Taiwan should carefully reassess the Economic Cooperation Framework Agreement (ECFA) with China in light of new information that suggests a growing economic reliance on China, academics told a forum yesterday.
Wu Rong-i (吳榮義), chairman of Taiwan Brain Trust, which hosted the event, said the government needed to adopt an attitude that favored long-term planning rather than focus on “short-term gains.”
The think tank unveiled its conclusions following a series of studies analyzing the effects of the ECFA, which after being signed in June last year lowered cross-strait border tariffs.
“Although Taiwan’s investments in China have risen, foreign investment coming into Taiwan has bottomed out. It will have repercussions for Taiwan’s economy and stock market and will increase the rate of our marginalization,” Wu said.
Figures published by the think tank show that Taiwan’s capital flow to China has grown significantly under President Ma Ying-jeou (馬英九). In the first quarter this year, investments to China grew 65 percent on an annualized basis, while foreign investment fell 34 percent.
Acknowledging the problems of looking at a problem from any one aspect, the panel also covered angles ranging from Taiwan’s agricultural industry to the stock market and stagnant salaries.
Looking at the sale of the country’s agricultural products to China, National Chung Hsing University professor Wu Ming-ming (吳明敏) said that while that figure grew, so did China’s agricultural exports to Taiwan.
While Taiwan’s exports grew at a slightly higher rate, Wu said this was accompanied by the transfer of agricultural know-how across the Taiwan Strait, which in his view cast doubt on the president’s promises that Taiwan’s agricultural industry would be largely immune to the ECFA.
Looking at the agreement from the perspective of the stock market, former national policy adviser Huang Tien-lin (黃天麟) said the ECFA had made the Taiwan Stock Exchange more susceptible to global upturns and downturns, as exemplified by the recent drop following the credit crisis in Greece.
“This is because once the capital and human talent of a small economy flows into a large economy, the small economy often becomes marginalized by the larger economy,” Huang said.
Comparing the ECFA to the Closer Economic Partnership Arrangement (CEPA) signed between China and Hong Kong in June 2003, Huang said the repercussions for Hong Kong included “lower average wages and lower productivity” for workers in the manufacturing industry and “an increase in poor people” overall.
Those effects could soon be felt in Taiwan, he said.
In terms of politics, Hsu Chung-hsin (許忠信), an associate professor of law at National Cheng Kung University, said that in addition to economic losses, the ECFA also threatened Taiwan’s sovereignty.
He said that by signing the ECFA under the same format as that used for the CEPA, Taiwan risked presenting to the world that it had accepted Beijing’s “one China” principle.
As Taiwan and China are both WTO members, the ECFA should have been reviewed by the global trade body, Hsu said.
While the Democratic Progressive Party and pan-green organizations have largely spoken against the pact, officials in the Ma administration have praised the trade agreement, saying that it has contributed to Taiwan’s economic recovery from the global financial crisis.