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Taiwan urged to reform economy amid dispute over trade pact

2013/09/21 14:22:39

Taipei, Sept. 21 (CNA) Taiwan was urged Saturday to speed up the pace of its economic reforms by amending laws to raise its global competitiveness, a move which is expected to assuage the impact of a failure by the Legislative Yuan to pass a service trade pact with China.

Lee Chun, deputy director of the Taiwan WTO Center under the Chung-Hua Institution for Economic Research, said Taiwan should revise it's existing laws to help domestic enterprises grow at a time that the cross strait service trade agreement remains pending in parliament.

The service trade agreement, signed in June between Taiwan and China, seeks to open up the service sectors on each side to the other. The agreement is considered the most significant bilateral economic accord since the two sides signed the landmark Economic Cooperation Framework Agreement (ECFA) in 2010.

But while the government has said the agreement will boost economic exchanges between Taiwan and China and eventually lift the local economy, strong resistance from opposition parties has prevented the legislature from passing the pact.

Lee cited the financial sector as an example, saying the government should strengthen transparency in financial supervision through regulatory adjustments so that local financial institutions will benefit from the change and improve their competitiveness.

Lee said a move to change the law to harmonize the local legal environment is expected to benefit Taiwan's enterprises through internal adjustments instead of external factors, such as a bilateral trade agreement. He added that amending laws is a good way for the country to modernize and boost its economy's efficiency.

Lee added that although the service trade pact with China is stuck in the Legislative Yuan, Taiwan can still prop up its global competitiveness on its own.

However, Lee admitted that if the service trade agreement remains pending, Taiwan will lag behind its major rivals, in particular South Korea, which has signed free trade agreements with 47 countries in the world.

Seoul's FTAs have encouraged foreign investors to move their funds into South Korea, Lee said, adding foreign investments in South Korea have been two to three times larger than foreign funds entering Taiwan.

Lee said the FTAs signed by Seoul will help South Korean exporters to enjoy zero tariffs in the U.S. market in one and half years and in the European Union in two years.

But Taiwan's exporters still have to shoulder 2.5 percent to 10 percent tariffs in U.S. and EU markets, which account for about 40 percent of Taiwan's and South Korea's total exports, Lee added.

Lee said there are concerns that the stiff opposition against the cross strait service trade agreement could hamper Taiwan's goal of signing another pact on trade in goods with China by the end of this year.

(By Yang Shu-min and Frances Huang)