Tsai urges China not to use ECFA to politically threaten Taiwan

Taipei, Jan. 1 (CNA) President Tsai Ing-wen (蔡英文) on Monday urged China not to use a commercial mechanism as a political means to threaten Taiwan, citing Beijing's recent suspension of preferential tariffs on 12 petrochemical products under the Economic Cooperation Framework Agreement (ECFA).

At a news conference held following her final New Year's Day address after two four-year terms which end in May, Tsai said Taiwan and China are both members of the World Trade Organization (WTO) so if any trade disputes arises, the two sides should resolve them through negotiations under the trade institutiton.

Beijing should not use any commercial means as a political tool to threaten Taiwan, Tsai said.

However, "Taiwan always welcomes orderly and healthy exchanges across the Taiwan Strait," Tsai added.

On Dec. 21, China's Customs Tariff Commission announced it was suspending preferential tariffs on 12 petrochemical products, including propylene and paraxylene, citing trade barriers imposed by Taiwan on similar products.

However, Taiwan's government has described the move as a "politically motivated" attempt to pressure the country ahead of the presidential election scheduled for Jan. 13.

When asked whether China's move to suspend preferential tariffs on the 12 petrochemical items will affect Taiwan, Tsai said Taiwanese industries have left behind the traditional path in which they used China as a spring board to enter the global market, adding that the size of trade under the ECFA, which was signed as early as 2010, has created limited economic benefits for Taiwan's economy in terms of the current local economic situation.

Many Taiwanese industries have turned to globalized production with China no longer a major manufacturing hub, Tsai said.

Many experts have said China no longer provides abundant cheap labor to foreign manufacturers, while trade tensions between the United States and China have turned many foreign investors away.

"Going global to diversify risks is the right way for Taiwan," Tsai said. "Taiwan will not go back to the old path of depending on China economically, in particular at a time when Beijing is facing its own economic uncertainties."

The decision by China to use ECFA as a political tool was anticipated by the Taiwan government and the government will do its best to help Taiwanese firms prepare themselves for such economic disruptions from China, Tsai said.

According to the Ministry of Economic Affairs (MOEA), Taiwanese petrochemical exporters selling the 12 products to China will now have to shoulder tariffs of 1-6.5 percent.

Taiwan's exports of the affected petrochemical products to China totaled about US$1.8 billion in the first 11 months of this year. This is just a small fraction of the country's total exports of US$392.56 billion during the same period, according to the MOEA.

While many exporters in the petrochemical industry have seen no immediate impact from China's actions, Yueh Chun-hao (岳俊豪), a section chief at the government-funded Industrial Technology Research Institute, expressed concern that Beijing could also suspend preferential tariffs for Taiwanese machine tools and auto parts, hitting small-and medium-sized enterprises.

In her New Year's Day speech, Tsai reiterated a call for the resumption of "healthy exchanges" with China, saying that during her eight years as president, Taiwan has gained international trust as a democratic partner for its "unprovocative and unyielding" approach in the face of Chinese aggression.

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