March 17, 2014
Mac News Rlease No. 032
In order to secure opportunities for Taiwan's service industry to enter the Mainland market, advance the timetable for Taiwan's accession to the Trans-Pacific Partnership Agreement (TPP) and Regional Comprehensive Economic Partnership Agreement (RCEP), and promptly complete negotiations on the Cross-Strait Trade in Goods Agreement and Economic Cooperation Framework Agreement (ECFA) follow-up pacts, the Mainland Affairs Council (MAC) called out to all sectors and asked for their support in the early completion of relevant procedures for the Trade in Services Agreement, in hope that it may pull Taiwan's economy forward and help avoid potential negative repercussions for Taiwan.
The MAC indicated that failure to pass and implement the Trade in Services Agreement would have three major affects:
1.Lose opportunities for Taiwan's service industry to enter the Mainland market
The delayed passage of the Trade in Services Agreement has already cost Taiwanese companies the loss of many decisive opportunities to develop in the Mainland. For example, Taiwan originally preceded Hong Kong in enjoying market-opening treatment for 20 industry items. However, after August 29 of 2013, when Hong Kong and the Mainland signed the Supplement X to the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA X), only three items were left in which Taiwan still enjoyed an advantage over Hong Kong (the items include architectural and engineering services, technical testing and analysis services, and exhibition services). Moreover, many preferential treatment measures in the securities, banking and insurance sectors may only be implemented after the Trade in Services Agreement comes into effect. Under circumstances that Taiwan's main competitor Korea is now also actively negotiating free trade agreement with the Mainland, Taiwanese companies will face greater difficulties in the Mainland market once Korea catches up with Taiwan,.
2.Delay the pace of Taiwan's accession to the TPP and RCEP
Foreign trade is the lifeblood of Taiwan's economy. The rapidly developing Trans-Pacific Partnership Agreement (TPP) and Regional Comprehensive Economic Partnership Agreement (RCEP) in the Asia-Pacific region account for 35% and 57% of Taiwan's foreign trade, respectively. Once negotiations of these two agreements are completed, member states will be granted mutual preferential tariffs and treatment. Taiwan’s future economic development is bound to be seriously impacted if it were unable to participate in the agreements. The Trade in Services Agreement is a closely watched benchmark in the international community of Taiwan's commitment to trade liberalization. If the pact is not successfully implemented, related countries will question Taiwan's qualifications and determination to join the TPP and RCEP, which may result in economical marginalization for Taiwan.
3.Delay the progress of the Cross-Strait Trade in Goods Agreement and ECFA follow-up negotiations
The delay in enacting the Trade in Services Agreement has also created uncertainties over the timetables for enacting other cross-strait agreements. It not only impacts the Mainland's willingness to promote ECFA follow-up agreements on trade in goods and dispute settlement, but also increases the difficulty of cross-strait negotiations. These negative factors are all detrimental to the development of Taiwan's external trade.
The MAC calls on the people of Taiwan to face up to the fact that the Mainland is an important trading partner of Taiwan and to rationally treat the development of cross-strait economic and trade relations. The Cross-Strait Trade in Services Agreement has undergone 20 public hearings in accordance to a bipartisan resolution reached in the Legislative Yuan. The government also has, in accordance with the views of various parties, strengthened related safety management and guidance and relief support measures. Moreover, after repeated explanations by related government agencies, many industries have expressed support and are willing to cooperate with the government in seizing this opportunity for industrial transformation. The MAC stated that the executive branch has never been opposed to the Trade in Services Agreement undergoing congress review, it fully respects review procedures of the Legislative Yuan. Yet Taiwan is now at a major juncture in its economic development; the government hopes that all sectors will support the prompt completion of the relevant procedures for the Trade in Services Agreement to help forge a road ahead for Taiwan's economy.