台灣肉類貿易之政治學－選擇性保護或選擇性的自由化? - 政大學術集成

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(1)National Chengchi University IDAS Dissertation. 政治大 The Politics of the Meat Trade in 立. ‧ 國. 學. Taiwan. Selective Protection or Selective Liberalization?. ‧. n. er. io. sit. y. Nat. al. Ch. v i n. Advisor: Dr. Wu Lin-Jun. engchi U. Committee Members: Dr. Elisa Wang Dr. Lee Chung-Shing Dr. Lee Yun-Tso Dr. Tsai Chung-Min Author: Fernando M. Schmidt.

(2) 立. 政治大. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi U. 2. v i n.

(3) ACKNOWLEDGEMENTS. This research came together with the help of several people and institutions, without whom it would have been impossible to conduct this work. First of all, I would like to thank Dr. Wu Lin-Jun, not only for her technical support and expertise, but most importantly for her constant encouragement and confidence in myself. I had almost given up the idea of pursuing the dissertation given the lack of resources that I had back in 2013, but Dr. Wu’s encouragement allowed me to move, even if it were step-by-step, towards finding a topic. 政治大. that was feasible, and thoroughly working on it. As this work comes to an end, Dr. Wu deserves a large part of the credit for what the following pages were able to achieve.. 立. I would also like to thank Dr. Lee Chung-Shing for taking up the time to support this research’s methodology in detail, so that the work conducted would stand on its own two feet,. ‧ 國. 學. being scientifically aligned with other case study methods. Dr. Roberto Chyou I thank for his constant insight into Taiwan and Latin America’s relationships, as he brought in a foreign policy perspective that was necessary in order to understand this phenomena. Dr. Mignonne. ‧. Chan has also backed me up regularly, with her insight and expertise in trade issues, as well as with her network of contacts which opened up the doors for qualitative interviews that would have been impossible to achieve without her help. Dr. Elisa Wang for her highly. Nat. sit. y. valuable comments, and her support in the chairing of the dissertation defence session. Dr. Lee Yun-Tso, who travelled from Shanghai to take part in the dissertation, offering valuable. er. io. comments and a completely novel point of view which truly helped the final outcome. And Dr. Tsai Chung-Min, who joined the dissertation committee in the last stage, and offered. n. al. v i n. excellent comments as well as his expertise in these areas of political economy.. Ch. engchi U. Among the institutions that supported this research I would like to thank the trade offices of Australia, Canada, New Zealand, European Union, Spain, Germany, Argentina, Brazil, Chile, and Idaho, as well as the Embassies of Paraguay and Nicaragua. The American Institute of Taiwan’s Agricultural Trade Office has also supported this research with data, information and clarifications. Without the support of all of these institutions, the data collected would have been impossible to triangulate, and some of the conclusions would have been left as inferences. Their support was vital into overcoming an excessive work of “what if”, connecting causal ideas, and bringing a fresh perspective into the research, from different corners of the world and holding different ideas about what the phenomena under research ought to be.. 3.

(4) Domestic institutions were fundamental as well in order to be able to understand the rationale and existing reasons behind Taiwan’s trade policy. In particular I would like to thank the Ministry of Foreign Affairs, the Council of Agriculture, the Bureau of Foreign Trade, the Bureau of Animal and Plant Health Insurance Quarantine, and the Food and Drug Administration, for agreeing to be interviewed qualitatively, and sharing information of how trade policies operate and are conceived, what ideas stand behind them, and what are the dynamics of policy resistance and change. Furthermore, I would like to thank TAITRA for its personal support, and the feasibility of attaining trade data which reinforced the results of this research.. 政治大. From the private sector, I must thank the cooperation with data and interviews of the United States Meat Exporters Federation (USMEF), JAC Food importers, and ANZCO. 立. Foods, whom all agreed to be interviewed. By obtaining the perspective of the private sector and interested importers and exporters, this research was able to gain a foothold into the. ‧ 國. 學. real market opportunities, needs and problems faced by actors that depend on the day-today nature of this activity: Meat trade. Their cooperation was further beyond what I had initially expected, as their data-sharing was truly insightful towards understanding the dynamics of the domestic and imported markets.. ‧. Several scholars have given feedback towards this research’s topic, but I would like to highlight and thank two in particular who also agreed to be interviewed, and shared. Nat. sit. y. fundamental insights. Dr. Ivy Chen from the Chung Hua Institute of Economic Research, and Dr. Woo Rhung-Jie from National Taiwan University. I would also like to thank Ms. Sara Lin,. er. io. from LY Hsiao Bi-Khim’s office for her feedback and information on DPP policies towards agricultural trade. Dr. Falero and Dr. Doncel from the University of Salamanca also deserve. n. al. my acknowledgement for their support towards this research.. Ch. engchi U. v i n. Personally, I owe a lot of this work to my boss, the Director of the Chilean Trade Office in Taipei, Ms. Rose Marie Bedecarratz. Her support has been unconditional, especially when she backed me up on the idea of taking four months off from work to dedicate myself to this dissertation, in spite of the fact that her workload increased largely during this time. I owe this research to her in no small share, and I am truly thankful for the opportunity. I would also like to thank the person who hired me in the Trade Office in the first place, Mr. Pablo Balmaceda, who constantly supported me as well and helped me create a network contact that was fundamental towards achieving the goal. My colleagues, Evelyn Huang and Lisa Chen, also deserve credit for this research through their support, during my time in the office as well as during the time I took off.. 4.

(5) There are several IDAS colleagues that I would like to thank as well, as their encouragement, friendship, knowledge and support has been on my side throughout the development of this research. In particular I would like to name Juan, Moises, Fabricio, Olga, Janet and Yilmaz, who have in one way or another collaborated with this research in concrete terms. Before finalizing, full I should give my utmost thankfulness to my family, which has been the most supportive family any researcher could ever ask for, be it in terms of dedicating time, supporting financially, bringing opinions together, but most importantly, caring for me, my wife and my son throughout this process which has been rather tough. My parents,. 政治大. Fernando and Ana, as well as my siblings, Teodoro, Maria, Francisca, Alfonso, Rafael, Maria Jesus, Santiago, Teresa and my nieces Sara and Blanca, deserve also a large part of. 立. the credit for this piece of research, and unconditional thankfulness on my part. It is not in any family that you will find the kind of support that I have found in mine.. ‧ 國. 學. Finally, the two most important persons in my life, and to whom I owe this research completely, are my wife, Paulina, and my son Fernando. They have been the pillar upon which I found the strength to move on and finish this work, and I will never be able to thank. ‧. them enough for their support, for their care, for their laughter, for their help with interview transcripts, for their supporting shoulder, or even for every smile that they shared with me throughout this process, even when I had to neglect family-time in order to dedicate it to. Nat. sit. y. research. Without them, in Spain, in Taiwan or in Chile, it would have been impossible to complete this research, thus the most important acknowledgement goes for them, for their. al. er. io. patience, and for their unconditional support and love.. v i n. n. Many more people have been a part of this research, as any research in social sciences. Ch. must be socialized regularly in order for it to increase its validity. Thus there are many thank. engchi U. you notes that may be slipping my mind, but the fact is that this research would not have come together only through myself without the support of many people and institutions. I am truly blessed to have had this chance.. 5.

(6) TABLE OF ABBREVIATIONS. Concept. Abbreviation. American Institute in Taiwan. AIT. Asia Pacific Economic Cooperation. APEC. Asia-Pacific Regional Operations Center. APROC. Bovine Spongiform Encephalopathy. BSE. Bureau of Animal and Plant Health Quarentine. BAPHIQ. Bureau of Foreign Trade. BOFT. 政治大. Chung Hua Institute of Economic Research. 立. CIER. Council for Economic Planning and Development. CEPD. Council for US Aid. CUSA. Council of Agriculture. COA. ‧ 國. 學. Economic Cooperation Framework Agreement. ECFA. European Union. EU. Executive Yuan. EY. Farmers Associations. FA. Food and Agriculture Organization. FAO. Foot and Mouth Disease. FMD. Free Trade Agreement. FTA. Free Trade Area of the Asia Pacific. FTAAP. Harmonized System. High Pathogenic Avian Flu. Ch. y. GATT. n. General Agreement on Trade and Tariffs Group of 10. sit. er. io. al. ‧. DDA. Nat. Doha Development Round. engchi U. v i n G10 HS. HPAI. Initial Negotiating Rights. INR. International Plant Protection Convention. IPPC. International Political Economy. IPE. Joint Commission on Rural Reconstruction. JCCR. Legislative Yuan. LY. Maximum Residue Level. MRL. Mercado Comun del Sur. MERCOSUR. Ministry of Economic Affairs. MOEA. Ministry of Foreign Affairs. MOFA 6.

(7) Multi Agency Support Tema. MAST. National Animal Industry Foundation. NAIF. National Development Council. NDC. National Taiwan University. NTU. Newcastle Disease. ND. Nominal Rate of Assistance. NRA. Non-Tariff Bariers. NTBs. North American Free Trade Agreement. NAFTA. Office International des Epizooties. OIE. 政治大. Organisation for Economic Cooperation and Development. OECD. Regional Comprehensive Economic Partnership. RCEP. Regional Trade Agreement. RTA. 立. Relative Rate of Assistance Republic of China. RRA ROC SPS. Special Safeguard Measure. SSG. Taiwan - New Zealand Free Trade Agreement. ANZTEC. Taiwan - Singapore Free Trade Agreement. ASTEP. Taiwan Food and Drug Administration. TFDA. Taiwan Relations Act. TRA. Tariff Rate Quota. Nat. TRQ. Technical Barriers to Trade. TBT. Trade and Investment Framework Agreement. TIFA. Trade Policy Review. TPR. n. y. sit. er. io. al. Trans Pacific Partnership. ‧. ‧ 國. 學. Sanitary and Phytosanitary. Ch. v i n TPP. engchi U. United Nations Conference on Trade and Development. UNCTAD. United States Department of Agriculture. USDA. United States of America. USA. United States Trade Representative. USTR. World Trade Organization. WTO. 7.

(8) LIST OF FIGURES. Fig. 1. Countries with market access to Taiwan (Bureau of Animal and Plant Health Quarentine, 2015) _____________________________________________________ 13 Fig. 2. Research Goals _________________________________________________ 18 Fig. 3. Taiwan's NRA Level in Meats ______________________________________ 34 Fig. 4. Theoretical chart ________________________________________________ 35 Fig. 5. Protectionism scale ______________________________________________ 64 Fig. 6. Research Hypotheses ____________________________________________ 66. 政治大. Fig. 7. UNCTAD's NTBs ________________________________________________ 71 Fig. 8. Research Flowchart ______________________________________________ 78. 立. Fig. 9. Case Study Protocol Table ________________________________________ 87 Fig. 10. Research Scheme ______________________________________________ 97. ‧ 國. 學. Fig. 11. Taiwan’s WTO accession commitments in meats (WTO, 2001) __________ 107 Fig. 12. Taiwan’s FTAs ________________________________________________ 107 Fig. 13. Schedule in meats of Taiwan’s FTAs_______________________________ 112 Fig. 14. Imports of meat into Taiwan (US$ thousands) ________________________ 113. ‧. Fig. 15. Domestic production of meat (US$ thousands) _______________________ 115 Fig. 16. Market shares of domestic and imported meats (%) ___________________ 116. y. Nat. Fig. 17. Imports of meats by origin(US$ thousands–HS Codes 02) ______________ 118. sit. Fig. 18. Market share of imported meats(%–HS Codes 02) ____________________ 121 Fig. 19. Sample of countries analysed in market restrictions and their presence in global. io. n. al. er. and regional markets _________________________________________________ 126. v i n. Fig. 20. Country and CODEX comparison of MRLs __________________________ 126. Ch. Fig. 21. Table of country vis-à-vis international standards _____________________ 127. engchi U. Fig. 22. Comparing MRLs _____________________________________________ 135 Fig. 23. Market Access Decision Diagram ________________________________ 148 Fig. 24. Ministerial goals ______________________________________________ 169 Fig. 25. Budget distribution (NT$ Thousands) ______________________________ 169 Fig. 26. Consultation Mechanisms between Taiwan and Meat Trading Partners ____ 220 Fig. 27. World Trade and Domestic Market for Taiwan’s Trade Partners on 2014 ___ 258 Fig. 28. Agricultural policy paradigms _____________________________________ 285 Fig. 29. The Protectionism Scale ________________________________________ 294 Fig. 30. The Protectionism Scale: Results _________________________________ 297 Fig. 1. Taiwan's NRAs in Meats________________________________________ 297. 8.

(9) CONTENTS. INTRODUCTION _____________________________________________________ 12 1. Statement of the problem __________________________________________ 12 2. Research goals _________________________________________________ 18 3. Literature review _________________________________________________ 20 3.1 Protectionism. 20. 政治大. 3.2 Taiwan’s trade liberalization and protectionism. 立. 28. THEORETICAL FRAMEWORK AND METHODOLOGY ___________________. 35. 1. Theoretical framework____________________________________________ 35. ‧ 國. 學. 1.1 Economic and Political Economy Assumptions. 36 39. 1.3 Interactions: Inter-state relations towards policy formulation. 48. 1.4 Ideas: Institutionalization or utilization of ideas. 54. ‧. 1.2 Institutions: The relevance of the government bureaucracies. 1.5 The protectionism scale. 64. y. Nat. 2. Research hypotheses. sit. 3. Conceptual framework 3.1 Protectionism. er. io. 3.2 Trade liberalization. al. n. 3.3 Non-Tariff Barriers (NTBs) 3.4 SPS/TBT. Ch. 60. engchi U. 3.5 Multifunctionality in agriculture. v i n. 67 67 69 70 73 75. 4. Methodology and operationalization. 76. 5. Significance of the research. 87. I – TAIWAN’S AGRICULTURAL TRADE LIBERALIZATION ___________________ 90 1. The process of agricultural trade liberalization __________________________ 91 1.1 WTO Accession. 93. 1.2 Further Unilateral Liberalization in the 21st Century. 99. 1.3 Bilateral liberalization through FTAs. 9. 106.

(10) 2. The meat market and its regulations ________________________________ 110 2.1 The meat markets. 111. 2.2 The regulations of the meat market. 122. 3. Liberalization and protectionism on different levels (domestic, bilateral, multilateral) ____________________________________________________ 128. II – THE DOMESTIC SOURCES OF AGRICULTURAL PROTECTION __________ 132 1. Bureaucratic institutions __________________________________________ 132 1.1 Technical Bodies. 政治大. 136. 1.2 Politico-Economic Bodies. 立. 139. 2. Historical Institutionalism – Coherence and State Autonomy______________ 149 3. Rational Choice – Bureaucratic Hierarchies Revealed in Policy-Making _____ 168. ‧ 國. 學. 4. Conclusion ____________________________________________________ 182. ‧. III – THE BILATERAL PRESSURES ON AGRICULTURAL PROTECTION _______ 185 1. Current status of meat-trade politics ________________________________ 186. y. Nat. 2. Historical Institutionalism – Institutionalization and Embeddedness Towards. sit. Results _______________________________________________________ 199. io. er. 3. Rational choice – The power of political entrepreneurs __________________ 218 4. Conclusion ____________________________________________________ 233. n. al. Ch. engchi U. v i n. IV – IDEAS FRAMING AGRICULTURAL TRADE ___________________________ 235 1. Ideas framing agricultural trade policy – State of affairs _________________ 237 2. Historical Institutionalism – Institutionalization of Ideas __________________ 248 3. Rational Choice – The Functionality of Ideas __________________________ 264 4. Conclusion ____________________________________________________ 280. V – DEFINING TAIWAN’S AGRICULTURAL TRADE POLICY ________________ 282 1. The protectionism scale. 284. 2. Taiwan and the protectionist scale. 287. 3. Political choice over economic choice. 295. 10.

(11) 4. Conclusion. 303. CONCLUSIONS _____________________________________________________ 305 1. The Path of the Research. 305. 2. Results. 306. 3. Of theories and protectionism. 309. 4. Policymaking environment in flux. 311. 5. What lies ahead: TPP-RCEP. 314. 政治大. BIBLIOGRAPHY ____________________________________________________ 318. 立. ‧. ‧ 國. 學. n. er. io. sit. y. Nat. al. Ch. engchi U. 11. v i n.

(12) INTRODUCTION. 1. Statement of the problem Why does Taiwan have in place a partially protectionist agricultural trade policy? Is the reason the self-interest of the powerful players, or the embeddedness of institutions over time? The goal of this research is to address such explanatory question by testing the theories of historical institutionalism and rational choice as potential rival explanations for Taiwan’s agricultural protectionism, taking as a case study the meats sector. Interviewees of. 政治大. this research have categorized Taiwan’s agricultural trade policy as strict, erratic, or even messy; however, this research argues that there is an organizational feature behind. 立. Taiwan’s agricultural trade policy, and the results in terms of market access appear to be selective and coherent, not erratic, messy nor overly strict. Whether this selection responds. ‧ 國. 學. best to the embeddedness of institutions and ideas, or the power play between the different actors will shed light on why Taiwan has in place a partially protectionist agricultural trade policy. What has emerged in this case is a form of foreign trade that resembles past sector-. ‧. specific patterns of protection much more than the free trade process envisaged regionally. Taiwan’s meat markets remain today relatively closed to imports (HS Codes 0201, 0202,. y. Nat. 0203, 0204, 0207). Meat producing countries such as Chile, Argentina, Brazil, Germany,. sit. Italy or Spain1 have struggled to achieve market access to the 23 million consumers living in the island due to the existence of unsurmountable non-tariff barriers (NTBs). Taiwan’s. io. al. er. Council of Agriculture is one of the institutions keeping the market relatively closed, as they. n. acknowledge that “with Taiwan's entering the World Trade Organization (WTO), livestock. v i n. products are bound to suffer tremendous pressure under global competition”, and regular. Ch. engchi U. adjustments are necessary (Council of Agriculture, 2015). On the other hand, the United States, Australia, New Zealand, Canada, and ally Nicaragua (among a few others) have had privileged market access for many years now, yet their presence in the market is not without its problems either. The situation has created a relatively un-competitive market, with a protectionist stance that promotes both the local industry, and the selected international imports. The current policy is not only protecting the domestic meat producers, but also some international exporters that have a privileged market position; therefore, the current regulations seem to have created incentives for protectionist pressures both domestically and internationally for Taiwan. For a country that has embraced free trade for several decades, and is looking to join the Trans Pacific Partnership (TPP), how is it possible to 1. Spain gained market access for porcine goods on Sept. 2014. 12.

(13) sustain a vestige of (relatively hidden) protectionism? This partial protectionism in agriculture can either be explained by the stickiness of institutions, or by the pressures of powerful actors. The current research will test two theories –in the different levels of analysis- in order to better understand whether the main factor influencing a partial protectionist policy in agricultural trade is power or institutions. As of today, the countries in Fig. 1 have achieved market access to Taiwan’s meat markets. While several other countries have tried to enter this market, complying with the necessary standards, the doors have been close so far for them.. 政治大. Fig. 2. Countries with market access to Taiwan (Bureau of Animal and Plant. 立. Poultry. Australia*. Australia*. United States* Australia*. New Zealand*. New Zealand*. Canada*. United States* Canada*. Paraguay. Netherlands*. Costa Rica. Poland. Honduras. Japan. Nicaragua. Hungary. Panama. ‧. Denmark*. io. sit. y. Hungary. n. er. Nat. United States* Panama. al. New Zealand*. France. Canada*. Sweden. Ovine. 學. Bovine. ‧ 國. Pork. Health Quarentine, 2015). Finland France Spain. Ch. engchi U. *With system certification. v i n. 2. The research will consider highly significant players in global meat trade (Chile, Argentina, Brazil, Germany, Spain and Italy) as countries without market access to be analysed. The fact that they are present in the markets of Japan and South Korea -which. 2. System Certification refers to a system established bilaterally with the target country, so that all the meat products originating in that territory will have market access to Taiwan. On the other hand, countries that do not have System Certification have to certify individual slaughter houses for approval towards their ability to export to Taiwan.. 13.

(14) have stringent and high-level sanitary and phytosanitary (SPS) requirements- means that the SPS conditions of production and export are good enough to comply with Taiwanese regulations 3 . While Germany, Italy, Chile, Spain and Brazil have never enjoyed market access to the Taiwanese market, Argentina did have access between 1997 and the year 2000; its access was cut down due to sanitary reasons, and the market never reopened for these products. In the case of Chile, it is important to highlight that even though it is not a large producer nor exporter of any of these products, it has positioned itself as the 6th largest supplier of pork to Japan, and 4th to South Korea; at the same time it is also the 4th largest supplier of. 政治大. poultry to China, according to 2014 statistics4. Germany is the largest worldwide exporter of pork, with strong presence in Japan and South Korea’s market where it exported over US$. 立. 340 million in 2014. In the case of Spain, we are speaking about the 4th largest worldwide exporter of pork, and the 5th largest exporter of lamb; in the region it stands as the 4th largest. ‧ 國. 學. supplier of pork to Japan, 3rd to South Korea and 3rd to China. For Argentina, it should be highlighted that it is the 8th largest exporter of frozen beef and poultry products. In the region, Argentina’s presence stands out mainly as a supplier to Hong Kong and China. Finally, the most outstanding case is without a doubt Brazil, which is the largest worldwide exporter of. ‧. poultry, and frozen bovine meats, 8th largest in fresh beef, and 9th in pork products. In the region it is especially important in poultry products, being the largest supplier to Japan,. y. Nat. South Korea, Hong Kong and China. At the same time, it is also the largest supplier of Hong. sit. Kong in terms of frozen bovine. With these opening data, it is natural to question why none. io. Taiwan, while they have massive markets in the region.. n. al. er. of these producing countries (except for Spanish swine since September 2014) is present in. v i n. The rationale for this partial closure may lay in the protection of domestic sectors (from. Ch. engchi U. pressure groups, politicians and political institutions), the strategic need for food selfsufficiency in case of conflict, pressure from the countries that have access to the market to keep their privileged position, lack of interest on the side of the exporting countries, or on the fact that the sector remains a hostage for trade-offs towards Taiwan’s difficulties in the international stage by attaching trade policy to broader policy goals. A combination of all the factors will certainly shed light on the politics of meat trade; but the focus of this research will lay on the institutional analysis of bureaucratic institutions and state-level analysis of traderelated interactions between countries. Using rival explanations as a methodology, the research will test whether historical institutionalism or rational choice theory provides a better explanation for the partial protectionist policy applied to agriculture. 3 4. This topic will be analyzed in detail on Chaper 2 of the research: “Food Trade Liberalization of Taiwan: The case of meats”. Statistics were obtained from Trade Map, in the webpage www.trademap.org. 14.

(15) In the first place the research will focus -through qualitative analysis- on the five institutions that are involved in the executive decision of further opening, or restricting the market access to Taiwan’s meat market: The Bureau of Foreign Trade (BOFT), the Ministry of Foreign Affairs (MOFA), the Food and Drug Administration (FDA), the Council of Agriculture (COA) and the Bureau of Animal and Plant Health Inspection Quarantine (BAPHIQ)5. While preferences of domestic groups regarding trade policy has been a widely researched topic, and it is known to have an impact on policy, this research will be based on the premise that “institutions aggregate such preferences and different institutions do so differently, thus leading to distinct policies” (Milner, 1999). Moreover, Chen and Hou (1993). 政治大. proved that from 1980 to 1986, the national interest model represented a robust explanation for Taiwan’s protectionist position, while the pressure group model failed to explain it; even though this research falls out of Chen and Hou’s research timeframe, it is supported by the. 立. path dependency that it established historically upon trade-related institutions. Therefore, domestic pressure groups will not be considered individually in the analysis, as policies are. ‧ 國. 學. finally drafted and implemented by bureaucracies and institutions.. “Some scholars see independent agencies as particularly likely to be captured by special interests. Most scholars, however, regard independent bureaucratic entities from an. ‧. explicit agent theoretic perspective in which the agency responds to the policy needs of politicians, albeit with some room for manoeuvre” (Frieden & Martin, 2003, p. 135). The. y. Nat. current research will start from the base of bureaucratic institutions as agents responding to. sit. the policy needs of politicians with some independence in their behaviour brought by their own institutional path dependence, and the needs of their aggregated interests. How. io. al. n. institutions create.. er. interests are translated into outcomes will depend on the strategic environment that. Ch. engchi U. v i n. Secondly, the international level interactions (bilateral and multilateral) will also be analysed, considering as case studies the countries that have already achieved market access, and those that are still pending even though they have complied with the existing regulations. “International factors affect national policy by way of their direct effect on domestic political economy. This effect may take place by restricting the set of feasible policies, by constraining domestic institutions, by altering domestic information, or by changing the preferred policies and behaviour of domestic actors” (Frieden & Martin, 2003, p. 123). When Frieden and Martin refer to international factors, they are referring to the. 5. The decision to exclude the Legislative Yuan from the analysis is based on the fact that in Taiwan, unlike in most developed countries, farm policies originate and are administered by the executive yuan, while the involvement of the legislative branch of government is minimal (for example in the approval of tariff reductions). This fact has been confirmed by previous research (Hou & Tu, 1993). 15.

(16) exposure that a country has towards the international economy. A country as exposed as Taiwan -being also a net importer of food- therefore will be faced by feasibility analysis when it takes measure related to trade regulations. Bilateral and multilateral interactions will intervene in the set of feasible policies. To complement the state level of analysis, the participation of Taiwan in trade-related international organizations (APEC, OECD and WTO) will also be considered as part of the research regarding potential normative influence (the importance of ideas) within the realm of food trade, and the extent of Taiwan’s commitments to trade liberalization in the agricultural sector. The goal of this research is to establish the dynamics of meat market. 政治大. liberalization in Taiwan from the three levels that interplay in the push-and-pull battle for further liberalization: domestic institutions, state-level and the international level.. 立. Therefore, the research will firstly identify the interests in play in the meat market of Taiwan; secondly it will investigate how these interests are mediated through political. ‧ 國. 學. institutions. Alongside the domestic analysis of meat market preferences, the interaction with the international level will be a key to deciphering the dynamics of the meat market. On the second level of analysis, we will identify the different states’ interests, specify the strategic. ‧. setting of their bilateral interactions, and analyse the outcomes obtained regarding meat trade liberalization. Finally, to round up the analysis from an informational viewpoint, international institutions will be taken for their normative influence in their ability to provide. Nat. sit. y. information about standards and state behaviour. The reputational factor is not a small one when it comes to painting the overall picture.. io. al. er. This research will argue that the selection of trade policy is closely related to political. v i n. n. preference, and political gains, not solely economic gains. Whether this preference is a. Ch. result of institutional development or power-play will help explain the research question. As a. engchi U. research in IPE, power is an essential part of the analysis, and trade policy shows how the existing distribution of power among the different players will influence their ability to obtain trade policies they desire, affecting the distribution of wealth and the allocation of resources. Yet institutions have regularly been overlooked in IPE literature, and it seems that their path dependence may also represent a robust explanation for Taiwan’s partial liberalization in agriculture. The research will structure itself as single-case study towards theory testing. Within the case study (Taiwan’s agricultural trade policy), the different levels of analysis will be embedded, showcasing the complexity of the forces involved in policy decisions. As a theory testing case study, hypotheses will be developed according to rival theories for the different levels of analysis, and these will be tested against the data collected and the analysis 16.

(17) conducted. The end result will allow the fulfilment of two different research goals: First, it will allow for a qualitative measurement of the forces pushing protectionism in order to answer the question of why a partial protectionist policy is applied to the meat market. Secondly, it will generate a better definition of Taiwan’s Agricultural trade policy under the protectionism scale that has been devised for this research (within the theoretical framework). Since at least the year 2003, Taiwan holds as an integral part of its trade policy the goal of international trade liberalization, expressed through the Ministry of Economic Affairs – Bureau of Foreign Trade – in its “Policy goals and major functions” documents produced on a yearly basis. Moreover, as part of President Ma’s “Golden Decade National Vision”, the. 政治大. area regarding economic transformation places great emphasis on trade liberalization. Thus it is clear that Taiwan strives for trade liberalization as a goal of state. The resounding words. 立. “isolation” and “marginalization” are constantly used by politicians, the media and scholars alike to resemble Taiwan’s situation regarding trade liberalization processes in the region.. ‧ 國. 學. Taiwan is not a part of the regional economic integration (at least in de jure terms6), and throughout the year 2014, the main topic of discussion regarding this matter was Taiwan’s potential accession to the TPP. While Taiwan has liberalized many of its economic sectors, the standards that the TPP aims to impose include a complete liberalization of every single. ‧. economic sector, making it a “comprehensive”, “21st century”, “high standards” agreement, to be finalized under a mechanism of single undertaking. If Taiwan aims to take part on the. y. Nat. TPP, besides overcoming tremendous political barriers, it will also have to liberalize its. sit. domestic economy to levels much higher than the WTO standard. These will certainly. io. er. include the meat markets.. In order to analyse this topic, this research will use a four-level protectionism scale. n. al. v i n. applied to the meat market. The four levels are strict protectionism, selective protectionism,. Ch. engchi U. selective liberalization, and strict liberalization. These four levels will be fully defined in order to be able to qualify the current policies in the market of analysis, and its variations. While this research will not use quantitative methodologies, it will fall back on the works of Anderson and Nelgen (2012) in order to have a quantitative base for the measurements of agricultural protection (in nominal and relative terms) in the Taiwanese meat markets. These time series go up to 2011.. 6. To further elaborate on this discussion, it is important to consider that Taiwan is vital to many of the supply chains operating in the region. As scholar Wu Linjun has pointed out, the businesses class of Taiwan has found ways into the porous regional noodle bowl of FTAs, therefore using to their advantage the regional economic integration, facilitating a de facto integration. Since scholars like Peter Katzenstein have argued that regionalization in East Asia is carried out main in de facto terms, the situation would not be as bad. Nonetheless, Taiwan’s de jure absence from regional economic integration will play a negative effect on the economy as this integration moves forward, and the noodle bowls standardizes.. 17.

(18) The time-frame for analysis of this research is from 2001 (the year previous to Taiwan’s WTO accession) to the year 2014 (the latest year with full-year statistics available as of the time of writing).. 2. Research goals The question that this research aims to answer is the following: Why is a partial protectionist policy applied to Taiwan’s meat market? In order to answer it, through a holistic case study this research will focus on Taiwan’s agricultural trade policy as its unit of analysis.. 政治大. Within the case study, the research will focus on an embedded analysis of three different levels where agricultural trade policy is influenced (domestic, bilateral and ideational).. 立. Theory-testing will proceed in these three levels in order to assess the role that power and institutions play in determining the level of protectionism.. ‧ 國. 學. This research has a clear structure that aims to first identify the forces of protectionism (and the counterforces of liberalization) in the three levels of analysis; then it will attempt to qualitatively measure the influence of the different actors towards policy formulation and. ‧. execution; and finally it will strive to offer a definition of Taiwan’s meat-related trade policy in a protectionism/liberalization scale devised as part of this research in order to offer a. io. n. al. Specific goals. er. General goals. Ch. To determine the forces influencing protectionism in the meat market in each level of analysis.. sit. Nat. Fig. 3. Research Goals. y. workable definition. The goals of the research then are the following:. v i n. To analyze the interests and policies taken by five. engchi U. bureaucratic institutions in order to protect/liberalize the meat markets.. To evaluate the influence that state-level relations have towards trade policy decisions regarding meat trade. To investigate the normative influence that ideas flowing from IOs have on Taiwan’s agricultural trade policy formulation.. 18.

(19) To measure (qualitatively) the importance that the different players analyzed have when it comes to the To unravel the interplay dynamics. formulation. that. execution.. influence. trade. policy. of. meat-related trade policy and. its. formulation and execution. To determine which theoretical narrative better explains the reason for Taiwan’s partial closure in agriculture. To generate a framework for analysis that is workable. 政治大. To define Taiwan’s foreign trade policy in the meat market according to. the. devised. protectionism.. 立. scale. of. towards the analysis of Taiwan’s meat market trade policy,. and. applicable. in. qualitative. comparative. analyses.. To understand and position Taiwan’s meat trade policy. ‧ 國. 學. within the categories of the generated framework.. ‧. The three layers of goals are directly related to each other, as each one forms the basis for the next, offering the reader the possibility of moving easily through the different stages of. y. Nat. the research through to the conclusion. These goals are also aligned with the methodology. sit. chosen, as the researcher will use the tactic of explanation building in order to strengthen the internal validity of the research. It is important to bear in mind, as Milner establishes, that. al. er. io. no single coherent national trade policy exists; trade policy will vary greatly from one. n. economic sector to the next, as the relevant domestic and international actors that each one. v i n. involves are different (Milner, 1988, p. 14). Thus the goals of this research are empirically. Ch. engchi U. related to the meat products, and applicable to the agricultural sector, but not extensible to other economic sectors.. This multi-level analysis aims to reach to a rich explanation of the phenomena under analysis, targeting stronger causation, instead of broad explanations. There is a trade-off that needs to be made, as David Singer established in his seminal work regarding the levels of analysis (Singer, 1961). Disaggregating one’s focus can lead to better explanations of causality, giving up a broader focus which could be easily applicable to understand crossnational differences. This does not mean that the current research lacks replicability; in order to strengthen the reliability of the research a case study protocol will be detailed within the methodology chapter. Following this protocol, the research can be applied to the study of other economies where protectionism is evident in the agricultural sector, such as South 19.

(20) Korea or Japan. However, and considering the depth that this research aims for, Singer’s warnings towards the toughness of replicating this research must be kept under consideration. Based on these goals, the following literature review covers what has been written in these matters, in order to make sure that this research makes a contribution to the existing literature.. 3. Literature review This research’s literature review can be divided according to the focus of the different. 政治大. kinds of literature that are necessary to bridge Taiwan’s selective protectionism (or selective liberalization) with its sources. First, protectionism (the dependent variable) as a. 立. phenomenon needs to be analysed in its empirical application to similar cases, studying the institutional-level analyses that have been carried out before. Secondly, a review will be. ‧ 國. 學. conducted on Taiwan’s trade liberalization process, including articles dealing with agricultural liberalization that refer to the topic under research. A study on the particular topic of Taiwan’s meat market protectionism is not available as of now neither in English nor in Spanish; while there are some articles on agricultural protectionism (mostly regarding the. ‧. rice market), and topics such as food security, self-sufficiency and domestic agricultural regulations, a comprehensive study and sectoral analysis of the issue is not available as of. y. Nat. today. The researcher’s inability to read mandarin impedes the possibilities of this research. sit. to look into material written in this language regarding the topic of research, and putting a. io. n. al. er. handicap into the potential of the current work.. 3.1 Protectionism. Ch. engchi U. v i n. Literature on protectionism dates back to Adam Smith’s Wealth of Nations, where the Scottish economist described the concept of absolute advantage, which would lead market forces to efficiently allocate resources according to production capabilities and consumption needs. From his free trade premise, any restriction to the market would counter the efficiency of the economy as a whole, therefore limiting the ability of the economy to produce in an optimum frontier. From him onwards, there has been an agreed consensus among economists regarding the benefits of free trade in terms of efficiency. However, this consensus has not been absolute, especially when considering it from a political economy perspective, and theories have appeared to defend protectionism either in its absolute sense, or in particular settings.. 20.

(21) “Protectionism hurts some groups, but benefits others, so some private actors have a vested interest in securing or retaining trade barriers” (Lukauskas, 2013, p. 223). The political selection of winners (or survivors) of the market system can be explained among the lines of different rationales. Arvid Lukauskas divides them in two categories (domestic and international rationales), which can at the same time have an economic basis, or a noneconomic basis. These are the following: a. Domestic rationales: I.. Infant industry – “If government officials believe a domestic industry lies within the country’s long run comparative advantage, they may choose to protect it. 政治大. temporarily to give domestic firms time to catch up to more competitive foreign firms” (Lukauskas, 2013, pp. 224-225). II.. 立. National defence or security – This rationale establishes that certain industries are critical towards the nation’s survival, or its security (food. ‧ 國. 學. security in the current case), therefore they need to be protected.. III.. Government revenue – Government may levy taxes or import/export tariffs in. order to increase its revenue, and allow it increased spending power.. IV.. Income redistribution – Since trade barriers affect the distribution of income,. ‧. protectionism could be established in order to favour disadvantaged groups, thereby promoting further equality in income distribution.. Protection of jobs – Import competing sectors, when faced with free trade, will. y. Nat. V.. sit. have to decrease their costs to remain competitive, therefore affecting their ability to hire new workers, and probably forcing them to fire part of the. io. n. al. er. existing workforce.. Ch. b. International rationales: I.. engchi U. v i n. Terms of trade - Applies when a country is such a large consumer or supplier of a specific good that it has the ability to alter world prices through the imposition of a tariff, improving the terms of trade.. II.. Balance of payments – Protectionist measures are established in order to improve the country’s finances, recovering its balance of payments. By suppressing imports, and boosting local production, government revenues increase alongside the economic activity.. III.. Strategic trade – The government targets priority sectors for their promotion, erecting. barriers,. or. subsidizing. them. in. order. to. increase. their. competitiveness and their position in world markets. Paul Krugman et al. 21.

(22) discussed this theory in a seminar work titled Strategic Trade Policy and the New International Economics (Krugman, 1986). To these arguments, in recent years the “fair trade” argument has been added. “Much economic analysis shows that in the eighties "fair trade" mechanisms turned increasingly into protectionist instruments used unfairly against foreign competition” (Bhagwati, 2015). As Baghwati proves in his publications, the argument of fair trade has repeatedly been used as a rationale towards protectionism in the 21st century. These rationales will be tested in the dissertation to establish a basis for Taiwan’s behaviour in the meat market.. 政治大. Protectionism is a broad and theoretical topic, but there are several empirical studies that have been carried out under this umbrella. Within it, we find studies of protectionism in agriculture, and the use of NTBs, which are the topics relevant to this research. In. 立. agricultural protection, Kym Anderson and Yujiro Hayami wrote a vital book in 1986 (Anderson & Hayami, 1986). In it, they focus on the Northeast Asian economies of Japan,. ‧ 國. 學. South Korea and Taiwan, in order to analyse the price distortion that protectionist measures impose on trade flows, and its causes. While theirs focus is mostly on subsidies, and less on barriers to trade (although they include NTBs on their calculations), the rationale of. ‧. protecting the domestic market is applicable to the current research, and the initial thirst for causation is imperative when it comes to understanding the problem, as Anderson and Hayami did. They start with an analysis of the economic process that leads to protection,. Nat. sit. y. concluding that economic growth and industrialisation diminishes the relevance of agriculture relative to GDP and employment. At the same time, the budget destined to food by. er. io. consumers gets proportionally smaller, diffusing their interests, while revenues from farmers are at stake, increasing their need to form pressure groups. Under this rationale, they. n. al. v i n. analyse the political economy behind protectionism, and conclude that “traditional food. Ch. engchi U. exporters will need to make a much more strenuous commercial diplomatic effort than has hitherto been the case” (Anderson & Hayami, 1986, p. 6) in order to avoid falling into the trap of protectionist pressures. Their book is fundamental as it brings international players into the scene, even if its main focus is on the domestic sources of foreign economic policy. Acknowledging that there are at least two levels of analysis required in a robust research is a starting point for a multi-level sectoral study. The most fundamental contribution that Kym Anderson has brought throughout his dedication to this topic is the quantitative assessment work carried out to measure the worldwide trends of protection. Alongside the World Bank and other scholars, he has made time series up until 2011 in order to measure the nominal rate of assistance (NRA) and relative rate of assistance (RRA) that the most important agricultural sectors (within the most 22.

(23) important agricultural-trading countries) have received in order to standardize a measurement for agricultural protection. Besides testing his work’s hypotheses, these analyses serve as a starting point for establishing that there is a high level of protection in the Taiwanese meat markets, as the data for the past decades show. Agricultural protectionism has been researched widely by Kym Anderson in his various works such as The Political Economy of Agricultural Price Distortions (2010), Distortions to Agricultural Incentives: 1955-2007 (2009) or “The Intersection of Trade Policy, Price Volatility, and Food Security” (2014) among others. His works present a robust methodology which mixes econometric analysis with historical narrative in order to decipher the origins and. 政治大. interests behind agricultural protectionism, arriving at results through empirical analysis. These have allowed him to theorize on the matter being the most distinguished scholar on. 立. the field of agricultural protectionism. He has done previous research on Taiwan’s agricultural protection (and Taiwan is included in the time series he developed alongside. ‧ 國. 學. Nelgen –mentioned above) concluding that there is a relatively high level of protection in the Taiwanese market, at least up to 2011, on the poultry and bovine meat markets. He does cover in his research several rationales for protectionism, but does not go into the field of international relations or international political economy; he’s strongly focused on the. ‧. domestic sources of pressure towards protection, and the economic theories behind it. Agricultural protection has also been analysed from an international perspective. Nat. sit. y. (bilateral and multilateral). Swinnen et al (Swinnen, Olper, & Thijs, 2012) have developed a quantitative analysis that aimed to measure ex post the results of policies that the WTO has. er. io. implemented regarding food trade. Their analysis generated quantitative data which is an interesting backup for the study of qualitative normative influence flowing from the WTO.. n. al. v i n. Furthermore they establish a framework of influence flowing from multilateral organizations. Ch. engchi U. into domestic policy choices. In a more qualitative vein, studies have analysed the concepts of food security and multifunctionality as protectionist measures legitimized by the proposals of multilateral organizations. Anderson again, in 2000, wrote an article titled “Agriculture’s Multifunctionality and the WTO” (Anderson, 2000) where he argues that domestic policy in pursuit of positive spillovers from multifunctionality do not require trade-offs towards agricultural protection as conceived by the WTO. In a similar approach but under different conclusions, Potter and Burney (2002) have studied disguised protectionism legitimized by the concept of multifunctionality towards environmental concerns. In the environmental contribution of agriculture they conclude that biodiversity and landscape values are highly positive externalities that provide a strong rationale for the protection of the sector. Since multifunctionality is a complex concept, involving several issue areas, the discussion around. 23.

(24) it is very much open, as Potter and Tilzey acknowledge (2007), where supporters and opposition exist towards the concept as an efficient public policy. Food security, on the other hand, is a concept that appears to be easier to define and grasp, as it is one of the indicators within the concept of multifunctionality. The concept of “food security” can be looked at from a self-sufficiency perspective, a hunger perspective, and a sanitary perspective. Either one is workable in its own right. In the case of northeast Asian countries of Japan, South Korea, or Taiwan, hunger is not a major policy issue, thus the focus is on self-sufficiency and food safety. Beghin, Bureau and Park (2003) take the analysis of the concept in South Korea by studying the impacts of a food security policy;. 政治大. while not questioning the core, they agree that it is a price distorting mechanism, and they “show that FS [food security] via production targets and reliance on imports would be more. 立. palatable to consumers and trade partners, while preserving income transfer to the farm sector” (Beghin, Bureau, & Park, 2003, p. 618). Just as with multifunctionality, there are. ‧ 國. 學. studies supporting the legitimate objective of food security (Gonzalez, 2004) for environmental (Turral, Burke, & Faures, 2011) and nutritional (Godfray, Beddington, Crute, Haddad, Lawrence, & Toulmin, 2010) purposes mostly, and studies that consider the concept to be a perfect excuse for disguised protectionism (Kaufman & Heri, 2007) (Runge,. ‧. 1990) (Kim, 2012).. While protectionism will establish the rationale for Taiwan’s behaviour, the analysis. Nat. sit. y. should also consider the form of the protectionism established, and literature on NTBs will be taken into consideration. As a basis for it, the United Nations Conference on Trade and. er. io. Development (UNCTAD), through the Multi-Agency Support Team (MAST), published in February 2012 the latest “Classification on Non-Tariff Measures” in order for analysts to be. n. al. v i n. able to quantify and measure this kind of barriers to trade according to a tree/branches/leafs. Ch. engchi U. system, similar to the HS harmonized codes. This research will use the same basis as UNCTAD.. NTBs are the protectionist tools of the 21st century. Baldwin (1970) wrote a comprehensive book on the phenomena in 1970, and its definitions are still valid. He writes in a context of disconformity with the Kennedy Round Agreement concluded in 1967, pointing out that in spite of what was achieved, NTBs continue to inhibit trade, and therefore welfare creation. In his argument he presents solutions for these distortions, which were later taken up for example in the WTOs boxes towards agricultural measures. As is the case with agricultural protection in general, the usefulness of NTBs has detractors and promoters. Beghin et al (Beghin, Disdier, Marette, & Van Tongeren, 2011) prove in their research, contrary to Baldwin’s assumptions, that the optimum level of non-tariff measures in 24.

(25) agricultural trade is not zero, since the application of certain food safety standards can be socially preferable to an open market. Several other studies (Saini, 2009) (Mikic, 2010) (Richards, Molina, & Hussein, 2009), on the other hand, have gone a great length to measure the results of NTBs, bringing monetary results of welfare loss that are worth considering. Thus the legitimacy of NTBs is not judged by the literature, since it depends on the policy goals that want to be achieved. Two key concepts that will be defined and operationalized for the analysis of the meat markets are those of selective protectionism and selective liberalization. These are concepts that the literature on political economy has used widely, without striving for a theoretical. 政治大. framework of the concepts, or an in-depth definition. Firstly, the concept of selective liberalization has been applied to describe the process of liberalization of the NIEs of East. 立. Asia, such as South Korea. The application of the concept is based on a sectoral strategy of liberalization towards economic growth applied by some countries in order to foster national. ‧ 國. 學. winners, and protect infant industries until maturity, while allowing a liberalized trade in inputs that may lower the costs of production. Dornbusch highlights the fact that “with the help of a selective liberal import strategy, Korea has been able to develop a highly competitive manufacturing sector” (Dornbush, 1992, p. 78). Similarly, and from the. ‧. perspective of the developing world, Shafeaddin (2005), argues for a selective sectoral liberalization process only when a certain industry reaches a level of maturity, in order to. y. sit. basis.. Nat. protect the growth of the selected industry. Once again, the concept is applied on a sectoral. er. io. The success stories invoked by Dornbusch and Shafeaddin, find a stronger categorization in Lall et al (Lall, Navaretti, Teitel, Wignaraja, & Ganeshan, 2010), where the. n. al. v i n. authors categorize the economic sectors according to liberalization potential in four levels,. Ch. engchi U. with a first group having well-developed capabilities which are already competitive internationally; a second group which has a “short distance from the technological frontier” and are near a stage of maturity; a third group which are potentially viable but require time and protection; and a fourth group of sectors which are not economically viable and should be allowed to die. These for groups aim to develop a potential scale for a gradualist process of selective liberalization. Smith (1999) brings the concept under an interesting definition and he establishes that “this term suggests that national executives indeed prefer economic liberalization, but that they also wish to control the scope and timing of the liberalization process” (Smith M. , 1999). This definition, while hardly workable towards research, widens the object of analysis beyond sectoral liberalization, and therefore opens up the door for a clear operationalization 25.

(26) of selective liberalization in different “scopes” and “timings” depending on the case studies under analysis. Applied to his own research, Smith looks at domestic pressure groups as well as regional institutions in order to understand the pursuit of selective liberalization within the European Union. These authors have some points in common in their usage of selective liberalization as a strategy: -. Selective liberalization is conducive to economic growth when conducted properly (as was the case of the NIEs), while a mechanism immediate strict liberalization does not. 政治大. necessarily derive in industrial development for the developing world. It has a positive effect towards growth and the efficient allocation of resources. -. Selective liberalization is part of a controlled process towards strict liberalization of. 立. trade.. A sectoral approach is the most common use of the concept, but it is not the only one,. 學. ‧ 國. -. and no theoretical framework has been generated to operationalize it.. The concept of selective protectionism has also been used with different connotations. While it may be thought to be an antonym of selective liberalization, or at least a process. ‧. that moves in parallel, the literature has made very different use of both concepts, and applied it to different empirical studies of trade policy. Hirashima (2004) provides a good. y. Nat. starting point, as he selects the concept to be used sectorally to describe the trade policies. sit. of Japan and Switzerland respectively. In this case, he talks about sectoral protection of uncompetitive domestic sectors in developed countries, and the focus is on the domestic. io. al. er. policy procedures that lead to the implementation of these protective mechanisms, and the. v i n. n. pressure groups that emerge from within. Similarly, Kriesi (1999) and Mach and Bonoli. Ch. (2000), formulate the same principle to explain protective policies in Switzerland’s vulnerable domestic sectors.. engchi U. Two main differences observable at first sight are the application of the concept to the developed world, not to the developing countries, and the sectoral characteristic of the concept. Menzel (2006) had already applied the selective protectionist concept to an analysis of the successful industrialization process of four countries (Switzerland, Denmark, Sweden and Canada). He understands the industrialization process of these countries as a cause of the following factors: A mix of technology transfer and endogenous innovation, trade policies that coupled greater economic integration through free trade with selective protectionism measures for some domestic sectors, a niche strategy based on low wages and a marketing strategy oriented towards the quality export of goods, and trade. 26.

(27) liberalization alongside increased state intervention. While the concept is clear, a workable definition is not present in this piece of research. Another scholar who used the concept of selective protectionism is Chorev (2007), and applied it to the United States. He applies the concept of selective protectionism to a particular historical period of America’s trade policy. While he sees the executive branch of government as internationalist, the congress of the United States is much more protectionist, and it applies selective protection according to the need of constituencies. Even when the executive branch had the ability to generate trade policy, “alternative protectionist measures, such as the imposition of import quotas, remained under the jurisdiction of Congress” (2007,. 政治大. p. 59). Finally, Keet (1999, pág. 5), understands the concept as “protective strategies [utilized by industrialized countries] in support of their economically vulnerable domestic. 立. industries or economic sectors”. With the abovementioned articles and works, the literature has understood the concept of selective protection under the following parameters:. ‧ 國. 學. -. A mechanism of protection applied by developed countries to shield their domestically vulnerable industries.. It is a negative phenomenon in terms of resource allocation and productivity.. -. The word “selective” applies to sectors, and has not been used for a wider or smaller. ‧. -. scope in the literature. -. It is part of a toolkit of policies used towards the achievement of industrialization, yet. Nat. sit. y. it does not possess a linear quality towards liberalization, but rather is based on the protective needs of vested interests, and the capability of countries to keep these. al. er. io. sectors under protection.. v i n. n. As we can see, both concepts have different characteristics according to the existing. Ch. literature. The basis of these concepts will be taken into account for the present research,. engchi U. but a more workable definition of both has been devised to operationalize and conceptualize the current research on Taiwan’s meat market. This conceptualization has been carried out alongside the theoretical framework applied to this research. As shown in the paragraphs above, the literature on protectionism is wide and varied. Moreover, the issues that concern this research (agricultural protection, disguised protectionism, selective protectionism and selective liberalization) represent a field where the discussions are open and ongoing, thus having a rich intellectual dialogue behind each of them that leads to a better understanding of the genuine concerns regarding the application or rejection of protectionist measures.. 27.

(28) 3.2 Taiwan’s trade liberalization and protectionism Taiwan’s trade liberalization process, or the lack of it, has been treated with special care during the past five years. The approach has come from three branches of scholarship, which are international political economy, international relations and economics. The positions that IPE and IR generally take seem to be similar. The question regularly asked by these disciplines is that since economic gains are to be expected from trade liberalization, what are the reasons behind Taiwan’s lack of trade liberalization? On the other hand, economists involved in the issue tend to overlook the international system, to focus on the effect on growth that trade agreements would bring to Taiwan, and therefore generally end. 政治大. up with words of encouragement towards the Taiwanese decision-makers regarding trade liberalization.. 立. Among economists, numerous studies have been carried out to test, through the GTAP databases with CGE modelling, what would be the efficiency effects (growth on GDP, total. ‧ 國. 學. welfare and the impact of exclusion) of FTAs, be them bilateral or regional. In this sense, the studies carried out by Lewis, Robinson and Wang (1995), Lee, Roland-Holst and Van der Mensbrugghe (1999), Gilbert, Scollay and Bora (2001) and also Kiyota and Stern (2008),. ‧. have intensively looked at the potential gains from inclusion (and damage from exclusion) that Taiwan would opt to if it were to join regional trade liberalization agreements. The analysis they carried out was not specific to Taiwan, but rather open to the whole Asia. Nat. y. Pacific region (even though each country is singled out for the results). All of them conclude. sit. that trade liberalization through regional or bilateral mechanisms will increase Taiwan’s GDP. er. io. growth by a certain margin. At the same time, a lack of liberalization would damage the Taiwanese economy generating trade diversion effects and worsening the terms of trade.. n. al. Ch. v i n. There have been studies carried out exclusively to assess the Taiwanese situation in. engchi U. these terms. Chen and Ku (2007), and Chow and Ciuriak (2012) have received the most light. Their focus, once again, is on the results that trade liberalization would have on the economy, but not on the process itself, or the reasons for the partial protection existent. In the case of Chow and Ciuriak, on their concluding remarks, the authors point out that “whether Taiwan can avoid being marginalized from East Asian economic integration and successfully sign multiple trade agreements with other Asian countries remains an open question”. An answer for this open question has not been looked at by the economists working on Taiwan’s trade liberalization. Thus even though the analysis on the results of Taiwan’s trade liberalization is intensive, the way to get there, or the blocks lying on its path are somehow overlooked, and left to political scientists. Where there is a consensus is on the fact that trade liberalization, according to modelling, brings growth to Taiwan’s economy. 28.

(29) Therefore we need to ask, do governments formulate trade policies solely on the basis of economic rationality? There is enough evidence to contradict this premise in several case studies worldwide, and in Taiwan in particular, and the “resultant policies are characterized more by political than by economic efficiency” (Lukauskas, 2013, p. 223). It is the task of political economy to bridge the gap in understanding why protectionist measures remain when free trade proves to be a better alternative if the goal is economic growth. Shiro Armstrong, young scholar from A.N.U., has tried to somehow bridge this gap with his article titled “Taiwan’s Asia Pacific Economic Strategies after the ECFA” (2010). He presents an interesting analysis, or projection, of the scenarios that open for Taiwan on a. 政治大. post-ECFA period regarding trade liberalization. His analysis is based on economic projections, and analysis of investment flows and variations on supply chain directions;. 立. however, he does leave a chapter to analyse the political strategy that Taiwan holds with regard to FTAs, or unilateral trade liberalization. What Armstrong questions is whether this. ‧ 國. 學. lack of FTAs are the cause of Taiwan’s economic stagnation, and also whether signing FTAs would have a positive effect on Taiwan’s economy. He concludes, however, that “rather [than pursuing FTAs] Taiwan should pursue a multilateral trade strategy and focus on domestic reforms that will bring larger economic gains, economic diversification and avoid. ‧. the political risks to the cross-Straits relationship associated with preferential deals” (Armstrong, Taiwan's Asia Pacific Economic Strategies Port-ECFA, 2010). As the. y. Nat. economists point out, there is a consensus on the benefits that liberalization would bring for. sit. the economy, but there is a clear policy indication on part of Armstrong signalling the need. io. er. for domestic reform towards liberalization.. Armstrong’s mentor, Peter Drysdale, is the author that best bridges the discussion. n. al. v i n. between the economic effects and the political considerations that should be taken into. Ch. engchi U. account when assessing Taiwan’s trade liberalization processes. In the year 2004, he published an article titled “Taiwan’s role in the Economic Architecture of East Asia and the Pacific”, where he matured his ideas regarding Taiwan’s position in the region. “A key characteristic of FTAs is that they involve political preference and political as well as economic choice. An environment in which FTAs dominate international economic diplomacy is not congenial to Taiwan’s economic and political interests” (Drysdale, 2004). While this study is not focused on FTAs, Drysdale brings about the idea of “political choice” in trade liberalization. As this research will argue, there is a clear political choice when it comes to the unilateral liberalization of Taiwan’s meat market; and the selection of trade policy is closely related to political preference, and political gains, not solely economic gains.. 29.

(30) When it comes to bilateral trade relations with the countries that are under analysis in this research we found no academic articles for this literature review in the relationships between Brazil and Taiwan, Argentina and Taiwan, or Spain and Taiwan, neither in English, Spanish nor Portuguese. Press articles and interviews are available in these matters. In the case of Chile and Taiwan, the author published an article previously in the potential for an FTA between both countries given their complementary productive structures (Schmidt F. , 2013). In this article, however, the topic of meat trade is not covered. The press and interviews available will not be reviewed here, as their topics are very broad and dispersed and generally treated superficially. They will be considered nonetheless for the analysis of each case study. Much different is the case between Taiwan’s relations with the United. 政治大. States. While several authors have considered this relationship to be asymmetrical (Baldwin, Chen, & Nelson, 1995) (Hsieh, 2011) (Huang C.-W. , 2009) due to the geopolitical game that. 立. is at stake, others have analyzed the situation from a perspective of equality (Tso, 2012) (Lardy & Rosen, 2005). Whether this has been the case in the agricultural trade policies. ‧ 國. 學. enacted will be a highly relevant topic towards defining Taiwan’s policy in the devised scale. While many of these publications focused on liberalization efforts from an FTA perspective, they are relevant to this research only to the analysis of situations where trade. ‧. agreements represent a requirement or an incentive towards achieving/granting market access. Taiwan’s trade liberalization from a domestic, or from a multilateral point of view,. y. Nat. has been relatively less analysed in the 21st century. Taiwan, as WTO member, presents in. sit. its official publications a good recount of its liberalization process. In 2006, 2010 and 2014, Taiwan submitted to the WTO its Trade Policy Reviews (TPR), accounting for its domestic. io. al. er. reforms, and international liberalization efforts. At the same time, the Bureau of Foreign. n. Trade from the Ministry of Economic Affairs, generates publications on Taiwan’s trade policy. Ch. v i n. titled The Development of International Trade on the Republic of China (Taiwan), where a. engchi U. recount of policies implemented is clearly visible, and can be contrasted with effective implementation of these. Both documents give a substantial picture of Taiwan’s progress in its trade liberalization, complying with its WTO commitments. Protectionism and liberalization are opposing forces, and research has also been carried out regarding Taiwan’s protectionist forces. A highly relevant work on this regard was developed by Chen and Hou, with their article titled “The Political Economy of Trade Protection in the Republic of China on Taiwan” (Chen & Hou, 1993). While the date of the publication is before the timeframe established for this research, their conclusions have validity from a historical institutional perspective. As Katzenstein’s research would also point out, the authors conclude that Taiwan has had autonomy in the creation of its trade policy. “Until recently, government economic policy was dictated by a small group of government 30.

(31) officials”. They, however, see this situation to be in flux, from increased domestic pressures, as well as outside pressures form the United States. Two important elements for this research can be highlighted: Bureaucracies are strong in the making of foreign economic policy, and the government is vulnerable to state-level pressures on its protectionist stance. A similar view is presented by Clark and Tan (2012) and Rigger (1999) as they understand the process of democratization to have limited the statist approach towards understanding Taiwan’s trade policy; however they fail to challenge its premises particularly in agriculture, and also consider the situation to be in flux. Taiwan’s strong government vis-à-vis its vulnerable international setting has been a. 政治大. constant in IPE and PE research. One of the strongest arguments in this regard has been presented Pang, conducting a comprehensive analysis of the historical structures that. 立. formed the government (Pang, 1992). Chen, Baldwin and Nelson, would argue in 1995 that state’s autonomy as related to trade was eroding (Baldwin, Chen, & Nelson, 1995). While. ‧ 國. 學. they maintain that the state still has a high level of autonomy, its absolute grasp of the foreign economic policy was changing due to pressures from different national and international actors, including Taiwan’s bid to join the WTO. Regarding protectionism, they recount the restrictions in trade that Taiwan still imposed on the United States by 1995, on. ‧. the sectors of agriculture, tobacco, wine, financial services and intellectual property, having relative autonomy by the time of their writing. These sectors were part of a complex. sit. y. Nat. protectionist policy based on state’s interest. Narrowing down the research, agricultural protection in Taiwan has also been studied,. er. io. among others by Anderson and Hayami (1986), Francks (1999), and Baldwin et al (1995). The question of whether Taiwan has protectionist policies in place in its agricultural policy. n. al. v i n. has been answered positively by all researchers, whether their measurements are qualitative. Ch. engchi U. or quantitative. While the three works just mentioned consider agricultural protection to be price distorting, and therefore inefficient in the allocation of resources, Zheng Gu (2014) argues that Taiwan’s policies have contributed to the agricultural development of Taiwan, having today the capability to export some of its agricultural products, being competitive in regional markets. The abovementioned TPRs of the WTO, provide a very interesting perspective of the policy discourse towards agricultural protection. They show relevant changes in the policy’s treatment of the agricultural sector. In the 2006 government report Taiwan argues that “The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu supports the long-term objective of the WTO to establish a market-oriented trading system through reforms by eliminating trade-distorting measures in the agricultural sector”, while maintaining the 31.