Taiwan should accelerate follow-up talks with China over a bilateral economic pact to reduce the adverse impact on Taiwanese exports of a free-trade agreement (FTA) between China and South Korea, advisers to the Mainland Affairs Council (MAC) said.
As South Korea is preparing to conclude an FTA with China, Taiwan should speed up negotiations with China to expand mutual tariff concessions under the Economic Cooperation Framework Agreement (ECFA), members of the MAC’s advisory committee said at a recent meeting.
Under the ECFA’s “early harvest” program, Taiwan and China have agreed to reduce and gradually eliminate tariffs on many industrial and agricultural items, but there are many products not on the list.
The ECFA effect could be offset by a China-South Korea FTA, since Taiwan and South Korea are major competitors in China, the biggest export destination for both countries.
The MAC, a Cabinet-level body responsible for charting the government’s policy toward China, called the meeting recently to solicit its advisers’ opinions about the possible economic impact on Taiwan of China-South Korea FTA talks next month.
In addition, some academics worried that such a pact might pose a strong threat to Taiwan’s efforts to solicit foreign investment and urged the government to come up with a rescue plan.
Part of that solution, according to some experts, could be a further push for industry upgrades that help domestic vendors transform original equipment manufacturing (OEM) into own-brand goods.
The committee also cautioned against the emergence of a possible China-Japan-South Korea free trade bloc, which could pose even more severe challenges to Taiwan.
They said such a partnership might be expected to pave the way for an “ASEAN plus Three” free-trade zone, which could further marginalize Taiwan.