Sun, Jan 16, 2005 - Page 4 News List

ASEAN bloc harmful to the economy

SCENARIO If Taiwan is excluded from the Asian free trade agreement, its textile and electronic exports would suffer, as well as its social welfare

CNA , TAIPEI

A significant impact is expected if Taiwan is excluded from the free trade bloc consisting of the member states of the Association of Southeast Asian Nations (ASEAN), China, Japan and South Korea, according to an assessment made by the Chung Hua Institution for Economic Research.

In the assessment made for the Ministry of Economic Affairs, the institution predicts that such a trade bloc will cause a 0.98 percent drop in Taiwan's gross domestic product (GDP), cut down the volume of Taiwan's international trade by 1.14 percent, drive down Taiwan's social welfare spending by US$4.33 billion and decrease Taiwan's industrial output by US$6.97 billion.

The textile industry will bear the brunt of the impact, suffering losses of US$1.95 billion, followed by the plastic and chemical industry, which will lose US$940 million and the electronics industry, which will lose US$710 million.

It will lead to a decrease of US$2.36 billion in the country's exports, including US$1.46 billion in the textile industry and US$630 million in the electronics industry.

Noting that the assessment is made according to 1997 data, which are the latest figures available, the institution said it has allowed for some margin of error but will not be far from the actual figures.

The impact would be much less if the ASEAN-centered trade bloc were to include only ASEAN states and the mainland, according to the assessment.

The institution predicts that in this scenario, Taiwan's GDP will be cut by 0.2 percent, international trade by 0.19 percent and social welfare spending by US$790 million.

Taiwan's combined industrial output will plunge by US$1.4 billion, with the textile industry suffering the most, losing US$325 million. Exports will shrink by US$446 million, with the electronics industry suffering the most, losing US$259 million. Employment will also suffer, with 14,154 jobs lost, mainly in the semiconductor industry, textiles and wholesale.

If the ASEAN trade bloc includes no countries other than its member states, the impact on Taiwan would be insignificant, according to the assessment.

It predicts that in such a case, the GDP will decrease by 0.1 percent, international trade by 0.08 percent, social welfare spending by US$360 million and industrial output by US$720 million, with the electronics industry bearing the brunt, giving up US$243 million, and a decrease of US$234 million in exports.

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