A US-based academic said Taiwan’s chances for growth would be limited if it misses opportunities for economic integration, including the hotly debated service trade agreement with China.
“Taiwan’s demonstrators occupied its legislature to resist a new trade bill with the mainland. Could Taiwan thrive without these trade deals?” asked Dan Steinbock, research director of international business at the US-based India, China, and America Institute in an article dated Monday last week.
Steinbock, who is also a visiting fellow at the Shanghai Institutes for International Studies and the EU Center (Singapore), said that China and Hong Kong accounted for more than 40 percent of Taiwan’s exports in 2012.
Without the two, Taiwan’s export-led growth would collapse, he said in the article, titled “Time to couple Taiwan’s export-led growth with regional integration.”
Steinbock called the services pact a “vital follow-up” to the Economic Cooperation Framework Agreement (ECFA) Taiwan and China signed in 2010, which cut tariffs and other barriers to boost bilateral trade to US$197 billion last year, according to the article.
Services are vital to the more advanced stages of development, making the pact to remove investment barriers in Taiwan’s and China’s service sectors all the more important for boosting Taiwan’s competitiveness, he wrote.
Beyond the China market, the pact “paves [the] way for Taiwan’s further economic integration in Asia, which is critical to its future,” Steinbock wrote.
“In the past, Taiwan’s rapid growth relied on globalization. Today it must thrive with regionalization,” he wrote, highlighting intensifying regional integration such as talks for the Trans-Pacific Partnership and bilateral free-trade deals between Asian countries and the EU.
Yet “political uncertainty has increased with the trade pact debacle,” he wrote, referring to the aggressive resistance to the pact that has seen student-led protesters occupy the legislature since March 18.
In an effort to end the standoff between the government and protesters, as well as the one between the Chinese Nationalist Party (KMT) and the Democratic Progressive Party, the KMT government has conceded to a draft law that will lend closer scrutiny to agreements signed with China — a move that Steinbock called into question.
“President Ma [Ying-jeou (馬英九)] gave in to demands to increase scrutiny of future pacts signed with the mainland... The anti-climax did not bring closure to the trade friction, but more uncertainty to Taiwan,” he said.
He wrote of the need for a political consensus to support growth, adding that “political determination without sufficient economic growth will result in stagnation.”
Taiwan’s future growth “requires trade pacts with the mainland, the emerging Asia and the rest of the world,” he said.