Sat, Aug 21, 2004 page8

• Workers at risk after WTO change

  • By Chen Jia-ching陳家勤
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  Since 1989, when the Chinese Nationalist Party (KMT) government announced it would start privatizing state-owned enterprises and develop neo-liberal economic policies in preparation for entry to the WTO, a varied and often confused set of political motivations has accompanied these "reforms."

  As an opinion piece by

  Honigmann Hong and Liu Yu-hsi ("Obstacles block free trade with US," Aug. 3, page 8) reminds us, national economic policy has

  often been intertwined with the problems of diplomatic recognition, cross-strait relations and national security.

  Under the Democratic Progressive Party, the acceleration of privatization has been linked to hostility toward decades of KMT corruption and clientelism, thus hindering the development of

  long-term solutions that will

  benefit workers and consumers. Worse still has been the corrupt use of privatization as a short-term source of cash -- as in the KMT sale of Formosa Petrochemical, China Steel and other companies in the mid-1990s, and more recently, the hotly debated sale of Taipei Bank.

  Neo-liberal economics seems to have provided some kind of order for economic policy.

  However, as this policy is in-compatible with many trends

  in national policy -- such as increased welfare spending and regressive forms of taxation -- and has resulted in increased economic hardship (such as an increase in unemployment and the potential collapse of the agricultural sector), it can be easily

  interpreted as utterly arbitrary.

  Recent comments by Taiwan's representative to the WTO Yen Ching-chang (顏慶章) and Council of Agriculture Chairman Lee Ching-lung (李金龍), which downplayed the potential negative effects of last month's WTO agreement on the economy, do not reflect concern for any impact on working people.

  These policy makers, like the worst architects of the Washington Consensus and "liberal containment" during the Cold War, believe that capitalist development and trade go hand-in-hand with political stability and democracy. But, as demonstrated by the rise of US-supported dictatorships, Taiwan's accession to the WTO as "Chinese Taipei" and increased concessions to China by the US -- not to mention China's combination of free-market fundamentalism and political repression -- neo-liberal economic policy sits quite well with tyranny. At the very least, it puts too much power in the hands of corporations at the expense of working people.

  In China, while foreign direct investment (FDI) rose to US$53 billion in 2002 and over US$68 billion last year, unemployment has continued to soar to as high as 20 percent. Some experts now estimate the migrant worker population at between 170 and 250 million.

  In the fallout of state-owned enterprise (SOE) and collective-owned enterprise privatization, labor conditions are bottoming out in the competition for foreign investment.

  Over the same period since joining the WTO, Taiwan recorded huge losses in FDI, declining by 65 percent to US$1.4 billion last year from US$4.1 billion in 2002. While FDI inflow to China from Taiwan has increased over the last 20 years, resulting in direct job losses, local unemployment has made its largest jump after the removal of a US$50 million investment limit on Taiwanese FDI in China.

  After the progress of the Doha Round and the much-celebrated July Agreements, the WTO removal of protections for Taiwan's agricultural industry will contribute to a web of neo-liberal policies that will hurt the majority of working people. Since joining the WTO, the income of farmers has already dropped by 30 percent, and fishermen have seen their incomes cut in half.

  Despite the NT$25 billion (US$734 million) recently allocated to compensate for these agricultural losses, this trend, combined with an increase in unemployment from the deregulation and privatization of SOEs, will create a situation in which the nation's workers are increasingly vulnerable to exploitation.

  In its blind embrace of neo-liberalism, the government is struggling with questions of political stability, national security and economic development. However, these problems will not be solved with policies that have resulted in increased inequality the world over, and which are being challenged by the majority of the world's population as anti-democratic and exploitative.

  Chen Jia-ching is an associate director at the international department of the Taiwan Confederation of Trade Unions.
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