Blind embrace of free trade reckless

By Lai Chen-chang 賴振昌  / 

Sun, Oct 20, 2013 - Page 8

At this year’s Double Ten National Day celebrations on Oct. 10, all eyes were on how President Ma Ying-jeou (馬英九) and Legislative Speaker Wang Jin-pyng (王金平) would interact, especially regarding the all-important handshake: would they or would they not? This drama distracted from the content of Ma’s National Day address, which is extremely unfortunate. The following are some of the questionable things the president said about the economy in his speech that day.

First, Ma talked about striving to encourage Taiwanese to move forward and of boosting morale. Unfortunately, he started his speech by asking whether Taiwanese were going to courageously take on the challenges of free trade in the global economy, or if they were going to cower under the umbrella of protectionism like shrinking violets. It was an opening that was both provocative and regrettable.

The promotion of government policy that ensures stable development and puts in place pragmatic protections is certainly not a byword for cowardice. On the contrary, facing challenges with foolish recklessness and a complete disregard for the risks involved is not a sign of courage from a wise leader.

Second, three years ago, the government was touting the benefits of signing the Economic Cooperation Framework Agreement (ECFA), boasting of how many concessions China would make to Taiwan and how much money Taiwanese would be saving every year in taxes. Yet a report on last year’s figures shows that the free-trade agreements that Singapore has signed mean that US$63 out of every US$100 it does in trade covered by these agreements is tax-free or is taxed at a preferential rate. For South Korea, this figure is US$64 out of every US$100.

By contrast, in the three years since the ECFA was implemented, the corresponding figure for Taiwan in its trade with China has only increased by US$4, and even then is still far below the corresponding figures for Singapore and South Korea. These data show that Ma’s claims of the benefits of the ECFA are lies.

Third, Ma said that the cross-strait service trade agreement can invigorate the nation’s service sector, that it will create conditions conducive to the nation’s participation in regional economic integration and also increase job opportunities for Taiwanese. However, these claims — made to account for such a major policy — are extrapolated from the opinions of a small number of companies. Such contentions lack statistical support from reliable studies and ignore how the public feels about the agreement. It is economically myopic and blind to the inherent risks.

Finally, although a substantial amount of the speech was given to the service trade pact, nothing was said about the concerns the public have expressed about the opaque manner in which the negotiations for the agreement were conducted. It is a pity that Ma could not take advantage of a public forum such as the National Day presidential address to assuage the general public’s concerns.

Lai Chen-chang is president of the National Taipei College of Business.

Translated by Paul Cooper