Siew advocates signing CEOF with mainland China

Taipei, Dec. 26, 2003 (CENS)--Vincent Siew, chairman of Chung-Hua Institution for Economic Research and chief economic advisor to President Chen Shui-bian, recently suggested that Taiwan should negotiate with mainland China to sign a 'Closer Economic Operation Framework' (CEOF) pact, with the accord to cover the issue of three direct links.

Siew raised the suggestion when speaking at a recent lunch meeting hosted by the Chinese National Association of Industry & Commerce (CNAIC), advising Taiwan to economically cooperate with the mainland to reinforce trading strength and avoid being marginalized amid the regional economic integration fever in Asia.

To help revive Hong Kong's economy, the mainland has recently signed a "Closer Economic Partnership Arrangement" (CEPA) pact with Hong Kong, which will be effective Jan. 1, 2004. Compared to "Free Trade Agreement" (FTA), the CEPA is more advantageous. Under the CEPA pact, some 273 products exported to the mainland from Hong Kong are subjective to zero import duty; and starting 2006, all of the products made in Hong Kong will enjoy duty-free imports into the mainland. The mainland will further relax investment restrictions for Hong Kong investors and open its service market to them.

Siew noted that he suggested signing CEOF, instead of CEPA or FTA, with the mainland mainly because the former can cover the three-link issue and can shun off possible dispute over Taiwan's political identity that may arise in the latter two pacts. He added, some countries in Asia, including mainland China, Japan, Indonesia, the Philippines, Singapore, Thailand, Malaysia, and Vietnam, have in the past few months been actively tried to sign FTA with each other or to form economic allies. And such a move will heat up among neighboring Asian countries early next year.

Viewing the world trend, Siew urged the government to make Taiwan a free trade zone to attract more foreign investors, and actively integrate with international or regional economic blocks.

C.Y. Kao, vice chairman and CEO of Uni-President Group, said that the foremost thing to make Taiwan and the mainland sign CEOF is to make them sit down and talk calmly, and this may be the most difficult. Theodore M. H. Huang, chairman of CNAIC, pointed out that the mainland might agree to sign such a pact with Taiwan as it has just inked CEPA with Hong Kong. And it is believed such pacts would help expand the mainland's economic power in the greater Chinese community and the global arena as well.

Siew urged that Taiwan should sign free trade agreements with other countries so as to join related international economic allies. The United States, Latin America, Japan and the mainland are Taiwan's potential parties for signing such pacts. Siew called for the government to firstly persuade the U.S, and Japan to ink FTA with Taiwan, and then ask Latin American nations that have diplomatic ties with Taiwan to follow suit. And finally, he said, the government should try its best to negotiate with the mainland for the signing of CEOF.