Who Will Make Concessions to Taiwan in FTAs?

A Commentary

Who Will Make Concessions to Taiwan in FTAs?

              Ku Ying-Hua  

(Research Fellow, Chung-hua Institution for Economic Research)

Source: United Daily News            May 18, 2010 

A cross-Strait Economic Cooperation Framework Agreement (ECFA) is expected to be signed in June. After the cross-Strait ECFA is signed, the government will still have much on its table. First, the government will have to continue to prepare for the follow-up negotiations on the ECFA. Second, the government will have to implement plans to protect and assist vulnerable industries in Taiwan. Third, the government will have to begin to seek consultations with other countries on FTA issues.     

To avoid unnecessary political obstacles and minimize unexpected difficulties, the government has to stay mum about the details of its plans on these three tasks, even though everything is being planned.  

In light of this, being a scholar who has devoted much of his time to the study of issues related to regional integration, I feel obliged to say that some notions on ECFA issues must be clarified so as not to cause confusion and misunderstandings.    

Of the 460 FTAs that have been signed between countries around the world, more than 270 FTAs have already gone into effect. Given the fact that more than 400 FTAs are currently being negotiated around the world, Taiwan finds itself in an unfavorable situation. Taiwan is eager to sign an ECFA with the Mainland, not simply because Taiwan wants to reduce the threat of competition from products from Southeast Asian countries in the Mainland markets, but also because Taiwan regards the cross-Strait ECFA as a ticket to the globe’s regional integrations so as to avoid overdependence on the Mainland. If Taiwan fails to get this ticket, then the chances of Taiwan entering talks with other countries on FTAs will be slim. In the end, Taiwan will inevitably face the situation of being marginalized.    

Taiwan does not have the luxury of choosing to first enter into FTAs with other countries. This approach did not work in the past, nor will it work today. There is only one approach for Taiwan. That is, to sign a cross-Strait ECFA with the Mainland. Only by doing so will Taiwan have a chance to enter into talks with other countries on FTAs. Given the current situation, such chances are exceptionally high. The government should make preparations in advance so as not to miss out the chance when it comes.

In the future FTAs negotiations, the toughest questions facing the government will be the negative impact on certain local industries. It is impossible for Taiwan to ask its counterparts to make concessions to Taiwan. It is also impossible for Taiwan not to open any industries that might suffer from opening up. Therefore, it is of great importance for the government to make the public and businessmen understand the necessity of opening up markets and facing the challenges that ensue. If Taiwan cannot open itself up, Taiwan will not be able to compete with others. In the end, all industries in Taiwan will lose their competitiveness in foreign markets, a most unfavorable situation for Taiwan.

Taiwan is currently negotiating an ECFA with the Mainland. The people of Taiwan all hope that the Mainland would make concessions during negotiations so that Taiwan can gain extra advantages. However, people must change this kind of mentality because it is impossible for other countries to sacrifice their own interests in favor of Taiwan. Win-win situations can only be achieved when both sides reciprocate with each other. Therefore, the government must adopt well-thought-out complementary measures to minimize the negative impact on Taiwan’s vulnerable industries. Meanwhile, businessmen and the public also have to adjust their mindsets in order to face the challenges ahead. They have to elevate their competitiveness so as not to fall victim to the opening-up of markets.

Taiwan must reach out to the world. Liberalization is the inevitable path for Taiwan to follow. The people of Taiwan must be aware of this and face it bravely. When Taiwan joined the WTO, Taiwan’s industries skillfully reoriented themselves in order to earn their living space. Taiwan did not decline as a result of joining the WTO. Quite the contrary, Taiwan has developed very well over the past years because it chose to reach out to the world. There are inevitable growing pains during the process of adjustment, but the beefing up of Taiwan’s competitiveness through competition will provide the basis for sustainable development. Taiwan should have the confidence to meet the challenges from liberalization in the coming new era.   

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