ECFA must be inked before formation of ASEAN plus one: MOEA

Taiwan News, Central News Agency, 2009-03-19 08:51 PM

Taipei, March 19 (CNA) In order to avoid international marginalization and an industrial exodus, Taiwan must sign a trade pact with China before the Association of Southeast Asian Nations (ASEAN) Plus One, which will group ASEAN with China in a trade bloc, comes into being, Economic Affairs Minister Yiin Chii-min said Thursday.

Speaking at a conference organized by the Taiwan-based Chinese National Federation of Industries, Yiin said Taiwan must push for the signing of an economic cooperation framework agreement (ECFA) before the Asian free trade zone is formed Jan. 1 next year.

The free trade zone will include all ASEAN members plus China, and will exclude Taiwan.

According to Yiin, Taiwan's petrochemical, electronics, textile and machine tool industries will be deeply affected when the ASEAN Plus One zone comes into being, as member states will have zero tariffs on cross-border trade.

Taiwanese exports will lose their competitiveness, as they will be subject to a tariff rate of 6.5 percent to 10 percent in China, said Yiin.

In addition, Yiin warned that a great number of Taiwanese industries will be forced to leave the country, which will lead to a further increase in the unemployment rate.

"If we fail to sign a cross-strait ECFA, local industries will have no choice but to move their factories to China or other ASEAN nations to avoid the tariffs," said Yiin.

Meanwhile, Yiin said that under the ECFA, Taiwan "will negotiate an early harvest with China, which will allow Taiwan's petrochemical, textile, electronics and machine tool products to maintain their competitiveness in the Chinese market." "The beauty of such a framework agreement is that it is very flexible, so that we can negotiate issues that are more urgent and uncontroversial first and leave the more sensitive and controversial issues for later," Yiin said.

He also said that an ECFA would establish a much-needed mechanism and platform for cross-strait trade and economic cooperation that would allow entrepreneurs from both sides to make more accurate prediction about market development.

"As trade and economic relations between Taiwan and China remain abnormal it is difficult to predict what will happen in the future, " said Yiin, adding that once a mechanism is established, both sides would be able to make more feasible arrangements to further improve bilateral economic cooperation.

President Ma Ying-jeou expressed hope March 5 that discussions on an ECFA can take place during the third round of talks between Taiwan and China, expected to be held in the first half of this year.

(By Luis Yu)