TPP and RCEP Membership Requires Comprehensive Planning
China Times editorial (Taipei, Taiwan, Republic of China)
January 9, 2014
Summary: The Shanghai Free Trade Zone is a means by which the Chinese mainland can join the TPP. On January 6 the Mainland took another step, and allowed in seven value-added telecommunications services. The Mainland's cross-Strait trade in services agreement was supposed to give Taiwan special e-commerce treatment. Instead, these have been given to the Shanghai Free Trade Zone. Political disputes made Taiwan miss a golden opportunity. It must now catch up. It must pass the agreement as soon as possible. It must accelerate the process of trade liberalization and integration into the Asian-Pacific regional economy. Taiwan's industrial competitiveness risks disintegration.
Full text below:
The Shanghai Free Trade Zone is a means by which the Chinese mainland can join the TPP. On January 6 the Mainland took another step, and allowed in seven value-added telecommunications services. The Mainland's cross-Strait trade in services agreement was supposed to give Taiwan special e-commerce treatment. Instead, these have been given to the Shanghai Free Trade Zone. Political disputes made Taiwan miss a golden opportunity. It must now catch up. It must pass the agreement as soon as possible. It must accelerate the process of trade liberalization and integration into the Asian-Pacific regional economy. Taiwan's industrial competitiveness risks disintegration.
The United States is willing to allow the Chinese mainland to take part in TPP negotiations. The Mainland has yet to officially respond. It is promoting the ASEAN Regional Comprehensive Economic Partnership (RCEP) negotiations while it keeps an eye on TPP negotiations . The Shanghai Free Trade Zone went into effect last September. Since then the Mainland has aggressively used FTAs to achieve a new wave of trade liberalization. Its goal was obvious, and the results have been substantitive.
According to news reports, late last November the Shanghai Free Trade Zone Trade and Industry Department admitted 1,733 new companies. These funded 1675 new enterprises. Total registered capital approached 40 billion RMB. As we can see, the Shanghai Free Trade Zone has attracted considerable domestic capital. It has inspired the establishment of free trade zones in the Tianjin Binhai New Area, Guangdong, Hong Kong, and Macau Free Trade Zone, the Zhejiang Zhoushan area, Chongqing Two Rivers area, Hebei Caofeidian area, and Fujian Pingtan area.
The Chinese mainland is using free trade zones as a means of liberalization. It is loosening regulations to attract private capital and a foreign presence. This achieves its goal of promoting investment. This also enables it to meet regional trade agreement liberalization requirements.
More importantly, Mainland China's accession to WTO constitutes its first wave of trade liberalization and integration with the global economy. Economic liberalization has enabled the Mainland to enjoy a decade of rapid growth. The Mainland has successfully transitioned from an agriculturally-based economy to an industrially-based economy. The Shanghai Free Trade Zone also explores ways of gradually transitioning from an industrially-based economy to a service-based industry. The Mainland is moving in the same direction as the developed economies. Taiwan must pay attention to the Mainland's development and seize whatever opportunities present themselves.
The TPP and RCEP are two forces for Asian-Pacific regional economic integration, and a new wave of Chinese mainland industrial restructuring. Taiwan has no time to waste. It must ride the wave of Asian-Pacific economic integration as soon as possible. It must take concrete steps to ensure Taiwan's accession the RCEP and TPP.
Taiwan may wish to join the RCEP or the TPP. If so, it must acknowledge the role of the Mainland. The Mainland is Taiwan's largest trading partner. Taiwan must sign the Cross-Strait Trade in Services Agreement and the Cross-Strait Trade in Goods Agreement, as soon as possible. These will help Taiwan's integration into the Asia-Pacific regional economy. They will reduce the impact of the FTA between Mainland China and Korea on Taiwan's economy.
Taiwan must take advantage of cross-Strait economic cooperation, as soon as possible. It must seek ways to integrate the two sides in the global economy and the East Asian regional economy. Mainland China has yet to join the TPP. Taiwan seeks early accession to the TPP. To improve its chances, Taiwan must understand the Mainland's reasons for joining the TPP. It must adjust its timetable for joining the TPP. It must realize its chances for joining may change.
Secondly, taking part in regional economic integration requires putting industry interests first. The TPP is a new style, high-standard regional trade agreement. Industry as a whole will benefit. But Taiwan must consider the impact on agriculture and traditional industries. It must provide concrete policy plans for industrial transformation.
Take the Taiwan-US Trade and Investment Framework Agreement (TIFA). The most difficult issue during negotiations was U.S. beef imports. Was Taiwan ready for the impact? Are producers of other sensitive agricultural products prepared to expand production in order to make the pie bigger? Take intellectual property. The TPP may require term extensions for patent medicines. This may increase health care costs. Are coping strategies in place? The government must communicate with industry before joining. It must mitigate the impact on industry. We believe TPP will enhance the efficiency of Taiwan's economy .
Taiwan must pay attention to Mainland Chinese dynamics. It must maintain good communications. The Mainland has already joined the RCEP. We must promote Taiwan's accession as soon as possible, before the RCEP completes negotiations in 2015. We must get a firm handle on RCEP negotiations once they are completed in 2015. We must explain the role of our foreign economic partners to the public. We must seek to maximize public support, and minimize opposition political pressure. We must also propose a comprehensive domestic industrial policy plan, on several tracks at the same time. We must sign regional trade agreements to improve the domestic economy. Only then can we achieve early integration into the new Asian-Pacific regional economy.
中國時報 本報訊 2014年01月09日 04:09