You don't have to be a fully paid-up member of Taiwan's main opposition party to be troubled by ECFA, the cross-strait trade accord Taipei is poised to sign today in the Chinese city of Chongqing. The island's economy has been ticking over just fine without one.
Year-on-year gross domestic product growth of 13.3 per cent in the first quarter was Asia's second highest, admittedly following some of the steepest declines. With low external debt, a manageable budget deficit, a bulging current account surplus and a $360bn pile of reserve assets – Asia's third largest – Taiwan seems well placed to ride out any storm. Why cosy up to Beijing, which still has 1,000 missiles pointed across the 100-mile stretch of water?
As Goldman Sachs notes, the goods included in ECFA's “early harvest” amount to almost 13 per cent of Taiwan's total exports to China – much greater than the initial phase of a similar scheme seven years ago, when 3 per cent of Hong Kong's exports to China became subject to lower tariffs. But president Ma Ying-jeou had to do something. China's trade agreement with the 10-member Association of Southeast Asian Nations, under which most tariffs should be phased out by the end of this year, raises the prospect of a seamless regional trading zone without Taiwan in it. The island's bilateral talks within Asia have always foundered, because no nation wanted to offend Beijing by dealing with what it saw as a rebellious province. The result is that Taiwan has just five accords with diplomatic allies in Latin America, accounting for less than 1 per cent of its total trade. Rapprochement with China, however vexing for the pro-independence camp, could open up agreements with the US, Japan and Euroland. President Ma should keep emphasising the bigger picture.
