Analysis: Taiwan to lose out in FTA race

By SONIA KOLESNIKOV-JESSOP, UPI Business Correspondent  |  Oct. 14, 2003 at 11:49 AM
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SINGAPORE, Oct. 14 (UPI) -- While Asia is actively building a framework of Free Trade Agreements within and outside the region, Taiwan is running the risk of being left out of the important trade developments because of its insistence on negotiating as a political entity.

"By taking this position you are excluding yourself from Free Trade Agreements," Singapore Senior Minister Lee Kuan Yew warned late Monday said in response to a query by Taipei Mayor Ma Ying-jeou.

"I think at some time, your government will have to reconsider its position and decide, let's play economics as economics and let's play politics as politics," Lee added.

Ma had queried why the Association of Southeast Asian Nations (ASEAN) was not negotiating an FTA with Taiwan.

Last week in Bali, ASEAN leaders decided to push ahead with plans for Free Trade Agreements talks with Japan, China and India and also sign a milestone agreement, the Bali Concord II, which envisions a European-style economic community by 2020. This week, the business community threw its support behind Asia's integration efforts during the World Economic Forum's East Asia Economic Summit with a statement of support for the Bali Concord II, while urging ASEAN leaders to strive for more rapid economic integration than the 2020 deadline agreed on in Bali.

Kakutaro Kitashiro, chairman of a Japanese business group Keizai Doyukai noted "the growth of trade and investment in our region will improve lives in both developed and developing countries," while many other participants pointed that the collapse of the World Trade Organization's Cancun meeting had generated new enthusiasm for ASEAN's regionalization initiatives, which are likely to be discuss at the Asia Pacific Economic Cooperation summit in Bangkok (Oct. 20-21), which President George W. Bush will attend.

The importance of trade integration in Asia was reinforced by pessimistic comments by Singapore Minister of Trade and Industry George Yeo, who served as a facilitator for negotiations on agriculture in Doha. Yeo expressed for the first time doubts about the likelihood of the WTO's Doha Round returning on track, saying "the dynamics have changed. If we started at zero in Cancun, we are no in negative territory."

Although Yeo warned that bilateral and regional free trade agreements could lead to protectionist blocs "if we are not careful," he also said that the larger APEC forum was now even more important as a majority of WTO members could agree on a package of commitments that they would be willing to extend to all other countries.

During the World Economic Forum summit, many countries expressed their intention to push forward with FTAs. Sri Lanka's President Chandrika Bandaranaike Kumaratunga indicated that FTA negotiations between her country and Pakistan where still ongoing, while there are hopes Sri Lanka and Singapore will be able to start next year negotiating for a closer cooperation agreement. Jordan King Abdullah II Ibn Hussein also indicated that the on-going negotiations with Singapore where progressing well and a deal could be completed by next July.

But amid all this optimism, Taiwan appeared a lonely figure. Tapei Mayor Ma, widely considered as a favorite presidential candidate for the 2008 elections, told participants the country feared it could be marginalized if it doesn't participate in the regional integration programs.

"I think Taiwan can play a very important role in bridging ASEAN country and China.. and I hope Taiwan can join the regional economic integration after China, Japan and Korea by promoting trade liberalization and foreign direct investment," Ma said, pointing the increasing close economic ties between Taiwan and China.

ASEAN is currently negotiating with China an FTA with view of completing the talks by 2010. This would create the world's largest free trade area in term of population.

On Monday, Singapore Senior Minister Lee indicated that two years ago, President Chen Shui-bian had approached his government to discuss the possibility of an FTA, but negotiations got "bogged down" because Taiwan wanted to negotiate a deal as a political entity, not as an economic one. He said given Singapore's adherence to a 'one-China' policy, these negotiations were not possible.

But Lee also said there was "no reason" why Taipei could not have bilateral FTAs or multilateral agreements as an economic entity. He pointed that China regretted agreeing to Taiwan becoming a member of Asia Pacific Economic Cooperation forum and was still blocking its entry to the World Health Organization.

Lee argued that whether China and Taiwan should be seen as "one country, two systems" or something else was a "futile" question as China becomes more integrated with the rest of the world and continues to develop a new relationship with the United States. Instead, the island should make best of its economic opportunities now, especially as the U.S. still guards against China reunifying Taiwan by force.

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