Premier Sean Chen today stressed the importance of renewing Taiwan's efforts to merge into the world economic system and participate in regional integration.
Speaking at the 2012 Southern Taiwan Leadership Institute of Education at Kaohsiung's Cheng Shiu University, Chen said he believes Taiwan is likely to sign the Trans-Pacific Partnership (TPP) before the Regional Comprehensive Economic Partnership (RCEP), since it has had more contact with TPP members through the Asia-Pacific Economic Cooperation (APEC) forum than with RCEP members such as Cambodia and Myanmar.
The premier said Taiwan has not been able to ink free-trade agreements (FTAs) with other countries since 2003 due to obstruction from mainland China, nor has it had opportunities to accumulate negotiation experience. Meanwhile, Singapore's FTA negotiations have not gone completely without a hitch either, but it was able to learn from the process to expedite negotiations in later stages. Taiwan must quicken its pace to catch up to Singapore, Chen said.
As another example of the importance of FTAs, Taiwan's exports to mainland China in 2004 were valued at US$64.8 billion, exceeding ASEAN's exports to mainland China of US$63 billion. But since ASEAN's FTA with mainland China went into force in 2005, ASEAN has outdone Taiwan with the gap continuing to widen as of 2010.
The premier also mentioned a visit he paid in 2003 with South Korea's minister of foreign affairs and trade, who said his goal was to sign a total of 45 FTAs. This indicates that South Korea noted the importance of signing FTAs as early as 2003 when other countries began pursuing the pacts, Chen added.
The TPP, presently led by the U.S., was originally launched in 2005 as an agreement among APEC members New Zealand, Chile, Singapore and Brunei. It liberalizes a wider scope of trade than that currently pledged by the World Trade Organization. As of December this year, 11 countries including the U.S., Australia, Peru and Vietnam are in negotiations to join the treaty, meaning the TPP is expected grow more influential in the years ahead, Chen said.
The RCEP, meanwhile, is another trade agreement being negotiated in the Asia-Pacific and comprises all 10 ASEAN members plus mainland China, Japan, South Korea, Australia, New Zealand and India. The premier noted the only APEC economies not to have been included in TPP or RCEP negotiations as yet are Hong Kong, Papua New Guinea, Russia and Taiwan.
There are 337 FTAs worldwide at present, 210 of which went into effect between 2003 and 2012, Chen pointed out. At a time when other nations are moving fast toward regional economic integration, exclusion would spell not just isolation for Taiwan but economic doom as well.
The premier also spoke on how industrial structure affects employment. He recalled being impressed by the economic boom at Kaohsiung's Export Processing Zone forty years ago while serving military service nearby; traditional labor-intensive industries flourished and workers enjoyed the fruits of economic growth. Today, Taiwan has gradually shifted toward capital-intensive industries, but if businesses do not invest in key technologies, their added values would decrease, said Chen. This would lower employee salaries and deter companies from making further investments, impacting the entire employment market.
Regarding programs to woo back overseas Taiwanese businesses, the premier said a common misconception is that the government is encouraging local businesses to expand their investments while on the other hand lowering operating costs for overseas Taiwanese businesses as incentives. This is not the case, the premier said. Rather, the government is encouraging businesses that develop original brands, possess key technologies in the industrial chain, or have core technologies that will raise overall production value. These are the companies that the government wants to bring back to Taiwan, he added.