The impact of the 15-member Regional Comprehensive Economic Partnership (RCEP) trade agreement on nonmember Taiwan could be limited, according to Roy Chun Lee (??), senior deputy CEO of the Taiwan WTO & RTA Center at the Chung-Hua Institution for Economic Research.
The RCEP, which created the largest trade bloc in the world, went into effect in several member states Saturday.
Lee said that since Taiwan already enjoyed a tariff-free status for 70 percent of its exports to RCEP's members, the impact on Taiwanese exporters would likely be limited.
The RCEP is a free-trade agreement that was signed by the 10 Association of Southeast Asian Nations (ASEAN) members, as well as Australia, China, India, Japan, New Zealand, and South Korea on Nov. 15, 2020.
The agreement covers a population of more than 2.2 billion and 30 percent of world GDP.
The deal took effect in Australia, Brunei, Cambodia, China, Japan, Laos, New Zealand, Thailand, Singapore, and Vietnam Saturday and is scheduled to do the same in South Korea Feb. 1.
Indonesia, Malaysia, Myanmar, and the Philippines have not yet ratified the deal yet but Jakarta is thought to be likely to do so early in 2022.
The RCEP aims to reduce or eliminate customs duties imposed by each member state on originating goods by about 92 percent over 20 years.
In a statement released on Saturday, China's Ministry of Commerce said Beijing would fulfill its commitments to the RCEP and aimed to build the free trade bloc into a major platform for economic and trade cooperation in East Asia.
Lee said many Taiwanese exporters had relocated their investments in the Southeast Asian market, which is expected to help Taiwan assuage the impact of its exclusion from the RCEP.
As for individual sectors, Lee gave the flat panel industry as an example, saying the RCEP was expected to take about 10 years to trim tariffs among its member countries, and over that 10-year period timeframe, the industry would continue to make progress and diversify resulting in negligible difficulties for Taiwan.
According to a report recently released by the Ministry of Economic Affairs (MOEA), the government will continue to provide assistance to the machinery, petrochemical, steel, and textile industries to help support digital transformation and raise their competitive edge in the face of the RCEP.
However, the MOEA has also emphasized Taiwan's industries are unlikely to feel any short-term material impact resulting from the trade agreement.
Lee said that since ties between Taiwan and China were at a standstill, it was unlikely Taiwan would join the RCEP anytime soon.
He added that Taiwan should set its sights on joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Taiwan filed an application to enter the CPTPP just days after China submitted its application on Sept. 16.
Outside of China and Taiwan, Lee said South Korea and Ecuador had also sought CPTPP membership, and that Colombia and Thailand could file their applications later this year.
Taiwan is expected to have a better chance to join the trade bloc as the existing members do not have to choose between Taipei and Beijing, according to the scholar.
In addition, Lee said that opposition toward China had been escalating around the world, resulting in an increasing number of countries pursuing friendly ties with Taiwan, something which could see the opportunity to join the CPTPP grow.
Lee said Taiwan should have a better understanding of what the CPTPP member states expect from the trade agreement in a bid to secure admission into the trade bloc.
The CPTPP free trade deal was signed in March 2018 by Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam, and went into effect at the end of that year, following ratification by more than half of the 11 signatories.
Source: Focus Taiwan News Channel