Taiwan's Economy Cannot Withstand the Impact of ASEAN Plus One

Taiwan's Economy Cannot Withstand the Impact of ASEAN Plus One
China Times Daily editorial (Taipei, Taiwan, ROC)
A Translation
February 26, 2009

Businesses, think tanks, and political parties have all presented their positions on whether Taipei should sign a Comprehensive Economic Cooperation Agreement (CECA) with Beijing. In order to understand why both industries and the government feel such an urgent need to promote CECA, we must begin by looking at global economic trends.

In 2001, the mainland and Taiwan became part of the World Trade Organization (WTO). We initially assumed that under the WTO's multilateral agreements, our foreign trade would enjoy considerable protection. But negotiations over the Doha Agreements have remained stalled. Instead, regional economic interests have come to the fore. Two to three hundred governments have signed regional economic agreements with each other. The one that affects the Republic of China most is the East Asian Free Trade Zone, better known as ASEAN Plus One (ASEAN Plus Beijing) to be signed in January next year, or possibly ASEAN Plus Three (ASEAN plus Beijing, Tokyo, and Seoul).

Once the East Asia Free Trade Zone becomes official, most products traded within the region will be tariff free. Economies within the region will of course benefit. But those outside may be severely harmed. Taiwan's economy will bear the brunt of the impact. Most Taiwan companies' exports go to the mainland. Together with Hong Kong, the mainland accounts for nearly 40% of our exports. ASEAN accounts for over 10%. Once Taiwan is excluded from the East Asian Free Trade Area, over half of Taiwan's exports will be affected. If ASEAN Plus Three becomes a reality, exports to Japan and Korea, amounting to 10%, will bring the affected total to 60%.

This is a low margin era. Most businesses enjoy only single digit profit margins. Our competitors will pay no tariffs, while we are subjected to tariffs of 10% on textiles and 6.5% on petrochemical products. For manufacturers the danger is not thinner margins or fewer orders, the danger is having to close up shop after being eliminated from the market.

In the middle and long term, in order to maintain their profits and to survive, businesses will be forced to uproot themselves and relocate. They will be forced to invest and set up factories inside the East Asia Free Trade Zone. Investment and employment opportunities on Taiwan will sharply decline.

Can our economy withstand such an impact? The East Asian Free Trade Zone will soon be established. Economists' estimates of its impact on our economy may vary. But all agree that economic growth is declining while unemployment is rising. Regardless, the negative impact is not something the public wants to see. Nor is it something our constitutionally weakened economy can sustain. Once the negative impact is felt, those harmed will not be limited to industry. The economy as a whole and everyone in it will suffer.

Put simply, signing CECA is of the utmost urgency. The reason is not to strengthen economic and trade relations with the mainland, but to alleviate the negative impact of the East Asia Free Trade Zone on our economy. It is easy for politicians to demagogue the issue. But if the opposition DPP and TSU want to oppose CECA, they must offer us a viable alternative. They must tell us how to alleviate the destructive impact of the East Asia Free Trade Zone on our economy.

Let's get back to basics, to people's fundamental interests and to the public welfare. Comparative advantage and bilateral trade can create greater economic benefits. Some people want to open Taiwan up to more mainland products. This will severely impact Taiwan, and is clearly contrary to the principle of comparative advantage. A previous wave of raw material price increases triggered inflation. Before that the world enjoyed low-inflation economic growth. They could buy cheaper goods. They benefitted from newcomers joining the ranks of global production, including the mainland,

Now let's look at the changes in Taiwan's industrial base over the past twenty years. Companies producing labor-intensive, low value-added goods, were weeded out or relocated. The resources were made available to high-end, high value-added products, making possible today's Silicon Island. Globalization is subjecting Taiwan's businesses to global purchasing pressure and peer competition. Refuse to make use of the mainland's resources and markets, and one will find it difficult to survive in the global market. Industry trends over the past few years bears this out.

In short, the most pressing challenge for our economy is coping with ASEAN Plus One once it is initiated in January. The export competitiveness of our businesses has fallen sharply. Our economy faces marginalization. CECA is the most realistic solution. Opposition parties are worried about sovereignty and terminology. This is understandable. But solutions can be found during negotiations. To stubbornly dig in one's heels, while failing to alleviate the economic pressures caused by ASEAN Plus One is flagrantly irresponsible. We hope the ruling party will address internal differences and concerns. We hope it will make every effort to resolve and accommodate differences. It should also use the political opposition as the "bad cop," in order to fight for better terms.

中時電子報
中國時報 　2009.02.26
社論－台灣經濟禁不起「東協加一」的重擊
本報訊

為了是否該推動與大陸簽訂ＣＥＣＡ（綜合性經濟合作協定），從企業、經濟智庫、到各政黨，紛紛發言各陳己見。在此，我們必須從全球性的經濟趨勢發展談起，才能了解企業與政府，為了對推動ＣＥＣＡ有如此深的迫切、焦慮感。

當二○○一年，兩岸都加入世界貿易組織（ＷＴＯ）後，原本以為在ＷＴＯ加權下，我國的對外經貿可在多邊協定下享有相當的利益保障。但近年杜哈談判受阻停滯，反而是區域經濟利益興起，各國彼此簽訂的區域經濟協定已達二、三百件之多；而其中，對我國影響最巨大者，即是明年元月上路的「東協加一」（東協加大陸）或「東協加三」（東協加大陸、日本、韓國）的東亞自由貿易區。

在東亞自由貿易區正式上路後，區域內大部分產品的關稅都將降為零，區內各國當然因此受惠，但區外國家卻可能大受打擊，台灣是首當其衝。大陸已是台灣出口比重最高地區，加上香港後占我國出口比重近四成，東協也占一成多，因此一旦台灣被排拒在東亞自由貿易區之外，代表我國超過五成的出口都會受影響。如果是「加三」，再加上一成的對日、韓出口，那就是六成多的出口都受影響。

而在這個微利時代，企業獲利大都只有個位數，如果競爭對手是零關稅，我國則要被課以十％以上（紡織業）、六．五％（石化業）不等的關稅，對廠商而言，不是獲利降低多少，也不是訂單減少多少成的問題，而根本是生死淘汰的問題了。

更中長期影響則是：企業為維繫原有在東亞自由貿易區的市場，並保有獲利以生存，必然「連根拔起」，前往區域內的國家投資設廠，台灣的投資與就業機會必然銳減。

試問：台灣經濟禁得起這一重擊嗎？學界對東亞自由貿易區上路後，對台灣經濟的影響之估算，雖然有不同的數字，但一致指出是讓經濟成長率下降、失業升高。無論最後的負面影響多大，都不是國人所樂見，更非已體質虛弱的台灣經濟所能承受。一旦負面影響出現，受傷者不僅企業，而是台灣經濟與全體國民。

用最簡單與最直接的話來說，簽訂ＣＥＣＡ有急迫性，為的不是加強與大陸的經貿關係，而是為了突破與化解東亞自由貿易區對我經濟的負面影響。政治人物噴口水容易，在野黨如果強力反對，那就該為台灣指出一條可行的明路，告訴大家如何突破與化解東亞自由貿易區成型後對台灣經濟的殺傷力。

如果回歸最基本的經濟利益與國民福祉看，兩國貿易的比較利益原則，原本就可創造經濟體更大的利益。部分人士一味以開放更多大陸產品將對台灣造成重創，顯然有違此比較利益原則。在前波因原物料高漲引發的通膨發生前，全球都享有低通膨的經濟成長，民眾可購買更低廉的商品，其實就是受惠於包括大陸在內的後進國家的加入全球生產行列。

再回頭看過去廿年台灣的產業變遷，也是不斷把勞力密集、低附加價值的商品、較虛弱的產業淘汰外移，釋出的資源則發展更高階、附加價值大的產品，也因此能成就今日的矽島之名。更何況，全球化的今日，台灣企業面對全球買主的壓力與同行的競爭，不思更進一步利用大陸的資源與市場，就很難立足全球市場。過去幾年企業的發展與布局，即證明這點。

簡言之，台灣經濟最迫在眉梢的問題，就是要突破明年元月東協加一上路後，台灣企業出口競爭力的大幅下滑、台灣經濟邊緣化的危機與壓力。ＣＥＣＡ是一個目前最可能的答案。在野黨擔心主權、名稱問題，可以理解，也可以在談判中尋求解決，但一味反對、卻提不出其它化解東協加一產生的經濟壓力之方式，就顯得相當不負責。而對執政黨，我們也期望能正視內部可能的分歧與疑慮，盡力化解與包容；同時，更善引這股反對力量為談判籌碼，為台灣爭取更好的條件。