The government is to accelerate the pace of economic liberalization to deal with the negative impact of a free-trade agreement (FTA) between South Korea and the US, which took effect yesterday, Council for Economic Planning and Development Minister Yiin Chii-ming (尹啟銘) said yesterday.
The agreement eliminated tariffs on about 80 percent of industrial and consumer goods exported from South Korea to the US as of yesterday, and is to be expanded to cover 95 percent of goods enjoying zero tariffs within five years.
“This is definitely a warning sign and a serious challenge for Taiwan,” Yiin said during a legislative question-and-answer session.
The agreement would mainly affect domestic exporters in the mechanical, textile and plastic industries, he said.
Compared with traditional industries, exporters of electronic and technology products might not be seriously affected under the protection of the WTO’s Information Technology Agreement (ITA), he added.
Taiwan needs to speed up economic liberalization and regional integration with other Asian countries to catch up with South Korea. The government also has to help weak domestic industries raise their competitiveness and expand their markets following economic liberalization, Yiin said.
The Ministry of Economic Affairs said in a statement yesterday that the government was continuing to attempt to sign economic cooperative agreements with other major economies, but admitted that there was quite a long way to go.
The Bureau of Foreign Trade said the ministry had launched several plans to help local firms weather the impact of the US-South Korea pact, such as assisting them in the research and development of products that are different from those produced by South Korea, and encouraging them to establish their own brands to increase the value and international profile of their products.
Liang Kuo-yuan (梁國源), president of Taipei-based Polaris Research Institute (寶華綜合經濟研究院), said Taiwan’s shortcomings in technology innovation and brand development were the major factors behind the nation’s fear of a US-South Korea FTA.
He said these factors are why Taiwan has lagged behind in internationalization.
Taiwan Institute of Economic Research director Yang Chia-yen (楊家彥) said that promoting product differentiation was an urgent task.
“If we can create something uniquely, we still have a chance even without an FTA,” Yang said.
The government could promote the value of domestic small and medium-sized enterprises to help Taiwan build up niches in the global market, he said, adding that the administration should offer them more resources to support their development.
Ministry data showed that exports to the US rose 15.3 percent from a year earlier to US$41.33 billion last year, accounting for 1.55 percent of the US’ total imports.
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