The signing of an economic cooperation framework agreement (ECFA) with China is crucial to Taiwan’s ability to compete with other countries on an equal basis, Straits Exchange Foundation (SEF) Chairman Chiang Pin-kung (江丙坤) said yesterday.
In a keynote speech at a national leadership forum held by the Taiwan Hakka Forum Association, Chiang said China, which joined the WTO as a developing country, has restricted the participation of foreign businesses, including those from Taiwan, in many of its sectors.
However, many of the restricted sectors are open to Hong Kong businesses, mainly because Hong Kong has signed a Closer Economic Partnership Agreement with China, Chiang said.
This has resulted in a phenomenon in which many Taiwanese businesses have acquired Hong Kong companies to enter the Chinese market, he said.
Chiang said economic agreements between countries can lead to a trade diversion effect, which is usually unfavorable to those excluded from the pacts.
For example, he said that after South Korea signed a free trade agreement (FTA) with the US, some Taiwanese businesses decided to set up operations in South Korea to obtain tariff-free treatment for their exports to the US.
“This shows that if Taiwan cannot sign similar agreements with other countries, Taiwanese businesses will be deprived of the opportunity to compete fairly in world markets,” Chiang said.
To date, there are more than 400 economic agreements in effect worldwide, he said. These include the economic integration of Europe, which allows for tariff exemptions and the free flow of goods and personnel in the region, he said.
Another example is the imminent economic integration of ASEAN with China, Japan and South Korea, he said.
Under this framework, Japan will grant tariff-free treatment to 90 percent of the goods exported by ASEAN countries and will gradually increase that to 93 percent within 10 years. This will severely undermine the competitiveness of Taiwanese exports, Chiang said.
Although Taiwan has raised the possibility of signing FTAs with Japan, Singapore and the US, there has been no progress on these fronts because of the countries’ concerns about opposition from China, he said.
With 40 percent of Taiwan’s exports being directed to China, signing an ECFA with China has become an urgent issue, he said.
President Ma Ying-jeou (馬英九) has expressed strong support for the establishment of an ECFA with China, saying that it would be similar to an FTA and there would be no political strings attached.
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