18 November 2014

Grappling with ‘China Policy’ at home, Taiwan keen on FTA with India, other nations

Nov 17, 2014

Taiwan is keen on fast-tracking trade pacts with India and other nations, particularly those in the Asia-Pacific region.

TAIPEI: Struggling to forge a domestic consensus on its outreach to Beijing for strengthening economic ties and days after China and South Korea signed on the outlines of a free trade agreement (FTA), Taiwan is keen on fast-tracking such trade pacts with India and other nations, particularly those in the Asia-Pacific region. 

"We have been trying for an FTA with India since 2009. It will be beneficial for both. We are waiting for a response from the new Indian government," said Michael Tseng, deputy chief negotiator in Taiwan's ministry of economic affairs. 

He said a Taiwanese team will soon visit India to explore market for automobiles, shipbuilding and textiles among other things. "Our team will visit Gujarat and some other places later this month to see prospects for original brand manufacture (OBM) facilities as also setting up techno parks," he said. 

India has so far been cautious in response to Taipei's overtures lest it ruffles feathers in Beijing. 

"We hope the new government in India will be more assertive in promoting economic cooperation in the Asia-Pacific region. India should take advantage of the situation through engagement," said Vanessa Shih, Taiwan's vice minister for foreign affairs, when asked about the shadow of Sino-Indian diplomacy on New Delhi's ties with Taiwan. 

Taiwan's fresh initiative to increase its export footprint- Free Economic Pilot Zones (FEPZ)- currently faces scrutiny in Parliament which is also debating the contentious 'Supervisory Act' put in place after the students' unrest earlier this year. The 'Supervisory Act', is aimed at setting up institutional checks and balances for transparency while dealing with China. 

In March, thousands of students had protested for weeks in Taipei to stall ratification of a services pact between Taiwan and Beijing. Taiwan had also signed Economic Cooperation Framework Agreement (ECFA) with China in 2010, seen as 'pro-Beijing tilt' of the government. 

"The clash of political and economic forces in Taiwan is a serious problem. Resolution has to be found here. There is very little that Beijing can do. Half of the population is living in the past," said Dr Yun-Peng Chu of National Policy Foundation, a think tank. 

Taiwan hopes the FEPZ Act will be a springboard for it to eventually join the US-led Trans Pacific Partnership (TPP) and Beijing-led Regional Comprehensive Economic Partnership (RCEP). 

But China has so far shown little interest in Taiwan joining RCEP. "The main reason seems to be political (two Chinas). But we have been trying to convince Beijing that our membership in TPP and RCEP is a purely trade issue," said DR Chu-Chia Steve Lin, deputy minister in Mainland Affairs Council. 

The announcement of the proposed FTA, set to be in place in 2015, by China and South Korea during the APEC summit in Beijing earlier this week has come as another blow to Taiwan. It is particularly worrisome for Taipei as over 70 per cemt of exports from Taiwan and South Korea overlap. 

"We are watching the impact of the China-South Korea FTA," said Dr Chu. "As a WTO member, Taiwan is entitled to FTA," he said. 

"We cannot rely on China only for exports. We should look to India and ASEAN nations," said Jiann-Chyuan Wang of Chung-Hua Institution for Economic Research. 

Currently, China accounts for nearly 40 per cent of Taiwan's exports. In 2013, bilateral trade between India and Taiwan stood at 6.17 billion dollars with 70 Taiwanese companies having set shop or invested in Indian businesses.

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