The European Chamber of Commerce Taiwan published its position paper Nov. 14, titled “Getting the balance right,” saying, “Taiwan needs to put in place balanced and progressive regulations, adopt international standards, pursue a trade deal with the EU and work much harder to put Taiwan on a path to sustainable economic growth.”
As an example, the ECCT said “the proposed amendments to the Consumer Protection Act’s mandatory cancellation and refund clauses for all types of products and services are inappropriate for a number of services and products such as perishable food, un-reusable goods and cosmetics.”
Likewise, the Occupational Safety and Health Act passed by the Legislative Yuan June 18 requires “employers to provide the same level of protection to employees who work from home or agents who work in multiple locations that are not directly controlled by employers.” The ECCT said that these laws were well-intentioned, but entail virtually unlimited corporate responsibility, so that they are likely to produce the opposite effect to the detriment of businesses, consumers and workers alike.
The ECCT does not urge unequivocal government support for business. Rather, it hopes Taiwan’s legislative process and quality will conform to international standards, striking a balance among interested parties so as to effectively, rather than appear to, perform its protective function. Reading between the lines, the ECCT is more of a reminder that Taiwan must take into account international compatibility when formulating laws, as otherwise the resulted laws will affect foreigners’ willingness to invest and constrain future efforts to sign free trade agreements.
To avoid marginalization, Taiwan is actively embracing regional integration. Following the signing of the Cross-Straits Economic Cooperation Framework Agreement (ECFA), Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP) and a similar agreement with New Zealand, Taiwan is preparing to join the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership. Present trends of regional integration include such matters as e-commerce, investment and competitiveness. Regulatory adjustment is another important aspect going far beyond traditional topics such as tariff reduction and most-favored nation status discussed under FTAs.
Advanced economies such as the EU and U.S. have in recent years been pushing for international convergence of legal norms. These countries have also been using their influence in international organizations, such as Asia-Pacific Economic Cooperation, and in FTA negotiations to press this issue. This means that today’s FTA talks have gone beyond tariff issues to those that impinge on domestic politics, and Taiwan must remain abreast of these changes.
The good regulatory practice that the U.S has been promoting via APEC is an example. GRP stresses member economies should reduce discrepancies between their respective legal systems through coordination, review and consultation mechanisms. This will avoid countries’ domestic laws affecting investment and trade flows within the region. The same spirit that motivates GRP also pervades the TPP and RCEP talks.
There are three facets to GRP. Countries must establish mechanisms to harmonize respective regulations. Before any law enters into force, there should be a full impact assessment. And opinions should be sought from all sides via a public consultation mechanism.
Judging by the ECCT’s recommendations, it sees Taiwan as being in the preliminary stages of GRP implementation. The Executive Yuan has an inter-ministerial regulatory coordination platform, but its ability to coordinate and scope of focus are insufficient. Many laws have gone on the books only for their provisions to be loosened later after much debate.
Aside from certain laws requiring mandatory gender equality or expenditure assessment prior to readings, most laws are formulated without a comprehensive assessment of the overall impact on industries and stakeholders. As Taiwan expands its FTA network, the government should itself improve its competitiveness before asking industries to do the same. It must actively promote regulatory harmonization and administrative reform for the benefit of businesses and the people. (SDH)
(This commentary first appeared in the Economic Daily News Nov. 15, 2013.)