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ASEAN and Taiwan

Updated On: Mar 30, 2009

With ASEAN Plus One (China) and ASEAN Plus Three (China, Japan and South Korea) coming into effect 2010 and in 2015 respectively, highly competitive Japanese and South Korean products such as semiconductors, liquid-crystal displays, petrochemicals and machinery will be given tax-exempt access to the ASEAN market.

These products make up 15 percent of Taiwan’s exports nearly 20 percent of the nation’s production value and 15 percent of the nation’s GDP.

They will be subject to a tax rate of approximately 6 percent, which happens to equal the net profit margin of the nation’s industries.

Any decline in the competitiveness of these products comes at a bad time against the context of a global financial crisis and rising unemployment in Taiwan.

Taiwanese companies may choose to move to a location that allows them to escape tariffs.

To comply with regulations for a certificate of origin, it is likely that more Taiwanese companies will move their factories to China.

Some Taiwanese analysts argue that an economic cooperation framework agreement (ECFA) is aimed at promoting economic and trade liberalization across the Taiwan Strait rather than between Taiwan and ASEAN or between Taiwan and Japan or South Korea.

One alternative pointed out by observers is developing new and innovative industries by value-adding and upgrading the island’s infrastructure to cope with the changes.

Others suggest that Taiwan can transform and provide these industries with more advanced raw materials and technological licensing.

Sources:

Lian, Ke-shaw, "Framework doesn’t help Taiwan face ASEAN deal" dated 24 March 2009 in the Taipei Times website [downloaded on 27 March 2009], available at http://www.taipeitimes.com/News/editorials/archives/2009/03/24/200343925...

Yeh, Joseph, "Taiwan on road to joining ASEAN: Philippines" dated 27 March 2009 in the eTaiwannews website [downloaded on 27 March 2009], available athttp://www.etaiwannews.com/etn/news_content.php?id=903930&lang=eng_news







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