Beijing, Tokyo, Seoul FTA Sets Off Alarms in Taipei

Beijing, Tokyo, Seoul FTA Sets Off Alarms in Taipei
China Times editorial (Taipei, Taiwan, ROC)
A Translation
May 18, 2012
Summary: Recently leaders of Mainland China, South Korea, and Japan signed an investment agreement in Beijing. They agreed to negotiate a three nation FTA (Free Trade Area). They expect to make it official two or three years down the road. This is not a death knell for Taiwan's economic and trade relations, But it is definitely a warning bell. If the government and private industry cannot catch up, Taiwan's economic future will be in jeopardy. No wonder President Ma expressed concern, No wonder he instructed the Executive Yuan to accelerate economic and trade negotiations with other nations. No wonder he stressed that follow-up consultations with the Mainland over ECFA must be completed as soon as possible. Otherwise the competitive advantage Taiwan enjoys over Japan and South Korea, made possible by ECFA, will soon be neutralized. .

Full Text below:

Recently leaders of Mainland China, South Korea, and Japan signed an investment agreement in Beijing. They agreed to negotiate a three nation FTA (Free Trade Area). They expect to make it official two or three years down the road. This is not a death knell for Taiwan's economic and trade relations, But it is definitely a warning bell. If the government and private industry cannot catch up, Taiwan's economic future will be in jeopardy. No wonder President Ma expressed concern, No wonder he instructed the Executive Yuan to accelerate economic and trade negotiations with other nations. No wonder he stressed that follow-up consultations with the Mainland over ECFA must be completed as soon as possible. Otherwise the competitive advantage Taiwan enjoys over Japan and South Korea, made possible by ECFA, will soon be neutralized. .

Asia has Four Little Dragons. Hong Kong and Singapore are city-states, They are mainly service and financial industry oriented. Their gross domestic product (GDP) may be lower. But their per capita income is higher. Taiwan and South Korea, on the other hand, are manufacturing oriented. The two economies export largely the same products. Consequently South Korea is regarded as a direct competitor. The two economies each have strengths and weaknesses. Taiwan has long been in the lead. South Korea even collapsed during the Asian financial crisis of 1997. It caught up only in 2000.

While recovering from the 2008 financial tsunami, the strengths and weaknesses of the two economies became clear. The gap between Taiwan and South Korea has steadily widened. Over the past few years, South Korea has been moving full speed ahead. It has signed FTAs with major nations as the United States, India, and the European Union. Taiwan meanwhile, signed nothing except ECFA with the Mainland. Taiwan's technology industry clearly lags in DRAM and LCD production. ECFA has enabled Taiwan to catch its breath by enabling it to retain its competitive advantage in the Mainland market. Taiwan can still compete with South Korea in the Mainland LCD market. In fact it commands a slightly larger share of the market than South Korea. But if the mainland and South Korea sign an FTA, the advantages ECFA provides Taiwan will be completely neutralized. Faced with these pressures and changes in the strategic picture, can government authorities, the ruling and opposition parties, and the general public really remain unconscious and unresponsive?

Over the past decade, global trade and economic relations have shifted in the direction of bilateral agreements. The trend is unlikely to change. Nearly 300 FTAs have been signed the world over. South Korea has seen the farthest and made the most elaborate plans. South Korea has signed FTAs with the United States and the European Union. India has followed suit. It is negotiating FTAs with Mainland China and Japan, the world's second and third largest economies, If these are signed, Mainland China's FTAs with Japan and South Korea will account for over 12 trillion dollars in GDP. They will account for almost a fifth of the world's wealth. South Korea's global FTA master plan will be complete.

Nations that sign FTAs demand that both sides open their markets to each other, usually in three to five years. They demand that tariffs on over 95% of the products they export be reduced to zero. They demand the removal of import barriers. Once tariffs are reduced to zero, bilateral trade invariably increases. For state-owned enterprises, the zero-tariff rate makes these nations more competitive than nations which levy tariffs. The other side is forced to open its markets, but so is ours. Some domestic industries may be "hurt." But the nation's overall efficiency is invariably increased. This is why 300 FTAs have been signed in a single decade the world over. This is why South Korea has systematic plans to sign FTAs with every one of the world's major economies. It knows that FTAs upgrade its economy and increase its growth.

Now take Taiwan. Taiwan investments on the Mainland have enabled Taiwan companies to benefit from export-driven investments. They have enabled them to enjoy a huge trade surplus on the Mainland for some time. Taiwan companies on Mainland China have also enjoyed an edge on the competition due to language and culture. The Mainland is gradually transitioning from world factory to world market. Each year it imports 1.7 trillion US. This is close to the United States' 1.9 trillion US. This market of course is what financial gurus have their eyes on.

The Mainland and ASEAN are about to sign the ASEAN-plus-one East Asia Free Trade Area. Concerns about Taiwan being marginalized encouraged Taipei and Beijing to sign ECFA. This gave Taiwan time to catch its breath. But ECFA is a slapdash, half-baked FTA. Follow-up work expanding its scope remains. Meanwhile, South Korea has signed FTAs with three other economies. Suppose Seoul signs an FTA with Beijing? Suppose Taipei fails to complete follow-up work expanding the scope of ECFA with Beijing as soon as possible? ECFA will be totally neutralized. Taiwan will find it nearly impossible to compete with South Korea, either globally or on the Mainland.

Taiwan must break out. It must complete follow-up negotiations expanding the scope of ECFA, as soon as possible. This will help Taiwan businesses to seize the market. FTA negotiations with other countries should be accelerated. The business community has undergone both growth and decline while competing with South Korea in the global marketplace. The government's negotiations with foreign nations may proceed smoothly. This may provide businesses with better and more competitive market conditions. But in the end, success or failure will be determined by the businesses themselves. Mainland China, Japan, and South Korea are negotiating an FTA, Taiwan's economic and trade prospects remain unclear. Everyone in the government and the private sector, must mobilize to defuse the crisis.
   
中時電子報 新聞
中國時報 　2012.05.18
社論－中日韓FTA 敲響台灣經貿警鐘
本報訊

    　大陸與南韓、日本等三國領導人日前於北京簽下投資協定，並同意啟動三國的ＦＴＡ（自由貿易區）談判，預計二到三年正式上路。對台灣經貿而言，這雖不是敲響「喪鐘」，但確實是一個非常嚴重的「警鐘」；如果政府與民間企業不能奮起直追，台灣經濟危矣！也難怪連馬總統都表達了憂慮，並特別指示政院加速與各國的經貿談判，與大陸的ＥＣＦＡ後續協商也務必盡速完成，否則因ＥＣＦＡ所帶來的對韓競爭優勢，很快就會被抵銷。

    　亞洲四小龍中，港、星是城市經濟體，以服務與金融產業為主，雖然總體國內生產毛額（ＧＤＰ）較低，但平均國民所得則較高；台、韓則以製造業為主，且兩國的出口項目有八成是雷同，處於競爭狀態。也因此，台灣一直視韓國為主要競爭對手。兩國互有優劣之處，但台灣長期處於較領先，韓國甚至還垮在一九九七年的亞洲金融風暴中，到二○○○年後才又逐漸趕上來。

    　但二○○八金融海嘯後的復甦過程中，台韓的優劣差距逐漸拉大。韓國在這幾年間，快馬加鞭，與包括美國、印度、歐盟等主要國家簽訂ＦＴＡ，台灣則只有與大陸簽下ＥＣＦＡ；台灣的科技產業─如ＤＲＡＭ、ＬＣＤ等，又明顯落居下風。靠著ＥＣＦＡ，台灣還「吊住一口氣」，保住在大陸市場的競爭優勢。例如台灣的ＬＣＤ在大陸的市占率仍能與韓國抗衡、甚至微幅超越韓廠；但如果大陸與韓國之間也簽下了ＦＴＡ，台灣的ＥＣＦＡ可說優勢全失。面對此一壓力與變局，政府當局、朝野黨派、社會各界，豈能毫無知覺、毫無反應？

    　近十多年來，全球經貿由多邊協定走向雙邊，已是難以逆轉的趨勢；全球的ＦＴＡ已達近三百個。南韓一直是所有國家中布局最深、最有計畫的國家；韓國與美、歐的ＦＴＡ已上路，印度也已完成洽簽；現在則是進行與全球第二、三大經濟體大陸、日本的ＦＴＡ談判。如果順利完成，中日韓的ＦＴＡ，其ＧＤＰ超過十二兆美元、貿易量占全球近二成，韓國的全球ＦＴＡ拼圖也完成。

    　對簽訂ＦＴＡ的國家而言，彼此要對對方開放市場，一般而言，都是在三到五年內，把接近九十五％以上的商品關稅降到零；去除進口障礙、關稅降到零後，雙方貿易量必然增加。對該國企業而言，因為零關稅，其競爭力必然高於其它需要課徵關稅之國家。不過，在對方開放市場的同時，自己也要開放市場，因此國內也同時會有所謂「受損產業」。但一來一往之間，其總體效益必然高於原來。這也是全球在短短十多年內，簽下三百個ＦＴＡ的原因，更是韓國有計畫、有步驟的與全球各大經濟體完成ＦＴＡ洽簽的原因。因為，ＦＴＡ的確有助於一個經濟體的提升、成長。

    　對台灣而言，過去台商在大陸的投資，讓台灣企業能享受「以投資帶動出口」的利益，長期對大陸享有鉅額的順差；台灣企業在大陸，也因同文同種、語言及文字皆相通，而在競爭上享有優勢。在大陸逐漸由「世界工廠」轉型為「世界市場」，每年進口金額一．七兆美元，已接近美國的一．九兆美元，這個市場，當然是全球企業逐鹿的焦點。

    　在大陸與東協間的「東協加一」東亞自由貿易區上路時，為了擔心台灣被邊緣化，台灣與大陸簽下ＥＣＦＡ，台灣因此得到「喘一口氣」的時間；但ＥＣＦＡ畢竟是急就章的半吊子ＦＴＡ，後續的擴大項目也遲遲未完成。但同時間南韓已先後與三大經濟體簽下ＦＴＡ，如果再與大陸簽下ＦＴＡ，台灣又未能盡速與大陸談定擴大ＥＣＦＡ項目，那麼，ＥＣＦＡ效益將歸零，台灣幾乎無法與南韓在全球乃至大陸競爭。

    　台灣的突圍之道，除了盡快完成ＥＣＦＡ擴大項目的談判，讓台商搶占市場外，與其它國家的ＦＴＡ談判亦應加速。而企業界從近年台韓的全球競爭力消長中，更該有體認，政府即使對外談判順利，為企業提供一個更佳的對外競爭條件，但最後決定成敗的關鍵因素，還是要靠企業自己的努力。因應中日韓ＦＴＡ談判啟動，為台灣經貿前景帶來濃厚的陰霾，從政府到民間，是該進行一次危機總動員才可能化解危機。