80,000 Taiwanese to lose jobs due to China trade pact



http://www.bt.com.bn/en/business-asia/2009...hina-trade-pact


TAIPEI
Saturday, October 17, 2009

A proposed trade pact between Taiwan and China will see up to 80,000 Taiwanese lose their jobs or need additional training to stay in work, the government yesterday said.

"We aim to alleviate the impact through negotiations," a spokesman at the Council of Labour Affairs said, asking not to be named.

"We will try our best to help the unemployed and we will try to provide more subsidies to them."

The 80,000 estimate, which the government says is a worst-case scenario, comes as China-friendly President Ma Ying-jeou strives to conclude the trade agreement with the mainland.

Relations between the island and China have warmed considerably since Ma came to power last year, with the trade agreement the latest in a series of moves to bring the traditional rivals closer together.

Despite the job losses, Ma's administration has repeatedly argued the trade agreement will boost the flow of goods and personnel between the two sides, raising annual economic growth by more than one percentage point.

The 80,000 are concentrated in low-tech industries such as towel, footwear and underwear manufacturing, which are especially vulnerable to the planned trade Economic Cooperation Framework Agreement.

"The government will provide all means necessary to help the affected industries restructure," the Council of Labour Affairs spokesman said.

The ministry of economics earlier said it would assign about 100 million Taiwan dollars (US$3.09 million) to support that restructuring.

Taiwan and China reportedly will hold informal talks next week in preparation of the trade pact. It will be the fourth such meeting and will aim for a timetable for formal negotiations.

10/22/2009

Gov't: ECFA not a zero-sum game


http://english.rti.org.tw/Content/GetSingl...ContentID=88886


The government says its plan to sign an Economic Cooperation Framework Agreement (ECFA) with China is not a zero-sum game.

The director of the Board of Foreign Trade Huang Chih-peng said Thursday that the pact could actually bring "new benefits" to Taiwan.

"There are benefits created by the ECFA. It's a bit like a trade transfer. Taiwan could have more exports if China lowers its tariffs. This is not a zero-sum game or how many benefits that [China or Taiwan] gets. There are benefits created by [both sides]," said Huang.

Huang also gave the example of the standard international practice of signing a Free Trade Agreement. He said as long as an evaluation report shows that the mutual benefits brought by such an agreement are greater than the negative impact, the two countries involved will go ahead with their plans.

The Council of Labor Affairs said signing the pact would create more than 100,000 job opportunities in Taiwan. But a labor union said Thursday the pact would only create low-paying jobs that do not require many skills and would result in more professionals leaving Taiwan to work in China.

Cross-strait economic pact expected to provide 260,000 local jobs


http://www.chinapost.com.tw/taiwan/china-t...it-economic.htm


TAIPEI, Taiwan -- Taiwan is expected to see a net increase of 260,000 jobs after the establishment of an economic cooperation framework agreement (ECFA) with China, Premier Wu Den-yih said Friday.

Asked about the issue during an interpellation session in the Legislative Yuan, Wu said the agreement will bring the greatest benefits to the petrochemical, machinery and textile industries, creating a total of 350,000 jobs in these sectors.

This will contribute to a net increase of 260,000 jobs after deducting those that are expected to be lost in the porcelain tile, home electrical appliance and towel industries, which are likely to be threatened by the liberalization of cross-strait trade, Wu said.

In anticipation of the possible negative impact from the agreement, the Ministry of Economic Affairs has earmarked a NT$35 billion (US$1.08 billion) fund that will used to provide assistance to more than 3,700 vulnerable businesses, Wu said.

He said the Council of Labor Affairs (CLA) will also put aside funds to finance increased unemployment benefits for workers who lose their jobs as a result of the trade liberalization.

Under the CLA's plan, these workers will be eligible to receive unemployment payment for up to nine months -- three months longer than average workers, while older workers and those with physical or mental disabilities will get paid for up to one year, the premier said.

He promised that the government will not further open the Taiwanese market to Chinese agricultural products and will not allow the import of Chinese laborers.

Wu stressed that the proposed ECFA will be signed under the World Trade Organization framework to deal with the special situation between the two sides of the Taiwan Strait and will differ from a free trade agreement, which requires full reciprocity and liberalization, he said.

In promoting the signing of the ECFA, he continued, the government will always prioritize the interests of Taiwan and the well-being of its people and will seek to maximize its benefits and minimize its disadvantages.

Clearly critical industries up there with military tech, infotech and clean energy.

The ECFA is based on unrealistic hypotheses

By 王塗發


http://www.taipeitimes.com/News/editorials...0/24/2003456748

Saturday, Oct 24, 2009, Page 8

Since taking office, Premier Wu Den-yih (吳敦義) has claimed to stand for grassroots economics. We want to ask Wu this: If an economic cooperation framework agreement (ECFA) with China were to cause more harm to the grassroots economy, would he still advocate signing one?

At a press conference naming the new Cabinet last month, Wu said the signing of any cross-strait agreement should observe the principles of national need, public support and legislative oversight.

Now that the government has refused to hold a referendum on an ECFA, how can it claim to have obtained public support or to have reached a broad public consensus on the matter?

Rushing to sign an economic pact with China, the administration of President Ma Ying-jeou (馬英九) has aggressively promoted the necessity of an ECFA with Beijing and cited an assessment report by the semi-official Chung-Hua Institution for Economic Research that endorses the view that an ECFA would be favorable to the Taiwanese macro economy.

The Ministry of Economic Affairs made “expert adjustments” in line with the report to minimize or eliminate any negative impact on certain industries before coming to the conclusion that signing an ECFA with China would have substantial and positive economic results.

In fact, several of the hypotheses in the Global Trade Analysis Project (GTAP) model on which the report is based defy reality.

First, the assumption of full employment excludes the possibility of unemployment.

Second, it is assumed that after signing an ECFA, tariffs on most Taiwanese industrial exports to China would be removed.

As a result, Taiwanese petrochemical products would replace petrochemical products from South Korea and Japan, which accounted for 38 percent — US$38 billion — of the Chinese market in 2007, while Taiwanese mechanical products would replace corresponding products from South Korea and ASEAN countries, which accounted for 23 percent — US$27 billion — of the Chinese market.

These assumptions are entirely unrealistic. Tariffs are not the only factor affecting product competitiveness, and petrochemical and mechanical products are not identical from country to country. Thus, it is out of the question that Taiwanese products would replace other products.

In addition, production capacity of the Taiwanese petrochemical and mechanical industries is not sufficient to replace products manufactured by Japan, South Korea and the ASEAN countries.

Worse, the GTAP model uses market overlap to estimate replacement levels, but it only considers the possibility that Chinese products may replace products from Japan, South Korea and ASEAN countries in the Taiwanese market, failing to mention the possibility that they may also replace Taiwanese products. This is the most significant problem, and the one that will most affect Taiwan’s market.

Since labor costs and rent in China are far lower than in Taiwan, cheap and inferior Chinese products and agricultural produce will likely enter the nation on a large scale under zero-tariff preferential treatment. The influx of Chinese products will cause domestic agriculture and industry to collapse — especially small and medium-sized enterprises manufacturing towels, ready-made garments, shoes, bedding and ceramics — and raise unemployment levels even higher.

The result of increasing unemployment in Taiwan will be depressed wages and increased income inequality.