Sizing up the impact of WTO entry
Minister of Economic Affairs Lin Hsin-yi this week told the Taipei Times which business sectors will bemost seriously affected by WTO entry and whatthe government plans to do to help theparts of the economy that stand to suffer the most
Taipei Times: Which sector will be most severely affected by Taiwan's accession to the WTO? What assistance will the government give to affected sectors?
\nLin Hsin-yi (林信義): The agricultural industry will be most affected by our accession to the WTO, since after joining, import regulations for agricultural products will be relaxed, import tariffs for agricultural products will be lowered and domestic agricultural subsidies will be cut. Agricultural imports are expected to increase, having an impact on less competitive domestic agricultural products.
\nAgricultural products that will be affected by our WTO entry include rice, where import quotas will be imposed to lower the impact on domestic rice growers. A long-term plan for reducing production of price-protected products such as sugar cane, corn, soy beans, and sorghum will be implemented. Domestic prices for locally produced peanuts, red beans, garlic, shiitake mushrooms and day lilies are high, and they are expected to be impacted after imports are opened up. Fruits such as mango, papaya, lichee and other local specialities will still be competitive. Only tropical fruits are expected to be affected by imports.
\nThe lifting of import restrictions on pork flank and offal will affect pig farmers. Chicken farmers will also experience some impact.
\nOverall, Taiwan is an exporter of fishery products, and we are still competitive in international markets, but mackerel products will see some impact.
\nTo deal with this impact, we have already obtained the rights to lift import restrictions on 22 sensitive products, such as pork flank, through a tariff quota system, while import quotas will be adopted for rice. Special protective measures can also be used for peanuts and other sensitive agricultural products.
\nWe will also set up a relief fund for agricultural products affected by imports. The government's preliminary goal for funding is NT$100 billion.
\nTT: What industries will benefit most and will the service sector be a major beneficiary?
\nLin: After Taiwan's entry into the WTO, the economic and trade systems will become more open and transparent. In addition, in accordance with the WTO principles of "most favored nation status" and "national treatment," Taiwan can take part in various economic and trade activities with other members on the basis of equality. Within the WTO framework, Taiwan can fairly and reasonably resolve its economic disputes with other nations and protect its domestic industries from unfair competition.
\nRegarding individual industries, the sectors with stronger international competitiveness -- for example, export-oriented industries such as petrochemicals, plastics, information technology and the communications sectors -- will be able to expand their international markets due to lower tariffs and open markets provided by WTO members.
\nTT: The ministerial meeting in Qatar will launch a new round of negotiations by next year. What stance will Taiwan take on the various issues?
\nLin: Taiwan supports a new round of negotiations. Regarding the agricultural industry, export subsidies should be cut down gradually because they have the effect of distorting trade. In terms of cutting domestic subsidies, price support measures should be gradually reduced.
\nIn the service sector Taiwan is willing to participate in trade negotiations, join hands with other members in opening up the market and share the results of the negotiations. In addition to the issue of liberalization, the negotiations should also focus on how to assist developing members to develop the service trade. The existing regulations related to regional trade agreements should also be clarified.
\nTT: What impact will Taiwan's and China's WTO entry have on cross-strait economic and trade relations?
\nLin: After Taiwan and China enter the WTO, both will be regulated by WTO rules -- which will serve as a shared basis for cross-strait economic and trade interactions. On that shared basis, we hope cross-strait economic and trade exchanges develop in a steady and orderly manner. Such development will have a positive effect on cross-strait relations.
\nIf Taiwan does not apply the WTO exclusionary provisions on China, then both sides will have to make the rights and duties of the WTO framework applicable to each other. Under such circumstances, we must open direct trade with China in accordance with WTO rules. In that case, Taiwan will take the following steps: First, review related trade laws involved in cross-strait relations. Second, propose relief and safeguard measures that can be adopted in response to the drastic increase of imports from China after the two sides enter the WTO. Third, strengthen the ability of Taiwanese businesses to expand sales in China.
\nWTO entry for both sides is expected to affect, to a good extent, the scale of and dependence upon cross-strait trade. Bilateral trade between Taiwan and China may continue to expand while Taiwan's trade surplus with China may shrink.
\nIn the long run, along with the expansions and investments by foreign businesses in the China market, the purchasing sources available to Taiwanese businessmen in China will increase, while the boost in trade by existing investments will gradually decrease. Next, the growth in Taiwan's dependence on cross-strait trade will slow in the long run. However, Taiwan's dependence on Chinese imports will inevitably increase as we gradually lift the restrictions on such imports.
\nTT: The WTO provides a good forum, an opportunity for members to resolve trade disputes through arbitration and other mechanisms. Should Taiwan prepare protective measures on specific trade and tariff policies, such as protecting agricultural products, the dumping of iron and steel products and opening up the telecom market?
\nLin: Related ministries and commissions are already coordinating various economic and trade measures and initial adjustments in line with Taiwan's WTO entry pledges. On the other hand, if Taiwanese products encounter unfair treatment by other countries after Taiwan's entry into the WTO, we will also consult with those countries and seek a fair, reasonable solution through the Dispute Settlement Body.
\n Translated by Francis Huang, Perry Svensson,
\n Eddy Chang and Jackie Lin
Minister of Economic Affairs Lin Hsin-yi.
PHOTO: CHIANG YING-YING, TAIPEI TIMES.
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