About US$3.16 billion to US$8.42 billion of the nation’s industrial exports to China would be replaced by South Korean products if Taiwan and China are not able to sign a cross-strait trade in goods agreement before Seoul and Beijing ink a proposed free-trade agreement (FTA), according to the government’s latest report.
Overall, about US$49 billion of the market in industrial exports to China would be impacted by the proposed China-South Korea FTA, assuming that it is to be signed by the end of the year, the Ministry of Economic Affairs yesterday said.
CLOSE COMPETITION
The ministry said that the nation and South Korea compete closely in such markets as steel, machinery, automobiles, flat panels, petrochemicals, textiles and glass.
“To be specific, 2 percent to 5.4 percent of the nation’s industrial exports to China would most likely be replaced by South Korean products,” Industrial Development Bureau Deputy Director-General Lien Ching-chang (連錦漳) said, citing statistics compiled by a ministry survey of industry associations.
That would represent a loss of between US$3.16 billion and US$8.42 billion in exports across the Taiwan Strait due to trade barriers which would be removed by the cross-strait trade agreement in goods, he added.
BILLIONS LOST
According to the survey, the top four industries that are most likely to suffer from the signing of a China-South Korea FTA are petrochemicals, flat panels, steel and textiles, of which Taiwan’s annual exports to China would drop by an estimated US$4.15 billion, US$3.08 billion, US$307 million and US$265.3 million respectively.
FIERCE COMPETITION
That is because Taiwan and South Korea are competing fiercely for the Chinese market, and the Chinese government imposed import levies of 6.54 percent, 5 percent, 5.31 percent and 11.15 percent respectively on the four Taiwanese industries last year.
South Korean petrochemicals hold a market share of between 18 and 19 percent in China versus Taiwanese firms’ 12 percent, 36 percent versus the nation’s 31 percent in China’s flat-panel market, 20 percent versus 9.3 percent regarding the steel market, and 7.3 percent against 6.4 percent for textiles, the ministry said.
“We must prepare some bargaining chips that we are willing to put on the negotiation table,” Vice Minister of Economic Affairs Woody Duh (杜紫軍) told a media briefing.
TRADE-OFFS
“Trade talks are all about trade-offs. If South Korea can sacrifice its auto industry in signing a FTA with the US, can we do the same for our trade-in-goods agreement?” he said.
Duh said Taiwan is still “searching for the right timing” to resume its trade negotiations with China. The two sides postponed all bilateral trade meetings in April due to protests in the nation over the already inked cross-strait service trade agreement.
“Our goal is to reach a much better agreement that covers a broader range of products than those to be included in the China-South Korea FTA,” Lien said.
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