Taiwan’s exclusion from the Regional Comprehensive Economic Partnership (RCEP) would have little effect on local exporters, because most firms already have a presence in Southeast Asia to take advantage of the favorable tariff terms there, government officials said yesterday.
Fifteen Asia-Pacific nations on Sunday signed the free-trade deal to form a trade bloc that accounts for nearly 30 percent of global GDP.
Minister of Finance Su Jain-rong (蘇建榮) told a meeting of the legislature’s Finance Committee that tariffs are already exempted on about 70 percent of Taiwanese shipments to RCEP markets.
Photo: Chien Jung-feng, Taipei Times
“The formation of the trade body, which is to expand the scope of tariff concessions [between the 15 member nations] from the current 90 percent to 92 percent, would have a very limited impact on Taiwan’s competitiveness,” Su said.
The difference of 2 percentage points is mild, he added.
Lawmakers from across party lines voiced concern that Taiwan would be marginalized internationally after failing to join the trade body and because of the transition in power in the US after US President Donald Trump lost the election.
RCEP members have negotiated trade terms for the past eight years during which time major Taiwanese companies have made inroads in ASEAN markets, giving them access to free trade, Su said.
The government has also encouraged local companies to diversify their investments beyond China under the New Southbound Policy, he added.
The National Development Council shared similar observations, saying that Taiwan-made semiconductors make up 60 percent of shipments to RCEP destinations and there is no tariff on semiconductors and related products due to international technology pacts and protections.
Some RCEP member nations have lowered tariffs to zero for particular technology products to remain competitive globally, the council said in a statement, explaining why tariffs are already not charged on about 70 percent of Taiwanese exports.
US-China trade tensions and the COVID-19 pandemic have awakened companies to the need for risk diversification and the danger of overdependence on a single market, the council said.
As a result, companies are restructuring their supply chains and speeding up digital transformation, it said.
Global supply realignment and the ability to develop a digital economy might become more important and relevant to supporting the economy than tariff reductions, the council said.
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