FTA to be Inked by China and S. Korea May Damage over US$60B. in Taiwan's Exports to the Mainland

Taipei, May 9, 2012 (CENS)--Over US$60 billion of Taiwan's exports to China may be damaged, accounting for 48.83% of the island's shipments to the mainland, if China signs a free trade agreement (FTA) with South Korea, according to an investigation report done by Chung-Hua Institution for Economic Research (CHIER), a government-backed economic think tank here.

China and S. Korea have recently kicked off FTA talk, hoping to ink FTA in two years. If both sides sign the FTA, Taiwan will surely be impacted in its exports to China as the competitiveness of its industries, particularly optics, LCD panel, and precision devices, will become weaker than that of S. Korea's.

A study done by National Policy Foundation, a non-profit institution in Taiwan helping the government improve public policies and decision-making, found that S. Korea now enjoys higher market shares than Taiwan in China for such products as cameras & optical items, LCD panels, plastics & related products, organic chemicals, machines & related parts, steel & iron, etc.

Among the said items, LCD panels play an important role in both Taiwan's and S. Korea's exports to China. Last year Taiwan's shipments of LCD panels to China reached US$14.179 billion and S. Korea's corresponding figure stood at US$19.788 billion. If S. Korea inks FTA with China, then Taiwan is likely to be replaced by S. Korea in China's LCD panel import market.

It is understood that Taiwan is trying to speed up further talks on ECFA (economic cooperation framework agreement), which was signed by Taiwan and China on June 29, 2010, and hopes to complete all the ECFA talks in two years. It is believed that the preferential duties offered by ECFA would help Taiwan maintain strength in China's import market.