South Korea’s Trade Deals Threaten Taiwan With Isolation

South Korea’s Trade Deals Threaten Taiwan With Isolation

Taiwanese exporters are anticipating the arrival of July 1 with some anxiety. On that day, the free trade agreement (FTA) between the European Union and South Korea, Taiwan's archrival in trade, will come into effect. As 70-75 percent of Taiwan's exports to the EU overlap with those from South Korea, and as Brussels is set to lift import tariffs on 93.9 percent of Korean products within the deal's first year, it is all but certain that Taiwanese products will suffer in the European market.

But the export-dependent island's plight does not end there. In terms of FTAs, South Korea, which competes head-to-head with Taiwan in electronics, steel, machinery, petrochemicals, plastics and textiles, has left a decisive footprint around the globe. Seoul has FTAs in place with Chile, India and the 10-country Association of Southeast Asian Nations. On top of those, the Obama administration is currently working hard to ensure passage of the mammoth South Korea-United States Free Trade Agreement, which, if enacted, would challenge Taiwan's position with its third-largest trade partner and the final destination of most of its manufactured products. Meanwhile, Seoul is continuing to put out feelers on a trilateral trade pact with China and Japan.

Taipei has FTAs, too. However, all of them are with economically insignificant countries, among the very few that Taipei maintains diplomatic relations with -- namely Panama, El Salvador, Honduras, Guatemala and Nicaragua. Apart from these, Taipei has the Economic Cooperation Framework Agreement (ECFA) that the current Kuomintang (KMT) government signed with Beijing last year, as well as recently restarted talks on an FTA with Singapore.

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