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Page 58

B Y E L I T U N G ( W ’ 13)

TAIWAN AND CHINA:

ALL EGGS IN ONE BASKET? W ise investors know that placing all

your

money

on

intellectual property protection. Controversy

stocks

has centered on the fi rst condition, since

of one company is a risky

tariff s in major sectors must be eliminated

strategy. Investors have to diversify their

within

investments in order to safeguard their

signing. President Ma believes that Taiwan

earnings

strikes.

is desperately in need of such an economic

Taiwan, under President Ma Ying-jeou,

agreement with China, as he fears that Taiwan

has taken steps in the opposite direction,

will become more and more “marginalized”

increasing its reliance on China to solve

in the global economy. His fear stems from

the nation’s problems. The most recent

China signing free trade agreements such as

example of this is Taiwan’s signing of

the ASEAN+1, with the member countries of

the

Framework

the Association of Southeast Asian Nations

Taiwan’s pavilion in the Expo 2010 in

Agreement (ECFA) on June 29, 2010 with

and the ASEAN+3 (with South Korea and

Shanghai, China.

China seeking to foster better cross-strait

Japan), both of which Taiwan is not a member

investment

was

of. Hence, President Ma warns that failing

implemented in September, Taiwan saw an

to sign ECFA will be detrimental to Taiwan’s

infl ow of USD 3 billion of new investments,

economic competitiveness.

58

111210 hq.indd 58

when

Economic

fi nancial

crisis

Cooperation

relations.

After

ECFA

10

years

from

the

agreement’s

a semi-annual growth rate of 13.1%, one of

This economic agreement opens up

the highest in the world, and an increase

bilateral trading markets for both nations.

of 285,000 new job opportunities. But

It states that, under the “early harvest”

this seemingly easy money does not come

program, tariff s on 539 Taiwanese goods

without a price; Taiwan may fi nd itself

(estimated at USD 13.84 billion annually) and

giving up a lot more by continuing to

267 Chinese products (USD 2.86 billion) will

depend on China to protect its economy.

be reduced to zero in three phases within

What is ECFA? The majority of Taiwanese

three years of Jan. 1, 2011. China will also open

citizens still cannot give a definitive answer

markets in 11 service sectors such as banking,

to that question, partially due to the lack

securities, insurance, and healthcare, while

of transparency from the Ma government

Taiwan will offer wider access in seven areas,

to disclose the details of the agreement to

including banking and movies. President Ma

the general public. The first public outline

believes that signing the ECFA with China is

of

a

the fi rst step for Taiwan in pursuing free trade

televised debate on April 25, 2010 between

agreements with other countries such as the

President Ma and the opposition Democratic

US, Japan or Europe, which have previously

Progressive Party (DPP) Chairwoman, Tsai

fl oundered due to negative pressure from

Ing-wen. Ma stated that the ECFA has three

China. Yet China has not explicitly guaranteed

general functions: tariff reduction, protection

Taiwan the right to expand trade with other

of cross-strait investments, and increased

countries, and if this agreement represents

the

agreement

I N T E R N AT I O N A L B U S I N E S S R E V I E W

was

given

during

FA L L 2 0 1 0

11/27/2010 3:13:22 PM

Profile for Daniel Hellwig

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

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