Viewing ECFA from the Macro Level, in terms of Economics

Viewing ECFA from the Macro Level, in terms of Economics
China Times editorial (Taipei, Taiwan, ROC)
A Translation
October 28, 2009

The Council of Labor Affairs has announced the signing of the Cross-Strait Economic Cooperation Framework Agreement, or ECFA. The job market impact report and the Mainland Commerce Department's assessments revealed Mainland earning figures larger than Taiwan's. All sorts of doubts and opposition to ECFA emerged. But ECFA must be viewed from the macro level, in terms of economics.
Government and industry desperately hope that ECFA can be signed. The main reason is that next year "ASEAN plus One," i.e., ASEAN plus Mainland China, touted as the world's largest free trade zone, will take effect. Tariffs within the zone will be for the most part reduced to zero. Taiwan will be left in the cold. Products exported to this region, including petrochemicals, machinery, textiles, and electronics, will all face higher tariffs.

Amidst fierce global competition, profits from exports are generally in the single-digit range. Other countries will impose tariffs ranging from 5% to 10%. In the short term, we will lose our competitiveness, and profits will decline. In the long term, many manufacturers will be unable to cope. They will have no choice but to pull up their roots in Taiwan and set up factories in the region in order to enjoy zero tariffs. Domestic investment and employment opportunities will be reduced. Mainland China signed ECFA in order to avoid being marginalized, to avoid higher tariffs on its exports. It had no other choice.

Some may ask, why don't other countries in the region sign FTAs, i.e., Free Trade Agreements? Why are they able to prevent themselves from being shut out? The international reality is that at this stage Taipei is unable to successfully sign FTAs with other countries in Southeast Asia. No matter how many FTAs Taipei signs with Latin American allies, that will not help it from being shut out of the East Asia Free Trade Area. Instead, countries in the region are keeping an eye on Beijing and Taipei. If the two sides sign ECFA, they may be willing to sign FTAs with Taipei. From the macro level, Taipei no longer has any option but to sign ECFA, as soon as possible.

As for opponents of ECFA, according to Mainland China Ministry of Commerce estimates, once the two sides sign ECFA, Mainland China's gross domestic product (GDP) will increase by 27 billion U.S. dollars, more than Taiwan's GDP increase of 6.9 billion U.S. dollars. Those opposed to signing claim that "The advantages are not enjoyed by Taiwan alone," or even that "Taiwan will lose more than it gains." Their allegations are absurd. Clearly the ROC benefits from the agreement. Without such an agreement, the ROC's GDP will decline, and unemployment will rise. Besides, when we look at the numbers, we must consider the relative sizes of the two economies. Based on these criteria, ECFA will increase the ROC's GDP 1.72%, and the PRC's 0.63%. Taiwan will benefit more than the Mainland.

Also, from another point of view, both sides will benefit from ECFA. ECFA is not an act of charity by the Mainland towards Taiwan. Rather, it is a normal, mutually profitable economic agreement. Opponents are unwilling to address the economic issues. Instead, they blindly fuss over the political issues, leaving Taiwan's economy mired in a crisis.

The Council of Labor Affairs and the Ministry of Economic Affairs have different assessments of the impact of ECFA on the job market. Some industries oppose ECFA because it may have a negative impact on them. They fail to see the forest for the trees. Different economic models use different parameters in their estimates. Of course their estimates differ. Besides, these are merely estimates. Economies make organic adjustments. No one can accurately forecast the final results with 100% accuracy. And because individual industries in other countries have different comparative advantages, some industries will benefit while others suffer. What matters is whether the overall economic benefits are worth it. The government's responsibility is to provide policy support for industry and labor, including relief for unemployed workers and guidance for manufacturers engaged in industrial upgrading. Opponents oppose signing because of potential harm to certain industries. But in the end, when more industries have been harmed, the overall economy will be harmed even more.

Domestically, we are engaged in a war of words over whether to sign ECFA. Meanwhile our main competitor South Korea has been signing agreements all over the globe. In October South Korea signed an FTA with one of the largest economies in the European Union. Within three years, 99% of the EU's exports to South Korea will have zero tariffs or reduced tariffs. Bilateral trade will increase an estimated 32 billion euros. Before this, in August, South Korea signed an FTA with India, the third largest economy in Asia, one roughly equivalent to the "Closer Economic Partnership Arrangement" or CEPA. Two years ago, South Korea signed an FTA with the United States. Currently the two countries are awaiting approval from their legislatures. Even earlier, South Korea signed an FTA with Singapore and the Association of Southeast Asian Nations, or ASEAN. This allowed South Korea's exports to the region to grow at a double-digit rate.

Take a look at others. Think about oneself. How much capital and time does Taiwan have to squander?

中時電子報 新聞
中國時報 　2009.10.28
社論－大處著眼、回歸經濟面看ECFA
本報訊

在勞委會公布我國簽署ＥＣＦＡ（兩岸經濟合作架構協議）後，就業市場的影響報告，加上之前大陸商務部公布的評估，顯示其經濟獲利數字高於台灣之後，各種質疑與反對聲浪又起。在此，我們必須指出，談ＥＣＦＡ必須從大處著眼，回歸經濟面看待。

政府與產業界迫切希望與對岸簽署ＥＣＦＡ，最主要的原因是明年「東協加一」（東協加上大陸）、號稱全球最大的自由貿易區的東亞自由貿易區將上路，屆時區內的關稅，大部分都將降到零。被排除在外的台灣，出口到此地區的產品─從石化、機械、到紡織、電子…，所有產品都就將面對高於區內各國的產品關稅。

在全球激烈競爭下，目前產業界出口普遍只有個位數字的獲利，一旦被課徵高於他國五％到十％不等的關稅，短期而言，競爭力頓失、獲利下降；長期而言，許多無法調適因應的廠商，別無選擇的要「根離台灣」、進入該區內投資設廠以享受零關稅，國內的投資與就業機會必然減少。因此，與大陸簽署ＥＣＦＡ以突破「邊緣化」、避免出口產品被課徵較高關稅，是唯一的選擇。

有人問：為什麼不與區內其它國家簽署ＦＴＡ（自由貿易協定），一樣可達突破被排除在區外的目的？這就是國際現實，現階段，台灣就是無法與區內其它國家完成簽署ＦＴＡ，台灣與中南美友邦簽再多的ＦＴＡ，都無助於突破被排除在東亞自由貿易區外的現況。反而是各國在觀察，如兩岸順利簽署ＥＣＦＡ後，才可能與台灣簽ＦＴＡ。從大勢著眼，台灣已沒有不儘快簽署ＥＣＦＡ的條件了。

至於反對者根據中國商務部估計，兩岸簽ＥＣＦＡ後對大陸國內生產毛額（ＧＤＰ）可增加二七○億美元，高於台灣ＧＤＰ增加的六九億美元，「好處不是台灣盡得」，甚至認為台灣「得不償失」，因而反對簽署，則更是不可取的謬論。因為明顯的是台灣在此協定中也有得利，如無此協定，台灣的ＧＤＰ卻會因此減少、失業增加。更何況看此數字必須把經濟體規模加入考量，以此估計，簽ＥＣＦＡ台灣ＧＤＰ是增加一．七二％，大陸是○．六三％，台灣受益還比大陸高。

而且，換個角度看，兩岸都能從ＥＣＦＡ獲利，才顯示簽署ＥＣＦＡ不是大陸片面對台灣的「示惠」，而是正常、雙方都能獲利的經濟協定。反對者不回歸經濟面著眼，一味在政治面作文章，只是陷台灣經濟於危機。

至於部分人士以勞委會與經濟部有關ＥＣＦＡ對就業市場影響的評估不一樣，及會對部分產業有負面影響而反對，則更是見樹不見林的說法。不同的經濟模型、模型的參數估計不同，結果當然不一樣，而且，坦白說，這些都只是一個預估值，經濟體是有機的調整，最後的數字一定沒有人能百分之百預測正確。而由於各經濟體內個別產業與他國同樣產業的比較利益不同，因此一定有產業受惠、有產業受損，只要整體經濟體受益即值得作。政府的責任是對受損的產業與勞工，在政策上給予支持─如對失業勞工的救濟、輔導，對廠商給予產業升級協助等。反對者以某些產業受損而主張不簽，最後是更多產業受損，整體經濟更將因此受創。

當國內還在為ＥＣＦＡ是否該簽署流於口水戰時，我們的主要競爭對手國南韓，已「全球簽透透」；十月南韓再與全球最大的經濟體之一歐盟，簽署了ＦＴＡ，三年內，歐盟銷往南韓的九九％商品將取消或逐步降低關稅，預估雙邊貿易額可增加三二○億歐元。在此之前的八月，南韓也才與亞洲第三大經濟體印度簽署相當於廣義ＦＴＡ的「更緊密經貿關係安排」（ＣＥＰＡ）。兩年前，南韓也已與美國簽署ＦＴＡ，目前正待兩國國會批准。至於更早前，南韓已與新加坡、東南亞國協簽署ＦＴＡ，讓南韓對該地區的出口金額呈二位數成長。

看看別人，想想自己。台灣，還有多少本錢與時間去爭執、去蹉跎？