After more than eight years of talks, the Regional Comprehensive Economic Partnership (RCEP) was signed on Nov. 15, combining the individual free-trade agreements signed between ASEAN member states on the one hand, and China, Japan, South Korea, Australia and New Zealand on the other.
Under the leadership of ASEAN and China, most observers did not expect the RCEP to provide a high degree of openness, and the announced agreement lives up to these expectations, containing few surprises.
All products covered by the RCEP tariff reductions are agricultural and industrial products, but reductions of agricultural product tariffs are very limited, for example covering only 49 percent of Japan’s agricultural and fishery products. In addition, many of the RCEP members are only to implement the reductions over the next 10 to 25 years.
Tariff reductions on machine tools and plastics industry products, which are of Taiwanese concern, would not be very high, and while this might still have an impact, it would not be a chock.
As for service trade and investment deregulation, the RCEP is probably the first free-trade agreement to use a “mixed-model” commitment method.
China and most of the ASEAN members continue to use the WTO’s positive list approach, tabulating deregulated service categories. A minority of members, such as Australia and Japan, would use a negative list approach, listing service sectors and investments with limited deregulation.
Doubts remain as to whether this complicated model will achieve the RCEP’s goal of integrating the various ASEAN Plus One regulations.
Furthermore, there is no additional deregulation for government procurement, as the RCEP stops at improving government procurement procedure-related transparency regulations without any commitment to market deregulation. In other words, China and many of the ASEAN states would remain closed.
Other issues, such as beef and pork inspection regulations, include progressive clauses about strengthening scientific evidence and risk evaluation.
In the same way, e-commerce rules prohibit forcing foreign businesses to localize databases as a precondition for approving their investments.
However, these progressive clauses are “soft,” in the sense that they do not include a dispute settlement mechanism. In other words, they are more symbolic than binding.
Many observers have expressed the view that as Taiwan would not be able to join the RCEP, it would result in the nation’s effective marginalization. While it is true that the RCEP will likely affect the Taiwanese economy, it does not involve very far-reaching liberalization, which lessens the pressure on the nation.
In addition, the ASEAN Plus One free-trade agreement has been in effect for more than a decade, and 90 percent of all such agreements include mutual clauses on zero manufacturing customs duties. This means that the Taiwanese economy has experienced 10 years of pain and adaptation, and has still found stable foothold and ways of handling this situation.
The main effect of the RCEP on Taiwan would stem from the new free-trade relationships between China and Japan, and Japan and South Korea.
Preliminary observations show that tariffs between these countries would be cut by 80 to 90 percent. However, thanks to information technology agreements stipulating zero tariffs or existing zero-tariff agreements with other countries, more than 70 percent of Taiwanese exports to China, Japan and South Korea already enjoy zero tariffs.
Fortunately, the three countries have have not reduced tariffs on products from high-tariff industries such as the plastics, machinery and textile industries, or are delaying reductions. In other words, while the RCEP will likely affect the Taiwanese economy, it would not be excessive.
In addition to increasing its push to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, Taiwan should make an effort to build a foundation for reorganizing its supply chains based on trust, like-mindedness, non-corruption and accountability — four characteristics that have increasingly come into focus for many countries.
Yen Huai-shing is deputy director of the Chung-Hua Institution for Economic Research’s Economic Law Research Center.
Translated by Perry Svensson
They did it again. For the whole world to see: an image of a Taiwan flag crushed by an industrial press, and the horrifying warning that “it’s closer than you think.” All with the seal of authenticity that only a reputable international media outlet can give. The Economist turned what looks like a pastiche of a poster for a grim horror movie into a truth everyone can digest, accept, and use to support exactly the opinion China wants you to have: It is over and done, Taiwan is doomed. Four years after inaccurately naming Taiwan the most dangerous place on
Wherever one looks, the United States is ceding ground to China. From foreign aid to foreign trade, and from reorganizations to organizational guidance, the Trump administration has embarked on a stunning effort to hobble itself in grappling with what his own secretary of state calls “the most potent and dangerous near-peer adversary this nation has ever confronted.” The problems start at the Department of State. Secretary of State Marco Rubio has asserted that “it’s not normal for the world to simply have a unipolar power” and that the world has returned to multipolarity, with “multi-great powers in different parts of the
President William Lai (賴清德) recently attended an event in Taipei marking the end of World War II in Europe, emphasizing in his speech: “Using force to invade another country is an unjust act and will ultimately fail.” In just a few words, he captured the core values of the postwar international order and reminded us again: History is not just for reflection, but serves as a warning for the present. From a broad historical perspective, his statement carries weight. For centuries, international relations operated under the law of the jungle — where the strong dominated and the weak were constrained. That
The Executive Yuan recently revised a page of its Web site on ethnic groups in Taiwan, replacing the term “Han” (漢族) with “the rest of the population.” The page, which was updated on March 24, describes the composition of Taiwan’s registered households as indigenous (2.5 percent), foreign origin (1.2 percent) and the rest of the population (96.2 percent). The change was picked up by a social media user and amplified by local media, sparking heated discussion over the weekend. The pan-blue and pro-China camp called it a politically motivated desinicization attempt to obscure the Han Chinese ethnicity of most Taiwanese.
RSS