Taiwan’s travel agencies could suffer from the signing of a cross-strait service trade agreement due to differences in the size of the two economies across the Taiwan Strait and the principle of reciprocity present in any free-trade agreement, Taiwan Solidarity Union (TSU) Legislator Hsu Chung-hsin (許忠信) said yesterday.
Hsu examined the potential impact the pact may have on local travel agencies once it is signed, as the government has not yet completed an impact assessment for the pact, which the Straits Exchange Foundation said could be signed before the end of the year.
The pact, along with a trade in goods agreement, are follow-ups to the Economic Cooperation Framework Agreement (ECFA) signed in June 2009. Opposition lawmakers have criticized the government for failing to complete a comprehensive assessment that such pacts would have on various local sectors.
The outlook was not optimistic because the restrictions that Taiwan implements on Chinese travel agencies would eventually be lifted, Hsu told a press conference.
According to the soon-to-be-signed agreement a maximum of three Chinese agencies will be allowed to operate in the Taiwanese market with their business operations confined to domestic travel.
The cap will be removed after a “transitional period” since Chinese firms are entitled to the same treatment as other foreign company according to the principles of free establishment in the WTO’s General Agreement on Trade in Services (GATS), of which Taiwan and China are members.
Taiwan would no longer prohibit Chinese agencies from running travel programs in Taiwan under the GATS’ “principles of free participation,” Hsu added.
The lawmaker questioned the government’s ability to monitor Chinese agencies’ operations, adding that they could collaborate with Taiwanese businesses to avoid inspections.
Moreover, Beijing could leverage its economic prowess by subsidizing the companies and driving Taiwanese agencies out of business with lower prices, Hsu said.
Deputy Director-General of the Tourism Bureau Chang Shi-chung (張錫聰) pledged that the bureau would strictly monitor the Chinese agencies’ operations.
Adjustments can still be made after the agreement is signed, said Yeh Kai-ping (葉凱萍), deputy director of the Economic Affairs Department under the Mainland Affairs Council.