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September 20, 2017

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Cross-strait trade shouldn't be politicized: expert

TAIPEI -- Taiwan's close economic relations with China are a reflection of its integral role in the global supply chain, a role that should not be politicized, a local economist said Saturday.

Those who argue that Taiwan's economic dependence on China will allow Beijing to determine Taiwan's fate have failed to see Taiwan's role and status in the new international division of labor, according to Chu Yun-peng, a professor at National Central University and a former minister without portfolio.

Unlike in the past when Taiwan assembled Japanese parts and components and sold the products to the United States and Europe, Taiwan is now producing intermediate goods using Japanese parts and components, with China responsible for assembling them for sale to end markets, he said.

Many other countries, including South Korea, follow the same model, and South Korea is even more dependent on China than Taiwan, which explains why a free trade agreement with China is necessary for both Taipei and Seoul, he said.

He noted that cross-Taiwan Strait trade saw rapid growth between 2000 and 2008 although cross-strait ties were not good at that time, which demonstrates that trade is unrelated to politics.

The delay by the Legislative Yuan in ratifying the trade-in-services agreement with China has led to concerns that Taiwan might lose its competitive edge to South Korea, which is expected to sign a free trade pact with China by the end of this year.

In an editorial titled "Taiwan Leaves Itself Behind" published Aug. 4, the Wall Street Journal warned that maintaining barriers to trade with China will only hurt Taiwan.

Citing data from Taiwan's Ministry of Economic Affairs, the paper said 2-5 percent of all of Taiwan's exports to China could be replaced by South Korean products after the China-South Korea free trade agreement is signed.

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