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The 10 ASEAN countries include 10 ASEAN countries (Thailand, Malaysia, Singapore, Indonesia, the Philippines, Brunei, Vietnam, Laos, Myanmar, Cambodia) plus China, Japan, South Korea, New Zealand, Australia, etc. The 15 countries in Asia and the Pacific formally signed the Regional Comprehensive Economic Partnership Agreement (RCEP) on November 15. After the RCEP was signed, there were many internal concerns that Taiwan’s exports would be affected by the agreement. The signing of a trade agreement will inevitably widen the difference in tariffs between member states and non-member states. However, if we conclude that the economies of non-member states will be severely adversely affected, it is inevitable that they are either too unreasonable or have little understanding of the economic situation in their own countries.
Economic performance and trade agreements are not positively correlated
In regards to the current economic situation of Taiwan, according to the announcement of the General Accounting Office on October 30, the rate of economic growth of Taiwan in the third quarter was estimated at 3.33%, while South Korea and Singapore they decreased by 1.3% and 7% respectively. South Korea and Singapore are the control groups most often compared to Taiwan’s economic openness when talking about openness in the past. At the same time, the two countries have close contacts with China. However, in the US-China trade conflict and Wuhan pneumonia (COVID-19) under the influence of the epidemic, the economic recession is much more severe than that of Taiwan, and the deeper connection with China may be one of the reasons why the recession is worse than Taiwan’s. Therefore, after the signing of the RCEP, it is not clear whether Taiwan’s participation equates with Taiwan’s economic recession.
The economic effect of RCEP has been reduced along with China’s economic recession
Since the beginning of the RCEP negotiations in 2012, China’s boost in economic growth has been one of the reasons why the RCEP has attracted global attention. Former US President Obama also launched the Trans-Pacific Strategic Economic Partnership (TPP) Agreement due to concerns about China’s increased influence. However, after Trump came to power, the United States adopted high tariffs and technology control policies against China, as well as the impact of the Wuhan pneumonia epidemic in China. China’s economic recession is accelerating, and the fact that China’s economic growth and technology must be self-sufficient can also be seen in the 14th Five-Year Plan. need. In other words, when China’s economic growth is slowing, the economic impact of the RCEP in 2020 will inevitably be less than in 2012. However, China’s economy has declined and the concentration of political power has steadily increased, which it is in no way beneficial to economic and trade agreements.
Taiwanese entrepreneurs return to Taiwan to dispel RCEP myths
Since the US-China trade conflict, the return of Taiwanese businessmen has become a driving force for private investment in Taiwan. Among the manufacturers who returned to Taiwan to invest, their products are not only high-tech products, but also include bicycles or machine tools. When these manufacturers are willing to return to Taiwan to invest, they can definitely expect the RCEP to be signed soon, and they will understand that the signing will affect non-member countries. For Taiwan, tariffs on exports to RCEP member countries will increase, but these manufacturers still decide to return to Taiwan to invest. This is because the level of the tariffs will certainly affect the competitiveness of the products, but a stable investment environment and a strong medical environment will be the key factors to keep the factory running stable. Therefore, manufacturers still choose to invest in Taiwan. In other words, the impact of RCEP is not in the imagination.
The impact of fees cannot be generalized
Also, lower tariffs can make it easier for Taiwanese products to be exported to foreign markets, but lower tariffs will also make it easier for foreign manufacturers to export products to Taiwan. However, most people are concerned about the impact of the RCEP on Taiwan and only discuss the decline in China’s export competitiveness, and do not worry about the latter. Comments on the RCEP that are unfavorable for Taiwan they will easily fall into a biased argument. For most RCEP member states, Southeast Asian countries and Chinese products are mostly low-priced. When these low-priced products can enter Taiwan with lower or no tariffs, they will inevitably have a great impact on Taiwan’s domestic demand market and cause unemployment. In other words, it’s not that not joining RCEP leads to unemployment, but joining RCEP will have a huge impact on the Taiwanese job market.
Finally, in recent years, Taiwan has continued to diversify its trading partners to reduce its economic dependence on a single country. This policy effect also reflects that the economic performance of Taiwan is very different from that of South Korea and Singapore. Right now, if Taiwan participates in a China-dominated trade deal again, it will only allow Taiwan to revert to the old path of relying on one country for its economy, which is definitely not a good thing for Taiwan. Wuhan pneumonia continues to cause an economic recession in several countries, and US policy toward China will not change significantly. The negative impact of the RCEP on Taiwan is too overstated.
(This article is reprinted with permission from China Central Radio; the source of the first image: Shutterstock)
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