Photo courtesy of the ASEAN Secretariat

Taipei, Nov. 5 (CNA) Taiwan's Ministry of Economic Affairs (MOEA) offered a measured response Tuesday to the announcement of a major regional free trade agreement that was reached a day earlier at a summit of the Association of Southeast Asian Nations (ASEAN) in Bangkok.

According to the announcement, the Regional Comprehensive Economic Partnership (RCEP) will establish a free trade area between the 10 ASEAN nations and five regional partners, including China, Japan, South Korea, Australia and New Zealand.

India, which has been involved in the seven-year negotiation process, opted out of the final agreement, which is expected to be signed next year.

Minister of Economic Affairs Shen Jong-chin (沈榮津) said Tuesday that 70 percent of trade between Taiwan and RCEP countries are already tariff-free, and that other effects of the agreement could be mitigated by industrial transformation.

As an example, Shen said that Taiwan's high-tech products are already highly competitive, but noted that traditional industries will have to work to enhance their services in the face of regional economic integration.

The government will be there to help these industries transition, Shen added.

In an interview with CNA, Taiwan Institute of Economic Research Deputy Director Darson Chiu (邱達生) said industries including textiles, petrochemicals and automotive components could be among those affected.

The impact of the RCEP will be felt slowly over the long term, likely pushing traditional industries to move investments to areas such as high-tech, which are less affected by tariffs, Chiu said.

Roy Chun Lee (李淳), deputy director of the Chung-Hua Institution for Economic Research's Taiwan WTO & RTA Center, largely echoed the MOE's moderate response, saying that the RCEP is a continuation of a trend that Taiwanese industry has been dealing with for more than a decade, following the establishment of ASEAN.

However, Lee cautioned that if industries such as machine tools and steel rebar face tariffs on exports to ASEAN markets, they will feel pressure to move their operations overseas.

Lee also sought to frame the challenge to Taiwan's economy in broader terms.

As countries in the region deal with economic fallout from the ongoing trade war between China and the United States, Taiwan lacks an effective mechanism to reduce the potential impacts and to a certain extent, this will affect the local economy, he said.

(By Wu Po-wei, Liao Yu-yang and Matthew Mazzetta)Enditem/J