The economic effects brought by the “early harvest” list of the Economic Cooperation Framework Agreement (ECFA) are more favorable to China than to Taiwan, according to a report released by the legislature’s Budget Center, a finding that contradicts a previous statement by Premier Sean Chen (陳冲) that touted the list’s “remarkable achievements.”
The “early harvest” list, which took effect in January last year, includes items that enjoy preferential tariffs first under the EFCA, an agreement signed between Taiwan and China in 2010 that also includes the opening up of certain industries.
“The early harvest list of the ECFA has yielded remarkable results, and the Cabinet will continue its efforts to build a ‘sensible economy’ within a month,” Chen said in his report to the legislature on Friday, following his survival of a no-confidence vote on Sept. 22.
The no-confidence motion, which was voted down by the 64 seat-strong Chinese Nationalist Party (KMT) caucus, was initiated by the Democratic Progressive Party (DPP) and the Taiwan Solidarity Union caucuses against what they called Chen’s “poor performance in managing the sluggish economy.”
Despite Chen’s promising words, the Budget Center’s latest report showed that there was a downward trend in Taiwan’s exports to China since the list came into effect, while the country’s imports from China have increased annually.
The report showed that Taiwan’s exports to China in the first half totaled US$8.95 billion, which is lower than the US$9.17 billion recorded in the same period last year, with the market share of Taiwan-made products in China shrinking for a fifth consecutive year.
Conversely, Taiwan’s imports from China surged from US$3.95 billion in 2010 to about US$5 billion last year, the report said.
“A reverse effect on cross-strait trade has emerged following the signing of ECFA, which has not only failed to exert the anticipated effect thus far, but also boosted the share of China-made products in Taiwan,” the report said, adding that the economic relationship between the two sides had turned from complementary to competitive.
Taiwan-made goods are now at risk of being replaced by products manufactured in China, and even if ECFA follow-up pacts are to be signed, the substantial effects they might bring should not be overestimated, the report said.
“The signing of ECFA is a lose-lose move for Taiwan. [Premier] Chen vowed to make a sensible economy, but he still focuses on cross-strait interactions and ECFA. His failures are therefore already foreseeable,” DPP Legislator Chen Chi-mai (陳其邁) said.
Urging the government to conduct a review of the trade deal and postpone any follow-up talks, Chen Chi-mai said endorsement of the ECFA by President Ma Ying-jeou’s (馬英九) administration was exaggerated as the deal did not have such a significant economic effect.
“The Ma administration should abandon its ‘China fantasy.’ The key to building a sensible economy lies in enhancing domestic industries, rather than in expanding economic ties with China,” Chen Chi-mai said.