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June 25, 2017

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Cross-strait goods pact to benefit local non-tech firms: government

TAIPEI, Taiwan --Non-technological firms are poised to gain from signing the Cross-Strait Trade in Goods Agreement, and this will prevent Taiwan from being marginalized in the global market, government officials said yesterday.

The Ministry of Economic Affairs (MOEA) invited local businesses to a conference yesterday to deliberate on the goods trade agreement, the pact that the government aims to ink after the signing of the Cross-Strait Trade in Services Agreement.

With China's low-cost advantage, local non-technological businesses said they are now under serious pressure, and called on the government to look out for their interests, instead of those of the finance sector only.

Some claimed that the reason the public has not been supportive of the service pact and the goods pact is that the government has not done a good enough job explaining these trade agreements.

Taiwan Poised to Gain from Trade Pacts

Some of the attendants questioned the positive effects the trade pacts may bring to Taiwan. Taiwan's export volumes used to be the highest among the Four Asian Tigers (South Korea, Singapore, Hong Kong and Taiwan). However, after joining the World Trade Organization, its export volumes have dropped to the lowest level among its peers. In addition, local wage levels have declined after Taiwan inked the Cross-Strait Economic Cooperation Framework Agreement.

In response, the MOEA's Industrial Development Bureau Deputy Director-General Lu Cheng-hua (呂正華) questioned if Taiwan would have fared better had it not opened up. Taiwan's economy relies heavily on exports. While Taiwan exports many IT products and services, without signing trade agreements, Taiwan's other quality products, such as car tires and machineries, may be less competitive in foreign markets, Lu said.

Despite the fact that mainland China is "out there pointing its missiles in our direction," local firms still need to engage in business activities. Therefore, a peaceful cross-strait relationship is still needed, Lu said.

South Korea's Active Pursuit of FTAs

According to MOEA's report, Taiwan's export rival South Korea has been actively signing FTAs with other countries and regions such as the U.S., Canada, Australia and the European Union.

Between January and September last year, about 36 percent South Korea's exports gained FTA favors, or tariff reduction, and the figure will reach 80 percent, after all of South Korea's signed FTAs take effect.

As 90 percent of Taiwan's exported products overlap with South Korea's, Taiwan may lose its competitive edge, the MOEA said, adding that Taiwan should hasten its pace to sign FTAs.

Asian Market not to be Ignored

Some business representatives pointed out yesterday that most of their products are sold to Japan, Europe, or the U.S. Therefore, they question the need for signing cross-strait trade agreements, and of joining the Regional Comprehensive Economic Partnership, an FTA plan for Southeast Asian nations and their trade partners.

Lu said in response that market states are always shifting, and local businesses should not rule out the possibility of actively engaging with Asian countries. This may well be the case for the next generation, Lu added.

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