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New challenges in Taiwan-Singapore FTA talks

Focus Taiwan News

Economic Daily News: New challenges in Taiwan-Singapore FTA talks

9 August 2010

By Sofia Wu

Taiwan and Singapore announced a plan last week to explore the feasibility of a bilateral economic cooperation agreement on a par with a free trade agreement (FTA).

The move is of profound significance as it comes on the heels of Taiwan concluding a landmark economic cooperation framework agreement (ECFA) with China and could inspire other countries to follow suit.

One of the primary goals in striking the ECFA deal is to protect Taiwan from being marginalized in the face of the growing waves of regional economic integration, but whether Taiwan can sign FTA-like accords with its major trading partners will be a major yardstick to gauge the value of the ECFA.

The start of Taiwan-Singapore trade talks, however, also pose challenges for Taiwan. For one thing, Taiwan must wait and see whether China will only allow Taiwan to negotiate similar economic deals with the eight countries or areas that have already signed FTAs or FTA-like deals with Beijing — Hong Kong, Macao, Chile, Singapore, Pakistan, New Zealand, Peru and Costa Rica.

Singapore accounts for a mere 3.2 percent of Taiwan’s overall foreign trade and if Taiwan wants to be included in the global economic system, it needs to conclude FTAs with its key trading partners, such as the U.S., Japan, the European Union, South Korea and other ASEAN member states in addition to Singapore.

Another challenge lies in the fact that Singapore is a free trade port that offers tariff-free treatment for 99 percent of goods. Multinational business groups also face fewer barriers to launching new ventures or service footholds there. In FTA talks, Taiwan will have to offer much more preferential treatment to Singapore than vice-versa. Is Taiwan suitably prepared to cope with such market-opening pressure?

With trade liberalization the ultimate economic policy goal, the government should speed up economic reform and the cultivation of cross-strait trust to facilitate Taiwan’s quest for economic globalization.