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Economic Daily News: Don't delay merchandise trade pact with China
Central News Agency
2014-05-13 11:36 AM
Economics Minister Chang Chia-juch recently confirmed that cross-Taiwan Strait negotiations on a merchandise trade agreement had been postponed. This, combined with the delay in a trade-in-services pact signed in June 2013, will directly impact Taiwan's export sector. Between 2011 and 2013, exports to China of Taiwanese products included in the early harvest program of the cross-strait Economic Cooperation Framework Agreement (ECFA) rose 17.3 percent, 3.5 percent and 10.6 percent, respectively. Total bilateral trade in ECFA early-harvest products, meanwhile, rose 19.5 percent, 2.3 percent and 8.4 percent, respectively. This proves that the ECFA is a mutually beneficial arrangement and is not favorable to one side only. Despite the pact's implementation, however, Taiwan's early-harvest products have averaged a 0.5 percent decline in their market shares in China, signaling that Taiwanese products are gradually losing their competitiveness there. That's a trend that won't easily be reversed by the ECFA. Over time, 90 percent of Taiwanese exports to China have been raw materials, components and assemblies sold to Taiwanese companies operating there that were then processed and exported to other countries. When Taiwan's investment in China deceases or when those China-based Taiwanese companies experience a slowdown in exports, their demand for imports from Taiwan go down. Also, due to the rapid expansion of China's manufacturing sector, many Taiwanese companies have begun to purchase materials and parts in China rather than importing them from Taiwan. Although China's demand for imported consumer products is rising as the country's national income continues to increase, Taiwanese products cannot compete with those from advanced countries in terms of quality and brand identification. The signing of a cross-strait merchandise pact will allow China-based Taiwanese companies to buy raw materials from Taiwan at lower prices, thus lowering their production costs and boosting their competitiveness. End-products from Taiwan will also become more competitive on the Chinese market due to lower tariffs. Besides obtaining lower-tariff access, Taiwanese companies must increase their investment in research and development, improve the quality of their products and create their own brands so as to sharpen their competitiveness and consolidate their positions on the Chinese market. (Editorial abstract -- May 13, 2014) (By Y.F. Low)
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