In May, Premier Yu addressed a distinguished visiting delegation from the American National Conference of Editorial Writers, and presented a cogent overview of the ROC's recent social, political, and economic progress, as well as ROC-U.S. trade relations. Because of the rapid changes in Taiwan—especially in the past year—even the most dedicated ROC watchers are struggling to keep up with the current scene. For this reason, Premier Yu's remarks, reprinted here, have relevance to a broader audience; they also illustrate his unique ability to explain ROC development issues in light of the guidelines given by Dr. Sun Yat-sen's Three Principles of the People and the leadership of President Chiang Ching-kuo.
I know that some of you have kept a close eye on the affairs of this country for many years, and already know much about the Republic of China on Taiwan. But I dare say that the Taiwan many of you remember from past trips or from second-hand stories no longer exists. This society is genuinely in motion, undergoing dynamic change rapidly, yet with the requisite stability.
I realize that there are two issues which most interest you about this country today. These are our recent political developments and trade issues. For the better part of a year now these have dominated the news about us in the foreign press.
In recent months I have been asked on several occasions what caused the ruling party—Kuomintang, or Nationalist Party—to undertake reforms in the political sphere. I have been asked if it was pressure at home, or pressure from abroad, a combination of both, or if there was any pressure at all.
Actually, the idea for political reforms is not new; it was discussed in the ranks of the Kuomintang as long as ten years ago. The important factor at work here is not pressure, but timing.
The question of timing was answered by President Chiang Ching-kuo in early 1986. Displaying once again his amazing foresight and a knack for good timing in decision making, President Chiang realized that the nation was ripe for further democratization. We have reached a historic crossroads in our nation's development.
The signs are all there: the emergence of a strong middle class, an educated public yearning for more political participation, and a society that has matured enough to handle the added responsibilities of democratic politics. So, It wasn't pressure that caused President Chiang to initiate the reform process; rather, it was the weight of progress. What we are experiencing today was actually being planned for yesterday. It is not an accident that our economically prosperous people have now turned their attention toward political participation. Indeed, we have taught our children all along the ideals of democracy. Now, they have grown up, and their expectations must be met.
The year 1986 was indeed a water-shed for our political development. President Chiang's publicly stated commitment to carry out political reform paved the way for many exciting developments. First among these is the process now underway in the national legislature to lift the emergency decrees which have been in effect since 1949. Indeed, they may be lifted as early as June, once a new National Security Law and its enforcement rules are passed.
The new law, I assure you, is not merely the emergency decrees in a different guise. The difference between them is like night and day, and you will have the opportunity to confirm this yourself by comparison after the new law appears. I very republic has a legal framework to provide for national security, and I frankly see no reason why we should be any different, especially given the fact that we remain in a precarious security position vis-a-vis Communist China, which still threatens to use force against us at its will.
Another development in 1986 was the formation of an organized opposition group of politicians. Though the ban on the organization of new political parties has yet to be lifted, the opposition politicians have already announced the formation of the "Democratic Progressive Party." In the interest of national unity, the government has tolerated their "jumping the gun." We have gone the extra mile to show our sincerity and determination to foster democratic politics in a peaceful manner, especially during last December's important national elections. As many of you know, the opposition fared pretty well in the elections and increased their seats in the legislature. They have since made their presence heard and given the public a better understanding of what pluralistic party politics is all about.
Whether a genuine and healthy multi-party system will emerge is largely unknown at this juncture. That is up to the people to decide. But one thing is unmistakable: this country is alive with democratic politics, and no one knows it more than the cabinet officials who must face legislative interpellations day-in-and-day-out.
A final word about the current reforms. Don't expect any dramatic change to occur overnight. We believe the only real political progress is gradual political progress.
Next permit me to turn your attention to trade issues. It is undeniable that trade is currently the major preoccupation of the U.S. Congress. Given that trade is our economic lifeblood, it goes without saying we think it is important, too. In this regard, we have been doing what we can to help brighten the trade picture between our two nations.
Indeed, we have made great strides toward liberalizing our economy so as to accommodate the U.S. on trade issues as well as to place it on a more solid footing for long-term growth. We are not naive; we understand perfectly well that if America's economy is not healthy, then our economy will suffer, too.
In the past year, we have taken a number of measures to alleviate trade problems. These include opening up several lucrative domestic markets to imports from the U.S. and other countries, such as wine and tobacco. We have agreed to allow additional U.S. insurance companies to be set up here. And we have practically restructured our tariff schedule to make imports from the U.S. and elsewhere more competitive. Tariffs have been eliminated or lowered on hundreds of items. Indeed, this has been a continuing effort over many years, which is now being accelerated.
At the same time, we have permitted steady appreciation of our currency against the U.S. greenback to occur. In the past year alone the New Taiwan dollar has risen 16 percent in value; this trend is continuing. The appreciation may not seem like much, but it has already entailed hardships for our export manufacturers, virtually all of whom are of very small size. Frankly, we don't think currency appreciation is the answer to the trade imbalance problem. The basic solution lies in our ability to do more importing and in the U.S. ability to compete for a larger share of our imports.
There are limits to what we can do. Not because we don't want to do more, but because of the nature of our trade relations. Simply stated, there is no way in the world for 19 million people to import as much as 250 million people can. Moreover, our levels of economic development are such that our people are able to supply your market with many of the things that are no longer produced economically in the U.S. On the other hand, we do need your high-tech products, but either your government won't sell them, or what we need is not enough to close the trade gap. Such are the realities of our trade that we have to face.
While it is true we enjoy a huge trade surplus with your country, which was close to 14 billion U.S. dollars last year, I must bring to your attention another way of looking at this. On a per capita basis, whereas each American bought only $78 worth of ROC products in 1986, each ROC citizen spent as much as $284 on American products, in spite of the big difference in their incomes. This fact clearly shows that trade imbalances are not always what they seem.
The issue, then, should not be balanced trade, per se, but rather fair trade. In that regard, there is still more we can and will do. I am referring, of course, to the fact that we will continue to open our markets. We also will continue to lower our tariff and non-tariff barriers to imports. In the meantime, we will not lessen our resolve to eradicate counterfeiting and provide adequate protection to intellectual property rights.
But none of these efforts on our part will mean much unless they are complemented with an intensified effort on America's part to sell her products abroad. According to the U.S. Department of Commerce, an estimated 80 percent of American manufactured exports are generated by not more than 250 companies. We believe there is much that can be done both by U.S. industry and by the U.S. government in expanding America's exports to improve her trade imbalance. In this connection, we are pleased that President Reagan has placed renewed emphasis on the need for American manufacturers to become more competitive. For our part, please rest assured we will continue to cooperate and do all we can for a smoother ride in our trade and other relations.