Fri, Dec 14, 2012 - Page 8 News List

Access to China’s services needed

By Tung Chen-yuan and Lin Yu-lung 童振源,林佑龍

Negotiations for a trade agreement in services with China are almost finished. The likely result will be that China will go a bit further in deregulation than Taiwan, in order to solve some domestic Taiwanese political problems. However, on the whole, the extent of services trade deregulation between Taiwan and China will likely be rather limited.

Taiwan has not been able to leverage the economies of scale of China’s service sector, nor has it been able to properly open up its service sector to increase its competitiveness. This shows that President Ma Ying-jeou’s (馬英九) administration still views these negotiations from a political perspective and lacks a plan for negotiating for complete economic development. This could mean that Taiwan’s service sector will miss out on an opportunity for growth.

Apart from promising the WTO that it will open up its service sector, China has signed bilateral service trade agreements with Hong Kong, Macau, ASEAN, Singapore, New Zealand, Pakistan, Chile, Peru and Costa Rica, while also signing an early-harvest list with Taiwan as part of the Economic Cooperation Framework Agreement (ECFA), which opened up 11 types of services.

Quantitative analyses of China’s promise to open up its service sector show that it has opened up 37.1 percent of its service sector multilaterally, which is slighter lower than the average of 45 percent in advanced nations, but much greater than the 18 percent average in developing nations.

However, China has been more conservative when it comes to the bilateral opening up of its service sector. Apart from the opening up of its two special administrative regions of Hong Kong and Macau by 10.1 percentage points, China has only opened up bilateral trade in services to other nations by 2.6 percentage points. In addition, China has only opened up its service sector to Taiwan by 1.2 percentage points after signing the ECFA’s early harvest list, highlighting just how limited the opening up of China’s service sector has been.

The ECFA is merely a framework agreement and that makes the restricted opening up of trade in services on the early-harvest list necessary. At present, China has opened up the following service sectors to Taiwan: Computing services such as software implementation and data processing, natural science research and experimentation services, conference services, specialized design services, audiovisual services, hospital services, aircraft repair and maintenance services as well as some financial services. China has also extended the temporary professional licenses for Taiwanese accountants.

It has been reported that negotiations on a cross-strait service trade agreement only include talks on the deregulation of 50 to 60 items and the number of service sectors opened up may be even lower than that. By comparison, more than 80 service sectors have been opened bilaterally between China, Hong Kong and Macau. It can already be determined that Taiwan will not enjoy the same degree of access as Hong Kong and Macau.

Because the government has not released much information about the negotiations, the following suggestions for a negotiation strategy based on China’s opening up to other countries in the past can be made.

There have been reports that the Chinese service sectors that Taiwan will try to gain access to include the wholesale and retail sectors, logistics, finance, tourism, medical treatment, telecommunications, and film and television sectors.

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