Premier Jiang Yi-huah today received representatives from more than 22 industrial and commercial groups and called upon businesses and the public to support the government in pushing the nation's trade and economic policies forward.
The number of groups represented at the meeting is the largest seen in recent years, demonstrating businesses' growing anxiety about the free trade agreement (FTA) between South Korea and mainland China, the premier stated.
Jiang said that the Executive Yuan is just as worried, if not more than businesses are about passing important financial and economic bills, including ratifying the Cross-Strait Agreement on Trade in Services, pushing through the long-stalled special act on free economic pilot zones, and speeding up negotiations on the cross-strait agreement on trade in goods.
The political parties or civic groups that oppose the administration's economic policies mainly hold two types of opinions, the premier pointed out. The first is that Taiwan's economic development cannot rely merely on FTAs, tariff reductions or removal of trade barriers, but should depend more on industrial transformation and innovation. The second is that FTAs are important, but that their effects are not as significant as exaggerated by the government.
Speaking to the first point, Jiang reiterated that the government will not focus solely on FTAs for the nation's economic development. The premier said when he took office, he made it clear in his first administrative report to the Legislature that the government will adopt a dual strategy of a "free and open economy" and an "innovation economy."
The free economy strategy includes pursuing membership in the Trans-Pacific Partnership and the Regional Comprehensive Economic Partnership, as well as completing major follow-up pacts to the Cross-Straits Economic Cooperation Framework Agreement. The work has not stopped there as Taiwan signed economic cooperation agreements with New Zealand and Singapore last year.
The innovation economy strategy is also important to the government as evidenced by numerous initiatives to promote industrial transformation, including plans for innovative startup parks formulated by National Development Council Minister Kuan Chung-ming, and programs by the Ministry of Economic Affairs, the Financial Supervisory Commission and the Ministry of Finance to encourage innovation and research among industries.
As for the idea that FTAs will not have significant effects on Taiwan, premier Jiang said that according to projections by domestic economic research institutions, the South Korea-mainland China deal could knock 0.5 percentage point off Taiwan's gross domestic growth of about 3.4 percent each year, which would translate to a loss of hundreds of billions of NT dollars in industry output.
Once this FTA goes through and liberalizes goods and services trade between South Korea and mainland China, about 2 to 5.4 percent or US$3.1 billion to US$8.4 billion worth of Taiwan's industrial exports to the mainland—primarily steel, petrochemicals, automobiles, display panels, textiles and glass—would be replaced by Korean products, Jiang pointed out.
Taiwan currently pays customs tariffs of 10, 11 and 13 percent on mainland-bound automobiles, textiles and glass. It will not be able to compete if South Korea's tariffs are eliminated or halved, Jiang warned.
"The industries' concerns are not groundless and the expert projections are not fabrications. Opponents of free trade must not mislead the public into a false sense of security like the proverbial frog being boiled alive."
The government urgently needs the people's support in order to make real headway on the issue, Premier Jiang said. He hopes the public can back the ruling party in the Legislature and persuade opposition parties to work together and move the country's economic and trade policies forward.