AmCham arrow Publications arrow Topics Archive arrow Topics Archive 2006 arrow Vol.36- No.3 arrow Issues: Emabling the Sub Deal to Resurface
Issues: Emabling the Sub Deal to Resurface PDF Print E-mail

Congressman Rob Simmons suggested in Taipei that the urgent first step is to set the specifications and prepare a conceptual design.

 

The proposed package of advanced military systems to be purchased from the United States has become one of the most contentious topics in Taiwan's always stormy domestic politics. The government's bill requesting budget approval has been kept off the agenda of the opposition-controlled Legislative Yuan, blocked 48 times by the Procedure Committee.

Of the items in the package, the most controversial has been the inclusion of eight diesel-electric submarines. Even many of those generally supportive of Taiwan's defense needs have had questions about the cost, delivery time, and just how the United States, which has long produced only nuclear subs, would be able to come up with appropriate technology.

Hoping to help find a way out of this impasse, U.S. Congressman Rob Simmons, a Connecticut Republican and member of the Armed Services Committee, paid a visit to Taipei last month. His schedule included calls on President Chen Shui-bian, KMT Chairman Ma Ying-jeou, and Defense Minister Li Jye, as well as an appearance as guest speaker at an AmCham luncheon.

In his comments, Simmons emphasized the importance of U.S.-Taiwan cooperation to help ensure the continued peace and prosperity of the Pacific region in the face of China's rapid military build-up - as well as the crucial role of submarine capability in that effort. Because subs are stealthy, they add uncertainty to the plans of a would-be attacker, and therefore have a strong deterrent effect.

The Congressmen addressed some of the objections that have been raised to the planned purchase: That submarines are offensive weapons. "This is nonsense," he told the Amcham audience. "Taiwan submarines are defensive because their mission is inherently defensive: to prevent a Chinese blockade or invasion."

That buying the subs would be "provocative" toward China. "This is a misguided and dangerous mindset. What Communist China finds 'provocative' is Taiwan's freedom and democracy."

That the purchase would be too costly. The estimated US$12 billion pricetag is probably an overstatement, Simmons said. US$8 billion is more likely. But no one knows the real price until a conceptual design is prepared. He recommended that the LY be asked to appropriate only enough funds at this point to cover work through the design stage.

That it will take too long to get delivery. Simmons said the reported 10 to 12 years before the subs could be operational may also be exaggerated. Like the price, the timing can't be known until the design is determined. But he noted that the Electric Boat Corp. in his home district of Groton recently launched the first of the new Virginia-class nuclear subs five years after the start of design.

He added that Taiwan subcontractors must be involved in the project as much as possible, and that arrangements should be made for basic maintenance and repair work to be done locally either by the Taiwan Navy or the China Shipbuilding Corp.

If the submarine deal can ever be extricated form the tangle of domestic politics, Simmons' suggestion of starting with selection of a prime contractor and definition of the design seems like an eminently reasonable approach. A final decision on the project could then be made on a realistic basis rather than relying on assumptions and conjecture.

- By Don Shapiro


Illegal Photocopying: A Textbook Case

Foreign publishers are losing millions of dollars, and local students are inadvertently learning that the law is meant to be skirted.

Although intellectual-property infringement has been a hot issue in Taiwan for some time, most of the focus has been placed on the fashion and entertainment industries. Relatively little attention has been paid to the educational textbook market, where illegal photocopying has become so rampant on college campuses that an increasing number of college students never buy a textbook.

Foreign publishers estimate that their total annual loss comes to at least US$20 million, equal to around 40% of their turnover. To combat this problem, more than two dozen foreign and domestic publishers four years ago formed the Taiwan Book Publishers Association (TBPA). The group actively seeks help from the police to conduct raids on photocopy shops suspected of illegal activity, from the judicial system to prosecute copyright infringers, and from the educational authorities to promote respect for intellectual property on the nation's campuses.

A major obstacle is that under the principle of university autonomy, students and professors are treated as a very special group in society. The police are therefore reluctant to enter the campuses, which is where many of the photocopying shops are located. For the same reason, taking legal action against students can be highly controversial. In April 2001, a major social uproar occurred when prosecutors led police in an unprecedented search of a dormitory at National Cheng Kung University, where they confiscated 14 computers allegedly containing illegally downloaded MP3 music files. Although publishers may sue the owners of photocopy shops, says Pearl Lin, general manager of Macmillan in Taiwan, "we think students should also be held accountable."

Even for off-campus photocopying businesses in neighborhoods around the universities, it is much more difficult than previously to discover their locations. The proprietors now typically take orders elsewhere, then do the actual copying upstairs inside apartment buildings instead of in clearly identified storefronts.

The publishers are urging the Ministry of Education (MOE) to take a more active supervisory role. "We hope the MOE can be more aggressive in trying to regulate student behavior," says Joseph Chen, the TBPA deputy secretary general. "Even though school rules state that photocopying textbooks is forbidden, the enforcement is very loose."

Some progress appears to be occurring, however. In a recent letter issued to colleges nationwide, the MOE admonished school authorities about the importance of this matter, ordering them to pay closer attention to the photocopy shops on campus and recommending that IPR protection be covered in more courses. A spokesperson for National Cheng Chi University told Taiwan Business TOPICS that the school has taken this issue very seriously. All the photocopying stores on campus have been required to post signs noting that they won't copy textbooks, and the school's Graduate Institute of Intellectual Property has been assigned responsibility for educating the entire student body about the importance of IPR protection. That will be a valuable lesson that this elite segment of society will carry into post-graduation careers in business and the professions.

- By Lin Mei-chun


Bottleneck for Wine Importation

New regulations due to start July 1 may lead to higher prices and less choice for consumers, without having much value for health protection.

The Department of Health has drawn up regulations requiring importers of wine or spirits to prove that their products don't contain excessive amounts of lead, methanol, or sulfur dioxide. The new rules - scheduled to come into force on July 1 - may be well-intentioned, but they're likely to increase alcohol prices and limit consumer choice without in fact doing much good for people's health.

Similar regulations for beer took effect at the beginning of this year. Those regulations haven't caused much disruption for importers, retailers, or consumers, because beer is a high-volume business in which the government's requirement that importers surrender some of their product for testing isn't terribly significant. But for wine and spirits, which are often imported in rather small lots, it's a different situation.

The rules, as currently written, will require importers to obtain certification from accredited laboratories that their products don't contain too much methanol, lead, or sulfur dioxide - an expensive and cumbersome proposition - or to surrender product samples for testing during the customs process, an anxiety-provoking proposition because importers won't be able to know for sure when their products will clear customs. In either case, importers will be confronted with a daunting new layer of bureaucracy.

Meanwhile, the regulations' contribution to public health will be dubious. The rules as they apply to sweet wines, for example, are overly restrictive. Yes, sweet wines contain higher levels of sulfur dioxide than do other alcohol products - but how much dessert wine is any one person likely to drink? In addition, the regulations seek to discover toxins in places where they'll probably never occur. "You're unlikely to find lead in wine," says Scott Sindelar, chief of the Agricultural Affairs Section at the American Institute in Taiwan, "so testing for it is unnecessary."

If the regulations are implemented as now envisioned, the result will be a decrease in the variety of products available to Taiwanese consumers - particularly of low-volume, high-value goods whose profitability for importers would be erased by forcing them to surrender even a small amount of product for testing. And even those goods that remain in the market will likely see price increases. Wiboon Arunthanes, managing director of Moët-Hennessy Taiwan, suggests that the government could safeguard public health more efficiently by randomly checking products purchased from retail shelves. "Many countries use that approach," he says. He also encourages the government to address the regulations' problems before they go into effect. "They should avoid the mentality of changing things later if they go wrong," he says, "because no one can say how long it might take to rectify the situation later."

Of particular concern from a free-trade perspective is that, according to Arunthanes, the regulations contain no mechanism to ensure that local alcohol producers, along with foreign ones, are required to follow the rules. That is, customs will be the only point in the process at which laboratory certification will have to be produced, or at which product will be demanded for testing.

- By Lucien Crowder
 
[ Back ]