Taiwan seeks closer economic ties with ASEAN

Lilian Budianto, The Jakarta Post, Jakarta | Tue, 03/23/2010 10:25 AM

Taiwan is looking to negotiate a free-trade agreement with ASEAN as soon as it accomplishes its historic economic partnership with China, slated to be signed this June, say official and scholars.

Negotiations for the Economic Cooperation Framework Agreement (ECFA) between Taiwan and China have been earmarked to reduce the import tariff of 500 items and open access to hundreds of products that are currently banned from entering each other’s countries.

Andrew Hsia, Taipei Economic and Trade Office (TETO) chief in Jakarta, said once the ECFA concluded, it would open the opportunity for similar trade deals with member states of ASEAN. Singapore is the first ASEAN country that has given a nod to the proposal.

“Our strongest economic ties in ASEAN is with Vietnam and Singapore, while Indonesia trails behind... We expect to boost trade and investment in Indonesia through an arrangement similar to the ECFA,” he said.

He said both Indonesia and Taiwan had potential to improve economic relations to a level above Vietnam but it had not been realized because of diplomatic barriers.

Indonesia and Taiwan do not have diplomatic relations because of Jakarta’s support for a one-China policy, which asserts that Taiwan is part of China.

Chen I-Hsin, vice president of the Taipei-based Foundation on Asia-Pacific Peace Studies, said the proposal of a free trade agreement with ASEAN was not meant to interfere with Jakarta’s one-China policy, currently embraced by around 170 countries.

“We have institutionalized our trade with China through the ECFA and we are looking for a similar arrangement with ASEAN countries, which have become important trade partners,” said Chen.

Chen is one of three scholars from Taiwan who visited Jakarta on Monday to research bilateral issues. They met with researchers from several think-tanks including the Centre for Strategic and International Studies and the Indonesian Resilience Institute (Lemhanas).

“Indonesia can maintain its one China policy and even include that stance in the future trade agreement. We are looking for an economic integration, not political recognition,” said Chen.

Chuang Yih-Chyi, an economic professor with Taiwan’s National Chengchi University, said a trade agreement between Taiwan and ASEAN would eventually benefit China and ASEAN as well because it would ensure a more prosperous region with “a complete supply chain”.

“The marginalization of Taiwan is not in the common interest of Asian economies. We have to consolidate Asian economic integration, including with Taiwan,” he said.

Taiwan’s economy is one of the leading economies in Asia. Its trade with China stood at US$82 billion in 2008 in favor of Taiwan.

China and ASEAN are the two largest trading partners of Taiwan. Taiwan trade with ASEAN reached $70 billion in 2008 while its trade with Indonesia reached $10.85 billion in 2008.

Francis Yi-Hua Kan, executive director for Taipei’s European Union Center, said foreign countries had increasingly eased Taiwan from isolation in international forums after Taiwanese President Ma Ying-jeou promoted its diplomatic truce to maintain political balance with its ally, the US, and with China.

He pointed to Taiwan’s admission to the World Health Assembly as the international community’s increasing recognition of the country.

“The truce has eased unnecessary rivalry between China and Taiwan for international recognition,” Kan said.

The truce also paves the way for other countries to increase economic relations with Taiwan, he said.