The anticipated signing of trade and financial pacts with China could do more good than harm to the Taiwanese economy, though the effect would only manifest itself one or two years after implementation, a credit agency said yesterday.
China Credit Information Service Ltd (中華徵信所) yesterday forecast that the inking of an economic cooperation framework agreement (ECFA) with China would create opportunities worth NT$220 billion (US$6.8 billion) to local businesses, 50 percent of which would go to the petrochemical and chemical industries, while another 24 percent would favor the nation’s textile sector.
A trade pact, however, would have a negative impact on the nation’s high-tech and electronic engineering industries by cutting down annual revenues by NT$345 billion, the agency said, referring to a simulation report that it conducted based on a model from the Chung-Hua Institution for Economic Research.
Any negative impact, however, would be moderated by the fact that most of Taiwan’s high-tech companies have been enjoying zero tariffs in China after setting up shop there, Liu Jen (劉任), editor in chief of the credit agency’s business information service, told a media briefing.
“We expect the negative impact may actually narrow by more than half,” Liu said, adding that a trade pact could end up bringing NT$50 billion into the local economy.
Council for Economic Planning and Development Chairman Tsai Hsun-hsiung (蔡勳雄) yesterday also stressed the importance of an ECFA at a different venue.
“Many APEC countries are keeping an eye on Taiwan’s inking of an ECFA with China before they mull negotiating investment treaties, or Bilateral Immunity Agreements [BIA], with Taiwan,” Tsai said at a business gathering.
He did not comment on whether fears of a Chinese boycott was the main reason for the reluctance of Asian countries to negotiate BIAs with Taiwan.
Meanwhile, Taiwan’s planned signing of a financial memorandum of understanding with China on market access will create refinance and wealth management opportunities totaling NT$5.5 trillion from 100,000 China-based Taiwanese businesses to Taiwanese banks that have set up shop there, Liu said.
That would be almost five times the local banking sector’s combined annual revenue of NT$1.1 trillion, the agency said.
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