Saturday, December 26, 2009

Taiwan Sets Up ASEAN Studies Center

As Taiwan strives forth to sign cross-straits ECFA (Economic Cooperation Framework Agreement] with mainland China and as Taiwan tries to make contact with ASEAN to negotiate for a Free Trade Agreement (FTA), Chung-Hua Institution for Economic Research, the Taiwan government's think tank, launched its first ever Taiwan ASEAN Studies Center recently. Of note was that Taiwanese President Ma Ying-jeou personally attended the launch and gave the opening speech. The presence of President Ma at the launch has highlighted the importance of Southeast Asian countries to Taiwan.
In his address President Ma Ying-jeou has again said that Taiwan planned to sign the ECFA with mainland China and hoped that Taiwan could become one of the members of "ASEAN Ten-plus-Four" (ASEAN Ten plus China plus South Korea plus Japan plus Taiwan.)
However, Rodolfo C. Severino, a former ASEAN Secretary General, who also attended yesterday's launch of Taiwan ASEAN Studies Center, opined that if Taiwan had the intention to sign FTA with ASEAN, the possibility of success would not be too optimistic. To him this was because FTA was essentially a political document. In fact, the Taiwan ASEAN Studies Center was already in operation on 1 October 2009.

Focused Center for Studies of Southeast Asian Nations
According to our understanding, this Taiwan ASEAN Studies Center is a comparative more focused center for the studies of Southeast Asian nations. It is also the first ASEAN Studies Center sponsored by Taiwan's Ministry of Foreign Affairs. The new Center does carry with it certain political significance. Prior to the establishment of this Taiwan ASEAN Studies Center, all think tanks or research units associated with Southeast Asian countries or ASEAN were funded by Taiwan's Economic Development Council or the Ministry of Economic Affairs.
In this regard, the Taiwan ASEAN Studies Center would indeed assume the role to help Taiwan promote the signing of FTA with the ten ASEAN nations. When asked to comment, Associate Professor Lin Qin Ming of Tamkang University opined that although Chung-Hua Institution for Economic would expect this new Taiwan ASEAN Studies Center to play the role to facilitate the sealing of FTA between Taiwan and ASEAN, this government think tank would probably also expect the new Taiwan ASEAN Studies Center to do more. It would expect the new Taiwan ASEAN Studies Center to help facilitate diplomatic ties and to build stronger political ties with all the 10 ASEAN nations.
In his address at the official launch of the Taiwan ASEAN Studies Center, President Ma has emphasized the need for Taiwan to pay attention to the integration of countries in ASEAN as the bloc has become an increasingly important economic power in the region. Ma also said that through the Taiwan ASEAN Studies Center, the government think tank could establish a dialogue mechanism between Taiwan and ASEAN and that through such dialogue Taiwan and ASEAN could enhance bilateral and multilateral cooperation.

Economic Cooperation Framework Agreement
President Ma pointed out that the total Gross Domestic Product (GDP) of the Asia-Pacific countries accounted for more than half of the world total GNP. In term of trade volume, Asia Pacific region has accounted for half of total world trade volume. In term of population, the Asia Pacific region accounted for 40 percent of world population. In addition, the intra-regional trade in Asia has grown from 40 percent in the last century to the present 52 percent. In 2000 there were only three FTAs signed in Asia. However, in August this year the total FTAs signed in Asia were as high as 56. President Ma added that within the Asia-Pacific region, countries that have not signed any FTA with other countries were Taiwan and North Korea only. As such, he said Taiwan must strive hard to become part of the regional economic integration in the Asia-Pacific region. He also said that after Taiwan signed the Economic Cooperation Framework Agreement (ECFA) with mainland China, Taiwan could, through the EACE look forward to broader interactions with ASEAN members, as well as to increase Taiwan's participation in regional forums.
In fact, because of political and economic consideration, Taiwan has already begun its 'Look South" policy during the mid 1990's. During that period, the Taiwanese government encouraged Taiwan businesses to invest in Southeast Asian countries. Taiwan's national policy then was to "look south" to Southeast Asian nations in order to balance the "westward expansion" of trade to mainland China. However, most Chinese businesses still preferred to invest in mainland China. As of today, mainland China has already become Taiwan's largest export market. Taiwan's total export market to mainland China now is as high as 40 percent. However, the ASEAN 10 is still Taiwan's second largest export market. Taiwan's export value to the ten Southeast Asian countries combined has accounted for about 15 percent of Taiwan's export trade in 2008. In other words, mainland China and Southeast Asia are Taiwan's two main export platforms.

Trade by Regional Organizations
Beginning 1 January 2010, the ASEAN Ten Plus China (ASEAN plus One) FTA will become effective. By then Taiwan's goods will still have to pay higher tariffs as compared with countries within the region. In order to prevent Taiwan's export goods to mainland China and to ASEAN countries from losing competitive edge in prices, it is thus Ma Ying-jeou government's desire to seal the ECFA deal with mainland China and also to sign FTA with ASEAN nations to prevent Taiwan from being marginalized in trade by regional organizations.
According to the interpretation of the Ma Ying-jeou government, the way for Taiwan to move toward regionalization is to sign the ECFA trade deal with Beijing first in order to remove the political hindrance coming from mainland China.
However, when we talked to the former Secretary-General of ASEAN, Rodolfo C. Severino who attended the launching function of the Taiwan ASEAN Studies Center yesterday, Severino felt that the possibility for Taiwan to enter a FTA with ASEAN was not optimistic. At this movement Severino is also the head of the ASEAN Studies Center in the Institute of Southeast Asian Studies in Singapore.
Severino pointed out that the crucial factor was that by nature "FTA is essentially a political document. He said FTA involved trade tariff and trade tariff has to be established between governments. Moreover, the signing of FTA would also involve taking oath to maintain friendly bilateral ties and encourage mutual investment and bilateral trade interaction. FTA also included the significance to support FTA partner's integration into regional organizations.

Political and Economic Interest
When we asked Rodolfo Seveino to comment if the success rate of Taiwan to sign FTA with individual ASEAN country could be higher if the cross-straits ECFA were signed, or when the cross-straits ties between China and Taiwan have continued to improve, Severino said the difficulty faced Taiwan to do that would also not be an easy one. According to Severino, the reason was that all ASEAN nations support the "One China" policy. This was in addition to the reality that the relationship between mainland China and Taiwan, and the Taiwan's relationship with other trading partners were two separate issues. Severino also said that ASEAN countries still have to take into account their own national interests. To the majority of ASEAN members, China today is definitely more important than Taiwan in term of ASEAN countries' respective political and economic interest.
In response to Seveino's comments, Associate Professor Lin Qin Ming of the Institute of Asian Studies, Tamkang University, also agreed with Severino's assessment of Taiwan's FTA situation with ASEAN nations. Lin pointed out that if it were a decade ago, it would be much easier if Taiwan wanted to sign FTA with individual ASEAN nation. Lin said that the opportunities and chips for Taiwan to do so then would be relatively better because during that period China has yet to emerge as an influential power. Moreover, during that period, there were also more Taiwanese investments and businesses in Southeast Asian countries. More importantly, to Associate Professor Lin, the signing of bilateral FTA would depend on the motivation usually coming from private industries from industry.

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