ASEAN Plus One makes ECFA signing more urgent

With the free trade zone involving the Association of Southeast Asian Nations (ASEAN) and mainland China coming into effect January 1, 2010, Taiwan’s total industrial production value may drop by US$2.46 billion, according to estimates by Taiwan’s Chung-Hua Institution for Economic Research. And in the future when this “ASEAN Plus One” free trade zone is expanded to include Japan and South Korea, Taiwan’s overall industrial production may fall by as much as US$9.99 billion. With such a tremendous impact to local industrial competitiveness, Taiwan’s pursuit of an economic cooperation framework agreement (ECFA) with mainland China has become more urgent than ever.

In his New Year’s Day message, President Ma Ying-jeou remarked that as the ASEAN Plus One free trade zone has come into effect, affected goods and services from the 10 ASEAN member states can enter mainland China tariff-free, while Taiwan’s competing exports to the mainland are still subject to high import taxes. This places Taiwan at a great disadvantage and the government cannot simply sit by and watch this happen, said Ma. For this reason, Taiwan is pushing to sign an ECFA with mainland China and will use the pact as a starting point for leveling the competition on the international market. The government also hopes to see an “early harvest” list of items eligible for lower tariffs included in the ECFA to avoid marginalization of local industries, attract new foreign investment and boost employment.

During a interview on December 29, 2009, Premier Wu Den-yih reiterated that the ECFA is being pursued under the conditions that it is needed by the nation, supported by the public and overseen by the Legislature. He expressed his hope that the pact will be signed by May or June 2010, otherwise local industries will not be able to enter the mainland market and their competitiveness will suffer a heavy blow.

As for those who doubt the benefits of ECFA, the government will pay heed to their concerns and work hard to win their support for the negotiations, Wu said. The government has also asked the Ministry of Economic Affairs and the Council of Labor Affairs to set up a relief program that will invest US$2.85 billion over the next 10 years to assist the industries most likely to be harmed by the signing of the ECFA. The program will help upgrade and transform these vulnerable industries, and provide training for workers so that they can find new jobs.

Minister of Economic Affairs Shih Yen-shiang pointed out that Taiwan could enter formal talks with mainland China January 2010 at the earliest, and that preliminary negotiations would begin mid-January at the latest. When the time comes, about 500 items—including petrochemicals, textiles, machinery and automobile parts—will be included on the tariff concession list. However, Director-General Huang Chih-peng of the Bureau of Foreign Trade noted that formal negotiations and exchanges with mainland China would have to first take place before the list can be finalized.