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Taiwan should learn from South Korea’s TPP strategy

Want China Times | 2014-01-19

Taiwan should learn from South Korea’s TPP strategy

Wu Fu-cheng

Taiwan’s president, Ma Ying-jeou, has recently turned aggressive in seeking to join the Trans-Pacific Partnership (TPP) talks, demanding related government agencies propose concrete policy by July this year, rather than the previous pledge to join the TPP within eight years. National Development Council minister Kuan Chung-ming meanwhile sounded an alert that if Taiwan cannot join the next TPP talks, this will accelerate the country being absorbed into mainland China’s economic circle.

South Korea’s president, Park Geun-hye, said at the same time when joining the TPP talks that her government still placed a strong emphasis on its FTA talk with China, hoping to make some progress this year. Park’s strategy should be able to provide some positive implications for Taiwan’s government.

The US-led TPP and Beijing-orchestrated Regional Comprehensive Economic Partnership (RCEP) are building new orders in Asia-Pacific trade, but both have excluded Taiwan. A byword for "regional economic orphan," TPP + RCEP = EBT(Everyone But Taiwan), has gradually emerged, especially as Japan joined the TPP talks from last year, South Korea has vowed to join the talks and Taiwan will face a severe blow to its exports if it cannot make headway this year.

The RCEP talks are expected to be completed by 2015, and whether Taiwan can join in remains doubtful since the talks are orchestrated by Beijing. Ma is therefore laying greater stress on the TPP, which does not include China.

From the point of view of pragmatism, when Taiwan joined the Asia-Pacific Economic Cooperation (APEC) forum and the World Trade Organization, the mainland factor was present back then. Now, with the regional economic integration drives it is impossible to duck the mainland factor and the controversy it brings.

If Taiwan really succeeds in joining the TPP, trade and investment between Taiwan and any TPP member will expand, weakening cross-strait economic and trade relations.

Park’s TPP strategy has two implications for Taiwan. From the political side, South Korea has already signed the FTA with the US, but it has adopted a cautious attitude in joining the TPP because it’s clear that the US has an agenda to counterbalance China’s growing influence through the pact. Later, when Beijing began to expres an interest in the TPP, Seoul then expressed its plan to join the TPP talks and reached an understanding with Beijing.

From the economic point, because China is transforming its growth model from relying on investment to domestic consumption, South Korea has transformed itself from a "made in China" model to a "made for China" model, from which it has already seen substantial benefits.

In the first 11 months of last year, trade between South Korea and China grew 7.4% from a year earlier to US$250 billion, and is expected to exceed US$300 billion in 2015, making South Korea the mainland’s second-biggest trading partner.

However, the Korean won has appreciated against the Japanese yen to a nearly five-year high, hurting exports severely. The country therefore hopes to expand its FTA networks and create more export opportunities by joining the TPP.

Shrewdly, the country has adopted a balanced strategy in the TPP and the Korea-China FTA. If Taiwan can follow South Korea in adopting a balanced strategy in dealing with the US and China while seeking to join the TPP talks, it also emphasizes that the cross-strait Economic Cooperation Framework Agreement (ECFA) is its top priority in pushing for economic talks with foreign countries — a strategy, I believe, can appropriately ease Beijing’s worries.

(Wu is deputy director of the Department of International Affairs of the Taiwan Institute of Economic Research.)

 source: Want China TImes