Too soon to laud success of ECFA

By Tung Chen-yuan 童振源  / 

Sun, Apr 10, 2011 - Page 8

Since the “early harvest” list of the Economic Cooperation Framework Agreement (ECFA) took effect on Jan. 1, the Ministry of Economic Affairs has placed a barrage of advertising in local newspapers announcing that the ECFA has resulted in a 20 percent increase in exports to China. However, a closer look at the government’s statistical data shows that the ministry is misleading the public by using data from Chinese customs authorities to exaggerate the effect of the ECFA.

In its advertising, the ministry said that, “according to statistics,” the value of Chinese imports from Taiwan in January and February increased by 20.19 percent. This rise included a 28.47 percent increase in the value of products on the early harvest list. At first glance, it seems like the ECFA is having a dramatic effect.

However, a thorough check of statistics from both the Board of Foreign Trade and the various customs authorities failed to produce these same figures. The data were eventually found on the ministry’s Web site, which revealed that the statistics came from Chinese customs authorities. When estimating the effect of the ECFA, the foreign trade board had rejected Taiwan’s own official data in favor of data from China, and it did so without giving any -information of the origin of the data.

According to Taiwanese customs data, the growth of exports to China has decreased significantly since the implementation of the ECFA. In January and February last year, exports to China and Hong Kong grew by 85.2 percent and exports going directly to China increased by 103.8 percent. However, in January and February this year, exports to China and Hong Kong grew by a mere 17.2 percent. Of this, direct exports to China grew by 21.7 percent. It is abundantly clear that the growth of exports to China has dropped sharply after the ECFA early harvest list took effect.

Furthermore, since the ECFA took effect, the proportion of Taiwan’s exports to China and Hong Kong has dropped markedly. In January and February this year, the growth rate for exports to China and Hong Kong dropped by much more than it did for any of Taiwan’s other major trade partners. The result is that China and Hong Kong’s proportion of Taiwan’s exports dropped from 42 percent last year to 40.7 percent this year.

According to a foreign trade board press release: “It is clear that our efforts to develop other markets has had a certain effect.”

This is praiseworthy, of course, but doesn’t it also show that the ECFA is not having the intended effect?

Imports from China and Hong Kong grew by 30.4 percent in January and February this year, a sharp drop from last year’s 75.7 percent. However, imports from the US, Japan, European countries and the six major ASEAN member states dropped by even more. This means that imports from China and Hong Kong have grown from 14.2 percent in January and February last year to 14.8 percent in the same period this year, making it seem as if the ECFA is making China’s exports to Taiwan more competitive.

The foreign trade board provides more detailed estimates of the value of Taiwan and China’s trade, but only the data for January is currently available. In January last year, after the free-trade area between China and ASEAN nations had taken effect, Taiwan’s exports to China and Hong Kong grew by 154.3 percent, so that China accounted for 32.3 percent of Taiwan’s exports. After the ECFA took effect In January, exports to China grew by a mere 5.5 percent and China only accounted for 29.3 percent of Taiwan’s exports.

The growth of imports from China fell from 100.2 percent in January last year to 38.9 percent for the same period this year. Despite that, China’s proportion of Taiwan’s imports saw a marked increase from 13.9 percent last year to 15.9 percent this year. This makes it clear that the ECFA has not made Taiwanese exports to China more competitive. Instead, it has improved the competitiveness of Chinese exports to Taiwan.

Cross-strait trade is of course affected by many different factors and the effect of the ECFA should not be judged based on simple trade data nor should it be judged on short-term changes in trade. However, the ministry’s judgment is not only based on simple short-term trade data, it also misleads the public by using exaggerated data from Chinese customs authorities.

I call on the ministry to apologize for wasting funds on exaggerating the effect of the ECFA and to release long-term data for the products on the early harvest list so that the public can have a chance to make an accurate evaluation of the ECFA.

Tung Chen-yuan is a professor at National Chengchi University’s Graduate Institute of Development Studies.