Why Does the Services Trade Agreement Spark Opposition? Starting from Agriculture and Free Trade

Over these past ten-plus days, since students broke into the Legislative Yuan, the whole society has begun to seethe, debating why this should be done. Some approve, some oppose, some say this is violence, some say this is democracy. But at least our media has begun to carry a little bit of proper news, and trivial little items have diminished a little. More people in Taiwan are looking at what kind of future we actually face. This article examines the issue from the angle of agriculture and free trade.

From the perspective of agriculture, although the Trade in Services Agreement does not cover agriculture, it does include opening up transport and warehousing, and through this China can send agricultural products or raw materials into Taiwan's free economic pilot zones (abbreviated as FEPZs). This bill is in the Legislative Yuan and is still going through the passage process. The FEPZ refers to "five ports and one airport"; the first phase may include the Taoyuan Aerotropolis, Taipei Port, Taichung Port, Kaohsiung Port, Keelung Port and Su'ao Port. The "free economic pilot zone" will loosen the various restrictions on the flow of goods, people, capital, information and knowledge. Everyone knows that at present our country still bans the import of more than 2000 Chinese products, of which about 800 are agricultural products.

This is because of doubts about the environmental standards of Chinese agricultural products, as well as fears that low-priced agricultural products will be dumped and cause the collapse of domestic agriculture. But within the FEPZ, these 800 agricultural products can be sent to Taiwan for agricultural processing and export (though they may not be shipped into the domestic market for sale). This will create a situation in which Taiwan's agricultural processing businesses, feeling the preferential measures of the FEPZ, rush to set up factories there (for example, processing for export comes in duty-free; see note 1), and then, because Taiwan's agricultural raw materials are more expensive than China's, switch to Chinese raw materials, process and export them, and for food labelling only the location of the manufacturing factory need be marked, not the place of origin of the raw materials, so whether local or Chinese raw materials are used, it is in fact impossible to tell.

Will this really come true? Teacher Chen Chi-chung of National Taiwan University's Department of Agricultural Economics points out that comparing current Chinese controlled agricultural export prices with Taiwanese place-of-origin prices, dried (red) beans are 28 yuan per kg versus 48 yuan, tomatoes 14 versus 35, and tea 90 versus 452, with the two prices differing several times over. If cheap raw materials can be imported from China and other countries, then Taiwanese agricultural products that could originally serve as raw materials will have no one to buy them, and output, production value and farmer employment will all be affected (note 2). Taiwan's existing agricultural processing output value is about 170 billion yuan, and it is very likely to be hit.

Let us imagine: China, because the FEPZ has passed, comes to Taiwan to set up agricultural processing and export companies, and transport and warehousing are its own; selling back to China or to other parts of the world can also be done through integration to cut costs. It imports from China or from other countries in the world whose raw materials are cheaper than Taiwan's, and after processing in the FEPZ exports them (unregulated agricultural products must be taxed before they can leave the FEPZ for export to Taiwan). Taiwan's agricultural product manufacturers may do the same, buying in foreign or Chinese raw materials, processing and exporting them, and then selling them labelled ”Origin: Taiwan”. Is something missing in the middle? That's right, the Taiwanese farmer.

Where are Taiwan's farmers, who originally grew raw materials to sell to agricultural processing, supposed to sell now? Their sales channels will gradually narrow. So how does the government respond to such doubts? ”Although agricultural products are substitutable, flavor is still affected by differences in place of origin, variety, cultivation technique and so on. When businesses use raw materials, they consider their formulation combinations in order to achieve the goal of shaping their product's characteristics. For example, pineapple cake, using local Taiwanese pineapple fruit filling, created another wave of eating. Some businesses even plan to use Taiwanese pineapple and Taiwanese taro to make fillings for export as an important commercial formulation, showing that domestic raw materials still have their particularity and irreplaceability.” (note 3)

But compared with Taiwan, which spent last year and much of the period before it in a food safety storm, these words are completely unconvincing. Besides chemical elements that should not be added in food safety matters, or permitted ones added in excess, false labelling is also a major problem, such as Vietnamese rice passed off as Taiwanese rice. Do businesses not know that Taiwanese people would rather eat Taiwanese rice? Once Vietnamese rice is mixed in, unless the raw materials are tested and disclosed, it is very hard for consumers to tell directly at the point of purchase. The same goes for pineapple cake. If foreign raw materials are truly imported, do Taiwanese products still have irreplaceability? There seems to be too much confidence in producers' pursuit of cost reduction.

We can imagine that a small number of manufacturers will insist on local Taiwanese raw materials, but their selling prices will gradually become higher, while manufacturers importing Chinese raw materials sell more cheaply, and yet we are helpless when it comes to safety and supporting Taiwan's local agricultural produce. With people's income and wage levels having fallen back to where they were 16 years ago, which one do you want to buy?

The Council of Agriculture has an even more amusing response: ”From the demand side, among the food processing output value ratio, domestic agricultural raw materials account for about 30%. If the food processing industry expands its output value by 10 billion yuan each time, it has the potential to raise domestic agricultural product market demand by 3 billion yuan. This is 'making the original pie bigger.' (note 3)” I really cannot see where the logic in this lies. Won't the proportion of domestic agricultural raw materials fall? Or will it stay at 30% forever? This is simply divine logic.

And as for making the original pie bigger, agricultural products have a market ceiling, which is that human stomachs are limited. This is very different from other industries. For example, you can buy more than two iPhones; that's fine, you have money. But will a person eat two lunches a day? Yes, but how many such people are there? And can they eat three? No, they can't. Why? Because there is an upper limit to what humans eat. Likewise, agriculture and agricultural processing are subject to this same limit. Do not imagine that this will rise in a straight line like an arithmetic progression (the only thing that can increase is agricultural product consumption through population growth, but whether the newly growing groups are countries whose markets we can open is not yet known, and the world is already suffering greatly from too many people).

But besides the Trade in Services Agreement and ECFA, we also face a greater free trade threat. Since his New Year's Day speech, Ma Ying-jeou has ceaselessly said that we must join the TPP, namely the Trans-Pacific Partnership (Trans-Pacific Partnership), a US-led multilateral free trade agreement. The original founding countries were Brunei, Chile, New Zealand and Singapore, and only later did Australia, Malaysia, Peru, the United States, Vietnam, Mexico and Canada join. Japan is currently the last country to join, having joined in March of last year.

And Ma Ying-jeou ceaselessly says through every kind of occasion that without the Trade in Services Agreement there is no TPP, which is completely a fallacy. The TPP's posture of containing China is very obvious. This is part of the United States' desire to once again expand its political and economic strategic layout in Asia, the ”Pivot to Asia”. China is not currently among the TPP participating countries either. Can you tell me why without the Trade in Services Agreement there is no TPP? But the TPP's harm to food sovereignty is extremely serious. According to the Japanese farmers' group Nosuiren, citing the impact assessment report from the Ministry of Agriculture, Forestry and Fisheries (the grain self-sufficiency rate is Nosuiren's own estimate). The following is the situation for each major crop (note 9):

A. Food self-sufficiency rate (measured by calories) falls from 39% to 13%

B. Grain food self-sufficiency rate falls from 27% to 2.6%

C. Farmland area will decrease by 2.72 million hectares (equivalent to 60% of the current amount)

D. Rice output will fall by 90%

E. Wheat output will fall by 99%

F. Sugar output will fall by 100%

G. Dairy output will fall by 100%

H. Beef output will fall by 75%

Japanese farmers will suffer an unprecedented blow, and this is also the reason Japan's farmers' groups have been resisting Japan's joining the TPP and completing the TPP negotiations. Could Taiwan escape this? Over the past decades, Taiwan's agriculture has kept being sacrificed because of import liberalisation, and in the end it was forced to leave fields fallow and grow nothing, seriously threatening our food self-sufficiency rate. Free trade is absolutely not forever wonderful; rather, it makes a few industries prosper, one might even say a few financial groups, while the broad masses of people face threats, and our food sovereignty is put in jeopardy.

Beyond the Trade in Services Agreement, the government is still negotiating a goods trade agreement with China. It is very likely that agricultural products will be hit even harder, and the same goes for other industries, but we still do not know what is being negotiated. This too is a black box. So this also echoes the students' demand in the Legislative Yuan: only by passing the Cross-Strait Agreement Supervision Act can we then look at what the domestic impact is and what the people's opinions and voices are. It is not only opposition to the China factor; we also demand a more democratic society with expanded public participation.

Also showing today, Teacher Guo Hua-ren's article: [To Everyone in the College of Agriculture] Professor Guo Hua-ren's letter about the Trade in Services Agreement https://www.newsmarket.com.tw/blog/48498/

FEPZ regulations (draft): http://www.fepz.org.tw/m1.aspx?sNo=0055037

The environmental risks of the Trade in Services Agreement and the TPP: http://e-info.org.tw/node/98205

Note 1. Scholar: With the FEPZ passed, the world's only zero-tariff agricultural products http://udn.com/NEWS/BREAKINGNEWS/BREAKINGNEWS6/8544917.shtm

Note 2. FEPZ may hit the 600 billion output value of agricultural processing http://e-info.org.tw/node/95203

Note 3. 103.01.05 The free economic pilot zone's agricultural value-added policy is to expand the agricultural sector and help domestic agricultural innovation and development http://www.fepz.org.tw/m1.aspx?sNo=0020432

Note 4. Farm household income has fallen miserably, yet the Ma government claims farm household income has broken a million!? http://gdp633.blogspot.tw/2011/10/blog-post_16.html

Note 5. Last year's farm household agricultural income 193,000 5-year lowhttp://www.libertytimes.com.tw/2011/new/sep/6/today-fo6.htm

Note 6. The Fall of Lu and Lianghttp://www.ptt.cc/bbs/Gossiping/M.1395367519.A.049.html

Note 7. Deflated ball, rusted iron net, fallow fields and free trade https://www.facebook.com/notes/%E5%8F%B0%E7%81%A3%E8%BE%B2%E6%9D%91%E9%99%A3%E7%B7%9A/%E6%B4%A9%E6%B0%A3%E7%9A%AE%E7%90%83%E9%8A%B9%E9%90%B5%E7%B6%B2%E4%BC%91%E8%80%95%E7%94%B0%E8%88%87%E8%87%AA%E7%94%B1%E8%B2%BF%E6%98%93/737531169614644

Note 8. Does Taiwan have homegrown olive oil? http://zuijiadaan.org/%E5%8F%B0%E7%81%A3%E6%9C%89%E8%87%AA%E7%94%A2%E6%A9%84%E6%AC%96%E6%B2%B9.htm

Note 9. Onward to Indonesia, a journey against the WTO and free trade https://www.newsmarket.com.tw/blog/46812/