Taiwan Expects ECFA Negotiations With China Later In January

by Mary Swire, Tax-News.com, Hong Kong

07 January 2010

It is hoped in Taiwan that the initial negotiations on the proposed economic cooperation framework agreement (ECFA) between Taiwan and China could begin as early as this month.

It appears that the Taiwanese government is looking to sign the ECFA at the next official round of negotiations with China in May.

Following the coming into force on January 1 of the free trade agreement between China and the Association of Southeast Asian Nations (ACFTA), some urgency has been noted within Taiwan to begin negotiations with China as soon as possible.

It is feared that ACFTA will have a harmful effect on the competitiveness of Taiwanese industry in the region. It has been estimated that ACFTA could reduce Taiwan’s potential growth in gross domestic product in 2010 by at least 0.15%.

In his New Year’s Day message, President Ma Ying-jeou confirmed that the government was pushing to sign the ECFA.

He stated that he hoped to see an "early harvest" list of items eligible for lower tariffs included in the ECFA to help Taiwan maintain its export competitiveness, avoid being marginalized in its export markets, attract new foreign investment, and stimulate its economic growth and boost employment.

To address concerns about the industries and workers most likely to be harmed by the signing of the ECFA, he confirmed that the government will draw up relief measures to invest TWD95bn (USD3bn) over the next 10 years.

He added that the trend toward economic integration in Asia is proceeding at a rapid pace. Regional trade accounts for over 50% of Asian nations' total trade, and now outweighs trade with markets outside the region. While there were only three free trade agreements (FTAs) between nations in the region in 2000, this had grown to 58 by 2009. North Korea and Taiwan, he added, are the only nations that have not participated in the integration process.

He went on to state that, in such a scenario, Taiwan must not be marginalized. With the ECFA as a starting point, Taiwan will actively pursue FTAs with our other major trading partners.

Only through such linkages, he continued, could Taiwan accelerate its involvement in East Asian regional economic integration and remain competitive.

Finally, he noted that the mending of Taiwan’s relationship with China has led to other doors opening internationally.

While, in the past, many countries did not want to get caught up in cross-strait quarrels, now that that relationship has improved, he disclosed that certain countries have now begun to discuss such matters as agreements on the avoidance of double taxation with Taiwan.

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