By John Liu From The China Post

TAIPEI, Taiwan — Taiwan’s efforts to establish free trade agreements (FTA) with other countries have stalled, with the international community beginning to doubt Taiwan’s ability to ratify negotiated agreements following the public’s strong opposition to the cross-strait service trade pact, according to a U.S.-China Economic and Security Review Commission statement in a recent report to the U.S. Congress.

Besides Taiwan’s retreat from the Cross-Strait Trade in Services Agreement, Beijing’s opposition and efforts to restrict Taiwan’s participation in most global organizations have also limited Taiwan’s success in establishing FTAs with other countries, according to the report.

Under President Ma Ying-jeou, economic relations between Taiwan and mainland China have deepened, as cross-strait trade and investment have grown, and up to 21 bilateral agreements have been signed since 2008. Among them, the Economic Cooperation Framework Agreement (ECFA) and the Cross-Strait Trade in Services Agreement are the most important, said the committee.

Taiwan’s service industry is an important driver of the nation’s economy, making up 70 percent of GDP and providing jobs for about 60 percent of the workforce. The commission believes that the service sector would benefit from a deal opening it up to China’s banking and financial industries for both investment and import of services.

Legislature May Not Ratify New Agreements Any Time Soon

However, the government’s efforts to ink agreements with Beijing face increasing public and political opposition. The public is concerned that economic integration may affect the island’s political and economic autonomy, which has led to a delay in cross-strait negotiations, and furthermore, a push for increased oversight of cross-strait agreements by the Legislature, the report said.

Although Taiwan and mainland China re-started negotiations in September following the Sunflower Student Movement, the review commission expressed doubts about the Legislature’s ability to ratify any new agreements, until a formal oversight mechanism is first put into place.

The report also noted the relationship between Taipei and Washington has improved in the past year, with the resumption of the bilateral Trade and Investment Framework Agreement (TIFA) talks. However, disputes over pork imports, pharmaceutical intellectual property rights and private equity investment regulations have hampered negotiations between the U.S. and Taiwan.

Semiconductors as the Top Traded Products

The report points out the close economic ties across the strait. China is Taiwan’s largest trading partner, largest export market, and this year, for the first time, surpassed Japan to become Taiwan’s largest source of imports.

Taiwan, the world’s largest semiconductor manufacturer, has tapped into the Chinese market. Microchips are Taiwan’s main export product to — and most important import from — mainland China.

In addition, China is the leading recipient of Taiwan’s leading foreign direct investment (FDI), while China’s FDI in Taiwan has been growing substantially despite restrictions placed on it by the government.

For more on this story go to: http://www.chinapost.com.tw/taiwan/national/national-news/2014/11/22/422419/Taiwans-ability.htm

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