ECFA = Negative Benefits

Gravel operation moonscape on the Dajia River.

I love that phrase, negative benefits. Farmers groups complaining about what everyone knows -- food smuggling from China is rampant (Taipei Times):

The associations highlighted statistics released by the Coast Guard Administration (CGA) showing that smuggled produce confiscated during the Lunar New Year holiday — when smuggling operations peak — dropped 80 percent last year compared to 2013 and stood at just 0.6 percent of the 2008 level.

The farmers said that there is still a huge quantity of smuggled produce on the market, and accused President Ma Ying-jeou’s (馬英九) administration of colluding with smugglers working with Chinese.

Statistics released by the coast guard show that the volume of illegal agricultural products smuggled from China fell from 6,632 tonnes in 2008 to 57 tonnes in 2011, before dropping further to 41 tonnes last year.

Everything about the article suggests serious collusion to destroy local Taiwan producers. For example, take tea leaves:

No Chinese tea leaves have been confiscated since 2011, when authorities discovered two tonnes of contraband.

Taiwan Tea Farmers Self-help Group chief executive officer Chen Chien-nung (陳鑑農) said the coast guard had failed to intercept smuggled Chinese tea leaves over the past three years.

“You can find as many Chinese tea leaves as you want in the marketplace,” Chen said, adding that if the Ma administration requires proof, he could immediately provide evidence.

He said that most tea circulating in distribution channels is brewed from Chinese tea leaves, which leads him to believe that at least two freight containers, or 36 tonnes, of Chinese tea leaves disguised as being from other countries are being smuggled into the nation on a daily basis.

"No Chinese tea leaves have been confiscated since 2011..."

One of the reasons the services pact is so unpopular is widespread awareness of these issues. In order to secure even limited public support for ECFA, the Ma Administration had to put Chinese agricultural products on a banned list. The Administration's answer to this problem appears to be to serve Beijing by turning a blind eye to smuggling. Taiwan importers use third party routes, which the government must surely be aware of. For example...

The smuggled tea leaves were first shipped to a third country, such as Thailand and Singapore, before being transported to Taiwan, where they were mixed with locally produced tea leaves and then processed into oolong tea, green tea and jasmine tea before being sold to unsuspecting customers.

An investigation found the unscrupulous business people had carried out 50 smuggling trips, shipping around 1,000 to 2,000 metric tons of cheap Chinese tea to the island, prosecutors said.

Moreover, this is not a new problem. I stumbled across this piece about the 1980s:

It appears that smuggling tea in from the mainland is causing major difficulties for established processors. Those who respect the law and don't deal in mainland tea are at a major disadvantage. Processors and retailers have been urging the government to reconsider the current ban and legalize mainland imports. It is significant that, of the legal imports of 565 tons in 1985, 95% was fermented and semi-fermented tea and only 5% green tea. By 1989, of the total 1,333 tons imported, 29 % was green tea. It is highly likely that this tea originated from the mainland.

Given the massive jump in smuggling from ECFA, coupled with the amazing fall in enforcement of smuggling laws, it should be obvious what the consequence of the Ma Administration's proposed Free Economic Zones will be. Those clunkers out of the 1960s would permit Chinese agro-materials to be processed in zones with little oversight, once again spurring massive increases in smuggling. The government's policy called for a formal lifting of the ban on the over 800 agricultural goods currently not permitted to enter Taiwan (TT) so that they could be processed in the zones -- with the government laughably claiming that goods made with materials on the forbidden list wouldn't be permitted to enter Taiwan. As if the government could or would stop them...

This knowledge is one reason Taiwanese rejected the CSSTA pact. They know perfectly well that letting in China in X amounts means that in reality X + SMUGGLING will enter. Hence any statistical claims about the effects of the agreements are meaningless since they never take the illegal trade into account.

One reason I find westerners who are boosters of ECFA so detestable is precisely their simpleminded, deliberate neglect of this destructive issue, their refusal to face what increased trade with China has meant for Taiwan and the health of its people and its economy. Such boosters, as in the Drysdale piece I linked to below, invariably neglect the military and political threat as well, as if trade with China were like trade with Canada or Thailand. As the TT article above notes, prices of tea buds in Taiwan have plummeted. This forces local tea farmers who would rather not to use Chinese teas if they want to stay in business and remain cost-competitive, while at the same time destroying the made-in-taiwan brand value. It is hard for me to see that outcome, easily predictable since adulterating Taiwan teas with cheap Chinese crap teas is a habit that dates back to the 19th century, as something other than a deliberate policy. A policy that extends to many areas of the economy...
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Daily Links:

• EATS Young Scholar Award
• DGBAS growth forecast to 3.78%
• Ma Administration/MOE war on Taiwan history thumbnailed in this Taipei Times editorial
• The always good Danshui history blog: watermelon of Taiwan
• Drysdale at EAF: Can Taiwan survive in the shadow of China?

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