Taiwan to lose big in Korea-U.S. FTA

Industry and foreign trade experts in the government and in private sectors all voiced grave concerns, while South Korea and the U.S. celebrated the FTA’s signing which will become effective just one and a half years from now.

The specialists estimated that Korea’s gross domestic product (GDP) will expand 2 percent as a result of the FTA. Korea will see its shipments to the vast American market increase by US$10 billion a year and its direct foreign investments rise sharply by US$40.4 billion.

Korea will make the massive gains partly at the expense of Taiwan, according to the experts.

According to one estimate by the Ministry of Economic Affairs (MOEA), Taiwan’s GDP will be shaved 0.05 of a percentage point. American enterprises’ investments in Taiwan will be squeezed by closer Korean-U.S. cooperation.

One report produced by researchers for the MOEA points that Taiwan stands to lose US$2 billion in its exports to the U.S. every year, accounting for 5 percent of the island’s overall annual export trade.

The traditional manufacturing industries anticipated to see the strongest impact will include textiles, bicycles, plastics and rubber products, and footwear.

At least 10,000 more people will be added to the swelling roster of the unemployed.

Exports in Taiwan’s high-tech sector, especially the information technology industry, will be less affected, mainly because local enterprises will maintain the current neck-to-neck competition with their Korean counterparts.

But what worries the officials and researchers is the closer business and technological ties to be forged by the Korea-U.S. FTA at the expense of Taiwan enterprises.

Lawmakers and trade experts complained about the continuous isolation and marginalization of Taiwan in regional and worldwide economic systems.

They said the FTA will serve as an accelerator to enable Korea to widen its lead over Taiwan in the years ahead, not just in terms of economic expansion and raising people’s income, but in almost all aspects.

Officials complained that China is to blame because it has been the major barrier for Taiwan in securing an FTA with the U.S., Japan or any neighboring nations.

Beijing leaders have adopted a new tactic in more recent years by simply ignoring provocative remarks made by President Chen Shui-bian and other senior officials concerning relations across the Taiwan Strait.

China has constantly been used by Taiwan’s politicians to attack their political opponents, in order to influence the outcomes of major elections on the island.

The politicians have branded those promoting closer cross-strait ties as people who do not love Taiwan, but only want to “sell out” Taiwan and bring disaster to the island.

President Chen’s administration also emphatically ignored repeated suggestions from American and European business leaders to push for further economic liberalization with China if Taiwan wants to remain a major global economic player. Instead of aggressively beefing up Taiwan’s global competitiveness, the government has guided the people on the island toward more internal clashes as well as higher tensions across the Taiwan Strait and in the ties between Taiwan and the U.S.

Analysts said some of the new cards played by Chen’s administration and his party include the plan of holding a national referendum on the island’s rejoining the United Nations under the name of “Taiwan” and then dumping the blame on Beijing for its opposition to the plan.

President Chen and leaders of his party have so far ignored U.S. criticism of the plan as a possible escalation in cross-strait tensions.

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