Posted on 28 Aug 2014
After the upcoming China-Korea free trade agreement (FTA)
comes into effect, Taiwan will likely see its overall output value decline by
up to NT$650 billion (US$21.89 billion) within the next three to five years,
according to the Industrial Economics & Knowledge Center (IEK), a market
research unit under the Industrial Technology Research Institute, a Taiwanese
government-funded R&D institute.
The IEK warned that the chances that Taiwanese companies
with close business links to China will be severely affected by the Sino-Korean
FTA are growing due to the lack of significant progress by the Taiwanese
government in its negotiations with China on signing cross-strait goods and
service trade agreements.
In the absence of the said cross-strait agreements, the IEK
forecast that if the utilization rate of the Sino-Korean FTA by Korean
enterprises reaches 40%, 60% and 100%, total output value of Taiwan's
manufacturing industries will decline by 1.59, 2.55 and 3.85 percentage points,
respectively, representing huge losses of NT$260 billion (US$8.67 billion),
NT$420 billion (US$14 billion) and NT$650 billion.
The IEK noted that the chemical industry would be the
biggest victim among Taiwanese industries, predicting the sector's output value
to plunge by 4.63 percentage points five years after the FTA is formally
enacted. This would mean a a loss of NT$227.6 billion (US$7.58 billion), mostly
concentrated in the petrochemical and plastic and rubber products sectors.
The IEK also estimated that the output value of Taiwan's
steel, metal products, machinery and auto parts industries would dive by 4.23
percentage points, or NT$195.6 billion (US$6.52 billion) as a whole; and that
of electronics and information technology sector, including consumer
electronics not included under the ITA (information technology agreement)
umbrella, would drop by 3.35 percentage points, or NT$179.3 billion (US$5.97
billion)
To confront the challenges of the upcoming Sino-Korean FTA,
the IEK urged Taiwanese enterprises to sharpen their core competencies by
investing more in R&D and differentiating their products to enhance value.
The center also suggested that the government should step up negotiations on
cross-strait goods and service trade agreements. (SC)
