Agriculture is one of the leading economic activities in Taiwan. This is due to the fact that the country is not reach in natural minerals such as natural metals and crude oil products. The island therefore relies greatly on agricultural activities such as farming, livestock keeping and fishing for its economic sustainability and development. Basically, agriculture is the key income earner for the Taiwan people and the government. Agricultural production in Taiwan basically caters for domestic food requirements and the rest is used as export and foreign currency earner for the country. Actually, Taiwan is one of the world countries doing well economically and among the world’s major participant in international trade in both imports and exports. However by 1990 agricultural production started facing challenges due to sudden increase of production factors and lack of good market for agricultural produce.
The government of Taiwan had to come with strategies and policies that could be used to improve the state of agriculture in the country and the welfare of the majority of the Taiwan Citizens who are farmers. One of the initiatives made by the government of Taiwan was to join the World Trade Organization (WTO) which is responsible for moderating international trade and among its member countries. The Taiwan Council of Agriculture (COA) felt that by joining WTO Taiwan could open to international market and this could enable its farmers to have ready market for its produce and also enable them to import farming requirements from other countries at lower prices thereby making the agriculture in Taiwan more profitable. However, there is a controversy on whether farmers in Taiwan really benefited from this move with many people arguing that the idea of joining WTO had more disadvantages to the local farmers than the intended benefits. On the other hand government organizations in charge of agriculture in Taiwan such as COA argue that the idea was the best for the country’s economy and the local farmers in general. This literature review general provides an analysis of the state role in on agriculture in Taiwan especially after joining WTO. The researcher tries to uncover all the available literature from reliable sources in order to back up the findings obtained during the actual study. The literature review will involve analysis of all the peer reviewed sources such as books, academic journals, government reports, scholarly articles, internet sources, business journals and magazines.
The objectives of the literature review are grouped into two categories for easier understanding and analysis. These are the general objective and specific objectives.
The general objective of the study is to determine how the Taiwan government has impacted agriculture in the country after its joining the WTO. This involves evaluation of all the available literature on the role of the Taiwan government on agriculture especially in setting policies that could harmonize the local agriculture trade with the international agriculture from other parts of the world.
In order to achieve the general objectives of the literature review and the study in general, there are specific objectives that are to be achieved during the review. They include the following:
- Finding and analyzing all the readily available literature on the state of agriculture in Taiwan before and after joining the World Trade Organization (WTO).
- To evaluate the strategies and policies used by the Taiwan government to regulate agriculture in the country before and after joining WTO and how these policies affected agriculture in the country.
- To determine the state of agriculture in Taiwan with more under the new policies set by WTO with more emphasis put on the living standards of the Taiwan local farmers. The review will try to uncover the living standards of the Taiwan farmers under the new WTO policies.
- The literature review also aims at finding how the Taiwan government through COA modified it agricultural policies in order to meet the requirements of WTO and also cater for the interests of its local farmers.
- To compare and contrast the state of agriculture in Taiwan before and after joining WTO and determine the most favorable in terms of farmers’ satisfaction and the general agricultural performance.
- To use the findings of the literature review to predict the outcomes of the actual study thereby eliminate cases of biasness during the study.
- To use the findings of the literature review in the analysis of the findings of the actual study and make reasonable conclusion and recommendations.
In order to ensure that the literature review does not constitute issues that are not related to the study, the following questions were set as guidelines to ensure consistence during the study. These questions will also be used to determine whether the study was completed satisfactorily. It is worth noting a well conducted literature review can be used as study itself simply because it represent previous findings by other researches that are valid and can be used for decision making. The researcher will therefore check whether the review is completely done by testing whether it provides solution to the review questions. The questions to be answered during the literature review include the following:
- Does the literature review evaluate all the available literature about the state of agriculture in Taiwan before and after joining the WTO?
- What are the policies used by the Taiwan government to regulate agriculture both before and after joining WTO? How these policies affected agriculture in the country and the state of farmers?
- Considering the fact that agriculture is the key income earner to the people of Taiwan, how do the new policies set by the government after joining WTO affect the living standards of the people of Taiwan?
- What are the functions of COA and other government institutions in Taiwan and how do these organizations influence agriculture in the country? Do they represent the interests of the government or those of the farmers?
- What is the comparison of the state of agriculture in Taiwan currently and before joining the WTO? Is agriculture more profitable and reliable to farmers currently than it was before?
- Does the literature review help in understanding and analyzing the outcomes of the study? What is the role of the literature review in making conclusions and recommendations on the entire study?
Main source of literature to be reviewed
The literature review will include the analysis of all readily available source of information about the state of agriculture in Taiwan and the impacts of government policies before and after joining WTO. This includes evaluation of all the peer reviewed literature ranging from government and WTO reports, business journals and agriculture reports, internet sources such as peer reviewed websites, books, academic articles and other sources that are reliable and applicable in this study. Basically the literature review emphasizes on the impact of the state role on agriculture in Taiwan both before and after joining WTO. Therefore, most of the materials reviewed will be published few years before 2002 and after 2002. This is due to the fact that Taiwan joined WTO in 2002 and the literature review should cover the situation before and after joining WTO.
Analytical methods used during the literature review
The study will involves analysis of all sources of information on readily available about the role of the Taiwan government roles on agriculture. Basically the review involves collecting all the available literature materials then sorting those that are certified as peer reviewed and then evaluate their content in order to determine those that contain information that is relevant to the study. The selected are then analyzed in order to find what previous researchers have to say about the state role on agriculture in Taiwan relative to before and joining the WTO. After the analysis, a conclusion will be made based on the findings before commencing to the actual study. A list of sources reviewed will be prepared in to give credit to previous researchers and make the study more reliable.
Background of agriculture in Taiwan before joining WTO
Taiwan is among the world greatest countries in terms of international trade and currently it is ranked top 20 according to the report released by WTO in 2010. According to World Bank, Taiwan is ranked 17th largest economy in the world with US $ 180 billion making it the 3rd largest holder of foreign exchange reserves. This is as a result of Taiwan participating in international trade with most of its goods being agricultural goods. For many years Taiwan has been relying on agriculture for its economic sustainability and well doing of its people. The government of Taiwan has been doing its best to ensure that agriculture, which is the back bone of the country’s economy, does not collapse.
Taiwan government got fully involved in the country’s agricultural activities in the mid- 20th century. Agricultural production rose greatly 1n the year 1949 due to government reforms that were started by Chiang Kai-shek. This was after KMT government was moved to Taipei from Nanjing. In the in 1960s most of the agriculture in Taiwan was done by foreigners through the incitement of the government through favorable export processing zones that attracted foreign investors into Taiwan. However with time the government attention in Taiwan was shifted to slowly to technology or capital intensive commodities other than labor intensive goods that were popular in 1960s. This made agriculture to decline in Taiwan due to lack of ready market and increase in prices for agricultural products. Agriculture was that key pillar of the economy of Taiwan and decline in agricultural activities and in 1990s the government felt that it was important to open up its economy by joining the rest of the world in international trade. This was intended to provide ready market for Taiwan agricultural products and also ensure that farmers have access to cheap farming activities from foreign countries. It is at this time, 1990s that Taiwan shown interest to join World Trade Organization as a way of creating more market for its agricultural products.
It is worth noting that the Taiwan government policies to improve agriculture in the country before joining WTO were not badly off though they were not sufficient enough to cater for all economic needs of the people of Taiwan and the government. For instance, Taiwan is among the world highest standards of living and a prominent member of the Asia’s ‘Four Tigers’. In terms of per capita gross national product (GNP), in 1950s it was $1100 and by 1990s it had raised to $11600 courtesy of advancement in agricultural activities due to favorable government policies. Technology related policies that were introduced by government by 1980s have borne many fruits to the Taiwanese agricultural sector. Initially, there was a controversy that government of Taiwan had shifted its attention from agriculture and more emphasize was put to technology and industrialization. However, the Taiwan has been able to improve its industries technologically for the past few decades thereby making its agricultural products of high quality and marketable over the world. Even after joining WTO in 2002, the Taiwan government is still working hard to promote agricultural activities and other economic activities in order to improve its competitiveness among the other members of WTO.
State role during the joining World Trade Organization (WTO) and later on
Research shows that Taiwan submitted its applications of General Agreement on Tariffs and Trade (GATT) on January 1st 1990. Taiwan was granted membership two years later on September 1992. This was the actually the entry point for Taiwan to the international trade. Immediately after acceptance into GATT, Taiwan got over 20 contracting parties willing to have bilateral trade negotiations on market access. This was a good trend for Taiwan for it assured ready market for its agricultural produce. Nevertheless, GATT was replaced by WTO and the Taiwan’s application for accession to GATT was transferred to the WTO with amendments. In 1998 February 20th, Taiwan completed all its negotiations with WTO and bilateral agreements with all 26 members were all agreed. However, according to the rules and regulations of WTO, Taiwan was officially granted membership on January 1st 2002. This marked an important step in Taiwan’s participation in the international trade community.
After joining WTO, Taiwan people thought, that challenges that were facing the agricultural sectors could come to an end. They believed that their government could come up with policies that could make agriculture more profitable thereby improving their living standards than they were before joining WTO. The most challenging thing for Taiwan after entering WTO was to adhere to the rules and regulations of WTO with some of them contradicting the Taiwan local policies on agriculture. Generally, in Taiwan agriculture constitute of small farms. Although the economy of Taiwan has been doing well for the recent past, wages and other farming expenses have been going rapidly high for the last few decades. High production among the Taiwan farmers and high marketing costs made it difficult to make profit in agriculture. It is this concern that made the Taiwan government to considering joining WTO in order to expand its market. However, this approach too came with its challenges because the country has to meet all the requirements of WTO and adhere to all the rules by opening its markets. Although this attempt was intended to open more market for Taiwan farmers, it also exposes them to unhealthy competition from well established traders with cheaper goods from other countries. This has also imposed more challenges to the state as it is required to meet all the requirement of WTO and at the same time come up with policies that protect interest of its farmers and country in general. The government of Taiwan therefore plays a very important role in on agriculture by ensuring that its local producers are not violating WTO rules and regulations in regulating international trade.
According to its local analyst, agriculture in Taiwan is faced with challenges associated with open trade that the state should address so that its farmers can benefit fully from international trade. Researchers feel that some of these challenges might be difficult to overcome if the agriculture sector in Taiwan does not speed up its structural adjustments and ensure that its industries are aim at achieving sustainable development. Currently the state is concerned about policies that balance market competitiveness, ecological conservation, farmers’ welfare and adherence to WTO rules and regulations that regulate international trade and market for goods and services. However, the state is also facing the challenge of ensuring that its agricultural policies meet the needs of a modern society in order to achieve support both locally and internationally.
The state through Council of Agriculture (COA) has thereby developed strategies and measures for each of its agricultural produce in order to ensure that it benefit from trade liberation associated with becoming a member of WTO. The Taiwan government has realized that opening its markets to international levels does not only come with benefits only but also with challenges that if good polices are not put into place farmers might not benefit from liberalized trade. Consequently, the government of Taiwan through COA has come with Task Force known as “Action Task Force on Agricultural Issues after WTO” that is working tirelessly in developing plans and projects that ensure that negatives impacts of joining WTO to farmers are reduced. It is only after Taiwan local farmers are protected from unprotected competitions from the international markets that the government Taiwan can claim to have established policies that fully promote agricultural in the country.
Taiwan government roles and responsibilities on agriculture after WTO
Similar to before joining the WTO, Taiwan government’s major responsibility is to ensure that its framers and other stakeholders in agriculture meet all the rules, regulations and commitment made during negotiations. This includes making agricultural market in Taiwan more open and thereby encouraging competitors to come in and trade with the locals. Since the government cannot fully stop competition from the external competitors, it has embarked on a more technical approach which involves lengthening the transition period. The government aims at ensuring that its farmers and other players in the agriculture develop adequate competitiveness that can match that of well developed competitors from other countries. The government role on agriculture in Taiwan has made local products more competitive in market thereby enabling the Taiwan farmers to benefit from the international trade.
One of the efforts by the Taiwan government to improve agriculture is by lowering its tariffs. According to the Taiwan economic development strategies, the government lowered its tariffs to 14. 01% from 20.01% in order to make its goods a little bit cheaper in the international market. The Taiwan government aimed at lowering its tariffs to a level between that of Korea and Japan. This made farm tools and equipment cheaper thereby lowering the cost of production. Consequently, Taiwan agricultural products became cheaper in market hence more competitive in the region and worldwide. Although the target date for tariff reduction was 2002, the whole process was completed by the year 2004. One of the major achievements in promoting Taiwan agricultures through tariff reduction was lowering prices for farm tools. Initially, there were 41 agricultural products that were under import restriction. However, after joining WTO 18 products became free thereby liberalizing the local market. This has made availability of agricultural tools and equipments readily available though the move has also opened the local farmers to unfair competition from the international market.
Another role that government has played in improving agricultural business in Taiwan is ensuring that there are no restrictions on imports. Initially some of the imports restrictions on agricultural produces were not on accordance with the WTO principle of non-discrimination. However, after joining WTO, the government of Taiwan had to remove restriction on 18 agricultural products so that they can be imported without restrictions. The 18 products include potatoes, oranges, lemons, papayas, apples, plums, peaches, grapes, lime, logans, lichees, guavas, turkey meat, duck meat and squids among others. Reduction of tariff rates for this product by the Taiwan government came with both advantages and disadvantages. It terms of advantages lowering tariffs on these products and their farm tools made availability of agricultural goods in the country thereby lowering competition. On the other hand, this imposed a threat on the locally produced goods.
Other than the tariffs free agricultural products, the government of Taiwan has the responsibility of regulating other agricultural goods under import under tariff- rate quota (TRQ). After joining WTO, 22 agricultural products that were initially banned in Taiwan put under TRQ quota in accordance with the Uruguay Round Agreement in Agriculture. The agricultural products under the tariff- quota included pork belly, young coconuts, bananas, dried logans, logans, liquid milk, animal offal, peanuts, oriental pears, sugar, garlic bulbs, chicken meat, mackerel and adzuki beans among others. According to the government of Taiwan, the quota normally counts between 4% and 8% of the domestic consumption expect some scarce products such as sugar. The fact that there is no restriction put in the quantity of goods under quota, more agricultural goods are imported into the country thereby exposing local farmers into unfavorable competition. According to the local analysts, lack of quantity import control, quota system may not improve the situation of agriculture in Taiwan.
Rice is the leading agricultural product in the country and one of the leading income earners to the people of Taiwan. Therefore, the government through COA has put extra efforts on agriculture to ensure that rice production in the country is economical to both the state and local farmers. After joining WTO, the Taiwan government importation of rice should be governed by special rules of Annex V of the Uruguay Round Agreement on Agriculture. For instance, rice importation was to be maintained to 8% by 2002 and the amount was to be divided into two parts namely governmental and private quota. The governmental quota that constitutes 65% of the total rice import in Taiwan is normally imported and governed by the government.
Another, way that the government of Taiwan improves agricultural activities is by reducing domestic support on agricultural products and inputs that could affect local agricultural activities. The government does this in accordance with the Uruguay Round Agreement on agriculture whereby all agricultural activities that have negative effects on the normal agricultural production and trade are supposed to be calculated in terms of “Aggregate Measure of Support (AMS)” and consequently reduced accordingly. This way the government of Taiwan is able to guarantee price of major agricultural products such as rice and other grains in order to protects interests of the of the Taiwan local farmers. Other agricultural products that the government of Taiwan has guaranteed price on contract basis include sugar, tobacco, and wheat in order to encourage farmers to grow other crops other than rice. However, the government of Taiwan reduced its subsidies on agricultural products by 20% in 2002 in accordance with the rules and regulations of WTO after becoming its member.
The government of Taiwan is also aware that fulfilling all its commitments to WTO means lowering its tariffs on agricultural, products, livestock and fishery. Consequently this will increase importation of agricultural products thereby affecting market for locally produced goods. However, the government of Taiwan has made policies that aim at eliminating other products that are not advantageous to the country in order to improve the agricultural sector. Therefore the government of Taiwan together with COA is currently reconstructing farmland, farm labors and water resources in order to improve agricultural production.
The government of Taiwan aims at using ‘knowledge economy’ to improve agriculture in the country. This concept aims at enhancing competitiveness and not to increase productions as nit was with policies that were implemented before joining WTO. It includes improving marketing efficiency and raises the value added of agricultural products thereby increasing the income of the farmers. The government is also determined to ensure that local farmers make use of the advantages of technology and economic scale. The government also aims at developing advanced agricultural technologies such as automation, biotech and environmental control in order to promote reconstruction and upgrading of agriculture. This is done though COA that is in charge of setting up Innovation Centers to provide new and up-to-date production technology and financial incentives. Another way through which the government of Taiwan is improving agricultural business in Taiwan is by starting food processing industry in the country thereby helping agriculture to become more industrialized and consequently more competitive.
Another role that is played by the government of Taiwan to improve agriculture in the country include developing potential and quality tourism agriculture in order to ensure that farmers are able to earn from potential people wishing to observe farming activities in the country. The government has also built information network for agriculture that enable farmers to be always informed of the market information thereby being informed all the time on the new market changes. It also encourages diversification and modernization of agricultural marketing channels in order to link production and consumption. The government of Taiwan through COA also aims at exploring foreign markets for competitive local farm and processed goods in order to increase income of its farmers. The government also plays a very important role in implementing animal and plant health inspection and quarantine in order to improve the quality of its animal products thereby making them more competitive internationally. The government of Taiwan also ensures that there is adequate planning for price stabilization and ensuring that its farmers have access to relief and assistance measures for agricultural products that are normally damaged by imports. The government of Taiwan through COA also ensures adjustment in the resource allocation in order to ensure development within the agricultural sector.
It is evident from the review that agriculture is the foundations of national development, natural conservation, culture and the source of livelihood for the people of Taiwan. Actually most of the Taiwan people are directly involved in agriculture. Therefore agriculture is used in Taiwan as an indicator of whether the state is executing its policies well and for their benefit. Research also shows that commercial agriculture has been practiced in Taiwan for many decades even before the state joined WTO. It is evident also that government had an important role in improving agriculture in the country although these roles increased after the state joined WTO. It is the responsibility of the people of the government of Taiwan to ensure that agricultural activities in the country are conducted in accordance with rules and regulations set by WTO. More so, the government of Taiwan has the responsibility of ensuring that joining WTO and other international trade activities do not pose threats to the agricultural activities. The impact of the state role in Taiwan is very clear especially after joining WTO. The government has come up with policies that protect agricultural sector harmful competition from the international market and make it more competitive. This has enabled the agricultural sector to improve its performance on the international market few years after joining WTO.