MOEA vice minister Francis Liang extols benefits of a signed ECFA

According to Liang, the stalemate in the Doha round of global trade talks has led to a proliferation of bilateral trade deals all over the world. For example, ASEAN countries have inked free trade agreements (FTAs) with China, South Korea, New Zealand and Australia. Given Taiwan's political status, it is not part of any of the major deals and has so far managed to sign deals with only a handful of Central American countries, which collectively account for just 0.2% of Taiwan's trade.

When the ASEAN-China deal comes into effect in 2010, tariffs on most goods traded among signatory countries will be eliminated, putting Taiwan at a considerable disadvantage. The situation will only get worse when other FTAs such as those between Korea and the United States, the European Union (EU) and India come into effect between 2010 and 2012. Since China now accounts for close to 40% of Taiwan's trade, by signing an ECFA with China, Taiwan will indirectly benefit from China's FTAs with its trading partners. “Once an ECFA is signed, the threat of marginalization by the ASEAN + China FTA can be relieved,” according to Liang.

Liang emphasized that the envisioned ECFA is a framework and not the same as an FTA. Instead, the ECFA would provide a framework on top of which specific agreements can be built. The ECFA will be designed to expedite negotiations on investment and trade agreements and will help to increase transparency for business.

Liang stressed the principles guiding the ECFA, most notably the principle of equality and reciprocity. The agreement will tackle simple issues first before moving on to complex issues while it will also incorporate a dispute settlement mechanism.

The preparatory stages towards an ECFA are close to completion. Academic institutions on both sides have already conducted studies on the expected impact of an ECFA. The next stage, negotiations on the ECFA terms, is expected to begin in late December 2009 or early January 2010, according to Liang and it is hoped that negotiations will be completed in time for the fifth round of official SEF-ARATS cross-Strait talks around mid-2010.

Besides boosting trade, an ECFA is expected to substantially increase foreign direct investment (FDI) into Taiwan, not only from China but also from elsewhere abroad, taking advantage of Taiwan as a springboard into China. Based on studies of the impact other major free trade agreements have had on their respective parties, FDI into Taiwan could increase by anything from 20% to 200% although Liang was careful to point out that mainland Chinese investors will be subject to greater restrictions than other foreign investors initially.

Finally, Liang said that the ECFA is just a part of the government's strategy of pursuing trade and investment agreements with all its major trading partners. In this regard, he reiterated the government's support for a Trade Enhancement Measures (TEM) agreement with the EU and expressed the hope that the ECCT, the Taiwan government, the European Commission and national governments from EU member states would continue to work towards a TEM agreement.

Subscribe to The China Post and save 25%. Click here

SharePrintEmail

Write a Comment

Enter your comments - 3000 characters max

Type in image code

Submit

 Receive China Post promos Respond to this email