TAIPEI — Taiwan’s economics minister warned Wednesday that a failure to sign a trade-in-goods agreement with China could hurt the local job market and drive Taiwan’s low wages even further down.
Minister Duh Tyzz-jiun (�����x) told members of the press that Taiwan must speed up negotiations on the pact to mitigate the negative impact of the China-South Korea FTA that reportedly wrapped up negotiations earlier this month.
Without the trade-in-goods agreement or an economic cooperation agreement, Taiwan will find it difficult to enter the Chinese market and become marginalized due to competition from trade rival South Korea in the important market, Duh said ahead of a question and answer session at the Legislature.
That could cause local businesses to be forced to relocate overseas, resulting in job losses and leading to low wages, he said.
South Korea is Taiwan’s biggest competitor for the Chinese market, in which their exports share an overlap of some 70 percent, his ministry said.
Once the pact between Seoul and Beijing takes effect, Taiwanese exporters will lose their competitive edge as Korean exports enjoy substantial tariff advantages.
According to the ministry’s assessment, around 30 percent of Taiwanese industrial products will be affected. Nearly 25 percent of the products �X including flat panels, petrochemicals, steel and other metals, machine tools and textiles �X will face a an existential threat, meaning there may be no return international orders once Taiwan loses them.
As exports serve as the backbone of Taiwan’s economy, the loss of market share in China, the largest buyer of Taiwanese goods, could cause Taiwan’s gross domestic product to drop by 0.5 percentage points, Duh said.
Taiwan’s strategy to meet the challenge is to vie for similar, if not better, market treatment than South Korea has received, he said.
In response to whether a push to sign FTAs could help, Duh said that FTAs could boost local industries’ overall competitiveness and contribute to Taiwan’s economic growth.
Although he cautioned that FTAs alone are not a panacea for all economic woes, he said seeking agreements is worth a try to help solve Taiwan’s problems.
Korea FTA Could Erode Taiwan’s Tax Revenues An impending China-South Korea free trade agreement (FTA) is expected to erode Taiwan’s tax revenues by NT$7 billion (US$227 million) per year, with flat panels, machine tools and textiles among the hardest-hit sectors, Finance Minister Chang Sheng-ford (�i���M) said Wednesday.
The pact could affect Taiwan as South Korea is Taiwan’s biggest competitor for the Chinese market, in which their exports share a significant overlap, Chang said during an interpellation session at the Legislative Yuan.
As exports serve as the backbone of Taiwan’s economy, the loss of market share in China, which is the largest buyer of Taiwanese goods, could cost Taiwan heavily, he said, warning that Taiwan’s economy could face the threat of being marginalized in the wake of the China-South Korea FTA that is expected to take effect in the first half of next year.