South Korea Can, Can We?
United Daily News editorial (Taipei, Taiwan, ROC)
July 8, 2011
The Korea/EU free trade agreement (FTA) went into force on July 1. Since then, 94% of South Korea's products have enjoyed zero tariff treatment, South Korea has also granted zero tariff treatment for 81% of the EU's products. Meanwhile, reports have emerged from the U.S. Congress that the US may sign a Korea/US FTA before the end of the year.
In the international market, South Korea has always been Taiwan's most direct competitor, especially in high-tech and ICT products, Taiwan and South Korea have long run neck and neck in Europen and US market share. But a few years ago, South Korea succeed in its brand marketing strategy. This, plus the depreciation of the Won and other factors, enabled South Korea to leave Taiwan in the dust. Today, the benefits brought about by FTAs may further weaken Taiwan's competitiveness, Consequently the government and other segments of society have long been concerned about South Korean FTAs.
In the race for FTAs, one must keep an eye on the opponent. One must focus on three things. The first is the number of signatories, the second is the identity of the signatories, and the third is the content of the agreements. If the quantity is limited, if the economic and trade interests are insubstantial, and the degree of liberalization is not great, there is little to fear. But South Korea has successfully signed FTAs with heavyweights such as the United States and the European Union. The number of signatories has rapidly increased. FTAs signed with Singapore, Chile, and ASEAN have already had an impact. An FTA with India went in effect last year. This year South Korea signed an FTA with Peru. Negotiations with Australia are already complete. It is currently holding discussions with Japan, Canada, Mexico and the Chinese mainland.
Consider economic and trade interests. Currently 14.4% of South Korea's trade benefits from FTAs. But FTAs with the United States and Europe are about to go into force. That number is expected to approach 50%. South Korea's ultimate goal is to win preferential trade treatment for at least 80% of its goods. Consider the degree of liberalization vis a vis the content of the FTAs. The FTAs signed by South Korea, the United States, and the EU, are considered indicators of a high degree of liberalization.
The target of South Korea's FTA Policy is not Taiwan or Japan, but the Chinese mainland. It is attempting to resist the magnetic pull of a rising Chinese mainland. In recent years the Chinese mainland has signed numerous FTAs in rapid order. South Korea's train of thought is clear. Europe, the US, Australia and others, are major export markets, Asean, India, Mexico, and the Chinese mainland are partners in the industrial chain. South Korea is the only Asian nation with the same high degree of liberalization as the US and Europe, and has established FTA relationships, South Korean strategic thinking wants Korea to rise phoenix like out of the ashes. Other FTAs are expected to appear at twice the pace. More crucially, South Korea is finishing up FTA negotiations with the Chinese mainland. Once that has been done, South Korea can immediately neutralize the cross-Strait economic cooperation agreement (ECFA) and seize the lead. In other words, South Korea's FTAs may have a limited impact on Taiwan. But its strategy is to connect the dots, and to flesh out the bones. This is something we must reckon with. If we had an FTA monitoring mechanism, a red light would be flashing by now.
South Korea poses a challenge. The Ministry of Economic Affairs recently adopted a domestic market segmentation support mechanism. Internationally, it pushed for an FTA with Taiwan on the EU policy agenda. But the former pertains to downstream industries involved in product development, marketing orientation, even pricing adjustments. They are not timely enough. Will it be a better fit with long term industry needs and development? That remains to be seen. As for the latter, the US, Europe, and even the Chinese mainland may wonder, "Are you (Taiwan) really ready?
We have fewer potential signatories to choose from. Potential signatories are probably less eager to sign with us than they are with South Korea. The biggest factor remains the human factor. The agencies responsible for FTAs, ECFA, and cross-Strait liberalization waffle and procrastinate. Motivated by selfishness, they adopt overly conservative postures, at the expense of industry. They have become a major obstacle. The government is ostensibly committed to liberalization. But electoral considerations have made it hesitant and coy. Put simply, the biggest obstacles to FTAs originate from within.
At this moment, the government needs to gather its wits. It needs to consider its attributes and its needs. It needs to draw up a blueprint for FTAs and liberalization policies, and for short term and long-term goals. In this blueprint, follow-up consultations on ECFA will no longer remain a cross-Strait matter. They will also need to consider the progress of Korea's FTA with the Chinese mainland. They will also have to look beyond Korea. They will have to consider the pace at which the Chinese mainland is signing FTAs. Cross-Strait relations are improving significantly. , The room for cooperation is increasing. But this has not changed cross-Strait industry competition. Therefore, when considering FTAs, we must not look only at the world while ignoring the other side of the Strait.
We face many difficulties. The government has also undergone reorganization. The sole function of the MOEA Office of Trade Negotiations is negotiations. It will be replaced by the Economic and Trade Policy Division. The impact of this change remains to be seen. The ruling administration can try to chant "If South Korea can, so can we!" in response to public concerns. But given current conditions, the words might not come!
2011.07.08 02:53 am
面對韓國的挑戰，經濟部這幾天提出對內採取市場區隔、輔導機制，對外大力推動台歐盟ＦＴＡ排上歐盟政策議程等作法因應。但對於前者，涉及產業上下游的產品研發、行銷定位，甚至於定價策略的調整，恐怕不會是及時雨，與產業需求及長期發展方向是否契合，也有待觀察。至於後者，則要面對美歐，甚至是中國大陸「Are you ready?（準備好了嗎）」的質疑。