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In Taiwan, an old-fashioned globalization debate

Analysis: A proposed Taiwan-China trade deal would mean cheaper stuff for consumers, but might also wipe out low-end local industries.

TAINAN and LINKOU, Taiwan — Cabdriver Chang doesn't like the deal.

Weaving through traffic in the balmy, temple-studded southern city of Tainan, he lets loose on why a proposed Taiwan-China trade deal — the Economic Cooperation Framework Agreement (ECFA) — is bad for Taiwan.

Taiwanese will lose jobs, he says. Taiwan's president is "selling out" the island. And Taiwan firms can't compete with the dirt-cheap "China price" made possible by low-wage labor.

"Take these, for example," he said, tugging on the worn, dark gray pair of pants he was wearing. "These pants are made in China, and I bought them for just NT$200 (about $7). The same kind made in Taiwan will cost you NT$1,000."

Asked about the apparent contradiction of railing against cheap Chinese imports while wearing a cheap pair of Chinese-made pants, he just laughed.

So goes the ambivalence of a globalized age. Trade deals like ECFA promise cheaper stuff for consumers in wealthier countries like Taiwan or the U.S. But wages for most workers in such countries are likely to stagnate, and some in low-end industries will lose their jobs.

Nowhere are feelings more mixed than in today's Taiwan, where the government is negotiating a deal that would bind the island more tightly than any other country in the world to China's behemoth economy.

Taiwan has the added anxiety of negotiating with a rising political and military force that has vowed to one day absorb the self-ruled island, by force if need be.

But, to a surprising degree, the debate on ECFA in Taiwan is shaping up as a classic — if more pointed — argument on the pros and cons of globalization, mirroring similar conversations from Brazil to Botswana.

In a late-April TV debate with the pro-ECFA president, anti-ECFA opposition leader Tsai Ying-wen barely talked about politics, focusing instead on economics. ECFA will worsen income inequality, mostly benefit big conglomerates and put many Taiwanese out of work, she said, as the two sides commit to scrapping most tariffs over the next decade.

"You're talking about the first two or three years," Tsai told Taiwan president Ma Ying-jeou, chiding him for low-balling potential job losses. "But in the next seven or eight years we have to eliminate most tariffs. How many people will be affected then?"

Ma, for his part, said Taiwan's trade with China, the island's chief export market, will "definitely" increase after the deal and that he would not allow Taiwan's sovereignty to be hurt. He accused Tsai's party of fear-mongering, saying it was "exaggerating the negative effects" of the deal.

Interviews with business bosses, workers, government officials and locals here illustrate why trade deals like ECFA create so much anxiety and uncertainty. The gains are often intangible, spread economy-wide and over long stretches of time, and so don't mean much in day-to-day terms to the average "Chou."

The threat is much easier to grasp. Cheap Chinese stuff could overwhelm the island, putting Taiwan firms out of business and hundreds of thousands of workers on the streets, the deal's opponents say.

"We can't compete"

Such are the fears of hand-made shoemakers, clustered in the Tainan area in southern Taiwan, and in the north around the capital Taipei.

Over tea at the Taiwan-made Footwear Development Association's office in Tainan, association chairman Yang Rong-de and local industry official Chiu Fu-yin said ECFA will put their business in peril.

http://www.globalpost.com/dispatch/china-and-its-neighbors/100521/china-taiwan-trade