South Korea's FTA Encirclement: A Breakthrough is Up to Us

South Korea's FTA Encirclement: A Breakthrough is Up to Us
United Daily News editorial (Taipei, Taiwan, ROC)
A Translation
October 26, 2011

Summary: Everyone is concerned about the US-Korea Free Trade Agreement (FTA) scheduled to go into effect next January. According to the agreement, 99% of all industrial products manufactured by the U.S. and South Korea will be tariff free. Many products manufactured on Taiwan and sold in the US are in intense competition with products manufactured in South Korea. Once the FTA between the US and South Korea goes into effect, many products manufactured on Taiwan will be at a disadvantage the moment they come ashore, The FTA South Korea signed with the EU goes into effect this July, This leaves the government and industry deeply worried.

Full Text Below:

Everyone is concerned about the US-Korea Free Trade Agreement (FTA) scheduled to go into effect next January. According to the agreement, 99% of all industrial products manufactured by the U.S. and South Korea will be tariff free. Many products manufactured on Taiwan and sold in the US are in intense competition with products manufactured in South Korea. Once the FTA between the US and South Korea goes into effect, many products manufactured on Taiwan will be at a disadvantage the moment they come ashore, The FTA South Korea signed with the EU goes into effect this July, This leaves the government and industry deeply worried.

The South Korean FTA is taking shape. Our government must break through the encirclement. The United States is Taiwan and South Korea's main export market, The two economies manufacture many of the same products. Therefore the advantage belongs to South Korea. Our side is at a comparative disadvantage. According to the Ministry of Economic Affairs, the financial impact may amount to US$11.8 billion, Textiles, clothing, machinery, and rubber and plastic products will suffer the most. The cost and quality of these products is similar to the cost and quality of products manufactured in South Korea. South Korea's gross margins are lower. In which case, the presence or absence of tariffs is often the determining factor. In fact, FTAs affect more than just exports. Taiwan and South Korea also compete for foreign investment. South Korea's FTAs will also have an effect on foreign investment. Therefore, our government is not alone in sounding the alarm. The Japanese public is urging Japan's government to accelerate the signing of FTAs.

The government has proposed a number of responses. President Ma says the cross-Strait economic agreement (ECFA) is an effective weapon against South Korea's FTAs. But lest we forget, in this Great Game of FTAs, South Korea's trump card is not confined to Europe and the US. It also signed an FTA with ASEAN that went into effect in 2007. It has completed a feasibility study and expects to sign an FTA with the Chinese mainland by the end of this year. Once the FTA between South Korea and the Chinese mainland is signed, any advantages conferred by ECFA could be lost.

FTA negotiations between South Korea and Europe and between South Korea and the US took an average of 15 months. Contrast this with the snail's pace for follow-up consultations over ECFA between Taipei and Beijings. South Korea began negotiating with the Chinese mainland later, but finished negotiating earlier. This is even more worrisome.

South Korea's web of FTAs is increasingly complete. Our own government has responded by undergoing industrial upgrading. and by adopting long-term measures such as market segmentation. It has also accelerated the pace of negotiations over ECFA and FTAs. Taipei has been attempting to sign an FTA with Washington for some time, Countless feasibility studies have been completed, all with positive results, But no concrete progress has been made. In recent years progress was stalled by disagreements over US beef imports. Domestic controversy over FTAs inside the United States over the past few years also had an impact. The US congress waited five years before approving the FTA between Washington and Seoul. Therefore an FTA between Taipei and Washington may be difficult at the moment. Taipei is holding FTA negotiations with the EU, But the EU has 27 countries. Each of them has different views. Much work remains to be done.

Asia has become a hotspot for FTAs in recent decades. Nearly 70% of the new FTAs have been signed in this region. The government is not oblivious to this development. But it has yet to make any practical breakthroughs. In the past, it deliberately erected barriers. But in recent years cross-strait economic and trade relations have eased markedly. Yet the government keeps turning in lousy report cards, A foreign investment protection agreement has been signed between Taipei and Tokyo. But bilateral consultations with ASEAN countries have made little progress. We can no longer blame poor cross-Strait relations. Other countries also need time to explore the Chinese mainland's stance. This may result in slow progress. But little progress has been made in the four follow-up talks over ECFA, especially over goods and services covered in most FTAs. That is even more disturbing.

Leave aside external factors such as international political and economic relations. The crux of the matter is that Taipei has been lacklustre in its efforts to promote FTAs. Everything points to the governnment, and its reluctance to liberalize. A government's determination is not exactly something that can be quantified. But the number of FTA talks held and the time allocated to FTA negotiations gives us a clue. Taipei is already negotiating ECFA with Beijing. Taipei is already negotiating an FTA with Singapore. But it lacks a clear timetable. Taipei has begun negotiating with Seoul. But it lacks a master plan. By contrast, South Korea has both a blueprint of potential FTA signatories, and a strict timetable for FTA signings. The difference between Seoul and Taipei is obvious.

In short, the key to breaking out of South Korea's FTA encirclement, is not entirely in other peoples' hands. We must strengthen our commitment to liberalization, accelerate cross-strait talks and establish a comprehensive strategy for promoting FTAs. These are all within our power. Therefore we must not blame our lack of FTAs on others. Instead, we must boldly seize the initiative.

突破韓國FTA包圍的關鍵操之在我
【聯合報╱社論】
2011.10.26 02:00 am

各界都很關注美韓自由貿易協定（ＦＴＡ）將於明年元月生效的情勢發展。按照這個ＦＴＡ的約定，美韓雙方將有百分之九十九的工業產品關稅，將自生效之日起降為零。由於我國許多工業產品，在美國市場都與韓國產品具有高度的競爭關係，美韓ＦＴＡ的生效，意味著我國許多產品從到岸那一刻起，就已經處於不利地位，加上韓國與歐盟的ＦＴＡ已於今年七月生效，凡此皆令政府及產業界憂心忡忡。

面對韓國ＦＴＡ布局儼然成形之際，我政府應速擬突圍之道。美國是台、韓的主要出口市場，加上兩國產品的替代性很高，因此韓國的優勢，相對我方就是劣勢。依據經濟部的估計，總影響金額可能高達一百十八億美元，並以紡織、成衣、機械及橡塑膠類產品所受衝擊最為明顯。在這些產品中，若與韓國同類產品的成本、品質接近，而毛利率又偏低時，關稅之有無往往成為勝負的關鍵。事實上，ＦＴＡ的影響不只是出口貿易而已，台韓在吸引外資上也具有競爭關係，ＦＴＡ的布局也將對韓國在招商引資上產生加分效果。因此，不僅我國拉起警報，日本輿論界也開始催促其政府加速ＦＴＡ的洽簽工作。

對於此一情勢，政府提出許多對策；馬總統則指出，兩岸經濟協議（ＥＣＦＡ）是對抗韓國ＦＴＡ網絡的利器。但是千萬別忘了，在這場ＦＴＡ的賽局中，韓國手中的王牌不是只有與歐、美的ＦＴＡ而已，還有早於二○○七年即生效的東協ＦＴＡ，並預計在今年底完成與中國大陸洽簽ＦＴＡ的可行性評估。一旦韓國與中國大陸完成ＦＴＡ，那麼兩岸ＥＣＦＡ所提供的優勢就有可能全部喪失。更令人憂心的是，以韓國與歐、美洽商ＦＴＡ平均只需要十五個月的決心，再對照兩岸的ＥＣＦＡ後續協商慢如牛步，韓中ＦＴＡ後發但先至，絕非杞人憂天！

面對韓國日趨完整的ＦＴＡ網絡，除了產業升級、市場區隔等長期措施外，政府最直接的回應，當然也是加速兩岸ＥＣＦＡ及ＦＴＡ的洽簽。台灣推動與美國的ＦＴＡ已有相當時日，各種呈現正面結果的評估研究也已不知進行幾回，但一直沒有具體進展；這幾年受到美牛事件的影響，加上美國內部過去幾年對ＦＴＡ的爭論不休，導致美韓ＦＴＡ延宕近五年才獲得國會批准，因此，此時此刻推動台美ＦＴＡ有一定的難度。至於與歐盟的ＦＴＡ協商，因其成員多達廿七國，而且立場分歧，也還需要相當的努力。

除了歐、美之外，近十年亞洲地區已是全球ＦＴＡ的熱點，有接近七成的新ＦＴＡ都發生在這個區域內的國家。對於此一趨勢，政府並非無感，卻也未見突破的作法；過去以對岸從中作梗交代也就罷了，但近幾年兩岸經貿關係已明顯和緩，政府還是沒有交出好看的成績單，除了台日投資保障協議外，與東協國家的雙邊協商也未有具體進展，恐已不能再完全歸責於兩岸關係。再者，即使其他國家還需要時間摸索中國大陸的立場，以致進展緩慢，但屬於兩岸間的ＥＣＦＡ四大後續協議談判，尤其是與一般ＦＴＡ性質接近的貨品貿易及服務貿易協商，一樣也是未見進度，就更令人不安。

排除國際政經關係的外部因素，歸納台灣推動ＦＴＡ乏善可陳的內部癥結，其實都指向政府自由化決心的不足。儘管政策決心的高低難以完全數據化，但洽簽ＦＴＡ的數量及談判所需時間的長短，卻提供了一些客觀指標。台灣一方面對於如兩岸ＥＣＦＡ及台星ＦＴＡ等幾個已經啟動的談判，都欠缺明確的時間表，另方面在洽簽對象上，除了隨韓國起舞外，也沒有通盤、具體的規劃。相反的，韓國無論在洽簽對象及完成時間上，非但都有藍圖，而且嚴格按表操課。相較之下，便可明顯感受到台灣的落差。

簡單地說，突破韓國ＦＴＡ包圍困境的關鍵，並非絕對操之在人；強化自由化決心，加速兩岸協商，並展開全方位的ＦＴＡ推動戰略，都是操之在我的方向。所以，對於ＦＴＡ，我們不必怨天尤人，而應挺起腰桿，主動出擊。