Now that the new legislative session has started, the Chinese Nationalist Party (KMT) has already convened a meeting to iron out the list of proposals that it wants passed. According to KMT caucus whip Lin Hung-chih (林鴻池), President Ma Ying-jeou (馬英九) has said that the proposed service trade agreement must be given absolute priority during the current session.
It is no secret that China is looking to secure unification through economic means and to annex Taiwan by signing a series of agreements — from the Economic Cooperation Framework Agreement to the service trade pact through to the proposed trade in goods agreement.
The government is fully aware that the service trade agreement is fraught with pitfalls and yet it insists on venturing down that path.
Signing the pact would be a mistake, and it is impossible to understand why the government is walking into this trap.
From the very outset, the Ma administration’s economic policy has been about tying Taiwan’s economy to the Chinese market, so that the nation’s economic growth rate has become excessively reliant on China.
As it stands, the correlation coefficient between the two nations’ economic growth rates has already reached 60 percent or more interdependency, suppressing the economy’s marginal growth rate and making it increasingly difficult to diversify risk.
In a recent interview, National Development Council Minister Kuan Chung-ming (管中閔) said he no longer thinks the idea of the “Four Asian Tigers” is relevant.
According to Kuan, people must not cling to past glories and should instead strive to engage with the rest of the world, as is the global trend.
When Kuan talks of the “the rest of the world,” he is not talking exclusively about China, and the nation needs to break away from the Ma administration’s policy of excessive reliance on that market. Kuan’s comments were clearly directed at Ma, who has all along been looking to China to solve the economic malaise.
What China lacks is experience in the services sector and in business management models, and the business models for the services sector is precisely the biggest feature and greatest competitive advantage Taiwan has, as a country and as a brand.
In the global market, Taiwan and China have very different brands, each with its own positioning and particular market segment.
The service trade agreement in its current form is weighted toward China. If it does not take into account the future development of the Taiwan brand, serious consideration should be given before it is allowed through the legislature.
The minute the agreement is passed, the nation’s economic growth rate will be even more dependent upon China, and the Taiwan brand will thereafter become increasingly diluted, making the nation’s survival and future development difficult.
Now that the new legislative session is due to start, the Democratic Progressive Party, as the largest opposition party in the country, must fulfill its duty to provide checks and balances on the government, and respond to the concerns of the public.
It needs to throw itself into scrutinizing every clause, every line and every word of the agreement, and to refuse to allow it to pass in its current form.
The party should demand that the agreement be renegotiated, to devise a new agreement more weighted toward the strengths and competitive advantages of Taiwan’s service sector, to ensure the sector retains those strengths in a sustainable form, as is the wish of Taiwanese.
Kuo Chen-hero is an adjunct professor in the School of Business at Soochow University.
Translated by Paul Cooper