Taiwanese exporters would pay US$4 billion more in Chinese tariffs than their South Korean rivals once a free-trade agreement between Beijing and Seoul takes effect, according to Ministry of Economic Affairs estimates.
With Taiwan and South Korea competing head-to-head in 70 percent of their exports to China, “Taiwan’s traditional industries and small and medium-sized enterprises would be affected the most by the proposed China-South Korea free-trade pact,” said Minister of Economic Affairs Woody Duh (杜紫軍), who had just returned from the APEC summit in Beijing.
Duh told a press conference that the tariff figure is an important reference for Taiwanese firms, as it suggests stiffer competitive challenges ahead.
He said the proposed China-South Korea FTA may have a limited impact on Taiwan’s information technology industry, as Taipei signed the WTO’s Information Technology Agreement 17 years ago.
However, traditional industries such as steel and petrochemicals would certainly be affected, as they still have to pay between 3 and 8 percent in tariffs in China, he said, adding that the proposed trade in goods agreement with China is Taiwan’s best chance to reduce the impact.
The ministry hopes to carry out technical negotiations with China on the flat-panel and machine tools sectors before formal talks on the trade in goods agreement takes place, he said.
“If we can have positive progress on talks on four key industries with China, we may have a chance to conduct another formal talk with Beijing before the end of this year,” Duh said.
The four key industries are flat panels, petrochemicals, machine tools and automobiles.
“We are trying to convince Beijing that since the Chinese market is so big and Taiwanese companies are relatively small, it is fine to allow Taiwanese products to enter their market,” Duh said.
In related news, the Taipei Computer Association (TCA, 台北市電腦公會) yesterday urged the government to seek more free-trade agreements with other countries.
The association is concerned that local companies would see their competitiveness weaken if their South Korean counterparts are able to enjoy zero-tariff exports to China.
“Taiwan should build more [trade] partners and should sign more free-trade agreements to expand its business scope,” TCA president Tung Tsu-hsien (童子賢) said in a statement, adding that Taiwan competes with South Korea in the export of electronics and other goods.
Still, the key to enhancing the nation’s global competitiveness is to develop quality products and services, he said.
Compal Electronics Co (仁寶), the world’s No. 2 contract laptop computer maker, also expressed concern over the proposed agreement’s impact on local firms.
“Taiwanese firms that rely mostly on Chinese markets to grow will be severely affected,” Compal president Ray Chen (陳瑞聰) said.
Taiwanese LCD panel makers could see their costs increase by 5 to 8 percent, while their South Korean counterparts, such as Samsung Electronics Co and LG Display Co, would benefit from zero tariffs, Chen said.
However, the impact on Compal would be minimal as the company manufactures most of its laptops and smartphones in China, Chen said.
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