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Economic zones need special care
By Du Yu 杜宇
Many countries’ experience of the promotion of economic growth indicates that establishing special economic and trade zones to attract overseas capital, technology and talent is a viable way of invigorating local and regional economies.
However, this strategy involves a variety of factors and has far-reaching consequences, so meticulous planning is required before such zones are set up.
Caution must be exercised in deciding which products should be deregulated. Government ministries and departments need to coordinate and integrate effectively.
The government has to clearly explain what its intentions are and communicate regularly and thoroughly with representatives from the business community and opposition parties, so as to build a consensus that allows free economic zones to be set up and run smoothly.
Over the past few years, the Japanese government has been setting up strategic economic zones with the aim of attracting business and investment and breathing new life into the domestic economy.
As well as focusing on specific regions, the Japanese government has been paying attention to selecting business sectors using a bottom-to-top selection process.
Currently six large national special economic zones have been chosen, with 16 items slated for deregulation. Local governments in the chosen regions have a positive attitude to reform and have been cooperating closely with the central government’s plans. These factors are helpful for promoting and implementing the special economic zones.
The idea of setting up free economic zones in Taiwan has been under discussion for years but has yet to be implemented.
The slow pace has allowed China’s free-trade zones to gain the competitive advantage despite having been proposed later than Taiwan’s, and this has put considerable pressure on the Chinese Nationalist Party (KMT). The government’s draft law on free economic pilot zones has been submitted to the legislature for deliberation, but confrontation between government and opposition legislators has caused discussion of the bill to proceed at a snail’s pace.
The two sides keep swapping accusations without engaging in rational debate. The outcome may be a repeat of what has happened with other bills — the KMT calling a vote to approve the Cabinet’s draft law unamended. Is that the outcome that the public want to see? Would it be good for the nation’s economic development?
Setting up free economic zones is not a zero-sum game. Neither referring the draft law back to the Cabinet nor passing it as it stands would be the best option for Taiwan.
It would be better to consult a diverse number of groups, make appropriate amendments and establish suitable standards.
Consider, for example, the creation of value-added agriculture in the free economic zones. The government insists that the zones would “make the cake bigger” and “add new cakes.” However, long-term observers who are concerned about Taiwan’s agricultural development and farmers’ livelihoods have considerable doubts about this claim.
In view of the big influence that agriculture has on people’s livelihoods and national security, major agricultural producers like the US and Japan employ various means to protect their farming sectors.
These include providing subsidies and insurance, subjecting agricultural imports to strict inspections and quarantine, imposing import quotas and so on. When it comes to agriculture, these countries are not completely liberalized.
Likewise, Taiwan’s government should take a gradual approach in relation to free-trade agreement negotiations, rather than recklessly deregulating in the name of free economic pilot zone projects.
Many observers suspect that allowing farm products made in the free economic pilot zones to be labeled as “made in Taiwan” would have a negative impact on existing Taiwanese farm products.
The government’s response has been rather lacking in detail, saying only that products that represent more than 35 percent added value would be allowed to be labeled as made in Taiwan.
However, this gives rise to further questions. What would the criteria for defining 35 percent added value be? How would it be checked and enforced? How would products that do not meet the 35 percent standard be labeled? Why not simply label products with the origin of their ingredients to differentiate between them?
Government departments have not offered concrete explanations regarding any of these questions. Surely it would not be acceptable to enact the draft law with all its clauses unchanged without first dispelling farmers’ doubts about these points.
Another concern that farmers have about adding value to farm products is that although the government has agreed to let manufacturers use Taiwanese agricultural ingredients, it will not be mandatory to do so. Considering such factors as cost, profit and stability of supply, manufacturers are rather unlikely to use Taiwanese ingredients.
Who stands to gain the most from such an arrangement — manufacturers, traders or Taiwanese farmers? This situation is reminiscent of the questions that have been raised about Taiwanese fishery expertise such as grouper breeding capability being leaked to China after the signing of the cross-strait Economic Cooperation Framework Agreement.
The government will have to come up with some clear and concrete figures this time if it wants to persuade farmers and gain their support.
Another issue concerns the proposed relaxation of restrictions on the importation of ornamental fish, the worry is that making that activity exempt from the existing regulations in the Wildlife Conservation Act (野生動物保育法) could well lead to the importation of pathogenic germs. These germs could well have a destructive impact on Taiwan’s native species and ecology.
Allowing unregulated hybridization and breeding would violate international biological conservation agreements. For all these reasons, even if fish are not raised for consumption, the import should still be strictly regulated.
These factors taken together make it clear that some aspects of the draft law on free economic pilot zones need to be reviewed and amended.
It would be a big mistake to enact the bill as it stands.
Civic groups, academics and experts should get together to keep an eye on the governing and opposition parties and make sure that lawmakers examine the draft law meticulously.
Rather than allowing itself to once again be corralled by either the pan-blue or pan-green political camps, the public should focus on these issues in a rational way and vote accordingly when when they go to the polls.
Only if these measures are taken carefully can Taiwan’s economy be lifted out of the rut it is in and be given a new lease on life.
Du Yu is chief executive of the Chen-Li Task Force for Agricultural Reform.
Translated by Julian Clegg
source: Taipei Times
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