Taiwan authorities' decision to build the island into a free trade
area will virtually invalidate their ban on cross-Straits direct
links, said experts.
But some other analysts doubt the feasibility of the plan because
of the island's severe restrictions on mainland-bond trade and
investment.
The economic development commission of Taiwan's "Executive Yuan"
proposed early this year to turn Taiwan into a free trade area like
Hong Kong and Singapore.
Relevant laws and rules are expected to come out next month.
"This is a really bold idea," said Lu Jinyong, a professor with the
Beijing-based University of International Business and
Economics.
Once put into practice, it will be both more influential and more
inspiring than Hong Kong and Singapore because of Taiwan's larger
geographical size, economy and population, said Lu.
Lu
said he expected the laws and rules will apply to the mainland as
well as to other parts of the world.
This will help promote direct trade, postal and navigation links
between the island and the mainland and thereby enhance
cross-Straits trade and economic cooperation, he said.
The three direct links between the mainland and the island are
still forbidden by Taiwan authorities except those between Xiamen
of East China's Fujian Province and Taiwan's Jinmen and Matsu.
But Taiwan leader Chen Shui-bian recently indicated that the island
will take measures to relax the strict control on cross-Straits
direct links.
Turning into a free trade area will also boost Taiwan's economic
development by avoiding marginalization in regional economic
co-operation, said the university professor.
He
said the measure paves the way for Taiwan to take part in the
ongoing "closer trade ties arrangement between the Chinese
mainland, Hong Kong and Macao."
The arrangement, proposed by Hong Kong Chief Executive Tung
Chee-hwa and supported by the central government, is actually a
free trade zone and is expected to help Hong Kong and Macao gain an
edge over competitors in the Chinese mainland now that China is a
member of the World Trade Organization.
Taiwan is not included in the arrangement but officials with the
Ministry of Foreign Trade and Economic Cooperation (MOFTEC)
told Business Weekly that Beijing will be happy to discuss
'closer trade ties' with the island if the three direct links are
made possible.
The lack of direct links between the mainland and Taiwan has made
closer trade ties impossible, and we are glad to discuss such
arrangements with the island if Taiwan authorities agree to lift
the ban on three direct links, said a MOFTEC official, who declined
to be named.
But Liu Xueqin, a senior researcher with the Chinese Academy of
International Trade and Economic Co-operation, a MOFTEC think tank,
doubts the feasibility of the idea.
"Trade liberalization and facilitation is a major trend in the
world but I don't know whether Taiwan could really build itself
into a free trade area like Hong Kong and Singapore with its
present severe restrictions on investment," she told Business
Weekly.
She speculates that Taiwan authorities mean to set up a free trade
zone with the United States, Singapore and Japan through the
measure.
"Taiwan authorities might be thinking of diversifying the island's
markets and reducing its present high dependence on trade with the
mainland through free trade agreements and closer trade ties with
the US, Singapore and Japan," she said.
The Chinese mainland is now the largest buyer of Taiwan
products.
Taiwan's capital input in the mainland jumped 47 percent
year-on-year to US$248.03 million in the first four months of this
year, according to Taiwan statistics.
But Liu said the US, Singapore and Japan have lower tariffs than
Taiwan and free trade agreements with these countries will deal a
blow to the island's local industries, while the mainland has
higher tariffs and large markets and is an indispensable and
important market for Taiwan no matter what political considerations
Taiwan authorities have in mind.
Lu
said Taiwan is strong in the high-tech industry, electronics and
services, but turning into a free trade area might be detrimental
to its labor-intensive industries, which are less competitive than
those on the Chinese mainland and in some Southeast Asian
countries.
(People's Daily
June 18, 2002)