Former minister of finance Yen Ching-chang (顏慶章) on Tuesday said that among many forthcoming regional economic integration and trade bloc initiatives, the nation’s priority should be placed on the Trans-Pacific Partnership (TPP).
Taiwan should pursue the TPP, as it is the most comprehensive regional economic and trade integration initiative, Yen said at a financial sector forum event organized by PricewaterhouseCoopers Taiwan.
The US, Japan and 10 other Pacific Rim nations concluded TPP negotiations on Oct. 5 after more than five years. The trade bloc covers about 40 percent of the global economy.
“There is no other initiative worth considering other than the TPP, as other options have no clear timetable and offer only limited integration beyond tariff reduction through free-trade agreements [FTA],” Yen said, referring to the Economic Cooperation Framework Agreement (ECFA) with China, the Regional Comprehensive Economic Partnership (RCEP), the Asian Infrastructure Investment Bank (AIIB) and the “one belt, one road” trade initiative.
The rhetoric leading up to the inking of ECFA in 2010 was that through the cross-strait deal, Taiwan could reap the benefits of China’s free-trade agreement with the 10-member ASEAN, Yen said.
However, since then, Taiwan has seen few benefits from the ECFA, while the promise of a new pan-Asian trade bloc has not materialized, he said.
In the meantime, Beijing has riled up ASEAN members with its disputed territorial claims in the South China Sea, he added.
Since Taiwan’s ascension to the WTO in 2001, the nation has implemented reforms that led to the formation of financial holding companies, and a wave of consolidation that propelled growth in the domestic financial sector through improved economies of scale, said Yen, who was formerly the nation’s representative to the global trade body.
“The TPP is characterized by its high level of integration and market liberalization, which is starkly different from RCEP, so it is not feasible to consider both options,” he said.
However, joining the TPP will bring challenges along with gains, he said.
“We often overlook the fact that South Korea’s FTA with China came at the cost of market liberalization,” Yen said.
Yen said that in the same vein, Taiwan must be prepared to abide by the TPP’s “dress code,” and he hopes that the government will have learned its lesson from the fiasco of the cross-strait service trade agreement.
“The people’s fear and misgivings can only be allayed through transparency, communication and sound contingency plans for affected industries,” he said.
Yen said that the lack of progress in privatization among government-affiliated financial companies is the largest obstacle hampering efforts toward expanding in Asian markets.
“These companies control about half of domestic lending, but their management talent is not at all prepared for international markets,” he said.
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