Beijing-Seoul FTA is ‘very big warning’: Ma
President Ma Ying- jeou said yesterday the freshly inked ChinaSouth Korea free trade agreement (FTA) is a “very big warning” to Taiwan about future economic competition.
Signed Monday after three years of negotiations, the ChinaSouth Korea FTA is set to eliminate tariffs on over 90 percent of goods over the next 20 years.
The pact is expected to come into force by year’s end, the president said yesterday in presiding remarks at the 2015 COMPUTEX Taipei ( ).
Currently, roughly 10 percent of Taiwan’s exports are shipped to FTA partners.
Meanwhile, South Korea’s FTA coverage rate is three times Taiwan’s at approximately 30 percent. Once the country’s newest FTA takes effect, its coverage rate will rise, Ma said.
South Korea’s FTA poses a particular threat to Taiwan due to the similarity of their economies: Both derive GDP (gross domestic product) growth from foreign trade and over 70 percent of their export products overlap, according to the Ministry of Economic Affairs (MOEA).
“In terms of competition, (the China- South Korea FTA) is of course a very big warning for us,” Ma said yesterday.
“We hope that we can hurry and honestly face these difficulties so as to identify a way out as soon as possible, because exports are our lifeline.”
Call for Legislative Action
At the trade show, Ma made a public call for the Legislative Yuan to accelerate its review of two acts governing cross-strait trade.
Taiwan and China signed the Economic Cooperation Framework Agreement (ECFA) five years ago, prompting then- South Korean President Lee Myung-bak to call an emergency response meeting.
Today, South Korean efforts have yielded a free-trade agreement with China, while Taiwan’s trade-in-services pact under ECFA and the Cross-Strait Agreement Supervisory Act (
) remain stalled in the Legislature, he said.
Ma urged the Legislative Yuan to accelerate its review of the two acts, as “Taiwan cannot fall behind.”
The Cross-Strait Agreement Supervisory Act, which establishes a protocol for legislative supervision on Taiwan-China pacts, has made little headway in the Legislature since its introduction last April.
The Executive Yuan sent the bill to the Legislative Yuan last year, after a student demonstration against Taiwan’s trade- in- services pact with China.
The China- South Korea FTA covers 22 areas including e-commerce, according to an April report from the MOEA.
The Economics Ministry forecasts that Taiwan’s real GDP will decline by 0.04 percentage points one year after the China-South Korea pact comes into force, and then drop by 0.13 and 0.15 percentages points 10 years and 20 years afterward.
Yesterday at COMPUTEX Taipei, Ma said the brunt of the FTA’s impact will be on traditional industries, textiles, machine tools and machinery products.
Because Taiwan’s information products benefit from participation in the World Trade Organization’s Information Technology Agreement (ITA, ), they are less likely to see an impact, he said.