The government claims that if an economic cooperation framework agreement (ECFA) or a comprehensive economic cooperation agreement (CECA) is not signed with China, Taiwan's export competitiveness will plunge. However, half of Taiwan’s exports are electronics and information-technology products, which are already exempt from customs duties thanks to Information Technology Agreements signed with other countries. This means that these products will not be affected by any free-trade agreement (FTA) between other countries or any regional economic cooperation.
Exports to East Asia are mostly raw materials and component parts for re-export. Since these countries have export tax-refund measures in place, imports are in effect tax-exempt. Although Taiwan will be hurt to a certain degree by the launch of the ASEAN Plus Three — China, Japan and South Korea — the damage will be lower than 0.2 percent of the nation's GDP. It will neither devastate the economy nor obstruct and marginalize development.
Economic and trade opening and cooperation always has its pros and cons, but as the government debates an ECFA or a CECA, it exaggerates the gains and glosses over the losses, just like it has done when pushing for other policies of opening up to China.
For example, President Ma Ying-jeou (馬英九) has repeatedly emphasized that the opening of direct links would make it more convenient to sell agricultural products to China, while ignoring the fact that this would make it easier to sell Chinese agricultural products in Taiwan. Since the opening of direct transport links, the amount of cheaper Chinese agricultural products sold to Taiwan is actually five times greater than that of Taiwanese agricultural products sold to China. With the ECFA or CECA proposal, the government would make things even worse.
Government officials and others say the signing of an ECFA or CECA will attract trans national enterprises to invest in Taiwan. They said the same thing when they promoted the relaxation of restrictions on Chinese investment by Taiwanese businesses and the opening of direct links. However, the expected benefits have not materialized. As a result, they now claim that since products imported to China from Singapore and other ASEAN member states are duty-free, Taipei must sign an ECFA or a CECA with Beijing in order to improve Taiwan’s export competitiveness.
Looking at how the government keeps telling bigger lies to cover up for previous lies, I wonder if an ECFA will be followed by claims that Taiwan is unable to compete with Shanghai because Shanghai uses the same currency and laws as the rest of China, so Taiwan should use the same currency and laws. Are we on the road to unification?
Lu Chun-wei is a research fellow at Taiwan Thinktank.
TRANSLATED BY EDDY CHANG
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