Ecfa Between Taiwan and China

Taiwan is a small opening economy country, which depends on the growth of the import and export trade. Therefore, the government tried so hard to join the global export market and participle in the WTO activities for several years. However, Taiwan had faced so many changes of economic trading environment in recent years, such as the “ASEAN (Association of Southeast Asian Nations)” which includes Brunei, Lao, Cambodia, Indonesia, Malaysia, Myanmar, Philippine, Singapore, Thailand and Vietnam, is sending the control power to China; the EU eastward expansion, etc.

These district integrations had made great impacts on Taiwan’s exporting. Furthermore, there are a lot of small and medium enterprises in Taiwan; they are lacking of internationalizing ability to conduct a global deployment, so their main markets were concentrated on Mainland China and Southeast Asia., and the distribution strategy wasn’t enlarged to other regions. In addition, the domestic manufacturers are lacking of the possession of brand and marketing ability. It resulted in the investment inefficiency and, moreover, overseas investment wasn’t able to enhance the national competition. Therefore, there’s a way to solve these problems, and that’s ECFA.

The ECFA, known as “Economic Cooperation Framework Agreement”, is an open-ended arrangement. Agreement has to be reached on Taiwan’s petrochemical, automobile, textile and machinery exports shortly to avoid being heavily taxed in China, Japan, Korea, and the “ASEAN “. Being three of the biggest trading countries for Taiwan, especially China, our government is really trying hard to be part of the ECFA.

Why joining ECFA is so important for us Taiwanese

With the membership of ECFA, we could trade with other member countries and have very low customs duties, and it can even be zero! However, if you are not a member of EFCA, then we should pay them plenty of taxes. For instance, if Indonesia wants to export their textile products to Thailand; because Indonesia is a member of ECFA, it won’t be charged for even a penny; compared to Taiwan, which is not a member of the institute, if we also planned to export textile goods to Thailand, without a membership of ECFA, we need to pay for about 10% customs duties, which is more expensive than the fabrics from Indonesia. Obviously,

Thailand would do the trading work with our business component, and I’m sure that’s the last thing we want to see! You may ask me:”We don’t need the trading opportunity with the Southeast Asian countries, because they are not our major buyer and supplier.” Well, we should focus on the pros which the other three powerful economic-based countries could help us make more money than before. Even if we couldn’t gain more profit from it, at least we won’t be worse than before since we still have the chance to do the daily trading works with the others.

And because of China is going to take one of the leading role for the institute, we should all be aware of the weakness for not being a part of them because we would have to pour out so much money paying the taxes to earn the equal right of trading fairly with other countries. Furthermore, for what I’ve learned from my economy class, cooperate with the world trading group system is beneficial and harmless to the small opening economic country such as Taiwan. And since Taiwan’s economic growth is fully depending on trading, we have to realize that for the market size of 1.6 billion people from China, Japan, and Korea, it is such a great opportunity for Taiwan to gain trading profits in order to increase GDP rate, and make the financial report better-looking. After that, it can make the consumers’ confident index grow higher, and make people willing to spend more money on shopping instead of considering saving their salary.

Americans’ attention to the ECFA progress for TaiwanWith the tendency of the Asian countries being part of the ASEAN, Americans pays much attention on the schedule of the progress for Taiwan’s ECFA. They wanted to know whether the ECFA’s participation for Taiwan is affecting the trading situation between Taiwan and the U.S., and to make sure how the TIFA worked. And why should Taiwan be aware of the benefits of Americans? Since Taiwan’s most of the technologies are provided and supported by the U.S., the Americans of course wanted us to ensure the advantages for them. And with the power of the membership for the ASEAN, the Americans can share a bit profits from the results of the trading advantages from Taiwan.

The awareness of being isolated from the worldInstead of being considered as “a brick to knock on the door to return to the world stage,” many Taiwan citizens are deeply concerned that an ECFA will lock the economy into an “one China market,” further isolate Taiwan from the world economy and undermine its economic and political autonomy, competitiveness, employment , and social equity. However, in my opinion, I think we shouldn’t take every thing between Taiwan and China into political issues. ECFA isn’t related to two places being integrated or being independent. Looking for the long run, join the ECFA could probably gain the relationship of trading with many countries, especially with China. It could increase our profits for importing and exporting.

In sum, the doubts of many Taiwan citizens on the wisdom of the ECFA and on its possible details, negotiation process and political, economic and social costs, could merit more than such a “policy explanation” in response.