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  • ECFA to create new opportunities, pave way for golden decade of Made-in-Taiwan products
  • 2010/06/25
ECFA to create new opportunities, pave way for golden decade of Made-in-Taiwan products
The government and mainland China are currently negotiating an Economic Cooperation Framework Agreement (ECFA). In fact, the pact is a work in progress that will gradually be completed over time. The early harvest list which includes the necessary items is only the first step of the bilateral agreement. Items that have not been included in the early harvest list may be included in the next stage after further negotiation. President Ma is extremely concerned about the impact that the ECFA will have on weaker industries here. Seventeen traditional industries, including textiles and bedding, will not be included in the early harvest list. Meanwhile, the president has asked the Ministry of Economic Affairs to formulate a set of supplementary measures to assist various industries in order to lessen the impact of the ECFA. President Ma expressed his confidence in MIT (Made in Taiwan) products. Socks industry in a good example, he said. In the past, socks were regarded as ordinary clothing items. Today, however, Taiwan factories have significantly increased the value of socks productions through R&D, introducing sweat-wicking, anti-odor, and anti-bacterial socks made from materials that are conducive to good health. The government is working to create an environment that features fair competition so as to enable outstanding MIT products that exhibit a high degree of innovation to be marketed and sold throughout the world. President Ma commented as follows:
Taiwan has relied on its brains to hold its own on the world stage. In the tumult brought on by the recent global recession, we have still been able to rely on our competitive strengths to stand out among the crowd.

The government has three objectives in promoting the ECFA. First, it is aiming to help the people of Taiwan to do business and boost the competitiveness of Taiwan. The government, however, will neither throw Taiwan's doors open to mainland laborers nor increase the number of mainland agricultural products allowed to be imported. The third goal is to reduce or eliminate tariffs, guarantee investments, and protect intellectual property rights.

I've made three trips to Shetou Township in Changhua County to look at the textile industry there. I asked them how they compete given that the wages here are so much higher than in mainland China. They smiled at me and said that they are not competing against mainland Chinese wages. Rather, they are competing against Italian design. Our industries know how to compete. For instance, in Taoyuan County there is a parasol maker that produces umbrellas that go for NT$20,000. Their most expensive one is NT$100,000. These umbrellas are artwork. Everyone needs to work to make their products more special, giving them added value. This is how MIT products will become even more competitive.

Promoting outstanding MIT products is not simply a response to the ECFA. In the future, we are going to face the same issue when we sign free trade agreements with other nations. These sorts of challenges are going to come to the forefront as we liberalize our markets. We must have ambition and confidence, and we must realize that only through raising product quality and boosting added value will our products be competitive.

Mainland China is currently Taiwan's largest export market. At the peak, Taiwan was exporting some US$100 billion of goods to the mainland each year. Given the vastness of mainland China and its cheap labor, Taiwan firms will find the competition very stiff when they enter this market. In contrast, mainland China's cheap products will quite easily find a foothold in Taiwan's market. In light of this, it was decided at ECFA negotiations in April that products from 17 traditional industries, including textiles and bedding, would not be included in the early harvest list.

Some people are concerned that our manufacturers will be impacted by the import of mainland China's cheap products and labor-intensive goods. That is why the government is doing everything it can during negotiations to not liberalize imports of those items. However, in cases where we do end up opening the door to import items that could impact local industry, we will be prepared. The Ministry of Economic Affairs is drafting industry revitalization and guidance measures, a mechanism to improve the structure of specific industries, and a system to provide relief to impacted industries. A budget of NT$95 billion is planned for the coming decade to help offset the negative impacts of the ECFA.

Taiwan won US$50 million in business opportunities in 2009 after becoming a party to the Agreement on Government Procurement (GPA). We expect this number to reach US$500 million this year. The government will continue to help companies develop more overseas markets. We hope that ECFA negotiations can be concluded soon, thereby providing our industry with an environment for fair competition.

While some in Taiwan have expressed concerns about the signing of the ECFA with mainland China, the government will certainly abide by the principle of "putting Taiwan first for the benefit of the people." The two sides must participate as equals in all negotiations, our dignity must be ensured, and the results must be mutually beneficial. With respect to the ECFA, renowned Japanese strategist Dr. Kenichi Ohmae expressed his support for the pact in a speech on the theme of "global economic development trends and prospects for cross-strait cooperative relations." Dr. Ohmae stated:

If you look at other countries in Asia, dependence on China is increasing in most countries. Some of you are worried whether you aren’t overdependent on China. I would say no. You are leading the group. You’re taking advantage of your strength, but are not overdependent.

Your country has been an outstanding performer, and to a large extent, this is due to your success with trading with China. Your government has also done an exceptionally good job in providing a competitive environment compared with Korea, China itself and Japan. Your international competitive rankings have been very impressive.

Taiwan has all types of knowledge, so you have good strategy to win niches. And the people of Taiwan know China inside out… ECFA is a very carefully crafted vitamin for Taiwan’s continued success. It can strengthen Taiwan's economy and enable Taiwan to continue to succeed. Your relationship with China is the envy of Koreans. They felt admiration at first, but it's now turning into fear, particularly after ECFA.
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