Why should Taiwanese support the Cross-Strait Service Trade Agreement?

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    Since March 18th, Taiwanese students have occupied the debating chamber of parliament over a week, protesting against the proposed services trade agreement with mainland China which would see closer economic ties across the Taiwan straits.

   However, under economic perspective, economists may argue that the Cross-Strait Pact is vital because it allows Taiwan to broaden and deepen its economic relationship with China and expands the Taiwanese businesses in the mainland. For example, under the agreement Taiwan only has to open up 64 sectors to Chinese companies, but China has to open up 80 sectors to Taiwan. In addition, Taiwan reserves the right to apply many barriers and restrictions.

   In theory, free trade is beneficial between countries in several ways, for example, it creates competition that engenders continual innovation and leads to lower price, better products and more job opportunities. In the case of Taiwan-Mainland service trade agreement, what makes this deal particularly significant to both sides is that it represents more advanced sectors. The previous trade agreement only focuses on goods, while the new agreement expands to services. The former is critical in the early stages of economic development, whereas the latter is vital in the more advanced stages of development. Consequently, the Service Agreement will foster Taiwan’s efforts to move higher in the value-added chain, and thereby supports the mainland’s efforts to move from cost-efficiencies toward innovation-driven competitiveness.

   More importantly, in contrast to the protestors’ concern, both sides agreed that the pact will not apply to any governmental measures affecting natural persons seeking access to the employment market of either party, nor will it apply to measures regarding citizenship, residence or employment on a permanent basis. Additionally, the service trade agreement with the mainland is not just a deal with the mainland. It also paves the way to further integration with other proximate nations in the region, which is critical to Taiwan’s future.

    So what are their grievances? In general, the students are concerned about the lack of transparency and secrecy surrounding the cross-strait trade pact; as well the effect expanded trade ties with Mainland China would have on Taiwan’s economy. Since the students are supported by the leaders from opposition Democratic Progressive Party, who are candidates for the next leadership election, this issue now is more similar to a political drama different two parties in Taiwan.

    In Taiwan, there is deep-seated anxiety about such close economic integration with China because the mainland is already Taiwan’s largest export market. In particular, it accounts for more than 40% of Taiwan’s total exports and there are over 1million Taiwanese people working and living in China. Further, most Taiwanese people fear that China’s efforts to enmesh the island country into its economy are targeted to achieve its ultimate goal — reunifying the divided straits via stealth.

   In conclusion, the trade agreement is crucial for Taiwan’s economic future, so I believe President Ma is right to push the agreement ahead despite the occupation of the parliament by rowdy student protestors. With the Cross-Strait Trade Pact, both Taiwan and the mainland would be better off, and as the analysis above shows, Taiwan may even gain more benefits than mainland China. Despite political reasons, Taiwan should

—–Written by Ting Chen

Source:

http://www.atimes.com/atimes/China_Business/CBIZ-01-240314.html

http://www.chinasmack.com/2014/stories/taiwan-students-protest-china-trade-pact-occupy-parliament.html

http://www.economist.com/blogs/banyan/2014/03/politics-taiwan

http://www.businessspectator.com.au/article/2014/3/24/china/why-taiwanese-protestors-are-wrong-china-trade-pact

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