If Taiwan signed an economic cooperation framework agreement (ECFA) with China that would help it expand into other Asian markets, it could boost the domestic economy by as much as 3.31 percent, an academic told a gathering of business groups yesterday.
Citing estimates by the Chung-Hua Institution for Economic Research (CIER, 中經院), Steve Lin (林祖嘉), professor of economics at National Chengchi University, said if inking a trade agreement with China allowed Taiwan to make inroads into other Asian markets, GDP would likely grow by 3.31 percent.
The Taiwan Institute of Economic Research (TIER, 台經院), however, forecast the boost at 0.05 percent.
But if Taiwan missed the opportunity to expand its presence in regional markets, the economy would contract by as much as 1.8 percent because of the formation of ASEAN Plus Six (China, Japan, South Korea, India, Australia and New Zealand), he said, citing CIER forecasts.
The nation’s plastics and chemicals sector would be hardest hit, he said, losing out on up to US$1.74 billion in business opportunities in the ASEAN Plus Six markets because Taiwanese companies would be marginalized.
Although signing an ECFA with China would in the beginning increase Taiwan’s dependence on the Chinese market, in the long-run it would help expand Taiwan’s presence in other Asian markets.
To address the opposition’s concerns over the trade pact, Lin suggested the government consider including an exit clause in the ECFA as a defense mechanism against malicious acts by China such as dumping cheap, poor-quality products.
Rock Hsu (許勝雄), who chairs Kinpo Group (金仁寶集團), one of the country’s biggest electronics groups, yesterday also threw his support behind the proposed ECFA.
Hsu said that any boost to the nation’s GDP, whether minimal or significant, would make the ECFA worth it.