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or morality grounds. The right of association is delimited by the Societies Act and labor and education laws and

regulations. In practice, Communist labor unions are not permitted. The national work force is comprised of about 1.27 million workers, of which some 210,000 are organized into 89 trade unions. Some 70 of these, which represent about 98 percent of the unionized workers, are affiliated with an umbrella organization, the National Trade Union Congress, which has a close relationship to the government. Workers have the legal right to strike but rarely do so the most recent strike took place in 1986.

b. Right to Organize and Bargain Collectively

Collective bargaining is a normal part of

management-labor relations in Singapore, particularly in the manufacturing sector. On the average, collective bargaining agreements are renewed every two to three years.

c. Prohibition of Forced or Compulsory Labor

The law forbids the use of forced or compulsory labor, and such labor is not practiced.

d. Minimum Age of Employment of Children

The government enforces the Employment Act which sets the minimum age for the employment of children at 12 years. Children under age 14 are not allowed to work in any

"industrial undertaking." Industrial employees must notify the Ministry of Labor within 30 days of hiring a child between the ages of 14 to 16.

The Singapore labor market offers relatively high wage rates and working conditions consistent with accepted international standards. Singapore, however, has no minimum wage or unemployment compensation. Because of a continuing labor shortage, wages have generally risen steadily, and unemployment has stayed below 3 percent. The government enforces comprehensive occupational safety and health laws. Enforcement procedures, coupled with the promotion of educational and training programs, have reduced the frequency of job-related accidents by one-third over the past decade. The average severity of occupational accidents has also been reduced.

f. Rights in Sectors with U.S. Investment

Substantial U.S. capital has been invested in several sectors of the economy, including petroleum, chemicals and related products, electric and electronic equipment, transportation equipment, and other manufacturing areas. Labor conditions in these sectors are the same as in other sectors, except that the labor shortage in Singapore causes employers in the electronics industry to hire many unskilled foreign workers. The government controls the number of foreign workers directly through immigration regulations and indirectly through levies on firms hiring foreign workers. Foreign workers face no legal wage discrimination, but the low-skilled jobs they generally hold and the extra cost of

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hiring them suggest that they are in general paid less than Singaporeans.

Source: U.S. Department of Commerce, Survey of Current Business August 1990, Vol. 70, No. 8, Table 13

* Section 8 is an abridged version of Section 6 of the Singapore country report included in the Department of State's Country Reports on Human Rights Practices for 1990, submitted to the Congress January 31, 1991. For a comprehensive discussion of worker rights, please refer to that report.

TAIWAN

Key Economic Indicators

(Billions of New Taiwan Dollars (NTD) unless otherwise noted)

1/

-7,000

Extrapolated from data for the first three quarters. 2/ CPI, or the consumer price index, rose 3.32 percent, 3.59 percent, and 5.66 percent in the first three quarters of this year, respectively. We are projecting a 5.0 percent CPI rise for 1990.

3/

Wholesale prices reversed from declines of 3.84 percent and 2.75 percent in the first two quarters to a rise of 0.86 percent in the third quarter of 1990. We are projecting a 0.47 percent WPI decline for 1990.

4/ Average exchange rates calculated by averaging end of month figures for the year. Rates at the end of the last three months of 1990 are estimated at 27.30.

5/ Excluding gold imported by Taiwan's Central Bank: US$2,878 million from the U.S. in 1988 and US$18 million from the U.K. in 1989.

TAIWAN

1. General Policy Framework

It

Although remaining an export-oriented economy, Taiwan has done much in the last three years to redress its large trade surplus, in particular its surplus with the United States. has revalued its currency, promoted capital flow, reduced import barriers, and encouraged the purchase of U.S. goods. In mid-1987 Taiwan removed all restrictions on foreign exchange transactions arising from trade in goods and

services. The NTD: US$ exchange rate rose 49 percent from 40.55 NTD: US$1.00 in September 1985 to 27.30 NTD: US$1.00 by late August 1990. The exchange rate has since stabilized within a narrow range between 27.20 NTD: US$1.00 and 27.35 NTD: US$1.00.

In March 1989, Taiwan announced a four-year (1989-1992) Trade Action Plan (TAP) to improve its trade imbalance with the United States. Since then, Taiwan has met the plan's annual targets by reducing its average nominal tariff rate from 12.6 percent in 1988 to 9.7 percent in 1989. However, the average effective rate in 1989 was below target because of a surge in the import of high-duty automobiles. If the general tariff reduction now being proposed takes effect, probably in early 1991, the average nominal rate will be reduced further to 8.9 percent.

After peaking in 1987, the U.S. trade deficit with Taiwan fell 14.4 percent in 1988 to US$15.2 billion (excluding US$2.5 billion in gold exports to Taiwan's Central Bank) and 14.5 percent in 1989 to US$13.0 billion. However, the U.S. trade deficit with Taiwan still remained the second largest, after the US$49 billion deficit with Japan. According to preliminary U.S. Department of Commerce data, the deficit for the first nine months of 1990 fell 15 percent from a year earlier to US$8.5 billion. U.S. companies are expected to sign US$2.6 billion in contracts with Taiwan entities in 1990. However, work still needs to be done to reduce this large, albeit diminishing trade deficit. Despite much progress, there is more Taiwan can do on trade liberalization. Tariffs on many agricultural imports are as high as 40 to 50 percent. There is still a ban against the import of rice, peanuts, small red beans, and animal offals.

The process of obtaining import permits for medicines and some cosmetics and agricultural products remains complicated. Imported cigarettes and alcoholic beverages (wine and beer) are subject to high taxes and a low profit margin, whereas contraband Japanese cigarettes, sold everywhere untaxed and exempt from margin restrictions, enjoy a distinctive competitive advantage. After almost a year of bilateral negotiations, Taiwan has yet to liberalize its import of distilled spirits. More than a year has passed since the amended banking law was promulgated in July 1989, but foreign banks have not yet reaped any meaningful benefit. U.S. credit card issuers are still forced to have their cards processed by a private monopoly, the national credit card center. There are still many problems especially the lack of effective in the protection of

enforcement of relevant laws

intellectual property rights.

-

Fiscal policy: While projecting a central budget deficit since 1988, financial authorities have actually posted a

growing budgetary surplus.

TAIWAN

Taiwan achieved a fiscal surplus of NTD 10 billion in FY88 (ending June 30, 1988), NTD 13 billion in FY89, and an estimated NTD 19 billion in FY90. These results contrast sharply with the planned deficits of NTD 66 billion, NTD 108 billion, and NTD 97 billion respectively for those three years. Recently, the authorities again forecasted a budget deficit for FY91 for the sake of boosting domestic consumption in a weakening economy. The budget deficit will be financed principally by cash savings and public bonds, rather than by external debt. Nonetheless, the underlying fiscal conservatism of the authorities and delays in major construction projects may again prevent spending from exceeding revenues.

Monetary policy: Taiwan controls money supply mainly through open market operations, adjustments in the reserve requirement and rediscount rate, and various bank credit regulations. The amended banking bill promulgated in July 1989 decontrolled interest rates. Large trade surpluses and capital inflows created severe excess liquidity between 1985 and early 1989. To combat this problem, the Central Bank (CB) boosted the issuance of treasury bills, certificates of deposits, and savings bonds, raised reserve requirements (e.g., from 23 to 29 percent for checking accounts), and increased the rediscount rate from 4.5 percent to 7.5 percent. As a result, the CB successfully lowered annual money supply (M1B) growth from 51 percent in 1986 to 6 percent in 1989. Taiwan experienced capital outflow in late 1989, leading to the first decline in M1B in March 1990. To ease the financial crunch prevailing in business circles, the CB has not only stopped issuing treasury bills and cut the supply of outstanding Cerificates of Deposit (CDs) and savings bonds, but also deregulated the supply of credit for real estate transactions. The CB is reluctant to adjust the deposit reserve requirements and the rediscount rate at present--chiefly because of higher oil costs and other inflationary pressures.

2. Exchange Rate Policies

Taiwan removed most restrictions on foreign exchange transactions in July 1987, leaving two limits in place on non-trade oriented capital flow. While the limit of US$5 million on outward remittance per entity a year remains unchanged, the CB has raised the limit on inward remittance from US$50,000 to US$2 million between June 1989 and October 1990. An interbank foreign exchange call market was set up in August 1989, with the transaction currency expanded from a single U.S. dollar to include Deutsche mark in August 1990. The number of participants expanded from 50 domestic foreign exchange banks to include 43 overseas banking institutions as of the end of September. After appreciating 58 percent between September 1985 and September 1989, the NTD: US$ exchange rate has since stabilized at a level around 27.30 NTD: US$1.00. The NTD remains a domestic currency and is traded only on the local market.

A wave of capital outflow drained the Central Bank's gold and foreign exchange holdings by about US$10 billion in the first half of 1990. This situation was abated in the second half of the year when the stable NTD: US$ exchange rate,