Bike Trade Group Calls For FTAs and Protection In Wake of ECFA

In the wake of all the crowing and cursing ECFA, the new economic agreement between Taiwan and China, this little news story crossed the wire courtesy of CENS. This particular story caught my eye for its message, which I can only describe as being bizarre in the least, leaving me to speculate as to the actual message contained within.

TBEA Urges Gov`t to Sign FTAs with Other Nations, Regions
2010/07/09

Taipei, July 9, 2010 (CENS)--Taiwan Bicycle Exporters` Association (TBEA), the largest bicycle and parts exporters` association in Taiwan, recently sent letters to government authorities to ask for faster signing of free trade agreements (FTAs) with European Union (EU), the United States, and other Southeast Asia nations.

This opening paragraph caught my eye as it appears to be a direct challenge to the Ma administration to follow up their rhetoric with deeds. In the lead up to signing the ECFA agreement, administration officials cited ECFA as a prerequisite to signing other FTAs with other nations. The overarching theme in the press seemed to be, "Don't let Taiwan fall behind other Asian nations, sign ECFA or Taiwan will be isolated like North Korea." Of course this was a ridiculous and hyperbolic line from desperate officials as Taiwan could sign FTAs with any country it likes, but those take time. The issue was further obscured by Chinese officials who declared that there would be no FTAs with other countries for Taiwan under ECFA as that could be read as an assertion of sovereignty, which would undermine China's own goals of integrating Taiwan's economy as a regional subordinate to the PRC's.

TBEA pointed out that the South Korean government has been aggressively promoting its bicycle industry and has signed FTAs with the EU and other nations, which will serious threaten Taiwan`s bicycle exports.

This second paragraph comes way out from left field. South Korea? Are they serious? Taiwan has spent decades building facilities, technical skills and relationships within the industry that has resulted in cementing Taiwan's reputation as the county that produces the best bicycle frames and components in the world. Now, "Made in Taiwan" is not viewed as a negative in the bicycle industry.

In addition to asking the government to pay more attention to the development of bicycle industry in Taiwan and other nations, TBEA also urged companies in Taiwan not to share know-how and core techniques to rivals in other nations to keep core competitiveness on the island.

The third paragraph is striking in its call for the government to take actions to protect trade secrets by, I presume, not allowing certain bicycle manufacturers from transporting proprietary technology overseas... to South Korea? Yeah... I guess. A few years ago several companies in the semiconductor industry rallied around similar cries regarding exporting 12" wafer production to China and only allowing Taiwanese firms to set up 8" wafer facilities outside Taiwan. Regardless of the furor Taiwanese companies transported 12" wafer facilities to China where they were copied by domestic firms.

James Liu, secretary-general of TBEA, pointed out that both the government and the bicycle industry in Taiwan have to prepare for the threats from S. Korean counterparts to minimize impacts, though the EU has not formally approved the FTA with S. Korea.

Michael Tseng, president of major assembled-bike maker Merida Industry Co., Ltd. and also the steering chairman of the A-Team high-end bicycle/parts industry alliance, pointed out the A-Team has been pivotal to shape Taiwan into the world`s key supply center of top-end bicycles and key parts by integrating dozens of world-class players in the alliance. The successful business model can hardly be copied by overseas rivals in a short period.

The final two paragraphs sum up the call to mitigate the impact of South Korean FTAs with Merida President, Michael Tseng, a major backer of ECFA, coming out to assert calm and confidence in Taiwan's domination of bicycle manufacturing.

If you are reading what I am reading you may be thinking something just doesn't sound right. I have come up with three basic scenarios behind the TBEA's calls for FTAs:

1. As a long time student of Taiwan and Taiwanese politics I have gotten myself thinking too much and the article is what it says; a call for FTAs to compete against South Korea. With its system of established and far reaching quasi-national conglomerates South Korea may have an organizational advantage over Taiwan's SMEs, which seem to be represented by TBEA.

2. South Korea has traditionally played the role as a diversionary foe when Taiwanese governments face domestic problems. It was no mistake that ties between South Korea and the ROC government reached an all time low in the late 80's as the KMT was trying to cope with civil unrest along with international and domestic calls for democratic freedoms. South Korea also has traditionally played into some Chinese nationalistic friction regarding "traditional Chinese territory". It could be that South Korea has been dragged out as a convenient "threat" to divert public attention from China, which is currently regarded as the real economic threat to Taiwan to better facilitate economic integration. The TBEA is actually running interference. When Taiwanese are not watching Korean soaps or listening to the Wonder Girls, there is a type of conditioned undercurrent of baseless Korean hatred.

3. The TBEA is calling out the Ma administration to make good on its promises to pursue FTAs with other countries and assert Taiwanese sovereignty and economic clout in an industry it owns... for the time being. It is a challenge to Ma's economic policies from an industry which fears it will face the same fate as the footwear industry and soon be forced to relocate to China where domestic Chinese companies will copy the processes and undermine the Taiwanese companies. The themes and language may be using "South Korea" as a proxy for "China", but in the current political climate where loyalty is rewarded with favors, and more concerning, dissent is punished, the members of the TBEA do not wish to go on record opposing an economic policy which may lead to a rapid deterioration in Taiwan's advantage in the bicycle industry. Some of the calls to diversify Taiwan's economic interests echoes Lee and Chen administration plans to "Go South" and not put all of Taiwan's eggs in one basket.

The Merida line is the administration calling on the TBEA to "be rational" as "irrationality" is often cited to brush aside calls for transparency and oversight.

What's This Elephant Doing Here?

I don't know... what do you think?