EDITORIAL: Good and bad should be assessed

Sun, Jul 14, 2013 - Page 8

Under ordinary circumstances, it would be welcome news that Taiwan’s recently signed service trade agreement with China might help local financial institutions, healthcare suppliers, construction companies and e-commerce firms to expand their business across the Taiwan Strait. More business opportunities would also follow if other local companies in the service sector could seek to explore the huge potential of China’s market, at a time when their home market has become increasingly saturated.

The problem is that it is under extraordinary conditions that the pact of June 21 will take effect. While companies in Taiwan’s service sector are mostly small and medium-sized enterprises, their Chinese counterparts are generally bigger and far more aggressive in their pricing strategy. Furthermore, Taiwan’s regulations for Chinese investment under the service trade pact could lead to more immigration by Chinese investors, while China’s laws still do not offer a level playing field for Taiwanese businesses. Examples are the printing and publishing industries.

Compare the economic cooperation agreement between Taiwan and New Zealand signed on Wednesday last week that both sides have agreed meet their country’s needs. The Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC) is considered less of a threat to Taiwan’s economy than similar free-trade pacts because economic structures and trade relations between the two countries are more complementary than competitive. There is also a consensus that the free-trade agreement bears high symbolic importance, being the first Taiwan has signed with a developed nation that is not a diplomatic ally.

The agreement is a major milestone in battling the threat of trade marginalization, helping Taiwan pave the way for similar trade pacts with Singapore, Chile, India and Switzerland, among others, in the near future. Taiwan could then seek New Zealand’s support to join the Trans-Pacific Partnership, of which New Zealand is a member state.

Yet this should be just one of the government’s efforts to retain long-term economic competitiveness. The goal should still be to attract international investors, help businesses develop foreign markets and raise Taiwanese living standards. Policymakers still need to revive the nation’s economy, increase household income, stem the brain drain and restore people’s trust in the government. However, the service trade deal with China — which the government claims will establish a precedent for more free-trade agreements and membership in regional economic blocs — is likely to fail to meet its goals if people’s worries remain unresolved.

The decision to enter into a free-trade agreement with other countries requires rigorous assessment and skilled negotiation because of the huge potential impacts. Dialogue between advocates and opponents needs to be comprehensive, and painstaking scrutiny of the details of the deal is essential.

Yet with the cross-strait service trade agreement, government officials have only touted the so-called benefits, and have not addressed the potentially negative repercussions, nor have they said how the government would negotiate with China to address possible investment barriers.

All in all, it would be a grave mistake for the legislature to be hasty with a pact that could severely affect Taiwanese businesses and people’s daily lives in the long term.