In recent years, South Korea has managed to significantly enlarge its pool of FTA partners, signing agreements that cover major economies including the United States and the European Union. It is thought that the mainland China-South Korea trade pact, which could take effect in the second half of this year, will initially eliminate tariffs on 44 percent of South Korean merchandise exports to the mainland before eventually expanding to 91 percent within 20 years. As approximately 77 percent of exports from Taiwan and South Korea overlap, this would put Taiwanese companies at a competitive disadvantage in mainland China unless the nation seals a similar agreement.
The ROC government has been responding to these developments and is working proactively to place Taiwanese exports on an equal footing in major markets. In 2010, Taiwan and mainland China concluded the landmark Economic Cooperation Framework Agreement, which laid the groundwork for further cross-strait trade negotiations.
This success was followed in 2013 by the signing of bilateral economic cooperation agreements with New Zealand and Singapore. These accords further enhance Taiwan’s chances of joining the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership as New Zealand and Singapore are involved in negotiations for both pacts. Furthermore, the ROC is working toward securing bilateral accords with some of its largest trading partners. Since May 2013, Taiwan has sealed 10 memorandums of understanding with Japan as part of efforts to move toward the signing of an economic partnership agreement, and in March 2013 talks were resumed with the United States under the Trade and Investment Framework Agreement.
While the ROC government remains strongly committed to diversifying the nation’s export markets, Taiwan’s geographic position means that engagement with the mainland economy is unavoidable. Recognizing that institutionalized cooperation benefits Taiwanese enterprises and advances the nation’s economic goals, the ROC government signed the Cross-Strait Trade in Services Agreement in 2013. The government is also seeking to accelerate the completion of a cross-strait trade in goods agreement, which would counteract the negative effects of the mainland China-South Korea FTA.
However, for Taiwan to continue negotiations on the trade in goods accord, the Legislative Yuan must first vote on a new supervisory mechanism for cross-strait pacts and ratify the trade in services agreement. More than 18 months after the Cross-Strait Trade in Services Agreement was signed, the dispute concerning the establishment of the supervisory mechanism has yet to be resolved. This delay, as demonstrated by the mainland China-South Korea FTA, is hampering the country’s economic development.
As one of the world’s foremost export-oriented economies, Taiwan cannot ignore the trend toward international trade liberalization or disregard the fact that the world’s second-largest economy sits on its doorstep. The ROC government recognizes this and is meeting the challenges posed by regional economic integration with determination and resolve. By passing the Cross-Strait Trade in Services Agreement and then completing negotiations on a trade in goods accord, Taiwan will be better able to protect its economic interests and promote its goal of participating in major regional trade pacts, thereby ensuring the continued competitiveness and global success of the nation’s enterprises.