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ASEAN plus One to benefit China-based Taiwanese companies: scholar

ASEAN plus One to benefit China-based Taiwanese companies: scholar

Taipei, Jan. 30 (CNA) A free trade area formed between China and the Association of Southeast Asian Nations (ASEAN) will benefit China-based Taiwanese businesses, a dynamic that has not been mentioned by Taiwan's government, said economist and Taiwan Thinktank Chairman Chen Po-chih.
The new free trade zone, which took effect Jan. 1, will give Taiwanese businesses in China the flexibility to move their production to ASEAN countries if there are competitive advantages to be gained, Chen said.
"Because wage levels and incentives are different in China and the ASEAN countries, Taiwanese companies that had to set up operations in China now have more options, " he told the Central News Agency in a recent interview.
"For example, maybe Vietnam is a better choice than China for agricultural products as wages are lower and agricultural products are more similar, " said the former head of Taiwan's official economic planning and development agency.
Taiwanese firms could also use the free trade area to reduce their export costs as they might no longer have to pay duties in every country of the trade zone, Chen said.
"Taiwanese companies now can invest in any of these countries and pay tariffs in the one country that offers the best incentives, " he noted.
Companies could even negotiate with the country they intend to invest in to lower or reduce tariff barriers because the ASEAN countries are competing against themselves to attract foreign investment, Chen said.
He dismissed concerns about a possible walkout of Taiwanese companies if Taiwan fails to sign the proposed economic cooperation framework agreement (ECFA) with China, as the government has argued, as enterprises in labor intensive sectors relocated prior to the inception of the free trade zone to reduce labor costs.
Because China signed the pact with ASEAN in 2002, Taiwanese firms, known for their flexibility and tenacity, came up with plans long ago to respond to the threat, Chen said.
But they still need assistance from Taiwan's government in negotiating better deals with other governments based on individual needs, the economist argued.
Chen contended that if Taiwan signs the trade pact with China, it will pay greater costs as it would be forced to open up other sectors, such as agriculture, to Chinese imports.
The government has pledged, however, that the more than 800 agriculture products that cannot be imported from China at present would be excluded from any trade deal.
Chen said he was not opposed to signing a free trade agreement-like deal with China, but he felt the government should not create a sense of urgency among Taiwan's people.
Taiwan concluded the first formal round of the ECFA talks with China earlier this month and aims to ink the deal in May.
Chen believes, however, that signing the ECFA with China will make Taiwan more dependent economically on its long-time rival if Beijing continues to block Taipei from signing free trade deals with other countries.
Chen said if Taiwan's economy is controlled by China, then pro-independence activists will have their dreams shattered while those backing unification with China will also not get what they want because they will be annexed by Beijing.
"I believe that most unification supporters in Taiwan look forward to a free, democratic China. Not the one that exists right now," he said.
(By Alex Jiang)




Updated : 2021-08-01 11:34 GMT+08:00