If we look at the content of the “early harvest” list of the Economic Cooperation Framework Agreement (ECFA), it becomes apparent that Taiwan did extremely well for itself, with many industries expected to benefit greatly from the inking of the trade pact. Despite this, the early harvest list has still been heavily criticized, largely based on the public’s unrealistic hopes and excessive fears over the agreement.
To be precise, the early harvest list is not a complete, all-encompassing list for tariff reductions on goods and products. It is mainly intended to provide assistance to Taiwanese businesses as soon as possible because they face competition from countries that have already received tariff reductions as a result of signing freetrade agreements (FTAs) with China.
The products that eventually made it onto the list were chosen based on four criteria: necessity, low volume, less contentious and the speed with which they could be deregulated with minimum administrative hassle.
Taiwan’s early harvest list will allow 539 export items, with an estimated export volume of US$13.8 billion per year, to receive zero tariff treatment in China. This is already far more than we have achieved by signing FTAs with other nations. However, if we look at the more than 8,000 products Taiwan exports, we can see that only 6 percent of these were included on the early harvest list and it is therefore no wonder that manufacturers of items not on the list have been complaining.
A review of this 6 percent of products shows that half of them are items produced by small and medium-sized enterprises (SMEs) and traditional industries, such as automobile components, bicycle components, tires, water heaters, filters, household appliances, hand tools, clothing and accessories, underwear, shoes, socks, bags, boxes, orchids and bananas. This shows the high level of importance the government places on SMEs, traditional industries and agriculture.
In the past, SMEs like these faced several problems. Because they were small in scale, as production prices increased they were unable to reduce costs through economies of scale. In addition, as the Chinese market had many tariff barriers, they were unable to take advantage of business opportunities in China. They were therefore forced to move their manufacturing base or follow their customers.
As various industries developed, only the more competitive companies were able to stay in Taiwan. They focused more on diversified, small volume production and concentrated on quality, innovative designs and technological improvements.
The early harvest list will mean that products currently subject to tariffs of more than 10 percent or even 15 percent in China will now have those duties significantly reduced. This will provide an excellent opportunity for Taiwanese SMEs to open up markets for themselves in China and elsewhere.
For Taiwan to reap the benefits of the early harvest list, not only will businesses have to capitalize on market opportunities at the right time, the government will also have to provide assistance to SMEs, including advice on markets, funds and legal matters. I am hopeful that such moves will increase the scale of Taiwan’s traditional industries, improve the overall quality of business, promote industrial development, create employment opportunities and take Taiwan to a completely new level of economic growth.
Shih Hui-tzu is a research fellow at the Chung-Hua Institution for Economic Research.
TRANSLATED BY DREW CAMERON
In the event of a war with China, Taiwan has some surprisingly tough defenses that could make it as difficult to tackle as a porcupine: A shoreline dotted with swamps, rocks and concrete barriers; conscription for all adult men; highways and airports that are built to double as hardened combat facilities. This porcupine has a soft underbelly, though, and the war in Iran is exposing it: energy. About 39,000 ships dock at Taiwan’s ports each year, more than the 30,000 that transit the Strait of Hormuz. About one-fifth of their inbound tonnage is coal, oil, refined fuels and liquefied natural gas (LNG),
On Monday, the day before Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) departed on her visit to China, the party released a promotional video titled “Only with peace can we ‘lie flat’” to highlight its desire to have peace across the Taiwan Strait. However, its use of the expression “lie flat” (tang ping, 躺平) drew sarcastic comments, with critics saying it sounded as if the party was “bowing down” to the Chinese Communist Party (CCP). Amid the controversy over the opposition parties blocking proposed defense budgets, Cheng departed for China after receiving an invitation from the CCP, with a meeting with
Chinese Nationalist Party (KMT) Chairwoman Cheng Li-wun (鄭麗文) is leading a delegation to China through Sunday. She is expected to meet with Chinese President Xi Jinping (習近平) in Beijing tomorrow. That date coincides with the anniversary of the signing of the Taiwan Relations Act (TRA), which marked a cornerstone of Taiwan-US relations. Staging their meeting on this date makes it clear that the Chinese Communist Party (CCP) intends to challenge the US and demonstrate its “authority” over Taiwan. Since the US severed official diplomatic relations with Taiwan in 1979, it has relied on the TRA as a legal basis for all
To counter the CCP’s escalating threats, Taiwan must build a national consensus and demonstrate the capability and the will to fight. The Chinese Communist Party (CCP) often leans on a seductive mantra to soften its threats, such as “Chinese do not kill Chinese.” The slogan is designed to frame territorial conquest (annexation) as a domestic family matter. A look at the historical ledger reveals a different truth. For the CCP, being labeled “family” has never been a guarantee of safety; it has been the primary prerequisite for state-sanctioned slaughter. From the forced starvation of 150,000 civilians at the Siege of Changchun
RSS