Saturday, January 30, 2010

Left out in the cold

With the China-Asean FTA Taiwan is in a bind. The goods it sells to China will be 5-15% more expensive now compared to the Asean members and could result in a significant decline in trade if no solution is found. To put it in perspective, Taiwan enjoys a $67 billion trade surplus with China and its exports to the Chinese market constitute 26% of their total. Let me repeat that. 26% of Taiwan's exports go to China.

What options does Taiwan have to counter the China-Asean FTA? Taiwanese companies could lower their prices accordingly, but that is something they probably don't want to do. The other option is for China and Taiwan to sign an FTA of their own (which could happen this year). Not only would this level the playing field for Taiwan in the Chinese market, but it could also open the door for quasi-FTAs with the Asean members themselves. Beijing has quite a few reasons for implementing an FTA with Taiwan, two major ones being that 1) Taiwanese companies employ lots of Chinese workers and 2) failure to establish one could be a PR disaster for China in Taiwan.

I've made the entire grand strategy available so you can flip through it. The assignment was to write it from the perspective of the government in power, with the expectation that it would be an internal document not seen by the public. I included bits of humor and I think you'll be able to spot them. Please be honest and not claim it as your own work. Use of the bibliography is fine obviously.

No comments:

Post a Comment