Sat, Jul 06, 2013 - Page 3 News List

SERVICES PACT: INTERVIEW: Government should halt implementation of pact: expert

National Taiwan University economics department chairwoman Jang Show-ling called on the government to suspend the newly signed cross-strait service trade agreement in an interview with ‘Taipei Times’ staff reporter Helen Ku. Jang said the feasibility of opening Taiwan’s market comprehensively to Chinese investors should be re-evaluated because it could bring more harm than benefits to local companies

Based on the Chinese government’s preferential treatment for Taiwan, it is certain that China is ambitiously carrying out a series of strategies to fully open its regional markets in eastern China, as the pact specifies that Taiwanese enterprises must mostly invest in China’s Fujian Province. By attracting Taiwanese technicians or professionals to provide services in western China, the Chinese government can upgrade China’s service sector. To the Chinese government, Taiwanese talent are chess pieces used to help develop China.

The service trade agreement is clearly asymmetrical in terms of the government’s pursuits for professionals or trained talent. It is clear that the Chinese government is eager to have Taiwanese professionals offer more high-end services in China, and the Taiwanese government cannot wait to welcome its counterpart to do so as they believe the ECFA helps Taiwanese talent find new markets, but it never imagined the “talent drain” could become a serious problem in Taiwan.

Both the Taiwanese and Chinese government need to re-negotiate the pact and come up with a reciprocity mechanism. Instead of continuing to lose talent to China, the Taiwanese government should act for those who have not received higher-level education or training and make sure that their handling in signing ECFA is based on the idea that both countries can benefit in the same market.

TT: How should the Taiwanese government have reacted after the pact was signed?

Jang: My suggestion to the government is that it should first consider opening sectors that are sure to benefit the country and then open up the rest step by step after a complete evaluation and contingency system is prepared.

Taiwan has an economy that is limited in its scale and therefore export-oriented. By suddenly opening service sectors to Chinese investors, Chinese government may gain control of Taiwan’s economy in a short time.

As the government has not yet thoroughly prepared for the possible adverse impacts confronting local small and medium-sized enterprises, the pact should be halted.

TT: Can the pact’s implementation be suspended?

Jang: Yes. It actually took five years for South Korea and the US to realize their free-trade agreement.

The South Korea-US free-trade agreement was signed on June 30, 2007, but suspended for five years due to issues surrounding US beef imports and automobile trade between the two countries. Last year, the South Korea-US free-trade agreement finally went into effect on March 15, after several rounds of negotiations during which representatives from both sides reassessed the original version of the agreement and made amendments.

If the Taiwanese government wants to reduce the impact of the agreement on the nation’s minorities, it should follow South Korea and the US’ example and revise the pact after reassessing it.

TT: Can the ECFA help Taiwan ink more free-trade agreements faster?

Jang: The Ma administration might see ECFA as panacea for Taiwan’s staggering economy, but the fact is that it is not helpful at all. ECFA was signed in 2010 and was expected to help boost the nation’s GDP, foreign investment and speed in signing free-trade agreements with other countries.

However, years of economic index figures showed that Taiwan’s economy remains sluggish with people consuming less, unemployment sitting high, average wage rate falling to 14-year low.

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