The signing of an economic cooperation framework agreement with mainland China would provide incentives to other countries to ink free trade agreements with Taiwan, Mainland Affairs Council Deputy Minister Kao Charng said Dec. 11.

“Taiwan’s economic situation will deteriorate if no progress is made in securing bilateral free trade agreements with other economies soon,” Kao warned, adding that Taiwan’s reliance on the mainland would be increased if it could not secure any FTAs following the ECFA.

According to Kao, Singapore has struck FTAs with 32 nations and South Korea with 23. “Singapore has said it would only consider an FTA with Taiwan after a breakthrough regarding the cross-strait ECFA is achieved,” Kao told the media. “Taiwan must obtain the ECFA with Beijing before it can sign any FTAs with other major economies,” he added.

Meanwhile, a total of 247 FTAs have been signed globally, Liu Sheng-chung, deputy minister of economic affairs, said Dec. 11. East Asian countries, including Taiwan’s competitors South Korea and Singapore, are actively seeking FTAs with their trade partners, Lin pointed out.

The mainland has become Taiwan’s largest export destination, accounting for 39 percent of the island’s exports. The inking of a cross-strait ECFA would thus benefit Taiwan the most, Lin noted. “In the past 10 years, Taiwan’s trade volume with the Association of Southeast Asian Nations has dropped from 24 percent to 11.8 percent, while South Korea’s trade volume with ASEAN has gone up from 16 percent to 24 percent. South Korea, with an FTA with Singapore, is likely to replace Taiwan in trade with ASEAN and force Taiwan to lose its competitive edge,” Lin said.

“The ECFA is just a prelude to the arrangement of more free trade pacts. The government will set its priorities and proceed accordingly,” Kao said. Taiwan and mainland China are both members of the World Trade Organization, Kao noted, so prohibitions on the import of many mainland goods to Taiwan have put the nation in longstanding violation of WTO regulations. The American Chamber of Commerce in Taipei and the European Chamber of Commerce Taipei have repeatedly urged the government to abide by the spirit of the WTO.

As it will take three to five years to negotiate issues such as trade in goods and services after the agreement is inked, Kao expressed hope that the ruling and opposition parties can focus their attention on how to sign the ECFA with the mainland, rather than on whether to sign it.

Convinced that the ECFA must go through for Taiwan to be able to sign more FTAs, Kao assured the public that the government would draw up accompanying measures to offset any negative impact on local industries after the signing of the agreement. (LC-THN)

(This article first appeared in the “China Times” Dec. 12, 2009.)

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