經經經 Minister of Economic Affairs Chii-Ming Yiin April 7, 2009 Possible Content for Advancing Possible Content for Advancing the Cross-Strait Economic the Cross-Strait Economic Cooperation Framework Agreement Cooperation Framework Agreement The 2009 First Joint Meeting of Heads of the Industrial Associations of 23 Counties and Cities in Taiwan
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Minister of Economic Affairs Chii-Ming Yiin April 7, 2009
The 2009 First Joint Meeting of Heads of the Industrial Associations of 23 Counties and Cities in Taiwan. Possible Content for Advancing the Cross-Strait Economic Cooperation Framework Agreement. Minister of Economic Affairs Chii-Ming Yiin April 7, 2009. Outline. - PowerPoint PPT Presentation
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經濟部
Minister of Economic Affairs Chii-Ming Yiin
April 7, 2009
Possible Content for Advancing the Possible Content for Advancing the Cross-Strait Economic Cooperation Cross-Strait Economic Cooperation
Framework Agreement Framework Agreement
The 2009 First Joint Meeting of Heads of the Industrial Associations of 23 Counties and Cities in Taiwan
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Outline
1. Overview of the Cross-Strait Economic Cooperation Framework Agreement (ECFA)
2. Impact of the ECFA
3. Vision for the ECFA
Appendix
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1. Overview of the Cross-Strait Economic Cooperation Framework Agreement
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1. Title
2. Objectives
3. Positions
4. Guiding Principles
5. Meaning of the Framework Agreement
6. Reasons for Choosing the Framework Agreement
7. Main Content
8. Measures for Vulnerable Industries
9. Steps toward Signing the Agreement
10. Negotiating Principles
11. Immediate Impact of Not Advancing the Agreement
12. Public Involvement and National Assembly Oversight
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The tentative title is “Cross-Strait Economic
Cooperation Framework Agreement” (or simply
“Cross-Strait Economic Agreement”).
The English title ECFA (Economic Cooperation
Framework Agreement) may be used
temporarily.
1. Title
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2. Objectives
1. Normalization of cross-strait economic and trade relations While both parties are members of the WTO, there are still many economi
c and trade restrictions.
2. Avoidance of being marginalized from regional economic integration schemes Currently, there are over 230 FTAs globally with mutual duty-free arrange
ments. If we do not participate, we will face the threat of being marginalized and losing our competitive edge in the important markets.
3. Internationalization of our economy, trade and investments By signing the Framework Agreement, the cross-strait economic and trad
e relations will be more predictable and benefit Taiwanese business to make worldwide arrangements and attract foreign business to Taiwan, thus enabling Taiwan to become a trading hub in the Asia-Pacific.
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(1) Cross-Strait Economy and Trade is Still Not Fully Normalized
Goods Taiwan restricts 2,194 agricultural and industrial
products from being imported from China.
Investments Taiwan is still not open to investments from China. Taiwan still restricts some investments in China.
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Southern Common Market
(MERCOSUR)
North American Free Trade Area( NAFTA)
Establishing Free Trade Area of the Americas (FTAA)
EU-Mexico Free Trade Area
European Union (EU) ASEAN-Japan
Comprehensive Economic Partnership Agreement
(set to lower tariffs on most goods to 0% in 2018)
ASEAN-South Korea Free Trade Area(set to lower tariffs on most goods to
0% in 2010)
Japan-SingaporeNew Age Economic
Partnership Agreement
ASEAN-India
ASEAN-Australia + New Zealand Free Trade Area
Signed Feb. 27, 2009Enter into force July 1, 2009
China-Hong Kong-MacaoCloser Economic
Partnership Arrangement (CEPA)ASEAN Free
Trade Area (AFTA)
US-South Korea FTA
CAFTA- DR
Delay of the WTO Doha Round has caused the spread of international bilateral FTAs and accelerated the deepening of regional economic integration in the world.
(2) The Present State of Development of Regional Economic Integration
EU-South Korea
ASEAN-China Free Trade Area (set to lower tariffs on most
goods to 0% in 2010)
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Cross-strait links will ease the bottleneck of participating in regional cooperation
Promote dynamic modifications in cross-strait economic and trade relations
Integration of business opportunities in global and mainland markets
• Bridging cross-strait projects, cross-strait industry exchanges
• Cross-strait direct flights• Open Taiwan’s production enterprises to
Chinese investments• Loosen the 40% ceiling on investments in
China and other industry restrictions
Shanghai
Silicon Valley
Taipei
Dual Golden
Triangles of High-
Tech Industries
Tokyo Shanghai
Taipei
• Promote the ECFA• Sign FTAs• ASEAN + N
(3) Promoting Internationalization of Taiwan’s Economy, Trade and Investments
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We do not adopt the model of Hong Kong and Macao, and the
ECFA is not an ordinary free trade agreement (FTA); it is an
economic cooperation agreement with a distinctive cross-strait
quality and one that does not violate the spirit of the World
Trade Organization (WTO).
It will cover matters pertaining to economic cooperation and
will not touch on unification, independence, and political
issues.
3. Positions
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1. Principle of reciprocity: There will be no mention of one country, two systems.
2. From simple to complex: Thread together a complete picture from one starting point by means of
a phased, step-by-step progression. Advance normalization and bilateral cooperation simultaneously.
3. A time for progress: Utilize a high level of reciprocity regarding urgent matters and building consensus to progress in an orderly way toward dealing with issues concerning sensitive industries.
4. The Early Harvest Program together with a period of adjustment can help to take care of short, medium and long term needs.
5. By advancing along a dual track of liberalizing items on one hand and keeping a reservation list on the other, flexibility in policy adjustment is maintained.
6. Establishment of risk management mechanisms: Strengthen the monitoring mechanism for imports from China, set up a cross-strait trade relief system, and build a notification mechanism for unsafe products.
4. Guiding Principles
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A comprehensive FTA cannot be achieved in one step. There will be more flexibility in dealing with it only by pre-determining the framework and goals and through future consultations on specific content.The “Early Harvest” provisions will meet the urgent needs of the project and provide early realization of favorable benefits.
Examples: ASEAN + China The ASEAN-China Comprehensive Economic Cooperation Agreement was signed
in Nov. 2002 (“Early Harvest”: HS Chapters 1-8 for agriculture and fishery products) and went into effect in Jan. 2004.
Signed a framework agreement for Agreement on Trade in Goods in Nov. 2004. Signed a framework agreement for Agreement on Trade in Services in Dec. 2006.
5. Meaning of the Framework Agreement
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1. Gradual liberalization of the framework content will help resolve the pressure from general FTAs for immediate and total liberalization.
2. Once the agreement is signed, it is expected to alleviate the problem of Taiwan’s marginalization.
3. An open agenda and clear timetable will improve predictability of our business environment and help attract foreign investment.
4. An “Early Harvest” approach in conjunction with an adjustment period will, on the one hand, meet our urgent needs and, on the other hand, take into account our short, medium and long term economic development needs.
5. It will provide time and flexibility to form a national consensus and adjust policies.
6. Reasons for Choosing the Framework Agreement
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Investment Trade in goods Trade in services Economic cooperation
tariff
non-tariff
Early Harvest Program Excluded and retained items and measures
TimetableLiberalization
Dispute settlement mechanism
(1) StructureMakes reference to the development of the “ASEAN-China Comprehensive Economic Cooperation Framework Agreement”
7. Main Content (1/4)
Sectors
Disputes
open
negotiable
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7. Main Content (2/4)
•(2) Scope
I. Agreement Title
II. Trade in Goods:
(i) Early Harvest Program: Both sides propose commodity tariff reduction
list and schedule for early harvest. (ii) Market Access: a. Agree to proceed with future negotiations on market access for trade in
goods and formulate a timetable for future negotiations.
b. Goods will be divided into general and sensitive, with the sensitive goods further differentiated into high level and low level in accordance with the reduction schedule.
c. Consider the question of normalization of cross-strait trade in goods and retaining items.
(iii) Others: Rules of Origin, trade relief measures, non-tariff measures (technical barriers to trade, SPS measures).
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(2) Scope (cont.)
III. Trade in Services:
(i) Agree to proceed with future negotiations on market access for trade in services and formulate a timetable for future negotiations.
(ii) Do not rule out trade in services as part of the Early Harvest Program.
IV. Investment:
(i) Gradually achieve liberalization of investment mechanisms through negotiations.
(ii) Strengthen cooperation to facilitate investments and improve investment regulations and transparency of laws and regulations.
(iii) Establish investment protection mechanisms.
7. Main Content (3/4)
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(2) Scope (cont.)
V. Other Sectors for Economic Cooperation: Intellectual property protection, dispute settlement mechanism, customs
cooperation, e-commerce, trade facilitation, and avoidance of double taxation.
VI. Administrative and Systemic Arrangement:
The Agreement’s entry into force; its implementation and management.
7. Main Content (4/4)
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• Not included in the Early Harvest Program
Adjustment period for liberalizing
Government Guidance Measures
At this stage, various relevant guidance measures will continue to apply for all types of industries.
and Parts14.92 13.59 11.42 7.04 4.31 504.70 5.40* 9,353.34 80,000
The amount of exports for the above 3 products totaled US$55.437 billion, accounting for 23.6% of exports.
Unit: US$million:%
Note: The ratio, 5.4%, is insignificant because Taiwan’s motor vehicles and parts mainly exported to North America in 2007. However, the potential market in Mainland China is great.
11. Immediate Impact of Not Advancing the Agreement (3/3)
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Before formal negotiation of the ECFA with Mainland
China, symposia and public hearings will be organized to
collect public opinions and build consensus.
After the negotiations finish, a draft of the agreement will
be sent to the Legislative Yuan for review, and it will go
into effect after the Legislative Yuan approves it.
12. Public Involvement and National Assembly Oversight
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2. The Impact of Signing the “Cross-Strait Economic Cooperation Framework Agreement”
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Detrimental Impact: The market positions of Taiwan and China’s products are separated, so the detrimental impact will not be very great.
Room for Adjustment: Regarding sensitive commodities, liberalization may be limited or the timeframe for liberalization may be extended so as to give industries room for adjustment.
Strengthening the Relief System: Utilizing anti-dumping and safeguard measures can prevent the short-term dumping of large quantities of Chinese products in Taiwan, thus reducing the impact on local industries.
Providing Counseling and Assistance: To help industries adjust and upgrade in the face of any detrimental impact, counseling and assistance will be provided.
The Impact of Signing the “Cross-Strait Economic Cooperation Framework Agreement”
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3. Vision for Cross-Strait Economic and Trade Cooperation
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Promote Taiwan in becoming a global center of innovation, an Asia-Pacific hub of economy and trade, and the headquarters for Taiwanese businesses
Establish a stable cross-strait economic and trade cooperation framework; open a favorable cross-strait interaction mechanism.
Improve the basis of promoting Taiwan’s opportunities to enter into bilateral FTAs with other countries and participate in regional economic and trade cooperation.
3. Vision for Cross-Strait Economic and Trade Cooperation
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Appendix
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Appendix 1: Current Status of East Asia Economic Integration---Country List(1/2)
(Updated: 2009.01.31) Country Current Conditions Japan Signed: Singapore, Malaysia, Philippines, Thailand, Mexico, Chile,
Indonesia, Brunei, ASEAN, Switzerland, Vietnam. In process: South Korea, Australia, India, GCC. Proposed: ASEAN+3, China + Japan + South Korea, Peru.
South Korea
Signed: United States, Chile, Singapore, EFTA, APTA, ASEAN. In process: Japan, Canada, Mexico, India, EU, GCC. Proposed: ASEAN+3, Mercosur, China + Japan + South Korea, China, GCC,
Peru, Australia, New Zealand. China Signed: Hong Kong(CEPA), Macau(CEPA), APTA, ASEAN, Pakistan,
Chile, New Zealand, Singapore. In process: Australia, Iceland, GCC, Norway, Costa Rica, Peru(2008.11.20
negotiation concluded), SACU. Proposed: India, South Korea, ASEAN+3.
Taiwan Signed: Panama, Guatemala, Nicaragua, Honduras, Salvador. In process: Dominica. Proposed: Japan, United States, Singapore, New Zealand, Philippines.
ASEAN Signed: AFTA(ASEAN FTA), ASEAN + China, ASEAN + South Korea, ASEAN + Japan
Framework Agreement Signed: ASEAN + India In process: ASEAN + CES (consultation concluded), ASEAN + EU。 Proposed: ASEAN+3, ASEAN + Canada、ASEAN + Japan, China, South
Korea, India, Australia, New Zealand(ASEAN+6).
Note: Bangkok Agreement was changed into Asia Pacific Trade Agreement (APTA) in 2005, including Bangladesh, India, South Korea, China, Laos, Sri Lanka, in total 6 countries.
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Appendix 1: Current Status of East Asia Economic
Integration---Country List(2/2)
Country Current Condition
Singapore Signed: ASEAN, New Zealand, Japan, EFTA, Australia, United States,
Jordan, India, Trans-Pacific SEP, South Korea, Panama, Peru,
China, GCC.
In process: Mexico, Canada, Pakistan.
Thailand Signed: ASEAN, Bahrain, Australia, New Zealand, Peru, Japan, India, China
(ASEAN + China), South Korea (ASEAN + South Korea).
In process: Papua New Guinea, United States, Chili, ASEAN + EU,
BIMSTEC (Bangladesh, India, Burma, Sri Lanka, Thailand,
Bhutan).
Proposed: Canada, EFTA.
Philippines Signed: ASEAN, Japan.
Proposed: United States, Taiwan, India, China, Australia, New Zealand.
Indonesia Signed: ASEAN, Japan.
Malaysia Signed: ASEAN, Japan, Pakistan.
In process: Australia, New Zealand, South Korea, Chile, India, United States.
Vietnam Signed: ASEAN, Japan.
Brunei Signed: ASEAN, Japan, Trans-Pacific SEP.
In process: United States, Pakistan.
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Appendix 2-1: Cases of Industries under Impact - Petrochemical
Rate
Goods
Rate Applied to Taiwan (Average Nominal Rate)
Rate Applied to ASEAN by China under ASEAN+1 Framework
(Average Nominal Rate) Taiwan’s Export to China in 2007
390810Polyamide-6,-11,-12,-6,6,-6,9,-6,10 Or -6,12
6.5 9.1 7.1 3.5 0637.75
(80.0)797.07
390210Polypropylene 6.5 9.7 7.6 5.3 0
371.14
(43.3)856.54
290723Bisphenol A, Diphenylolpropane And Its Salts
5.5 5.5 5.0 1.1 0303.89
(58.9)515.76
Unit: US$ million, %
Sources: Customs Tariff Schedules; Taiwan’s Customs Statistics.Note 1: China’s Customs Tariff Schedules from 2005 to 2009 are different, to a certain extent, from Tariff Reduction Co
mmitment in Agreement on Trade in Goods of ASEAN+ChinaNote 2: Forecast based on Tariff Reduction Commitment in Agreement on Trade in Goods of ASEAN+China
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Rate
Goods
Rate Applied to Taiwan (Average Nominal Rate)
Rate Applied to ASEAN by China under ASEAN+1 Framework (Average
Nominal Rate) Taiwan’s Export to China in 2007
(Mainland China / Global,
%)
Taiwan’s Global
Export in 20072009 2005 2007 20091 20102
845710Machining Centers For Working Metal
9.7 9.7 5 1.9 0221.44
(19.5)1,134.09
846210Forging/Die-Stamp Mach Press and Hammers For Work Met
10.9 10.9 6.5 4.2 0155.80
(64.3)242.37
841490Air/Gas Pump, Compressor And Fan Etc Parts
8.8 8.8 5.8 2.3 0111.14
(46.0)241.80
848340Gears; Ball Or Roller Screws; Gear Boxes, Etc
8 8 5.9 2.1 075.45
(29.5)256.13
843999Pts For Machy Mkg Or Finishing Paper Or Paperboard
6 6 5 1.2 064.34
(73.7)87.31
Appendix 2-2: Cases of Industries under Impact - Machinery
Sources: Customs Tariff Schedules; Taiwan’s Customs Statistics.Note 1: China’s Customs Tariff Schedules from 2005 to 2009 are different, to a certain extent, from Tariff Reduction Co
mmitment in Agreement on Trade in Goods of ASEAN+ChinaNote 2: Forecast based on Tariff Reduction Commitment in Agreement on Trade in Goods of ASEAN+China
Unit: US$ million, %
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Duration Total Industrial Goods
Agricultural Goods
Up to 2000.05.20
5,689 5,210 479
Up to 2008.05.20
8,723 7,310 1,413
Appendix 3-1: Accumulated Items Allowed to Import from China
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Appendix 3-2: Accumulated China-bound Investment
Duration Investment Amount
Investment Cases
Up to 2000.05 15.30 22,390
Up to 2008.05 68.97 36,850
Unit: US$ billion
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Appendix 3-3: Trade surplus
YearTrade Surplus
from China
Trade Surplus
from Hong Kong
Trade Surplus from China + Hong
Kong
Total Trade Surplus by
Taiwan
2000 -1.84 30.38 28.54 11.22
2008 35.47 31.20 66.67 14.84
Unit: US$ billion
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Appendix 4-1: Industries and Employment of Taiwan’s Major Exports Still under Non-zero Tariff by China in 2007
Rate Applied to ASEAN by China under ASEAN+1 Framework
(Average Nominal Rate) Taiwan’s Export to China in 2007
(Mainland China / Global, %)
Taiwan’s Global
Export in 20072009 2005 2007 20091 20102
870899Parts And Accessories Of Motor Vehicles
14.1 15.0 11.4 6.2 0174.27
(10.2)1,705.15
871499Parts And Accessories Of Bicycles Etc
12.0 12.0 10.0 6.4 064.47
(8.9)721.29
870829Pts & Access Of Bodies Of Motor Vehicles
10.0 13.5 8.8 6.3 3.013.99
(3.7)382.02
870870Road Wheels & Pts & Accessories For Motor Vehicles
8.9 10.2 7.7 5.1 012.41
(3.2)383.43
Appendix 4-2: Cases of Industries under Impact –Vehicles Parts and Assembly
Sources: Customs Tariff Schedules; Taiwan’s Customs Statistics.Note 1: China’s Customs Tariff Schedules from 2005 to 2009 are different, to a certain extent, from Tariff Reduction Commitm
ent in Agreement on Trade in Goods of ASEAN+ChinaNote 2: Forecast based on Tariff Reduction Commitment in Agreement on Trade in Goods of ASEAN+China
Unit: US$ million, %
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Appendix 4-3: Industries and Employment of Taiwan’s Major Exports Still under Non-zero Tariff by China in 2008