Vice Economics Minister Cho Shih-chao has said that a free trade agreement (FTA) between South Korea and Mainland China will be a major threat to Taiwan’s industries.
Cho’s remarks came Monday after South Korean President Park Geun-hye and Chinese President Xi Jinping announced that both sides have reached a consensus in negotiations on the FTA. Cho said that the government has instructed Taiwan’s representative office in South Korea to learn the details of the agreement. Meanwhile, he also said that Taiwan must complete its own trade negotiations with China within six months of the China-Korea FTA taking effect.
One official with the economics ministry said that the agreement could have a large impact on Taiwan’s economy because South Korean firms compete directly with Taiwanese firms in fields that include iron, machine tools, automobiles, panels, petrochemicals, textiles, and glass. Once the FTA takes effect, China will lift tariffs on South Korean industrial products, while 31% of competing Taiwanese products will remain subject to tariffs.
The government fears that the massive Chinese market will then prefer tariff-free Korean goods over their more expensive Taiwanese counterparts. One prediction estimates that 24.7% of Taiwan’s industrial products, worth a total of US$38.6 billion, could remain unsold due to the FTA.