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Taiwan firms urged to pull weight in US-South Korea FTA fight

Taiwan Today, Taiwan

Taiwan firms urged to pull weight in US-South Korea FTA fight

3 November 2011

By Meg Chang

Taiwan’s private sector needs to pull its weight if government policies aimed at offsetting the impact of the U.S.-South Korea free trade agreement are to succeed, Economic Affairs Minister Shih Yen-shiang said.

“The nation’s firms must do more to develop value-added products and differentiate themselves from South Korean rivals in the marketplace,” Shih said. “The government will provide all necessary assistance but cannot achieve this goal on its own.”

The minister’s remarks came at a conference organized by locally based Chinese National Association of Industry and Commerce Nov. 2 in Taipei. The event was attended by around 120 government officials and business leaders from sectors set to be affected by the FTA.

Shih said the government is mapping out strategies to help the private sector, but it is a case of all hands on deck if these firms are to maintain a competitive edge.

“Bilateral and regional trade agreements are a fact of life and both the public and private sectors must adjust accordingly.”

Taiwan is the ninth largest exporter to the U.S. with shipments of US$34.42 billion in 2010. Of these, 66 percent were tariff free; the remainder—comprising machinery, metal products, plastics and textiles—is expected to be hard hit by the FTA.

According to a recent study by Taipei-based Chung-Hua Institution of Economic Research, the U.S.-South Korea FTA could push Taiwan’s annual gross domestic product down by 0.04 percent.

Shih said one way of compensating for this drop-off is to continue developing markets for Taiwan’s key industries in mainland China and other emerging markets.

“Efforts to sign economic cooperation agreements with major trading partners are also paying dividends,” the minister said. “Trade talks with Singapore are progressing on schedule, and we are conducting ECA feasibility studies with India, Indonesia and New Zealand.”

“If all goes to plan,” Shih said, “half of Taiwan’s exports will go to partners with which Taiwan has ECAs or FTAs by 2016.” (JSM)