In recent years, countries of the world have rapidly proceeded regional economic integration after the WTO Doha Round negotiation is failed, however, due to a particular political status internationally, Taiwan has been excluded from economic integration system in APAC region, in which Taiwan’s primary competitor – South Korea has signed 8 Free Trade Agreements (FTAs) as of Dec. 2010 while Taiwan, reported 5 FTAs with 5 countries in Central/South American and ECFA with China only, there is a necessity for Taiwan to speed up move to negotiate for ECFA signing to sustain its economic competitiveness while facing a challenge from economic integration worldwide.
The study has firstly proceeded a discussion on regional integration trend for FTA type in overall to understand whether ECFA is an international agreement and the differences with Closer Economic Partnership Agreement (CEPA), and to analyze the possible benefits, policy direction enabled by ECFA through examining the process and position of ECFA signing between China and Taiwan, with SWOT analysis introduced to forecast the possible strengths, opportunities, weaknesses and threats that Taiwan might have upon ECFA .
Moreover, a visit to Ministry of Foreign Affairs and Trade, Republic of Korea, Ministry of Knowledge Economy, KIEP, SERI, KREI and personnel of knowledge bank for FTA study by peer review has been proceeded through seminar or one-on-one interview, it on the one hand, observes the impact of ECFA on South Korea from the perspective of South Korea, and on the other hand, observes the viewpoints of South Korea on ECFA signing between China and Taiwan, and get to know the progress of FTA promotion in South Korea, FTA promoting strategies, policy change, and comments on FTA deeply.
To infer the ECFA signing between Taiwan and South Korea upon the outcomes of above-mentioned study and work experiences, to discuss and analyze the background of FTA promotion, to evaluate possible benefits of FTA signing between China and South Korea after ECFA between China and Taiwan is signed, and, to assume a scenario among Taiwan, China and South Korea upon a prerequisite of China’s obstruction, whether there is an intention between China and South Korea to deduce possible action plans, to cross-discuss China and South Korea’s position and the possible action plans to rehearse the status of ECFA signing between Taiwan and South Korea.
According to the outcomes derived from the scenario, it is found that South Korea’s attitude toward Taiwan’s position in FTA promotion has gradually changed due to the ECFA signing between China and Taiwan, to switch from passive attitude to an attitude with concern, and is in vague position for the time being; preparing for a possibility of FTA signing with joint effort afterwards. The study also discovered that even Taiwan signs FTA with South Korea, it contributed a 0.1% GDP to Taiwan while the real GDP of Taiwan and South Korea will be increased by 0.008% and 0.006%, respectively. The social welfare contour in Taiwan will be increased by USD 90m or so, while the social welfare contour in South Korea will be increased by USD 130m, reporting less significant benefits to both parties. There is no urgency for Taiwan to sign FTA with South Korea, however, accordingly to the opinions from people of knowledge bank in South Korea, Taiwan is not the first choice for FTA signing to South Korea, in which the study has summarized that the likely timing for South Korea to trigger FTA signing with Taiwan is after FTA between South Korea and China is signed. According to the paper, FTA signing between Taiwan and South Korea is not likely to happen within a short time, it is suggested that an utilization of advantages upon ECFA signing shall be reinforced and is the urgent matter to do for Taiwan, to grab the market before FTA between China and South Korea is settled, to reinforce coordination of external FTA signing and to negotiate with South Korea for FTA promotion.
Keywords: ECFA, FTA, regional integration