After Kaohsiung Mayor Han Kuo-yu (韓國瑜) of the Chinese Nationalist Party (KMT) announced his free economic pilot zone plan, KMT legislators Alex Fai (費鴻泰), Lai Shyh-bao (賴士葆) and William Tseng (曾銘宗) immediately announced their proposal of the draft special act for free economic pilot zones. Their proposal reflects their outdated and barren “imagination,” which is far behind world trends.
The draft special act is based entirely on a plan proposed by the National Development Council during former president Ma Ying-jeou’s (馬英九) administration in 2012.
The main idea is to attract foreign professionals, investment and goods by loosening restrictions on immigration, finance and trade. The ultimate goal is to energize economic growth in Taiwan, accelerate the pace of its integration into the world economy and pave the way for entry into regional trade agreements.
The objectives of free economic pilot zones can be achieved by strengthening and amending existing regulations, such as the Act Governing the Establishment and Management of Free Trade Zones (自由貿易港區設置及管理條例) and the Enforcement Rules of Statute for the Establishment and Administration of Export Processing Zone (加工出口區設置管理條例施行細則).
However, the Executive Yuan under the Ma administration insisted on using “six ports, one airport and one biotech park” as the starting point for its “Free Economic Pilot Zones Plan,” even allowing local governments to apply to establish their own zones and making land acquisition laws, therefore raising doubts on land speculation.
Furthermore, the scale of Taiwan’s agriculture and manufacturing industries are larger than regional economies such as Hong Kong or Singapore. The service sectors attached to those industries are varied and complicated.
The government should focus on expanding foreign markets and ensuring that Taiwan enjoys fair trade. At the same time, it should bolster the development of industries that need to be protected, such as the agriculture industry, in response to the trend of regional economic integration and the open market. The unilateral open market would lead to local agricultural raw materials being replaced with cheap duty-free imported materials and products.
The Ma government claimed that the Free Economic Pilot Zones Plan was in line with the Trans-Pacific Partnership (TPP). However, the openness of the market does not satisfy the conditions to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which was negotiated after the US withdrew from the TPP.
Taiwan should move its attention to improving regulations for labor rights, environmental protection, transparency of the decisionmaking process and the protection of intellectual property rights, because the CPTPP is a high-quality, high-standard regional multilateral agreement.
The scope of the issues goes beyond the WTO or any conventional free-trade agreements.
It includes market entry of goods, agriculture, textiles and garments, cross-border trade in services, financial services, telecommunications, government procurement, pharmaceutical and medical device transparency, rules of origin, customs management and trade facilitation, food safety inspections, flora and fauna, epidemic prevention and quarantine, technical trade barriers, investment, and labor and intellectual property rights, among other things.
The KMT’s plan to have free economic pilot zones is outdated. Regional multilateral free-trade agreements will emphasize consistency of social equity and the rule of law in member countries.
Instead of establishing free economic pilot zones, the government should revise the existing laws and make domestic regulations conform to CPTPP standards; learn the challenges that the industries might face when Taiwan joins the CPTPP; and take corresponding relief and auxiliary measures to assist the industries that might be affected.
Wei Jia-yu is a graduate student in National Chengchi University’s Department of Diplomacy.
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