DTI says bilateral trade pact with Taiwan not necessary

A bilateral agreement with Taiwan is not necessary because the Philippines and Taiwan already have the Joint Economic Conference, the Trade Department said.

Trade Secretary Jesli A. Lapus said that the 17th Joint Economic Conference between the Philippines and Taiwan is expected to be signed fourth quarter of this year.

Lapus said that with this in place, a free trade agreement (FTA) with Taiwan is no longer necessary because the JEC will already ensure good trade and investment relations beween the two countries.

Ambassador Donald Lee, Representative of the Taiwan Economic Cooperation Office (TECO), already warned the Philippines that the signing of the Economic Cooperative Framework between China and Taiwan in July would result in the transfer of some Taiwanese factories in China because it is cheaper to produce in China.

Once the factories are in China, Lee said, the OFWs will be displaced. Currently, he estimated that there are 80,000 OFWs in Taiwan.

However, Lapus said there is no need to worry because the Filipinos have advantages over Chinese workers. “Filipinos have specialization,” Lapus said.

Earlier, Lapus said that the Taiwanese government is eager to enter into an FTA with the Philippines. However, the supposed talk between Lapus and his Taiwanese counterpart during the APEC meeting in Japan did not push through.

“There were no talks. There is still a one China policy,” Lapus said.

However, Lee countered that the FTA with the Philippines has nothing to do with the one China policy. He stressed that urgency of forming an FTA with Taiwan because he said firms would choose to locate in China because of the big domestic market. China has a population of 1.2 billion while the Philippines only has 92 million. The access to raw materials is also easier in China rather than the Philippines.

The labor cost in China is cheaper than the Philippines, Lee said. The cost of production in China is one fifteenth cheaper than Taiwan while it is only one tenth cheaper here in the Philippines.

“This is the reason why the two countries (Philippines and Taiwan) must enter into an FTA soon,” Lee said. He said talks for a possible FTA began early this year. “It is quite urgent for Taiwan and the Philippines to negotiate.”

Aside from displaced workers, Lee said the Philippines may also lose potential investors because it would be easier to enter a country that has an existing agreement with Taiwan.