Sat, Nov 25, 2006 - Page 11 News List

Beware hidden trade pact dangers, TIER chief says

PROS AND CONS The president of the Taiwan Institute of Economic Research said that the nation could easily be marginalized in the proposed APEC-wide free trade zone

By Jackie Lin  /  STAFF REPORTER

Although the possibility of a new APEC-wide free trade zone garnered wide support at the APEC leaders' summit in Hanoi, the government must heed the hidden political dangers of such a pact while working to secure Taiwan's inclusion, the president of the Taiwan Institute of Economic Research (TIER, 台經院) said yesterday.

TIER president David Hong said that Taiwan had much to gain from participation in the so-called Free-Trade Area of the Asia-Pacific (FTAAP), as it would ensure the most effective allocation of economic resources in the region while counteracting the growing trend among local businesspeople to relocate to China.

Moreover, administrative costs related to trade can be greatly reduced and businesses can enjoy greater mobility in merchandise, capital and personnel, which would sharpen competitiveness, he added.

China could remain an adverse factor to Taiwan's future participation in the regional free trade pact. Blockaded by China, Taiwan has so far failed to ink any FTA within the Asia-Pacific region, although the nation has signed FTAs with Panama, Guatemala and Nicaragua, which have had diplomatic ties with Taiwan.

Hong warned that China has suggested that APEC be split into two groups, the Free Trade Area of the Americas (FTAA) and the East Asian Free Trade Area (EAFTA), to promote regional integration before being merged into the FTAAP.

"This would be the most disadvantageous to Taiwan, as Taiwan is still being shut out of ASEAN-plus-one, ASEAN-plus-three and even the ASEAN-plus-six proposed by Japan," he said.

The nation's chances of joining the FTAAP would be even worse if China's proposal is accepted, Hong added.

The government should closely track the preparation process before the multilateral structure takes shape, he said.

All free trade zones are binding in nature, which stands in contrast to organizations like APEC, whose policy-making mode is non-binding.

"Whether APEC's transformation into the FTAAP would bring good or bad changes to Taiwan, which is currently a full APEC member, requires further study," he said.

The president and minister of foreign affairs are still barred from APEC events, while China is gradually acquiring more clout in the organization.

"Considering the FTAAP's binding policymaking nature, it's highly likely that Taiwan's voice will be neglected or sacrificed as a result of China's marginalization efforts," Hong said.

He urged the government to keep close contact with the US and strive for fair treatment in signing an FTAAP, which would give Taiwan more economic benefits while members' rights are taken into consideration.

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