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ECFA to widen income disparity: forum

Taipei Times

ECFA to widen income disparity: forum

BUBBLES GALORE: Experts predicted that the trade agreement would increase ‘triangular trade’ with China, exacerbating long-term economic risk to the nation

By Ko Shu-ling, Staff Reporter

13 September 2010

Experts at a forum on economics yesterday said the Economic Cooperation Framework Agreement (ECFA), which came into force yesterday, would exacerbate income disparity and unemployment in Taiwan.

Chiou Jiunn-rong (邱俊榮), a professor of economics at National Central University, said President Ma Ying-jeou’s (馬英九) administration focused too much on GDP growth and relied too much on the manufacturing industry, which risked retarding the development of the service industry and restricting employment opportunities.

“The ECFA will add more bubbles to the top of the country’s economic bubble,” he told the forum, organized by Taiwan Thinktank.

Titled “The Economy Grows for Who?,” the event sought to prescribe remedies for the widening gap between rich and poor, and propose strategies for future economic development.

“The administration hopes the ECFA will remove taxes imposed on China-bound exports, but what will happen is ‘triangular trade’ will become more prevalent, ­production will concentrate more in China and industrial capitalists will make more money, while the disadvantaged become poorer,” Chiou said.

Triangular trade refers to orders that are taken in Taiwan for goods made abroad — usually in China — which does nothing to improve Taiwan’s employment situation or stimulate domestic demand.

As a result of its overemphasis on GDP growth, Chiou said the administration spent too much time and money tackling the problems of the Central Taiwan Science Park and Kuokuang ­Petrochemical Technology. The ­excessive ­government subsidies for the manufacturing industry also distorted the use of limited public resources, he said.

The uneven allocation of education resources also exacerbated the problem, he said. Extending the nine-year compulsory education to 12 years would not fix the problem, he said, urging the government to consider issuing educational vouchers so that children from disadvantaged families could afford higher education.

In addition to changing government policies on economic development, Guo Jiann-jong (郭建中), director of the Graduate Institute of Mainland Studies at Tamkang University, proposed the expanded use of free-trade zones.

“China and the other countries we sign free-trade agreements with should not be our sole free-trade areas,” Guo said. “We have free-trade zones in Taipei, Keelung, Taichung and Kaohsiung operating 24 hours a day.”

Guo also said the government should encourage young people to start businesses, preferably in the service industry. The service industry should work with academic institutions to train talent, while the government should offer the necessary funding, Guo said.

The academic system must also change from providing students with degrees to teaching them critical thinking and ­competitiveness, he said.

The administration must also avoid separating the minimum wage of local workers from their foreign counterparts, Guo said.

Lee Chien-hung (李健鴻), a professor at the Chinese Culture University’s Graduate Institute of Labor Science, said the administration ignored problems associated with “new poverty” and “working poor,” and did not have policies to address these problems.

“The government’s liberalization policy will only make things worse,” he said.

Saying unpaid leave was illegal, Lee said Premier Wu Den-yih (吳敦義) deserved condemnation for saying earlier this month that its inventor deserved a Nobel prize.