THE LIBERTY TIMES EDITORIAL: ECFA: an economic masquerade

Mon, Apr 13, 2009 - Page 8

Despite strong public opposition, the administration of President Ma Ying-jeou (馬英九) is undeterred in its plan to sign an economic cooperation framework agreement (ECFA) with China.

Several ministries have been aggressively promoting the pact. Besides meeting various industrial groups, Minister of Economic Affairs Yiin Chii-ming (尹啟明) has compared himself to a stock market commentator, claiming that he would be able to recite the contents of an ECFA verbatim.

The Ma government has even said that inking an economic agreement with China could be a springboard for Taiwan to return to the international stage. All this has made it clear that the government is rushing to sign an ECFA with China — even at the expense of Taiwan’s sovereignty.

Previously, the standoff between Taiwan and the Chinese Communist Party (CCP) precluded economic exchanges and trade. Taiwan saw the world as its market and developed the competitiveness of its products based on local industry. With two-digit GDP growth for the past 20 years, Taiwan became an economic miracle and a model for other developing nations.

The strength of Taiwanese industries and their success helped Taiwan earn acclaim as one of four Asian Tigers.

Based on this foundation, education levels of Taiwanese rose and Taiwan consciousness formed.

Growing public support for a liberal democracy and protests at the legislature and on the streets finally broke the authoritarian system and democracy was established. Taiwan’s political and economic achievements — even in the face of threats by a powerful neighbor — prove that a state can prosper by focusing on localization while thinking globally.

After the collapse of communism in the late 1980s, poverty-stricken countries formerly attached to the Soviet bloc began to offer cheap labor, land and preferential tax treatment to attract investment from developed countries. The supply of capital and technology contributed to the economic development of these former communist states.

At the time, several Taiwanese government officials and financial experts urged local companies to manufacture in China and leave research and innovation in Taiwan with an eye to upgrading domestic industries. Their plan to turn Taiwan into an Asia-Pacific operation center prompted many Taiwanese firms to move their factories to China, resulting in a severe brain drain and capital flight. This seriously undermined Taiwanese local industry and unemployment increased.

Meanwhile, with the influx of Taiwanese investment, China enjoyed a rapid rise in exports and prosperous development even as the Taiwanese economy suffered from the hollowing-out of industries, talent outflow and financial sector bankruptcy.

A glance at the history of cross-strait affairs shows that Taiwan and China are engaged in a zero-sum game. If one party wins, the other must lose without gaining any benefit. Politically, the so-called cross-strait win-win situation is a lie.

Ever since taking office, Ma and his administration have sidestepped the political nature of the cross-strait economic and trade relationship and promoted the old concept of an Asia-Pacific regional operation center. To match its rhetoric of a “one China” market and a “Greater China economic sphere,” the Ma government opened direct cross-strait transport links, allowed Chinese tourists to visit Taiwan and plans to sign an ECFA to bring about unification.

Yiin knows very well that he cannot rely on expertise and logic to convince people that an economic pact with China is essential; by comparing himself to a stock market commentator he has unwittingly shown the public that inking an ECFA with China is nothing more than a masquerade.

In the past, stock market commentators would talk up China-related shares and thus cause investors to lose money when stocks fell. Yiin is now using similar techniques to play up an ECFA. It is unlikely that the public will fall for that trick again.

The earlier “no haste, be patient” and “effective management” policies that aimed to discourage Taiwanese companies from moving to China were not sufficient to prevent massive Taiwanese investment in China. If the government were now to sign an ECFA with China, it would be tantamount to ensuring and encouraging the hollowing-out of Taiwanese industry. Eventually, Chinese products, companies and human resources would enter the Taiwanese market. Under attack internally and externally, Taiwan’s economy would list and there would be no going back.

Therefore, the Ma government’s claim that signing an ECFA will be a stepping stone for Taiwan to resume an active role in the international community is flawed. Doing so will only increase the speed of Taiwan’s decline.