ECCT says ECFA needed to survive

Taiwan can improve its global competitiveness by pursuing trade agreements with China and Europe, lowering taxes and upgrading its infrastructure to the highest environmental standards, according to ECCT.

ECCT pledged for abolishment of Taiwan-only standards in the service industry, because they continue to obstruct the industry's development in Taiwan and form non-tariff barriers for manufacturers and importers.

Existing businesses are reluctant to expand investments and new investors are reluctant to come to Taiwan, said Philippe Pellegrin, chairman of ECCT, pointing at the fact that both Taiwan's imports from and exports to the European Union (EU) have dropped significantly.

“Given that Taiwan is a relatively small economy, extraordinary efforts will have to be made to survive the downturn,” he said, as the ECCT resolutely offered several options to the Taiwan government that could embody these “extraordinary efforts.”

Firstly, government should sign an Economic Cooperation Framework Agreement (EFCA) with mainland China, the ECCT report said. This would “benefit Taiwanese and European businesses” and it would “help to counter the impact of the global economic recession.”

Secondly, Taiwan should pursue a Trade Enhancement Agreement (TEA) with the EU, as it would be mutually beneficial according to the ECCT. Such an agreement would be “vital,” especially now that the EU and Korea are close to implementing a Free Trade Agreement (FTA). Without a similar agreement between Taiwan and the EU, Taiwan would be put at a “significant disadvantage” to Korea.

Thirdly, Taiwan should develop a “competitive taxation and tax incentive climate.” The global recession makes the need for a competitive tax environment “even more urgent” and Taiwan should “benchmark itself on regional competitors such as Hong Kong and Singapore,” the ECCT suggested.

The government's recently announced tax reforms are not enough to satisfy the chamber's demands. These would be insufficient to make Taiwan attractive to foreign investors, the ECCT said. It called for “bolder tax reforms” such as lowering personal and corporate income tax rates, and reforming its withholding tax laws on service income, as they are a “strong disincentive” for new businesses to set up operations in Taiwan.

The ECCT also strongly opposed a proposed levy luxury goods. “Such a tax would go against government's own recent policies and objectives of revitalizing domestic consumption, promoting tourism and developing Taiwan's own high-end products,” the chamber stated.

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