The Wall Street Journal is urging Taipei to sign a free-trade agreement (FTA) with China.
“Taiwan’s leaders have warned for years that economic isolation will damage the nation’s competitiveness — now their worst fears may be coming true and the consequences of resisting freer trade and economic reform are becoming clear,” the newspaper said in an unsigned editorial on Tuesday.
The editorial, titled “Taiwan Leaves Itself Behind,” comes amid reports that China and Taiwan have reached an agreement to restart formal negotiations to drop tariffs on almost all trade between the two.
According to Washington sources, the talks will start again within weeks.
The Journal said that China and South Korea would finalize a free-trade agreement later this year and that could be a problem for Taiwan because both countries count China as their largest trading partner and their exporters compete head to head.
“If the deal goes through as expected, roughly 2 to 3 percent of all of Taiwan’s exports to China could be replaced by South Korean products,” the editorial said.
At the same time, the paper acknowledged anxieties in Taiwan that it “is in danger of being swallowed up by China as its businesses become increasingly dependent on the mainland.”
However, the Journal argues that since China is an integral part of global supply chains, Taiwan only hurts itself if it preserves barriers to cross-strait trade.
Beijing has also signaled it will lobby against Taiwan’s participation in multilateral pacts such as the Trans-Pacific Partnership (TPP) if Taipei does not first liberalize with China, the editorial said.
“So the road to less reliance on China paradoxically runs through Beijing,” it said.
“If Taiwan rewrites outdated regulations and rolls back restrictions on investment, it can promote domestic competitiveness and signal that Taipei is serious about joining the TPP,” it said.
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