February 17, 2009
While fears of protectionism are sweeping the EU and the US, China is preparing the launch, in 2010, of a regional trade bloc which will extend the benefits of free trade to the ASEAN countries (Brunei, Singapore, Indonesia, Malaysia, the Philippines, Thailand, Vietnam, Cambodia, Myanmar and Laos). The move will create the world´s largest trade bloc, covering 1.7 billion people, with a combined GDP of around 1.5 trillion euros. Initially, the economic bloc will include the original six founders of the ASEAN group, with Cambodia, Laos, Vietnam and Myanmar to join them by 2015. Nor is that all. As a consequence of the 1997 Asian financial crisis, its member countries are also contemplating the adoption of an Asian Currency Unit (ACU), emulating the example of the euro´s predecessor, the ECU.
Most, if not all, of these countries´economies are dominated by expatriate Chinese business elites, popularly known as the “maritime Chinese”. Since China´s inauguration of the “open doors” policy, they have been doing brisk business with the mainland and have contributed with large amounts of money to developing the Chinese economy. During the 1997 Asian financial crisis, these countries´ currencies and economic stability were seriously endangered. With the exception of Brunei and Singapore, their average income per capita is rather low, their infrastructure underdeveloped, with their industrial sectors consisting of low-productivity, labour-intensive companies. They all see their economic prospects lying with the huge Chinese market, which seems to offer them boundless development opportunities.
The region´s industrial powerhouses of South Korea, Japan and Taiwan are also currently assessing the opportunity of joining the “ASEAN plus one” trading bloc. According to the Taiwanese Ministry of Economic Affairs (MOEA), Kuomintang officials have promised last week to look into the possibility of concluding a Comprehensive Economic Cooperation Agreement (CECA) with mainland China in the near future.(Source: China Post)
This change in policy is being driven by Taiwanese business organisations fearing exclusion from the trade bloc in the making. According to local business sources, in the absence of such a free trade agreement, importers of Taiwanese products from this region will be forced to pay duties ranging from 6.5 to 14.9 per cent, affecting their competitiveness. When China and the ASEAN countries are going to be joined by South Korea and Japan as well, the import duties within the bloc are expected to be lowered or even eliminated altogether.
Not all Taiwanese politicians are happy with the prospect of liberalising trade with China and its ASEAN partners. The pro-independence Taiwan Solidarity Union (TSU) and the opposition Democratic Progressive Party argue that the conclusion of such an agreement would downgrade Taiwan to the status of a Chinese province governed , like Hong Kong or Macao, from the mainland. Do they really believe that if South Korea and Japan join, they too would be governed from Beijing ? Fortunately for all concerned, such scare tactics are bound to fail, because these days it is the Taiwanese business leaders who are driving the ruling party´s agenda.
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