Taiwan And China May Sign Free Trade Agreement

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China and Taiwan may soon sign a free trade agreement that would see the reduction

or elimination of tariffs and trade restrictions, bringing new bilateral business opportunities to the two regions.

Taiwans exporters, financial companies, and high-tech industries will likely benefit the most from the Economic Cooperation Framework Agreement (ECFA), which current Taiwanese President Ma Ying-jeou hopes to sign in June. Taiwans other, labor-intensive industries will likely be the biggest losers if such a deal is signed due to Chinas army of cheap labor and its ability to undercut prices for clothes, shoes, towels, and other low value-added goods.

Bilateral trade between the neighbors exceeded US$100 billion last year and China accounts for more than 40 percent of Taiwans exports. The current China-friendly Kuomintang administration obviously believes that this deal is the right move for Taiwan at this juncture. Some, including Democratic Progressive Party Chairwoman Tsai Ing-wen, do not share their enthusiasm.

What you are doing now will leave Taiwans future generations unable to say no to China, Ms. Tsai wrote in a letter to President Ma last week.

Since plans for the ECFA have been made public, many Taiwanese have taken to the street in protest. Hundreds of pro-independence demonstrators have rallied in the capital of Taipei this week, voicing their fears that the deal will cost the island jobs and will allow China to put a strangle-hold on the economy.

Since the ECFA will dictate Taiwans fate and the future of our next generation, the agreement must be decided by all the people, Ms. Tsai told the rally outside parliament on Thursday.

Recent surveys put 40 percent of Taiwans citizens in favor of the ECFA, 30 percent against it, and the last 30 percent undecided.

We are of course aware of the political ambitions of mainland China toward us during this period, but we cannot let this make us afraid, pull back, or avoid trying to move forward, Ma said. We have confidence in Taiwan, in Taiwan businesses and in Taiwans democracy. Trade is Taiwans lifeblood. Without trade, Taiwan cannot subsist.

by: Dezan Shira & Associates

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