Sat, Nov 13, 1999 page8

• `No haste, be patient' policy works

  • Lin Chuo-Shui
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  As Taiwan and China prepare to enter the WTO, the three links issue has once again thrown the spotlight on the "no haste, be patient" policy, which has been the key official policy for Taiwan's cross-strait economic and trade relations.

  However, contrary to what many people believe, the "no haste, be patient" policy is essentially a measure of economic control designed for national security and normal economic exchanges. A certain level of control in specific areas is -- on the contrary -- the norm.

  To be a normal country, and to develop normal trade relations with China, Taiwan needs to look at how other countries do things.

  Speaking of the restrictions on Chinese and foreign investment in Taiwan, the US and Japan also have related controls on foreign investment in their domestic industries.

  In Japan, according to its Telecommunications Business Law (1q信1q話珠|◎|社法), only the Japanese government, local organizations, Japanese citizens and Japanese corporate entities (with less than 50 percent foreign capitalization) were eligible to acquire stock of companies like NTT and KDD. The restrictions were lifted in 1998.

  However, foreign capitalization was not allowed to exceed 20 percent. The Law for the Handling of Commodity Shipping Businesses (3f物1B送事業3B2z法) stipulates that: (1) Non-Japanese citizens, (2) foreigners and foreign organizations, (3) corporate entities and organizations set up under the laws of the foreign countries, and (4) representatives of companies in these three categories holding more than one third of the voting rights or board seats at these enterprises, are not allow to operate cargo shipping businesses between Japan and other countries.

  The Foreign Exchange and Foreign Trade Control Law also exempts 16 sectors, including aircraft and electrical appliances manufacturing industries, from liberalization.

  In the US, the successive enactment of the Foreign Investment Study Act (1974), the International Investment Survey Act of (1976), and the Agricultural Foreign Investment Disclosure Act (1978) has empowered the president to investigate foreign investments in the US.

  The Exxon-Florio Amendment to the 1988 Omnibus Trade and Competitiveness Act authorizes the US president to prohibit foreign firms from acquiring specific enterprises. Foreign investment in those areas are required to undergo review by the Committee on Foreign Investment. Article 1108 of the North American Free Trade Area treaty allows the US, Mexico and Canada to exempt certain sectors of their economies from liberalization. The Federal Aviation Act/Air Commerce Act and the Federal Telecommunication Act both prohibit foreigners from conducting related businesses within the US. Also, according to Article 16 of the 1956 Fish and Wildlife Act, foreign-owned companies are not allowed to ship to the US marine products caught in international waters.

  In the area of overseas investment, Japan prohibits direct trade with and direct investment in North Korea. It also bans local firms in certain industries from setting up branches in that country.

  Likewise, the US prohibits direct investment in countries that do not have Normal Trade Relations (NTR) with the US, including North Korea, Cuba, Iran and Iraq.

  It is worth noting that in 1990 US President George Bush prohibited the sale of Mamco, a Seattle-based company that manufactures aircraft parts, to the China National Aero-technology Import and Export Corporation (航空?THORN>3N進出?f?膝q) under the Exxon-Florio Amendment.

  Looking at today's circumstances, Taiwan's "no haste, be patient" may be a superficial measure in the eyes of foreign observers. In fact, in a few important areas, trade with China has been given a surprising degree of freedom.

  Taiwanese investment in China has reached 1.2 percent of Taiwan's GNP. In contrast, Japanese investment in China only takes up one percent of Japan's GNP. For the US, it is only 0.04 percent.

  If China is really a golden land of endless opportunities, will the Japanese and Americans still remain such fools? Will they be getting less preferential treatment than Taiwanese firms do?

  For these reasons, "no haste, be patient" should be seen as a normal measure. The US and Japan are the world's first and second most powerful economies. It is very difficult for any country to deal them a blow strong enough to jeopardize these two economies, threaten their national security or their foreign policies.

  More importantly, we do not need to see the "no haste, be patient" policy as a punitive measure for China's unreasonable attitude toward Taiwan and its threat of force.

  Cross-strait economic exchanges should be liberalized on the premise of both sides being normal countries. Under this premise, an appropriate level of control and the concept of "proactive security" are indispensable. Even within the WTO framework, Taiwan should be able to talk about a "no haste, be patient" policy toward China in the precedents of international trade, regardless of the status of cross-straits relations.

  Lin Chuo Shui is a DPP legislator.
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