Exporters' plight holds a lesson for Taiwan

By Chiu Li-li 邱莉莉  / 

Fri, Dec 30, 2005 - Page 8

In terms of cross-strait economic and trade issues, those who advocate "going west" -- ?namely, expanding investments in China -- have been portrayed as liberal and wise. On the contrary, legal restrictions and government actions that protect the public interest, and the assets and safety of the Taiwanese people, have been portrayed as conservative and stubborn. Such naivety puts Taiwan's economic achievements at the mercy of development based on populist ideology.

Many readers will recall the sensation caused by fruit exports to China. In July, Beijing invited both the Chinese Nationalist Party (KMT) and the Farmers' Association of Taiwan Province (台灣省農會) to discuss this. Anyone of good sense could tell that this was a politically motivated move. Thanks to certain political parties, however, exporting fruit to China was publicized as the best way of boosting the income of local farmers.

As President Chen Shui-bian (陳水扁) repeatedly warned, food quarantine and safety standards are much lower in China. And, even though Taiwanese fruits were granted tariff-free status, they would have to compete with cheap products from Southeastern Asia. Once the novelty of fruits from Taiwan wore off, profit margins would be squeezed and our farmers would have no choice but to cut prices, the the Democratic Progressive Party (DPP) government warned.

The Council of Agriculture repeatedly stressed that issues involving public rights should be handled by the government or authorized agencies so that a trade agreement could be reached that would protect farmers' rights. However, politicians and media with with their own agendas criticized the DPP government, saying that they were "sacrificing the interests of disadvantaged groups" for the sake of ideology.

Within six months, the pro-unification media were forced to eat their words and to admit that Taiwanese fruit fever in China had cooled substantially. Stands selling Taiwanese fruits in stores in Beijing were half the size they had been, and business was down by more than 50 percent.

Apart from the novelty having worn off, this was also the result of much fruit from Guangdong and Hainan Provinces having been labelled as being from Taiwan. Thus, the market was flooded with low-quality counterfeits. Even some wax apples exported from Thailand to China were labelled as coming from Taiwan. The Chinese government's failure to crack down on counterfeits and a lack of a classification system contributed to Taiwanese farmers being unable to secure a steady market.

Taiwanese farmers exporting fruits to China continue to face significant hurdles and the reputation of Taiwanese fruits has been damaged even before the farmers have begun to profit. In hindsight, the government's fears have been realized.

In light of these developments, the executive should not be fooled into acceding to the Chinese National Association of Industry and Commerce's (工商協進會) request that it cancel the 40 percent cap on China-bound investment by Taiwanese companies (Taiwanese businesses are banned from investing over 40 percent of their net value in China). Rather, it should carefully consider the risks. For example, if the investment ceiling is canceled, how will the flood of business relocation affect Taiwan's unemployment rate? And how will the capital outflow to China further marginalize Taiwan?

In recognition of the complex relationship created by investments in China, the government needs to have firm policies. The media should also view this from the perspective of public interest and should honestly uncover the failure of many Taiwanese businesses in China, so as not to lead the nation to its ruin.

Chiu Li-li is a Tainan City councilor.