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Commercial Times: The best trade policy is industrial policy

Commercial Times: The best trade policy is industrial policy

In May, Taiwan's exports declined for the fourth consecutive month to 3.8 percent. The Ministry of Economic Affairs (MOEA) is planning to hold 30 trade promotion activities and sales expansion projects to boost exports. These activities are routine annual events that were already scheduled since the beginning of the year. The scale of the events has been expanded to cope with the decline in exports, but their effects may be very limited. Taiwan's trade has been declining, not because there are not enough trade promotion activities, but because the competitiveness of the industry has been falling. Taiwan first adopted an emergency trade promotion plan in 1982 to cope with the decline in exports that year. Vincent Siew, then director-general of the Bureau of Foreign Trade, set up bases overseas, took delegations to overseas trade shows abroad and reduced export controls. Those actions not only helped boost Taiwan's export momentum but also resolved some of the structural problems in Taiwan's foreign trade. For the past 30 years, the MOEA has been following Siew's example whenever Taiwan's exports decline. The new wine in old bottles approach, however, has proved unhelpful in resolving the fundamental plight of the export sector. In 1980, Taiwan's five major exports were electrical appliances, textiles and clothing, plastic and rubber products, wood and bamboo products, and processed food. Because most of them were end products, orders could be obtained through trade shows. Today, the country's five major exports are electronics, basic metals, plastics and rubber, machinery, and chemicals. Most of them are intermediate products, and it is difficult to obtain orders for them through trade shows. According to customs statistics, three-fourths of Taiwan's exports are intermediate products. With the changes in the country's industrial and export structure, we can no longer rely on trade shows and trade promotions to boost export momentum. Taiwan's best trade policy is an industrial policy. As long as a good industrial policy is implemented, Taiwan's foreign trade will return to its past prosperity, and the problems of unemployment and wage stagnation can also be resolved. (Editorial abstract -- June 12, 2015) (By Y.F. Low)


Updated : 2021-09-27 06:39 GMT+08:00