Minister of Economic Affairs, Lin Hsin-yi (
His comments, written in a report submitted to the cross-strait trade panel of the Economic Development Advisory Conference (
President Chen Shui-bian (陳水扁) has already pledged to abide by all decisions reached during the final meeting of the conference, to be held in Taipei from Aug. 24 to Aug. 26.
Once Taiwan enters the WTO, expected later this year or early next year, direct trade links with China will ensure a smooth flow of goods and people across the Taiwan Strait, making the nation a top regional business hub, Lin wrote in the report.
Taiwan has maintained a 56-year-old ban on direct trade between China and Taiwan, causing all movement of people, goods and capital between the two countries to go via a third country or area.
"If Taiwan wants to carry out cross-strait trade, [we] must repeal this law and make every effort to open negotiations on direct sea and air cargo links as soon as possible," the economics minister said in the report.
He also pledged his support for opening the local market to more China-made goods.
Currently, a large number of products manufactured in China are not allowed into Taiwan in order to protect local manufacturers.
To ensure that low-priced goods from China do not put local manufacturers out of business, Lin said that new regulations concerning imported goods must also be prepared ahead of any market liberalization.
Current WTO regulations allow member economies to establish mechanisms to protect against the dumping of food, textiles and other products.
Lin also warned that China has used its cheap labor and land, as well as the lure of its large potential market, to gain technology transfers and increase its influence on worldwide product standards. As a result, China's influence on Taiwan's economy has increased steadily and "we must adjust our cross-strait policy to cope with the new challenges," he said.
Increased investment in China by Taiwanese firms has also changed the nature of cross-strait ties, Lin said, adding that his ministry should make adjustments to the current "go slow, be patient" investment policy.
Although he remained cautious toward appeals by local entrepreneurs -- particularly those in the petrochemical and silicon wafer industries -- to ease restrictions on China-bound investments, he said that there would likely be more flexibility in the future for adjusting the size of such investments.
Lin said the current US$50 million investment ceiling for a single China-bound investment plan may blunt the competitive edge of Taiwanese firms. To reconcile the situation, the ministry should review China-bound investment projects worth more than US$50 million on a case-by-case basis.
The cap for accumulated China investment should also be adjusted to facilitate the management of China-bound investment, he said.
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