Thu, Apr 04, 2013 - Page 8 News List

Economic liberalization needed

By Tung Chen-yuan 童振源

It was in February 2009 that President Ma Ying-jeou (馬英九) put forward the idea of signing a cross-strait Economic Cooperation Framework Agreement (ECFA), saying that it would open the door for the nation to take part in Southeast Asia’s economic integration and enable relations between the two sides of the Taiwan Strait to develop in a positive direction.

However, two-and-a-half years have passed since the ECFA came into effect and although the agreement has created favorable conditions for some industries, its overall benefits have been limited.

While talks on cross-strait trade agreements are proceeding at a snail’s pace, Southeast Asian economic integration has been speeding up and Taiwan is still not part of the process.

There are three large-scale economic integration agreements currently under negotiation in the Asia-Pacific region. They are the Trans-Pacific Partnership (TPP), based on the existing Trans-Pacific Strategic Economic Partnership Agreement and spanning the whole Asia-Pacific region; a trilateral free-trade agreement (FTA) between China, Japan and South Korea in Northeast Asia; and a Regional Comprehensive Economic Partnership, which seeks to integrate Asian economies.

If any of these three agreements are completed, it will radically change the Asia-Pacific’s economic scene. However, Taiwan is not involved in any of them and has not asked to take part in negotiations, which is seriously depleting the nation’s economic advantages.

Taiwan and China signed the ECFA in the middle of 2010. At the beginning of the following year, Taiwan started talks about economic integration agreements with Singapore and New Zealand, and launched negotiations about a cross-strait agreement on trade in services, but as yet, no agreements have been reached.

Singapore and New Zealand together only account for 3.8 percent of the nation’s total trade, and the extent of deregulation under a cross-strait agreement on trade in services may be limited. Even if all these agreements are signed, they will be of limited assistance to Taiwan and will not be enough to get it out of isolation.

In contrast, various countries in East Asia have been speeding up their FTA negotiations. For example, Taiwan’s main competitor, South Korea, has already signed FTAs with nine economic entities, including ASEAN, India, the EU and the US, and is negotiating FTAs with a further eight economic entities, including China. Notably, South Korea is always keen to bring its FTA talks to an early conclusion. Its negotiations with the US only took 15 months and those with the EU were concluded after 27 months.

An FTA is not a framework agreement; it requires both sides to fully liberalize their trade practices. The nation cannot expect other countries to make unilateral concessions in its favor — rather, it may have to make appropriate concessions to less developed economies.

Ma has suggested that Taiwan could join the TPP in eight years’ time, but that looks like pie in the sky, and there has been no sign of concrete planning and progress on the part of the government.

If the Ma government wants to proceed smoothly toward signing FTAs with other countries, it needs the political will to liberalize the economy. The US government and those of EU countries have reminded Taiwan of this on numerous occasions, but the Ma administration is still bogged down by protectionist tendencies.

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