Commentary

Taiwan's two possible roles--platform or terminal?

• Publication Date：10/30/2009
• Source： United Daily News

Over the past year, relations across the Taiwan Strait have improved. As a result, the European Chamber of Commerce in Taipei published a report a while ago indicating EU enterprises have begun to return to the island. More recently, the Taipei-based Japanese Chamber of Commerce and Industry issued its first-ever annual white paper in which it expressed strong support for the proposed cross-strait economic cooperation framework agreement and its hopes that Taiwan and Japan can engage in bilateral discussions as soon as possible on signing a free trade agreement.

This is contrary to what took place before. During former President Chen Shui-bian’s time in office from 2000 to 2008, many foreign enterprises, fed up with the government’s closed-door economic policies and the incessant political wrangling, packed up their operations and withdrew from the island in droves.

The fact that enhancing cross-strait relations equates to improving Taiwan’s investment environment is something that the Democratic Progressive Party administration was never really willing to face. The DPP’s “love Taiwan” model basically consisted of constructing an insurmountable wall to keep out any and all mainland Chinese influences, as well as broadening battlefronts and entanglements on various issues both at home and abroad.

This policy not only forced a mass exodus of Taiwanese and foreign businesses, but also smothered and weakened the island politically and economically. Nevertheless, to this day, the party, now in opposition, continues to reject with all its strength the signing of an ECFA.

From the ECC and JCC’s latest annual reports, several important points emerge. Firstly, improvements in cross-strait relations are in line with the interests of foreign enterprises, and therefore mesh with Taiwan’s interests. Secondly, amid the competition and cooperation across the strait, Taiwan possesses advantages in terms of quality of living, cultural environment and the rule of law.

Furthermore, Taiwan businesses’ understanding and penetration of the mainland market helps attract foreign enterprises to set up operation bases on the island. So thirdly, foreign firms can use Taiwan as a springboard for gaining a foothold in the mainland market, thereby serving to strengthen the island’s economic development as a hinterland to the benefit of all those involved.

Comparing the ECC and JCC’s perspective on cross-strait ties with the DPP’s thoughts on the issue, the stark differences become evident. While the former views this relationship strategically in terms of creating a win-win-win situation for the two sides and foreign enterprises, the DPP sees it as a zero-sum game. The problem with the DPP’s approach through this lens is that it has not resulted in any concrete gains or major advantages for the island.

An even bigger difference is that foreign firms see Taiwan as serving as a springboard to the mainland, which is consistent with the current approach by the Ma Ying-jeou administration.

The DPP, on the other hand, is unswerving in its desire to prevent Taiwan from becoming an intermediary platform between China and the rest of the world. Instead, it continues to entertain the false hope that Taiwanese and foreign businesses will strive to defend the island as a “terminal” where a policy of exclusion and isolation reigns.

Since the start of the new century, Taiwan has experienced two waves of mass exodus of foreign enterprises. The first occurred during Chen’s first term as president, when large numbers of U.S. firms withdrew from the island out of frustration with the lack of progress in cross-strait relations. The second happened after Chen was sworn in for a second term, when many EU-based businesses finally gave up on hopes to use the island as a springboard to the mainland market.

In the years 2005 and 2006 alone, some 50 European enterprises packed up and left Taiwan, with a majority of them shifting their operations to Seoul, South Korea. At that time, the ECC issued a commentary on the Taiwan economy’s “lost decade.” Instead of learning anything from the report, the DPP simply blasted it as interference in the country’s internal affairs.

Recently, mainland China’s annual automobile production broke the 10-million mark for the first time, and the country is on the path to soon becoming the world’s largest automaker. In contrast, vehicle sales in Taiwan last year amounted to only about 230,000. The figure is particularly low when one considers that more than 20 years ago, the island was talking about building large auto plants with the aim of producing at least 300,000 units annually. In recent years, thousands of kilometers of highway have been built, but auto sales have fallen sharply. Some of the reasons include the fact that per capita income has not risen over the past decade, while the unemployment rate has remained relatively high.

At the same time, passenger traffic on the high-speed rail has been far lower than initial projections. Meanwhile, the supply of higher education institutions has outstripped demand, yet the island continues to refuse to accept mainland Chinese students. Has not this narrow-minded way of thinking resulted in a deterioration of society in Taiwan?

The more that Taiwan seals itself off, the more it will stray from the globalization trend. On the other and, the more that the island opens itself up and liberalizes, the more it will understand how to use its position as a platform and create even greater possibilities. Amid the ongoing globalization of trade and commerce, foreign enterprises are eyeing Taiwan as an important “marine silk road” to the mainland market. In efforts to promote and strengthen Taiwan, what reasons are there to lock the door and not do business?

Like the arrival of the swallow, the return of European businesses to Taiwan and Japanese enterprises’ support of an ECFA herald good news for the island. It also instructs us to reflect once again on Taiwan’s position. If the island’s role as an intermediary platform between mainland China and the rest of the world can be strengthened, Taiwan’s road into the future should be even wider.

(This commentary first appeared in the “United Daily News” Oct. 25, 2009.)

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