Following the signing of a free-trade agreement between Taiwan and Paraguay, two news reports immediataly published erroneous information about the agreement.
One claimed that “the government hopes the agreement will open up trade opportunities between Taiwan and South America,” while the other was entitled “Taiwanese alcohol exports expected to benefit from trade pact with Paraguay.”
Despite the misinformation about the trade agreement in the reports, the government has made no attempt to clarify the situation. In fact, it seems to enjoy seeing the media exaggerate its contribution.
South America has been open to trade with the nation for a long time, with many companies already doing business there. Why make it sound like the agreement was necessary for trade between Taiwan and South America?
A trade or economic pact is an agreement regarding trade cooperation, usually involving the reduction or complete removal of tariff and other trade barriers, either in steps or immediately. It can help boost the imports and exports of nations involved, and enhance trade and economic cooperation between them.
If Taiwan must sign an agreement with Paraguay to open up trade opportunities in South America, that would suggest the nation has some serious problems, because it implies all goods must be exported to Paraguay first before being shipped to other South American countries.
If Taiwanese businesses believed that, they would have been misled: because in order to do that, companies must first show proof that their products were made in Paraguay, as required by the regulations of the Mercosur trade bloc, and then sell them for at least four times the original price to have them exported tariff-free to Brazil, Argentina, Chile, Venezuela and other South American countries.
If Taiwanese breweries want to rely on the agreement to export their products to South America, they would have to build breweries in Paraguay and provide proof that the alcohol was made locally and then sell them to other parts of South America.
If Taiwanese breweries were to look into the conditions for investment in Paraguay, they might find out that even with the tariff, directly exporting to South America from Taiwan is still cheaper than setting up breweries in Paraguay and then exporting beverages from there. If Taiwanese companies were to not figure this out before they began investing their time and money, they would suffer considerable losses.
Every government department hopes to impress with their contributions, which is essentially a good thing. However, attempts to impress by deliberately misleading businesses, giving them false hope and wasting their time, cast a shadow over their actual contributions.
Policymakers should always be honest with businesses about what their policies can do, without any exaggeration.
Tu Jenn-hwa is a professor at Chinese Culture University’s English Program of Global Business.
Translated by Tu Yu-an
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