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Previous Hard Law or Soft Law? –Global AI Regulation Developments and Regulatory Considerations Next Reviews on Taiwan Constitutional Court's Judgment no. 13 of 2022

The Institutionalization of the Taiwan Personal Data Protection Committee - Triumph of Digital Constitutionalism: A Legal Positivism Analysis

The Institutionalization of the Taiwan Personal Data Protection Committee - Triumph of Digital Constitutionalism: A Legal Positivism Analysis

2023/07/13

The Legislative Yuan recently passed an amendment to the Taiwan Personal Data Protection Act, which resulted in the institutionalization of the Taiwan Personal Data Protection Commission (hereunder the “PDPC”)[1]. This article aims to analyze the significance of this institutionalization from three different perspectives: legal positivism, digital constitutionalism, and Millian liberalism. By examining these frameworks, we can better understand the constitutional essence of sovereignty, the power dynamics among individuals, businesses, and governments, and the paradox of freedom that the PDPC addresses through governance and trust.

I.Three Layers of Significance

1.Legal Positivism

The institutionalization of the PDPC fully demonstrates the constitutional essence of sovereignty in the hands of citizens. Legal positivism emphasizes the importance of recognizing and obeying (the sovereign, of which it is obeyed by all but does not itself obey to anyone else, as Austin claims) laws that are enacted by legitimate authorities[2]. In this context, the institutionalization of the PDPC signifies the recognition of citizens' rights to control their personal data and the acknowledgment of the sovereign in protecting their privacy. It underscores the idea that the power to govern personal data rests with the individuals themselves, reinforcing the principles of legal positivism regarding sovereign

Moreover, legal positivism recognizes the authority of the state in creating and enforcing laws. The institutionalization of the PDPC as a specialized commission with the power to regulate and enforce personal data protection laws represents the state's recognition of the need to address the challenges posed by the digital age. By investing the PDPC with the authority to oversee the proper handling and use of personal data, the state acknowledges its responsibility to protect the rights and interests of its citizens.

2.Digital Constitutionalism

The institutionalization of the PDPC also rebalances the power structure among individuals, businesses, and governments in the digital realm[3]. Digital constitutionalism refers to the principles and norms that govern the relationship between individuals and the digital sphere, ensuring the protection of rights and liberties[4]. With the rise of technology and the increasing collection and use of personal data, individuals often find themselves at a disadvantage compared to powerful entities such as corporations and governments[5].

However, the PDPC acts as a regulatory body that safeguards individuals' interests, rectifying the power imbalances and promoting digital constitutionalism. By establishing clear rules and regulations regarding the collection, use, and transfer of personal data, the PDPC may set a framework that ensures the protection of individuals' privacy and data rights. It may enforce accountability among businesses and governments, holding them responsible for their data practices and creating a level playing field where individuals have a say in how their personal data is handled.

3.Millian Liberalism

The need for the institutionalization of the PDPC embodies the paradox of freedom, as raised in John Stuart Mill’s “On Liberty”[6], where Mill recognizes that absolute freedom can lead to the infringement of others' rights and well-being. In this context, the institutionalization of the PDPC acknowledges the necessity of governance to mitigate the risks associated with personal data protection.

In the digital age, the vast amount of personal data collected and processed by various entities raises concerns about privacy, security, and potential misuse. The institutionalization of the PDPC represents a commitment to address these concerns through responsible governance. By setting up rules, regulations, and enforcement mechanisms, the PDPC ensures that individuals' freedoms are preserved without compromising the rights and privacy of others. It strikes a delicate balance between individual autonomy and the broader social interest, shedding light on the paradox of freedom.

II.Legal Positivism: Function and Authority of the PDPC

1.John Austin's Concept of Legal Positivism: Sovereignty, Punishment, Order

To understand the function and authority of the PDPC, we turn to John Austin's concept of legal positivism. Austin posited that laws are commands issued by a sovereign authority and backed by sanctions[7]. Sovereignty entails the power to make and enforce laws within a given jurisdiction.

In the case of the PDPC, its institutionalization by the Legislative Yuan reflects the recognition of its authority to create and enforce regulations concerning personal data protection. The PDPC, as an independent and specialized committee, possesses the necessary jurisdiction and competence to ensure compliance with the law, administer punishments for violations, and maintain order in the realm of personal data protection.

2.Dire Need for the Institutionalization of the PDPC

There has been a dire need for the establishment of the PDPC following the Constitutional Court's decision in August 2022, holding that the government needed to establish a specific agency in charge of personal data-related issues[8]. This need reflects John Austin's concept of legal positivism, as it highlights the demand for a legitimate and authoritative body to regulate and oversee personal data protection. The PDPC's institutionalization serves as a response to the growing concerns surrounding data privacy, security breaches, and the increasing reliance on digital platforms. It signifies the de facto recognition of the need for a dedicated institution to safeguard the individual’s personal data rights, reinforcing the principles of legal positivism.

Furthermore, the institutionalization of the PDPC demonstrates the responsiveness of the legislative branch to the evolving challenges posed by the digital age. The amendment to the Taiwan Personal Data Protection Act and the subsequent institutionalization of the PDPC are the outcomes of a democratic process, reflecting the will of the people and their desire for enhanced data protection measures. It signifies a commitment to uphold the rule of law and ensure the protection of citizens' rights in the face of emerging technologies and their impact on privacy.

3.Authority to Define Cross-Border Transfer of Personal Data

Upon the establishment of the PDPC, it's authority to define what constitutes a cross-border transfer of personal data under Article 21 of the Personal Data Protection Act will then align with John Austin's theory on order. According to Austin, laws bring about order by regulating behavior and ensuring predictability in society.

By granting the PDPC the power to determine cross-border data transfers, the legal framework brings clarity and consistency to the process. This promotes order by establishing clear guidelines and standards, reducing uncertainty, and enhancing the protection of personal data in the context of international data transfers.

The PDPC's authority in this regard reflects the recognition of the need to regulate and monitor the cross-border transfer of personal data to protect individuals' privacy and prevent unauthorized use or abuse of their information. It ensures that the transfer of personal data across borders adheres to legal and ethical standards, contributing to the institutionalization of a comprehensive framework for cross-border data transfer.

III.Conclusion

In conclusion, the institutionalization of the Taiwan Personal Data Protection Committee represents the convergence of legal positivism, digital constitutionalism, and Millian liberalism. It signifies the recognition of citizens' sovereignty over their personal data, rebalances power dynamics in the digital realm, and addresses the paradox of freedom through responsible governance. By analyzing the PDPC's function and authority in the context of legal positivism, we understand its role as a regulatory body to maintain order and uphold the principles of legal positivism. The institutionalization of the PDPC serves as a milestone in Taiwan's commitment to protect individuals' personal data and safeguard the digital rights. In essence, the institutionalization of the Taiwan Personal Data Protection Committee represents a triumph of digital constitutionalism, where individuals' rights and interests are safeguarded, and power imbalances are rectified. It also embodies the recognition of the paradox of freedom and the need for responsible governance in the digital age in Taiwan.

[1] Lin Ching-yin & Evelyn Yang, Bill to establish data protection agency clears legislative floor, CNA English News, FOCUS TAIWAN, May 16, 2023, https://focustaiwan.tw/society/202305160014 (last visited, July 13, 2023).

[2] Legal positivism, Stanford Encyclopedia of Philosophy, https://plato.stanford.edu/entries/legal-positivism/?utm_source=fbia (last visited July 13, 2023).

[3] Edoardo Celeste, Digital constitutionalism: how fundamental rights are turning digital, (2023): 13-36, https://doras.dcu.ie/28151/1/2023_Celeste_DIGITAL%20CONSTITUTIONALISM_%20HOW%20FUNDAMENTAL%20RIGHTS%20ARE%20TURNING%20DIGITAL.pdf  (last visited July 3, 2023).

[4] GIOVANNI DE GREGORIO, DIGITAL CONSTITUTIONALISM IN EUROPE: REFRAMING RIGHTS AND POWERS IN THE ALGORITHMIC SOCIETY 218 (2022).

[5] Celeste Edoardo, Digital constitutionalism: how fundamental rights are turning digital (2023), https://doras.dcu.ie/28151/1/2023_Celeste_DIGITAL%20CONSTITUTIONALISM_%20HOW%20FUNDAMENTAL%20RIGHTS%20ARE%20TURNING%20DIGITAL.pdf (last visited July 13, 2023).

[6] JOHN STUART MILL, On Liberty (1859), https://openlibrary-repo.ecampusontario.ca/jspui/bitstream/123456789/1310/1/On-Liberty-1645644599.pdf (last visited July 13, 2023).

[7] Legal positivism, Stanford Encyclopedia of Philosophy, https://plato.stanford.edu/entries/legal-positivism/?utm_source=fbia (last visited July 13, 2023).

[8] Lin Ching-yin & Evelyn Yang, Bill to establish data protection agency clears legislative floor, CNA English News, FOCUS TAIWAN, May 16, 2023, https://focustaiwan.tw/society/202305160014 (last visited, July 13, 2023).

※The Institutionalization of the Taiwan Personal Data Protection Committee - Triumph of Digital Constitutionalism: A Legal Positivism Analysis,STLI, https://stli.iii.org.tw/en/article-detail.aspx?no=105&tp=2&i=168&d=9023 (Date:2025/04/02)
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Augustine Chu
 Advanced Legal Researcher

Release： 2023/07
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Previous Hard Law or Soft Law? –Global AI Regulation Developments and Regulatory Considerations Next Reviews on Taiwan Constitutional Court's Judgment no. 13 of 2022
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Under both of Finland model and Sweden model, funds will be provided at the pre-seed-initiation stage (Tekes is responsible for providing the fund in Finland). Fourth, the difficulty in networking must be solved. In Sitra, the large-sized talent network set up by it will be dedicated to recruiting human resources. Fifth, the voluntary professional guidance is indispensable at the pre-seed-initiation stage, while the same is unavailable at such stage under Sitra model. Instead, the Sweden model is held as the optimal one, as it has a dedicated unit responsible for solving the difficulty to seek profit. Sixth, soft loan[6] will be successfully only when the loan cannot be convertible to shares. At the pre-seed initiation stage or seed-development stage, a start-up is usually funded by traditional loan. Assuming that the start-up is not expected to gain profit, whether the loan may be convertible to shares will also be taken into consideration when the granting of loan is considered (therefore, the fund provider will not be changed to the “capital” provider). Besides, the government authorities mostly lack the relevant experience or knowledge, or are in no position to negotiate with international large-sized venture capital companies. For example, under the French model, the government takes advantage of its power to restrict the venture capital investment and thereby renders adverse impact to starts-up which seek venture capital. Finally, the supply of own fund to meet the enterprises’ needs at seed-development stage and follow-up-growth stage to mitigate the gap with large-sized venture capital[7] is also required by a successful funding model. IV. Conclusion－Deliberation of Finnish Sitra Experience 　　As the leading national industrial innovation ability promoter in Finland, Sitra appears to be very characteristic in its organizational framework or operating mechanism. We hereby conclude six major characteristics of Sitra and propose the potential orientation toward deliberation of Taiwan’s industrial innovation policies and instruments. 1. Particularity of Organizational Standing 　　In consideration of the particularity of Sitra organizational standing, it has two characteristics observable. First, Sitra is under supervision of the Finnish Parliament directly, not subordinated to the administrative organizational system and, therefore, it possesses such strength as flexibility and compliance with the Parliament’s requirements. Such organization design which acts independently of the administrative system but still aims to implement policies has been derived in various forms in the world, e.g., the agency model[8] in the United Kingdom, or the independent apparatus in the U.S.A. Nevertheless, to act independently of the administrative system, it has to deal with the deliberation of responsible political principles at first, which arouses the difficulty in taking care of flexibility at the same time. In Taiwan, the intermediary organizations include independent agencies and administrative corporations, etc., while the former still involves the participation of the supreme administrative head in the right of personnel administration and is subordinated to the ministries/departments of the Executive Yuan and the latter aims to enforce the public missions in the capacity of “public welfare” organization. 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Instead, for this purpose, the various decisions made by it will deal with the utility and mitigate the gap between R&D and market. Such entity is responsible for public welfare or policy projects and also oriented toward gain from investment to feed the same back to the individuals in the organization. In the administrative system, Sitra is not directed by the administrative system but reports to the Parliament directly. Sitra aims to upgrade the national R&D innovation ability as its long-term goal mission and utilizes the promotion of innovation business and development of venture capital market. The mission makes the profit-orientation compatible with the selection of investment subjects, as an enterprise unlikely to gain profit in the future usually is excluded from the national development view. For example, such industries as green energy, which is not likely to gain profit in a short term, is still worth investing as long as it meets the national development trend and also feasible (in other words, selection of marketable green technology R&D, instead of comparison of the strength and weakness in investment value of green energy and other high-polluted energy). 2. Expressly Distinguished From Missions of Other Ministries/Departments 　　For the time being, Sitra primarily invests in starts-up, including indirect investment and direct investment, because it relies on successful new technology R&D which may contribute to production and marketability. Starts-up have always been one of the best options, as large-sized enterprises are able to do R&D on their own without the outsourcing needs. Further, from the point of view of an inventor, if the new technology is marketable, it will be more favorable to him if he chooses to start business on his own or make investment in the form of partnership, instead of transfer or license of the ownership to large-sized enterprises (as large-sized enterprises are more capable of negotiation). However, note that Sitra aims to boost innovation activities and only targets at start-up business development, instead of boosting and promoting the start-up per se. Under the requirement that Sitra needs to seek profit for itself, only the business with positive development view will be targeted by Sitra. Further, Sitra will not fund any business other than innovation R&D or some specific industries. Apparently, Sitra only focuses on the connection between innovation activities and start-up, but does not act as the competent authority in charge of small-sized and medium-sized enterprises. 　　Meanwhile, Sitra highlights that it will not fund academic research activities and, therefore, appears to be distinguished from the competent authority in charge of national scientific research. Though scientific research and technology innovation business, to some extent, are distinguished from each other in quantity instead of quality, abstract and meaningless research is existent but only far away from the commercialization market. Notwithstanding, a lot of countries tend to distinguish basic scientific research from industrial technology R&D in the administration organization's mission, or it has to be. In term of the way in which Sitra carries out its mission, such distinguishing ability is proven directly. 3. Well-Founded Technology Foresight-Based Investment Business 　　The corporate investments, fund investments and project funding launched by Sitra are all available to the pre-designated subjects only, e.g. ecological sustainable development, energy utilization efficiency, and social structural changes, etc. Such way to promote policies as defining development area as the first priority and then promoting the investment innovation might have some strength and weakness at the same time. First of all, the selection of development areas might meet the higher level national development orientation more therefor, free from objective environmental restrictions, e.g. technical level, leading national technology industries and properties of natural resources. Notwithstanding, an enterprise’s orientation toward innovation R&D might miss the opportunity for other development because of the pre-defined framework. Therefore, such way to promote policies as defining development areas or subjects as the first priority will be inevitably based on well-founded technology foresight-based projects[9], in order to take various subjective and objective conditions into consideration and to forecast the technology development orientation and impact to be faced by the home country’s national and social economies. That is, said strength and weakness will be taken into consideration beforehand for foresight, while following R&D funding will be launched into the technology areas pre-designated after thorough analysis. 4. Self-Interested Investment with the Same High Efficiency as General Enterprises 　　Sitra aims to gain profit generally, and its individual investment model, e.g., DIILI, also permits marketing managers to involve business operation. The profit-sharing model enables Sitra to seek the same high efficiency as the general enterprises when purusing its innovation activity development. The investment launched by Sitra highlights that it is not “funding” (which Tekes is responsible for in Finland) or the investment not requiring return. Therefore, it has the system design to acquire corporate shares. Sitra participates in a start-up by offering its advanced technology, just like a general market investor who will choose the potential investment subject that might benefit him most upon his personal professional evaluation. After all, the ultimate profit will be retained by Sitra (or said DIILI manger, subject to the investment model). Certainly, whether the industry which requires permanent support may benefit under such model still remains questionable. However, except otherwise provided in laws expressly, said special organization standing might be a factor critical to Sitra profit-seeking model. That is, Sitra is not subordinated to the administrative system but is under supervision of the parliament independently, and how its staff deal with the conflict of interest issues in the capacity other than the public sector’s/private sector’s staff is also one of the key factors to success of the system. 5. Investment Model to Deal With Policy Instruments of Other Authorities/Agencies 　　Sitra decides to fund a start-up depending on whether it may gain profit as one of its priorities. As aforesaid, we may preliminarily recognize that the same should be consistent with funding to starts-up logically and no “government failure” issue is involved. For example, the funding at the pre-seed-initiation stage needs to tie in with Tekes’ R&D “funding” (and LIKSA service stated herein) and, therefore, may adjust the profit-seeking orientation, thereby causing deviation in promotion of policies. The dispute over fairness of repeated subsidy/funding and rationality of resource allocation under the circumstance must be controlled by a separate evaluation management mechanism inevitably. 6. Affiliation with Enhancement of Regional Innovation Activities 　　Regional policies cannot be separable from innovation policies, especially in a country where human resources and natural resources are not plentiful or even. Therefore, balancing regional development policies and also integrating uneven resource distribution at the same time is indispensable to upgrading of the entire national social economic benefits. The Finnish experience indicated that innovation activities ought to play an important role in the regional development, and in order to integrate enterprises, the parties primarily engaged in innovation activities, with the R&D ability of regional academic research institutions to upgrade the R&D ability effectively, the relevant national policies must be defined for adequately arranging and launching necessary resources. Sitra's approaches to invest in starts-up, release shares after specific period, integrate the regional resources, upgrade the national innovation ability and boost the regional development might serve to be the reference for universities’ centers of innovative incubator or Taiwan’s local academic and scientific sectors[10] to improve their approaches. 　　For the time being, the organization engaged in venture capital investment in the form of fund in Taiwan like Sitra of Finland is National Development Fund, Executive Yuan. However, in terms of organizational framework, Sitra is under supervision of the Parliament directly, while National Development Fund is subordinated to the administrative system of Taiwan. Though Sitra and National Development Fund are both engaged in venture capital investments primarily, Sitra carries out its missions for the purpose of “promoting innovative activities”, while the National Development Fund is committed to achieve such diversified goals as “promoting economic changes and national development[11]” and is required to be adapted to various ministries’/departments’ policies. Despite the difference in the administrative systems of Taiwan and Finland, Sitra system is not necessarily applicable to Taiwan. Notwithstanding, Sitra’s experience in promotion and thought about the system might provide a different direction for Taiwan to think when it is conceiving the means and instruments for industrial innovation promotion policies in the future. [1] Bart Clarysse & Johan Bruneel, Nurturing and Growing Innovation Start-Ups: The Role of Policy As Integrator, R&D MANAGEMENT, 37(2), 139, 144-146 (2007). Clarysse & Bruneel analysis and comparison refers to Sweden Chalmers Innovation model, French Anvar/Banque de Developpement des PMEs model and Finland Sitra PreSeed Service model. [2] id. at 141-143. [3] id. at 141. [4] id. at 145-146. [5] id. at 143. [6] The loan to be repaid is not a concern. For example, the competent authority in Sweden only expects to recover one-fourths of the loan. [7] Clarysse & Bruneel, super note 26, at 147-148. [8] 彭錦鵬，〈英國政署之組織設計與運作成效〉，《歐美研究》，第30卷第3期，頁89-141。 [9] Technology foresight must work with the innovation policy road mapping (IPRM) interactively, and consolidate the forecast and evaluation of technology policy development routes. 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Taiwan Government Planed to Promote the Biotechnology and Other newly Industries by Investing Two Hundred Billion To expand every industrial scale, enhance industrial value, increase the value around the main industrial field, and to encourage the industrial development by government investments for creating the civil working opportunities to reach the goal of continuous economic development, the Executive Yuan Economic Establishment commission has expressed that, the government has selected six newly industrials including "Biotechnology", "Green Energy", "Refined Agriculture", "Tourism", "Medicare", and "Culture Originality" on November 19, 2009 to promote our national economic growth. The government will invest two hundred billion NT dollars to support the industrial development aggressively and to enhance the social investments from year 2009 to 2012. According to a Chung-Hua Institution for Economic Research report, the future growth rate will reach 8.16% after the evaluation, Hence, the future of the industries seems to be quite bright. Currently, the government plans to put money into six newly industries through the existing ways for investment. For instance, firstly, in accordance with the "Act For The Development Of Biotech And New Pharmaceuticals Industry" article 5 provision 1 ",for the purpose of promoting the Biotech and New Pharmaceuticals Industry, a Biotech and New Pharmaceuticals Company may, for a period of five years from the time it is subject to corporate income tax, enjoy a reduction in its corporate income tax payable for up to thirty-five percent (35%) of the total funds invested in research and development ("R&D") and personnel training each year; provided, however, that if the R&D expenditure of a particular year exceeds the average R&D expenditure of the previous two years or if the personnel training expenditure of a particular year exceeds the average personnel training expenditure of the previous two years, fifty percent (50%) of the amount in excess of the average may be used to credit against the amount of corporate income tax payable. Secondly, according to same act of the article 6 provision 1 ", in order to encourage the establishment or expansion of Bio tech and New Pharmaceuticals Companies, a profit-seeking enterprise that (i) subscribes for the stock issued by a Biotech and New Pharmaceuticals Company at the time of the latter's establishment or subsequent expansion; and (ii) has been a registered shareholder of the Biotech and New Pharmaceuticals Company for a period of three (3) years or more, may, for a period of five years from the time it is subject to corporate income tax, enjoy a reduction in its corporate income tax payable for up to twenty percent (20%) of the total amount of price paid for the subscription of shares in such Biotech and New Pharmaceuticals Company; provided that such Biotech and New Pharmaceuticals Company has not applied for exemption from corporate income tax or shareholders investment credit based on the subscription price under other applicable laws and regulations. Thirdly, to promote the entire biotechnological industry development, the government has drafted the "Biotechnology Takeoff Package" for subsidizing the startup´s social investment companies which can satisfy the conditions to invest in "Drug discovery", "Medical Device" or other related biotech industries up to 5 billion with the capital invest in domestic industry over 50%, , with operating experience of multinational biotech investment companies with capital over 150 million in related industrial fields, and with the working experiences of doctor accumulated up to 60 years. Additionally, the refined agriculture industry field has not only discovered the gene selected products, but also combined the tourism with farming business for new business model creation. According to the "Guidelines for Preferential Loans for the Upgrading of Tourism Enterprises" point 4 provision 1, the expenditure for spending on machine, instruments, land or repairing can be granted a preferential loan in accordance with the rule of point 6, and government will provide a subsidy of interest for loaning Tourism Enterprises with timely payments. At last, Council for Economic Planning and Development also points out because most of technology industry has been impacted seriously by fluctuation of international prosperity due to conducting the export trade oriented strategy. Furthermore, the aspects of our export trade of technology industry have been impacted by the U.S. financial crisis and the economic decay in EU and US; and the industrial development seems to face the problem caused by over centralization in Taiwan. Hence, the current framework of domestic industry should be rearranged and to make it better by promoting the developmental project of six newly industries. Taiwan Government Had Modifies Rules to Accelerate NDA Process and Facilitate Development of Clinical Studies in Taiwan In July 2007, the "Biotech and New Pharmaceutical Development Act" modified many regulations related to pharmaceutical administration, taxes, and professionals in Taiwan. In addition, in order to facilitate the development of the biotechnology and pharmaceutical industries, the government has attempted to create a friendly environment for research and development by setting up appropriate regulations and application systems. These measures show that the Taiwanese government is keenly aware that these industries have huge potential value. To operate in coordination with the above Act and to better deal with the increasing productivity of pharmaceutical R&D programs in Taiwan, the Executive Yuan simplified the New Drug Application (NDA) process to facilitate the submission that required Certificate of Pharmaceutical Product (CPP) for drugs with new ingredients. The current NDA process requires sponsors to submit documentation as specified by one of the following four options: (1) three CPPs from three of "ten medically-advanced countries," including Germany, the U.S., England, France, Japan, Switzerland, Canada, Australia, Belgium, and Sweden; (2) one CPP from the U.S., Japan, Canada, Australia, or England and one CPP from Germany, France, Switzerland, Sweden, or Belgium; (3) a Free Sale Certificate (FSC) from one of ten medically-advanced countries where the pharmaceuticals are originally produced and one CPP from one of the other nine countries; or (4) a CPP from the European Medicines Agency. Thus, the current NDA process requires sponsors to spend inordinate amounts of time and incur significant costs to acquire two or three FSCs or CPPs from ten medically-advanced countries in order to submit an NDA in Taiwan. According to the new rules, sponsors will not have to submit above CPPs if (1) Phase I clinical studies have been conducted in Taiwan, and Phase III Pivotal Trial clinical studies have been simultaneously conducted both in Taiwan and in another country or (2) Phase II and Phase III Pivotal Trial clinical studies have been simultaneously conducted both in Taiwan and in another country. Besides, the required minimum numbers of patients were evaluated during each above phase. Therefore, sponsors who conduct clinical studies in Taiwan and in another country simultaneously could reduce their costs and shorten the NDA process in Taiwan. The new rules aim to encourage international pharmaceutical companies to conduct clinical studies in Taiwan or to conduct such studies cooperatively with Taiwanese pharmaceutical companies. Such interactions will allow Taiwanese pharmaceutical companies to participate in development and implementation of international clinical studies in addition to benefiting from the shortened NDA process. Therefore, the R&D abilities and the internationalization of the Taiwanese pharmaceutical industry will be improved.

Executive Yuan Promotes Free Economic Demonstration Zone

I.Background To promote more liberal and internationalized development of Taiwan economy, Premier of Executive Yuan approved the “Free Economic Demonstration Zone Plan” on April 26, 2013. Meanwhile, an Executive Yuan Working Group on Promotion of Economic Demonstration Zone is set up to accelerate the mapping out of the promotion programs as well as detailed action plans. The first phase of the Free Economic Demonstration Zone is to be officially initiated in July. According to the “Free Economic Demonstration Zone Plan”, the relevant laws and provisions regarding the flowing of human and financial capitals, and of logistics, will be loosen up to a great degree, based on the core ideas of liberalization, internationalization, and forwardness. Other related measures such as offering of lands and taxation would also be made, in order to attract capitals from both the inside and outside of the country. In addition, the Free Economic Demonstration Zone will first develop economic activities such as intelligent computing, international medicine services, value-added agriculture and cooperation among industries, to accelerate the transformation of the industrial structure of Taiwan. In order to construe an excellent environment for business of full liberalization and internationalization, the promotion strategies will be focused on “break-through of legal frameworks and innovations of management mechanisms”. II.Content of the Plan To accelerate the promotion process, the Free Economic Demonstration Zone will be conducted in two phases. The first phase is centered on the existing free trade port areas, including five ports and one airport, incorporated with the nature of “being inside the country border but outside the tariff zone”. All the industrial parks in the near counties and cities will also be integrated. The promotion will be set out simultaneously in the north, middle and south of Taiwan. The effects of the promotion are expected to be magnified by fully utilizing the resources and the unique characters of industries of each region. Moreover, the promulgation of a special legislation on the Free Economic Demonstration Zone would be facilitated in the future. After this special legislation is passed, the set-ups of demonstration zones can be applied by authorities either of central or of local government and the related promotion works of the second phase will be unfolded immediately. According to the Executive Yuan, the Free Economic Demonstration Zone will be beneficial in terms of creating positive conditions for Taiwan to participate in regional trade organizations and attract both local and foreign investment, injecting new movement into the economic growth of Taiwan. III.Recent Development In addition, on August 8, 2013, relevant discussions on “Furtherance Plan for Free Economic Demonstration Zone Phase One” are further unfolded in the Executive Yuan conference. In addition, the Premier also indicates, that the furtherance of the Free Economic Demonstration Zone (hereafter: FEDZ) is divided into two phases. The first phase starts from the moment that the Plan is approved till the related special legislation is passed and promulgated. In this phase, the relevant tasks can be achieved through the ways of promulgation of administrative orders. On the other hand, the tasks concerning taxation benefits and other parts that involve legislation will not able to be initiated till the second phase of the Plan. For those tasks, the Council for Economic Planning and Development is asked to complete the drafting of this special legislation and related procedures for registering it into the Executive Yuan, together with the Ministry of Economic Affairs and other concerned agencies, in the hope that the related legislation works of the Executive Yuan can be completed before the end of this year. In respect of “Furtherance Plan for Free Economic Demonstration Zone Phase One”, Premier Jiang further points out, that FEDZ is a model incorporates the concept of “being inside the country border but outside the tariff zone” and the idea of “combining the stores upfront and the factories behind, outsourcing manufactures”. In this way, the hinterland of a port can be expended and magnified effects to be achieved through using the resources provided by the factory in behind. Under this pattern, the expansion effects that cities and counties such as New Taipei City and Changhua Country fight for, can be further extended by this concept of “factories in the back”. As for Port of Anping, over which Tainan City government has proactively fought for, can be listed as a demonstration zone once the Executive Yuan approved it as free trade port zone. In the future, other places that are with forward-looking industry and suitable can still be enlisted. Premier Jiang further expresses that, there are four demonstration industries in the first phase, including intelligent computing, international medicine services, value-added agriculture and cooperation among industries. Yet, he also points out that the demonstration of liberalized economy is a concept of “4+N”. It means that the demonstration will not be limited to the scope of these four industries. Other industries that match up with the idea of liberalization, internationalization and foresight can all be incorporated into FEDZ through continuing examination. Moreover, Premier Jiang later mentions on August 14th, that FEDZ is a crucial task for the government at this moment. He thus requests the Ministry of Economic Affairs, Ministry of Transportation and Communications, Ministry of Health and Welfare, and the Council of Agriculture, to enhance the training and service quality of staffers of the single service window of furtherance of FEDZ. Moreover, Premier Jiang additionally indicated in November, that the scope of the FEDZ will include Pingtung Agricultural Biotechnology Park and Kaohsiung Free Trade Port Area. The combination of the two will facilitate adding value to the agriculture in Taiwan and put momentum into quality agriculture, making the high-quality agricultural products of our country being sold to all over the world with swift logistic services. Premier Jiang also mentioned, that in order to avoid Taiwan being marginalized amid regional integrations of global economies, the government is facilitating industries of potentials by proactively promote the FEDZ. The current approach is to expend the original free trade port area with legislative bases, creating the demonstration zones of free economy by combing original establishments such as Pingtung Agricultural Biotechnology Park. If this approach and system is proved feasible, the next step would be promoting it to island-wide, making the whole nation open-up. IV.Conclusion In the past decade, the economic development in Taiwan, compared to neighboring economic zones such as Hong Kong, Korean or Singapore, was indeed stagnant. It is thus a positive move for the government to put great efforts in promoting FEDZ, in the hope that the liberalization and internationalization of the economy of this country can therefore be significantly improved. Yet, some commentators are of slightly more skeptical opinions, reminding that in terms of the tax relaxation in the Plan, similar approach was already taken by the government before, which did not lead to the expected outcome. In sum, it still remains as a continuing task for us and for the administration as well, to ponder on how Taiwan can find out its own unique strength in the face of global competition. How we can attract more international partners, to create mutual economic benefits. The FEDZ is undoubtedly a first step. Nevertheless, challenges are still ahead of the government, as to how to take many more steps in the future, in order to make Taiwan to march on the stage of the world again.

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