ECFA will hurt South Korean export: trade group

The Economic Cooperation Framework Agreement “will likely lead to an early reduction of customs on certain items as it includes an early harvest program,” the Korea International Trade Association (KITA) was quoted by the Korean Yonhap News Agency as saying.

The ECFA, a free trade agreement between China and Taiwan in all but name, will reduce or exempt tariffs on hundreds of Taiwanese exports to the mainland in the coming years, which will result in “significant damage” to South Korea, the KITA said as a majority of the nation's exports to China overlaps with that of Taiwan.

Fourteen of South Korea's twenty key export items, including electronic integrated circuits, LCD monitor components, petroleum products, semiconductors, etc., account for US$60 billion, or 60 percent of Korean total exports to China, are already facing competition from Taiwanese goods, the KITA pointed out.

　　”Especially, the price competitiveness of petroleum products, such as organic compounds and plastic products that are in fierce competition with Taiwan may suffer severe damages,” KITA was quoted as saying by YNA.

The trade group estimated that the some 500 Taiwanese items included in the “early harvest” list designed to speed up the ECFA's impact will worth as much as US$12 billion in total.

The KITA urged Seoul to sign a free-trade agreement with the mainland quickly to offset the impact of the China-Taiwan deal before the tariff reductions to Taiwanese exports kick in.

“The country must minimize the negative impact from the China-Taiwan ECFA by quickly signing a Korea-China FTA as there is a possibility that the enactment of the China-Taiwan ECFA may significantly be delayed,” it was quoted by Yonhap as saying.

Christina Liu, chairwoman of Taiwan's Council for Economic Planning and Development, expressed similar views on ECFA's impact. The cross-strait agreement and Taiwan's Statute for Industrial Innovation will help put the island in a better position than South Korea in global trade. ECFA will play a key role in Taiwan's post-global downturn economic development, she said.

In a related report, Kwok Yun-kwong, an economist from the Hong Kong Baptist University, told Taiwan's Central News Agency the ECFA will definitely benefit Taiwan and help launch the island's products to the world via the mainland market.

Taiwan will be the one to gain from ECFA as the mainland's market is substantially larger then that of Taiwan and that the agreement is in design more Taiwan-leaning as Beijing yielded considerable benefits to Taiwan. Compared to the over 500 Taiwanese exports in the early harvest list, only some 260 Chinese goods will enjoy similar preferential tariff treatments in Taiwan.

The ECFA will benefit Taiwan in two key ways: spur the island's economic growth and help Taiwan's industry upgrade, Kwok said. Kwok expected Taiwan's gross domestic product to grow and to be more dependent on China, adding that such trends should not be a cause of worry as countries are bound to rely on each other under economic globalization.

The agreement will have negative impact on some of Taiwanese industries, but Kwok stressed that the damage will be temporary. In the long term it will help Taiwan to focus its resources on stronger industries, he added.

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