The Ministry of Economic Affairs yesterday said it is considering negotiating with its Chinese counterpart on a broader range of products to be covered in the cross-strait agreement on trade in response to China and South Korea’s signing a bilateral trade agreement.
After a three-hour meeting in Seoul on Thursday, Chinese President Xi Jinping (習近平) and South Korean President Park Geun-hye issued a joint statement that Seoul and Beijing would work to complete a long-negotiated free-trade agreement by the end of the year.
In response, Vice Minister of Economic Affairs Woody Duh (杜紫軍) told a media briefing that he felt “highly agitated” about China and South Korea signing a free-trade agreement because the pact is likely to cause the nation’s businesses to lose competitiveness with their South Korean peers.
“We need to have a much better discussions about helping Taiwanese companies become more competitive with their South Korean counterparts, but the key is to let the already inked cross-strait service trade pact get ratification from the legislature first,” Duh said.
Duh said the ministry’s trade negotiation office is revising its strategies and considering negotiating a longer list of products to be covered in the cross-strait agreement on trade in goods.
The ministry said Taiwan’s panel, petrochemical and machinery industries would suffer the brunt of the new free-trade deal. Taiwan is competing with South Korea in those sectors.
Taiwanese academics have also expressed concern about the agreement between China and South Korea.
Chung-Hua Institution for Economic Research’s WTO and RTA center deputy executive director, Roy Lee (李淳) told CNA that after the signing of the agreement, Taiwan will suffer an impact in a short-time frame.
“Between 50 percent and 80 percent of Taiwan’s export items overlap with those of South Korea,” Lee said.
As China is also developing its own panel industry, it probably will not allow zero tariffs for South Korea, but even if China reduces tariffs in seven to 10 years, it will still curb Taiwan’s panel sector.
He said that Taiwan has enjoyed a trade surplus of between US$80 billion and US$90 billion with China over the past few years, while its trade surplus with the rest of the world has totaled US$30 billion.
“If Taiwan’s trade surplus with China is reduced, its trade surplus with the rest of the world will also be reduced,” he said. This, coupled with high tariffs, could induce an even faster exodus of domestic industries, according to Lee.
Taiwan Institute of Economic Research (台灣經濟研究院) Microeconomic Forecasting Center director Gordon Sun (孫明德), said that China is also the largest export destination for South Korea, accounting for 30 percent of its total exports.
“If China also completes the signing of a free-trade agreement with Japan, then Taiwan will be marginalized,” he said.
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