By Stephanie Chao ,The China Post
TAIPEI, Taiwan — Economics Minister John Deng (鄧振中) warned of the potential impact brought on by the China-South Korea Free Trade Agreement (FTA) yesterday, despite his hopes of successful negotiations on the cross-strait trade in goods agreement.
While Deng said he hopes to see a breakthrough in the current cross-strait trade negotiations, he stated how talks are still dependent on the negotiating partner, and whether both sides would be able to find a balance in removing barriers on products, noting how the latest rounds of talks failed to make any headway late last month.
Deng’s remarks were made during his attendance at a seminar on the impact and challenges for Taiwan brought on by the recently agreed Trans-Pacific Partnership (TPP).
South Korea’s National Assembly ratified the FTA at the end of November, meaning that the agreement will take effect once mainland Chinese lawmakers give their approval. “If the China-South Korea FTA manages to eliminate tariffs in December on time, and another tariff decrease takes place next January, the total eliminated rate would add up significantly,” Deng stated, believing the FTA would likely come into effect by the end of this year. Immediate elimination of tariffs on most of the products, around 40 percent, would occur in the first stage after the FTA goes into effect, likely next year.
Even though some products will eventually see a removal of all tariffs within 20 years, including the elimination of tariffs for panel products in the ninth year of the free trade deal, the impact on Taiwan will occur gradually, Deng said.
“It is still important to be on guard,” Deng said. He pointed out that Taiwan and South Korea compete in many overlapping industries, therefore the impact brought on by the FTA will occur faster in some industries.
To address the looming challenges posed by the China-South Korea FTA, Deng stated that there are only two ways that Taiwan can address the situation now: continue to commence talks with other countries to sign FTAs and quickly increase the country’s industrial competitiveness.
According to an analysis released by the Ministry of Economic Affairs on tariff elimination in the China-South Korea FTA, China must immediately eliminate tariffs for 20.12 percent of 8,194 types of agriculture products from South Korea listed in the agreement, including those that already have zero-tariffs.
Impacted industries include the petrochemical, textile, glass and medical industries, as well as the plastic-production machinery industry.
In the fifth year after the FTA has taken effect, 40.6 percent of the impacted products will see zero-tariffs.
In other news, Chinese National Federation of Industries Vice Chairman Koo Cheng-yun (辜成允) stated during his opening speech at the seminar how around 72 percent of industrial associations, out of a total of 157, are in favor of completely or conditionally lowering barriers in a possible free-trade agreement. On the other hand, 60 percent of associations believe it is vital to join the TPP first.