Wed, Aug 12, 2009 - Page 8 News List

Would an ECFA keep firms here?

By Chao Wen-heng 趙文衡

Because imports and exports between Taiwan and China would be tariff free, even Taiwanese businesses that focus on the domestic market would consider moving their production to China to gain access to tariff-free raw materials.

Third to leave Taiwan would be businesses affected by imports from China.

Some Taiwanese companies affected by an influx of Chinese imports would struggle to survive. These companies may look for opportunities in the Chinese market rather than attempting to stick it out in Taiwan. They could transfer all operations to China and focus on the Chinese market.

If an ECFA is signed and China, but not Taiwan, signs more FTAs with other countries, relocations are a grave risk.

The ECFA could, in these circumstances, do more harm than good. But things would be different if the ECFA were a springboard to FTAs with other governments.

An ECFA with China has two possible outcomes. What happens is up to the government’s ability and determination to salvage Taiwan’s future.

Unless signing an ECFA would allow Taiwan to ink FTAs with other countries, an ECFA would only be harmful.

Chao Wen-heng is an associate research fellow at the Taiwan Institute of Economic Research.

TRANSLATED BY DREW CAMERON

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