March 9th 2002

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Articles from this issue:

The Hollingworth Affair

Federal Cabinet decision on cloning

Media putsch overwhelms Governor-General

Will CHOGM bite the bullet, oust Mugabe?

Straws in the Wind: Rumpole arising

Environment: National parks are an unacceptable fire risk

Agriculture: Bar lowered on quarantine once again

Media: Crude but effective

Environmental optimism (letter)

Bias: in the eye of the beholder (letter)

Economics: Privatisation: the promise and the reality

Comment: Trust: a commodity in short supply

Culture: How the media exploits the US$150 billion American youth market

ASIA: WTO entry will put pressure on China-Taiwan ties

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WTO entry will put pressure on China-Taiwan ties

by Peter Westmore

News Weekly, March 9, 2002

In a recent address to the Heritage Foundation in Washington, one of Taiwan's top trade negotiators, Dr Ing-wen Tsai, has predicted that the simultaneous entry of Taiwan and China to the WTO may assist develop their large and growing economies, and provide a forum for discussion of outstanding political issues.

Dr Tsai, who has been involved heavily in Taiwan's bid to enter the WTO, emphasised that despite the political differences between Taiwan and Beijing, economic ties have been developing very rapidly.

She said, "With the increasing exchanges between the two sides in the 1990s, the relationship now is a complicated one, especially in the trade and economic areas."

She said that between 1987 and 2000, indirect trade between the two sides grew by around twenty-one times.

"For 2000 alone, China is Taiwan's third largest market, with total trade valued at US$31.25 billion. In terms of Taiwanese business investment to China, by the end of 2000, official figures show that Taiwan investments to China totalled US$17.1 billion (actual figures could be as high as US$60 billion to $70 billion), which accounts for 40 per cent of Taiwan's outward investment.

"Conservative estimation shows that Taiwan investment to China has contributed to the creation of at least 3 million jobs. With Taiwan investments to China exceeding trade figures, this could imply the shift of our job opportunities to China," she said.

Turning to the political consequences, she said that China continues to claim its sovereignty over Taiwan and makes every possible effort to undermine Taiwan's political identity in the international setting.

"Militarily, China poses threats to Taiwan by building up its military capability, conducting military exercises in the coastal area, and installing hundreds of missiles directed at Taiwan."

Dr Tsai said that since his inauguration last year, Taiwan's President Chen has made a series of efforts to assure China that there would be continuity in the cross-Strait policy, and the Administration will have the necessary patience to wait for the best time to resolve the issues facing the two sides.

He has reiterated that, as long as Beijing does not have the intention to use force against Taiwan, he will make no change to the national title, the Constitution, or the status quo with respect to the question of independence or unification.

The President also said that Taiwan is prepared to discuss with the mainland the question of a future one China, while Taiwan is a fully independent and democratic state.

Impact on Taiwan

Dr Tsai said that accession to the WTO would undoubtedly benefit Taiwan by giving Taiwan access to the world market and will deepen its integration into the world economy.

"However, accession would also mean much greater competition. On top of this, Taiwan's economy is facing a critical turning point. Taiwan is now faced with structural changes which are much triggered by the rapid global changes, the technology changes, and the emergence of other economies as competitors in areas where Taiwan once excelled. An apparent example is, of course, China."

She predicted that while entry into the WTO would help China gain export markets, it would also open the closed Chinese economy to international competition, and force international standards to apply to China's financial institutions, with unpredictable consequences.

"WTO membership and rapid economic development in the last decade will inevitably result in adjustment problems, which in many cases mean unemployment, redistribution of wealth; this could entail social and political problems.

"In addition, China has to find a proper role for its military in a modern setting.

"Moreover, its regional imbalance, its urban-rural divide, its problems with minority groups, and distribution or redistribution of power between local and the central governments may all be sources of its instability."

She said that WTO accession brings massive changes to domestic economies, politics, and social structure, so that the two governments will be facing unprecedented challenges.

"If the governments fail to meet the challenges, the WTO will bring more harm than benefit.

"A stable cross-Strait relationship is essential for the pursuit of domestic agendas. WTO offers a forum for both sides to interact in a multilateral context and try to learn to live with each other under one roof, as competitors, business rivals, or even partners."

Whether that eventuates, she said, will depend largely on the Chinese Government.

  • Peter Westmore

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