The question is whether the government is ready to face the challenge.

Some agricultural products produced by boldly innovative Taiwanese farmers are of high quality, comply with food safety regulations and may be certified organic or have other kinds of official certification, such as the Traceable Agricultural Product or Taiwan Good Agricultural Practice labels.

These factors put these products in the high-quality category, and quality differentiation enables them to compete with imported farm products that are low-priced but may be associated with food-safety risks. Some of them are even exported and sold abroad. Farmers who produce such high-quality goods are not afraid of the competition brought by trade liberalization.

The problem is that high-quality products such as these represent a relatively small proportion — about 15 percent — of total production. The majority of farmers are limited by factors such as scale, capital, technology and market access, and their products are of ordinary quality.

They are often hit by imbalances between production and sales, along with sudden price cuts that may even leave them unable to cover their outlay, and they are unable to compete on price with products grown overseas in massive quantities and with low production costs.

Considering the present state of Taiwanese agriculture, joining regional economic cooperation organizations, hastily making big tariff cuts and opening up the domestic market for farm products would indeed present an unbearable challenge for the majority of Taiwanese farmers, so it is not without reason that farmers and their organizations are opposed to such moves.

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