Op-Ed Contributors

Taiwan must march westward to prosper

By Liu Hsiao Hsu (China Daily)
Updated: 2010-05-12 07:54

The American Chamber of Commerce in Taipei (AmCham) has supported the signing of the ECFA, showing Taiwan has to go through the agreement to take its economic development forward. The AmCham believes Taiwan would be more successful in luring foreign investment if the ECFA, which reduces tariff on exports from Taiwan to the mainland, is signed.

Taiwan's advantages, such as research and development, robust protection of intellectual property rights, and a sound legal system, could be amplified by the agreement, making Taiwan a bridgehead to the mainland market and a strategic point in the East Asian economy. Otherwise, the competitiveness of Taiwan's products in the mainland market would be impaired, and Taiwan's economy could be marginalized.

In this age of globalization, even if Taiwan fends off competition from the mainland, it cannot escape that from foreign countries. Through free trade agreements the distribution of economic resources could be ameliorated, every economy could specialize in producing goods they have advantage in, and competition could be intensified. If Taiwan officials ask the mainland only for unilateral concession, they will not win the respect for Taiwan. Plus, excessive protection for some industries in Taiwan is not a good thing.

A responsible government should bravely tell the people its plan in detail so that they know the gains and losses involved and can prepare for the consequences. If this is done, the firms that intend to enter the mainland market will know when tariff would be reduced and can choose the best time to invest. The enterprises that want to stay in Taiwan can plan to upgrade their industries based on when it would open up for free trade.

With the topic of ECFA heating up in Taiwan, DPP has started resorting to populist maneuvers, such as protests and parades, which it is good at. It may even call for referendum on ECFA. More worrying is the fact that it will make use of the opportunity to hijack the topic in the campaign for elections in the five municipalities of Taiwan.

The DPP's tricks, however, should not prevent Taiwan from making the right decision. Michael Porter, a professor at the Business School of Harvard University, said recently that, when economies of varied sizes form a free trade zone, the smaller ones usually gain more because they get access to the larger markets. Taiwan should not waste more time in pointless infighting, and instead welcome the ECFA. If Taiwan's economy marches bravely westward it will definitely prosper again.

The author is a Taiwan businesswoman and research fellow in the Renmin University of China's Law School.

(China Daily 05/12/2010 page9)

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