It was 10 years ago Taiwan joined the World Trade Organization. Perhaps, now is an opportune moment to look back on the economic developments that have taken place during this period. Such a retrospective might also provide insight into where the nation is headed in the next decade.
On Jan. 1, 2002, after Taiwan became the 144th member of the WTO, it started to enjoy the blessings of expanded free trade. At the same time, it also assumed the obligations of membership.
Thanks to the WTO’s Information Technology Agreement, telecommunication products from Taiwan, which account for 39 percent of the nation’s exports, now enjoy zero percent tariff rates in all major overseas markets.
As to obligations, over the last 10 years Taiwan has lowered its agricultural duties by more than 30 percent. Tariff rates on industrial products have also been sharply reduced, to such an extent that current import duties are comparable to those found in industrialized nations such as Japan and the U.S.
What all this means is that the public now enjoys better goods at more affordable prices. Everyone can see the advantages of opening up the telecommunications, financial and transportation sectors.
(Photo: Huang Chung-hsin)
As a whole, Taiwan’s economy has done remarkably well in the last decade, despite the global financial crisis and a worldwide recession. The gross domestic product has grown by 34 percent; foreign trade volume has also increased, by more than 100 percent.
No doubt there is still plenty of room for improvement, but what has been accomplished already is impressive. These achievements are reflected in Taiwan’s improved rankings in various international comparison surveys.
It cannot be denied that some people have lost their jobs because of expanded free trade. Support and compassion should be extended to these individuals, and to those sectors that have been negatively affected by Taiwan’s entry into the WTO. At the same time, however, the ability of the private sector to renew itself should not be underestimated.
Over the last 10 years, for instance, there has been a slight decline in exports of information technology and electronics products; but this has been offset by exports in optics, precision instruments and organic chemicals, which have grown by a combined average of 20 percent annually during the same time frame. Even agricultural products have seen their exports grow by 8 percent annually.
These impressive results reflect the profound economic changes that Taiwan had to implement in order to gain entry into the WTO. Starting in the 1990s, large-scale liberalization reforms were carried out, so that under the market mechanism the private sector gradually took the place of state-run enterprises to become the main engine of economic growth. At the same time, improper and excessive regulations were re-examined and loosened, while transparency and due process came to be respected.
Looking back on the economic projections made back then, it is clear that the majority of the dire predictions made concerning Taiwan’s entry to the WTO have turned out to be wrong. On the contrary, because of the positive competition resulting from the opening up of Taiwan’s economy, a new industrial structure has been created.
And yet, after a decade of WTO membership, the external pressure to reform has been lifted, and consequently the drive to economic liberalization is starting to lose steam. Policy measures to further privatize the economy are stuck in neutral. Farmers, too, are deeply fearful of exposing themselves to more competition. It is as if the present generation is living off the dividends of the previous one. But the payoffs are starting to diminish.
During the last few years, the Doha round of WTO talks has been stalled, even as bilateral Free Trade Agreements have proliferated. All this is causing the world to forget the importance of the WTO.
But what is even more worrisome than a lack of progress in trade talks is that the determination to further liberalize the economy is missing. In the coming decade, perhaps the benefits of joining the WTO will come to be taken for granted. What should not be forgotten is the confidence and determination that Taiwan once had, when it decided to step onto the path of free trade and economic liberalization. (HZW)
(This article originally appeared in the Economic Daily News Jan. 2.)
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