On the afternoon of July 11, President Ma Ying-jeou attended a conference on the Cross-Strait Trade in Services Agreement as it relates to the financial services industry. The conference was organized by the Executive Yuan's Mainland Affairs Council and the Financial Supervisory Commission. The president spoke about the benefits of the Cross-Straits Economic Cooperation Framework Agreement (ECFA) since its implementation in 2010, and also stressed the importance of the Cross-Strait Trade in Services Agreement and the Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC) to Taiwan's future economic development. He encouraged the financial sector and the government to work together "to help Taiwan do business and raise Taiwan's competitiveness."
In remarks, the president first provided background to the government's active efforts to sign the ECFA, the Cross-Strait Trade in Services Agreement, and the Cross-Strait Trade in Goods Agreement with the mainland, as well as the inking of the ANZTEC with New Zealand. President Ma remarked that in 2000, in the Asia-Pacific region only Singapore and some ASEAN members had signed free trade agreements (FTAs). Fast forward to today, however, and we find that mainland China, Singapore, Japan, and Korea have respectively signed 11, 13, 13, and 9 such agreements. This development constitutes a big challenge for Taiwan's export-based economy, he said.
In 2003, said President Ma, he was invited to Singapore to attend the East Asia Economic Summit, where he delivered an address entitled "Why Not 10 plus 4?" and urged ASEAN to let Taiwan join in the grouping. Unfortunately, the attitude of mainland China at that time, Taiwan's status in the international community, and other factors dissuaded ASEAN from considering his proposal at that juncture. This was quite a pity, he commented.
The president remarked that in 2008 when he took office, Taiwan had signed FTAs with several nations in Central and South America, but none with its major trading partners, such as mainland China, Japan, and the United States. Consequently, the following year he proposed the signing of the ECFA. There was a lot of skepticism toward the ECFA in Taiwan, said the president, but he responded to criticisms one by one, and the two sides formally signed the agreement on June 29, 2009. The president said the pact is now yielding results.
President Ma further explained that after the signing of the ECFA, many countries noticed that a lot of items exported from Taiwan to mainland China received either preferential tariffs or tariff-free status, which in effect made Taiwan a springboard from which to export to the mainland. "Doors once closed suddenly swung open," he said. For instance, on August 5, 2009, Taiwan and Singapore announced that they would begin exploring the feasibility of signing an economic cooperation agreement. In 2011, Taiwan and Japan signed the Taiwan-Japan Bilateral Investment Arrangement, and in 2012 the two countries inked the Patent Prosecution Highway Memorandum of Understanding, noted the president. Meanwhile, New Zealand in May of last year began negotiations with Taiwan on an economic cooperation – ANZTEC – which they signed on July 10 this year, concluding negotiations in just one year and two months, he remarked. Furthermore, in March of this year, Taiwan and the United States re-opened negotiations under the Trade and Investment Framework Agreement (TIFA) that was signed between the two countries in 1994, he said.
President Ma mentioned that after signing the ECFA, the government set its sights on creating a global presence for Taiwan. It has sought to negotiate and sign FTAs with other countries so as to pave the way for Taiwanese enterprises to move into the global market and truly act upon the concept of "building up Taiwan while linking with the Asia-Pacific region and creating a global presence," he said. The early harvest list of the ECFA, the trade in services pact, and an impending trade in goods agreement between the two sides of the Taiwan Strait, as well as the ANZTEC agreement with New Zealand, are all efforts in line with this initiative, he noted. The ROC, the president stated, now has a new place for itself in the global economy, and many countries now look upon the ROC with renewed respect. However, he acknowledged, much remains to be done. The agreements signed cover only about 16% of Taiwan's total trade in goods, he pointed out. Taiwan, the president said, exports 539 types of goods to mainland China, while the mainland exports 267 types of goods to Taiwan. The signing of the Cross-Strait Trade in Services Agreement offers entirely new possibilities for Taiwan's service sector, he added.
With respect to the ANZTEC, President Ma thanked the Ministry of Economic Affairs (MOEA), the Executive Yuan's Council of Agriculture, and other cabinet agencies for their commitment and positive attitude in the course of negotiations. After 14 months of negotiations, the two sides forged an FTA over 1,600 pages long. The president expressed admiration for the efficiency demonstrated by these agencies. In addition, he explained, a number of supplementary measures have been included in preparation for the opening of Taiwan's markets to liquid dairy products and fresh deer velvet from New Zealand. Tariff quotas and market segmentation, for example, have been instituted to reduce the blow to Taiwan's manufacturers. The president stated that liberalization must still go ahead because, for instance, consumers will enjoy lower prices in the future for various items imported from New Zealand, such as milk powder, kiwi fruit, and cherries.
President Ma stressed that the principal significance of the ANZTEC lies in the fact that it shows the international community that the ROC has big plans and is serious about achieving trade liberalization. Taiwan wants to gain access to the world's markets, and to participate in regional trade integration, he said.
President Ma also mentioned that the recent signing of the Cross-Strait Trade in Services Agreement provides quite a few opportunities for the financial services industry. In fact, he said, these opportunities are late in coming. At present, he noted, some 80,000 Taiwanese companies do business in mainland China, and have invested over US$150 billion there. Taiwan's financial services firms, however, have been unable to provide Taiwanese firms operating there with comprehensive services. Fortunately, the government has tried to address this situation as quickly as possible, the president said, adding that if any more time had passed, local financial services firms would not have had a chance to take a share of the market, and this might have prevented Taiwanese companies operating in the mainland from obtaining the financing they need to continue to grow, he stated.
President Ma acknowledged that a number of scholars have expressed concern that several million mainland Chinese laborers could flood Taiwan in the wake of the signing of the Cross-Strait Trade in Services Agreement. President Ma made his stance on this issue very clear, saying that "the government absolutely is not opening Taiwan's doors to laborers from mainland China, but only to managerial personnel." Acknowledging that some have been concerned about the impact upon Taiwan's taxi cab industry, Chinese herbal medicine retailers, and the publishing industry, he stressed that the government is only opening Taiwan's doors to car rental businesses, Chinese herbal medicine wholesalers, and the printing industry, which are not the same as the aforementioned industries. Therefore, said President Ma, the fears of some that Taiwan's taxi cab industry is ultimately going to face competition from its mainland Chinese counterparts are misplaced. In addition, the president explained, the liberalization of the printing industry will only allow investment by mainland China in existing companies here, and the shareholding of mainland interests in these local firms will not be allowed to exceed 50%. He called on the public here not to worry about this situation.
President Ma also looked at the example of the Chinese herbal medicine wholesale industry. He explained that in fact this sector was opened back in 2009 and over the past five years only four mainland Chinese firms have submitted applications to do business here. Of these, two have been approved by the MOEA. The opening of this industry has not had a negative effect here, he said.
The president also looked at e-commerce. After the signing of the Cross-Strait Trade in Services Agreement, Taiwan's e-commerce industry will be allowed to operate e-commerce websites in mainland China's Fujian Province, he said, adding that Taiwanese interests will be allowed up to a 55% stake in these ventures. Services, however, from these websites can be offered to all of mainland China, which presents enormous business opportunities.
As for cultural and creative industries, President Ma stated, when Taiwan and mainland China signed the ECFA three years ago, many expressed concerns about Taiwan's move to open its movie industry to mainland China. However, Taiwanese films screened in mainland China since then have generated box office receipts of NT$3 billion, which is 122 times the amount of box office receipts generated by mainland Chinese films screened here, he said. And now that the Cross-Strait Trade in Services Agreement has been signed, post-production and film finishing work for mainland China's 80-plus films each year can be carried out in Taiwan, he stated. This is a boon to over 100 companies here, and will spur expansion of Taiwan's post-production market, the president remarked.
President Ma further pointed out that the government, prior to the signing of the ECFA, has adopted a Program to Assist Industry Adjust to Trade Liberalization. This program provides assistance and services to industries, enterprises, and laborers impacted by trade liberalization so they can make the necessary adjustments, and also provides financial assistance to compensate for losses suffered as a result. The ultimate goal of this mechanism, he said, is to enhance the competitiveness of Taiwan's industries and support their transition.
The president reiterated that the ECFA has already presented quite a few opportunities to Taiwan's agricultural sector. Products on the early harvest list – such as saury, grouper, dancing doll orchids, and pineapple atemoyas – have seen huge growth in exports. He pointed out that when he took office, Taiwan ran an agricultural trade deficit of nearly US$300 million with mainland China. As of last year, the deficit had fallen to slightly over US$40 million, and Taiwan has now turned this around to a trade surplus, he said, so the benefits of the ECFA are clear.
Lastly, the president stressed that when Taiwan applied to join the World Trade Organization (WTO) over a decade ago, Taiwan's farmers were concerned they would be adversely affected. Since Taiwan joined the WTO in 2002, the number of people working in the agricultural sector has declined, but the value of agricultural output has increased, he stated. Agriculture has thus gone through a transition here, the president noted, which shows the unlimited potential and competitiveness of Taiwan's farming community. In light of changes in global economic and trade relations, President Ma also encouraged the financial sector to support companies and work together with the government "to help Taiwan do business and to raise Taiwan's competitiveness."