Taiwan has been left out in the cold for political reasons as the nations of East Asia have moved forward with economic integration plans. Would the Economic Cooperation Framework Agreement provide us with a bridge to ASEAN? No consensus exists at this point. The photo shows a night scene along the Chao Phraya River in Bangkok. (Jimmy Lin)

While the other nations of East Asia demonstrate mutual economic goodwill through measures that include investment guarantees, trade facilitation, and the elimination of tariffs, and continue to work towards economic integration, Taiwan has been left to cool its heels. The "international orphan" is in a bind and people are frightened. But is the Economic Cooperation Framework Agreement (ECFA) really the solution?

When ASEAN Plus China began to come into force in 2005, the Council for Economic Planning and Development (CEPD) conducted a survey to ask manufacturing firms what sort of impact they expected as a result of Taiwan's exclusion from the ASEAN Plus China and ASEAN Plus Three (China, Japan, South Korea) free trade zones on our six major exports-optoelectronics, electronics, petrochemicals, steel, textiles, and automobile parts.

The results indicated that Taiwan, China, Japan, Korea, and the five original members of ASEAN already enjoyed reciprocal free trade in large appliances and electronics through their participation in the World Trade Organization's Information Technology Agreement (ITA). As a result, slightly more than half of Taiwan's exports to ASEAN, China, Japan, and Korea are already tariff-free. Though ITA does not cover LCD panels and a small number of other electronics products, upwards of 80% of these components enjoy tariff rebates because they undergo further processing locally before being exported to a third nation. Consequently, they too have been largely unaffected by the ASEAN Plus China agreement, and are unlikely to be much affected if and when an ASEAN Plus Three agreement is concluded. That portion of the just under 50% of products that are not already traded freely but that undergo further processing before export are also unaffected. The study anticipated that the petrochemicals, steel, textiles, and machinery industries would be most affected by the agreements. Unfortunately, it forecast that the impact on these products, the principal exports of Taiwan's traditional manufacturers, would be significant.