Taiwan to study possible CECA with China

The MOEA stated in a press statement that it has been closely monitoring the formation of a regional economic bloc that includes the Association of Southeast Asian Nations (ASEAN) and its neighboring trade partners of China, Japan and South Korea.

The MOEA knows that Taiwanese exporters will face tough challenges when the “ASEAN plus one” — ASEAN and China — free trade zone goes into operation in 2010, according to the statement.

Therefore, the government has been seeking to sign free trade agreements (FTAs) with Taiwan's major trading partners and has spared no effort to devise strategies to deal with its exclusion from the regional economic bloc, the MOEA said.

Industry and business groups in Taiwan have been pushing for the Taiwan government to forge closer economic links with China by signing a CECA, and to move quickly to liberalize cross strait trade though actions such as the removal of tariffs.

Amid some doubt and uncertainty in Taiwan regarding the idea of signing a CECA with China, the MOEA said it will conduct a study on how such an agreement could be achieved without sacrificing the overall interests of the country's industrial sectors.

Taiwan is also concerned that when ASEAN enters into an “ASEAN plus three” arrangement, which not only includes China but also Japan and South Korea, import duties on goods flowing between East Asia and the Southeast Asia countries will be lowered or eliminated.

This means that countries outside the economic bloc will have to contend with import duties ranging from 6.5 percent to 14.9 percent in competing with exporters from East Asia or ASEAN vying for regional markets.

Fearing they will lose their competitiveness, six of Taiwan's major business and industrial organizations — the Chinese National Association of Industry and Commerce, Chinese National Federation of Industries, Taiwan Electrical and Electronic Manufacturers' Association, National Association of Small and Medium Enterprises, General Chamber of Commerce of Republic of China, and Taiwan Federation of Industry — urged the government to take action as soon as possible to deal with the looming problem.

President Ma Ying-jeou has sought to build closer economic ties and eventually ink a CECA with China, but the approach has drawn strong criticism from some quarters, including the pro-independence opposition Taiwan Solidarity Union (TSU) and the Democratic Progressive Party.

TSU Chairman Huang Kun-huei argued that the proposed CECA with China will force Taiwan to follow the Hong Kong and Macau model, which will ultimately downgrade Taiwan to the level of a local government subordinate to Beijing.

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