South Korea and Australia recently signed a free-trade agreement (FTA) that will come into effect in 2015. It is the 11th FTA that South Korea has signed with another country.
Now that the deal has been cilnched, it is almost certain that officials from President Ma Ying-jeou’s (馬英九) government, along with many other observers, will come out and make specious statements about South Korea stepping up the pace of trade liberalization and how this means that the cross-strait service trade agreement must not be postponed any further.
These statements will be followed by demands that the agreement must be passed by the legislature with the utmost urgency.
However, South Korea’s latest FTA is not the only piece of news that Taiwan should be paying attention to. Seoul’s Ministry of Trade, Industry and Energy announced this month that according to import data released by Beijing, as of October, the value of South Korea’s exports to China stood at US$150 billion, while exports from Japan into China were worth US$133 billion.
Figures for the last two months of the year are not yet finalized, but it seems likely that South Korea is set to overtake Japan and become China’s largest source of imports. Taiwan, on the other hand, is third on the list with exports to China worth US$130.6 billion.
It is worth comparing South Korea with Taiwan.
South Korea has yet to sign an FTA with China, while the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China has been in effect for more than three years. Back when the Ma administration was evaluating the benefits of the ECFA, it emphasized its view that Taiwan would have the advantage of gaining access to Chinese markets at an earlier stage than Japan or Korea, and that this would allow Taiwan to replace these countries in the Chinese market.
It is therefore worthwhile to consider three important questions: How is it that although Seoul has never signed an FTA with China, South Korean products have been able to gain such widespread access to the Chinese market?
Why has the Ma government failed to deliver on promises that Taiwan would catch up with and overtake South Korea and Japan in the Chinese market?
Why is it acceptable for Ma to promote the cross-strait service trade agreement with China before any real review of the policy and its effects has been conducted?
In simple terms, the Ma government has no idea how to stimulate the Taiwanese economy, and it simply wants to rely on China and is prepared to concede benefit after benefit to cover up its pitiful political performance.
The government is unwilling to face up to the tendency of China to suck the lifeblood out of Taiwan nor face the changes that have occurred as the industrial relationship between the two nations has moved away from Taiwan representing the upstream with China the downstream toward a reality where China has replaced Taiwan.
At the end of the day, where Taiwan really lags behind is not in the number of FTAs signed with other countries, but in the foresight and ability of those leading this country.
Huang Tzu-wei is a researcher at the Taiwan Thinktank.
Translated by Drew Cameron