Taiwan to focus on competitiveness after RCEP exclusion

Taipei,  Governmental officials argued Monday that improving Taiwan’s industrial competitiveness is the best strategy to counter the impact of a newly formed China-led trade bloc of 15 Asia-Pacific economies that does not include Taiwan.

“Because of political factors, it is difficult for Taiwan to join international organizations, so we should think about how to improve our competitiveness,” said Economics Minister Wang Mei-hua (王美花) prior to attending a legislative hearing on Monday.

Wang was responding to questions on the possible effects of the Regional Comprehensive Economic Partnership (RCEP), which was signed by its members in Hanoi on Sunday.

China, which sees Taiwan as part of its territory, generally blocks Taiwan’s participation in international organizations to try to prevent any perception that Taiwan is a sovereign entity, independent of Beijing.

That strategy has been even more aggressively pursued since President Tsai Ing-wen (蔡英文) of the pro-Taiwan independence Democratic Progressive Party took power in May 2016, leaving little chance that Taiwan could become a member of the RCEP.

Wang urged old-economy industries to focus instead on research and development and find ways to increase the added value of their products.

Asked if the government will subsidize industries that could be effected by the mammoth RCEP trade bloc, which accounts for a third of the world’s GDP, Wang said it would not, but it will continue to offer financial support for companies’ R&D programs.

Wang, however, did not expect the new trade deal to affect information and communication technology products, which are Taiwan’s strengths, because they are already considered tariff-free under the World Trade Organization’s Information Technology Agreement.

Echoing Wang, Vice Premier Shen Jong-chin (沈榮津) said Monday that the government will continue to help manufacturers with industrial upgrading and transformation to boost the value of their products and improve their competitiveness.

It will also help companies develop overseas, Shen said, such as by setting up Taiwan industrial zones in Southeast Asian countries, signing bilateral investment agreements, and establishing a Taiwan Desk to offer one-stop services.

Taiwan’s inability to join the RCEP because of China only highlights the need to strengthen trade ties with the United States, Shen argued.

Doing so will give Taiwan a better chance to join the other major regional trade bloc — the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) — and sign free trade agreements (FTAs) with regional countries, he believed.

The Japan-led CPTPP comprises 11 signatories — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

Both Shen and Wang said the RCEP’s effect on Taiwan will be limited because trade liberalization among RCEP members is already as high as 90 percent, and the new pact will only expand that by 1-2 percentage points.

In addition, companies in industries outside the high-tech sector, such as the textile and bicycle sectors, have diversified their operations by setting up factories in Southeast Asian countries, and should not face too big of a jolt, Shen said.

Meanwhile, Financial Supervisory Commission Chairman Huang Tien-mu (黃天牧) said the RCEP will not significantly affect Taiwan’s financial sector or stock market.

He said he had confidence in the openness of Taiwan’s financial system, judging from the net inflow of foreign funds in October.


Source: Focus Taiwan News Channel

Leave a Reply

Your email address will not be published. Required fields are marked *