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Friday, July 2, 2010

ECFA or Enema?

Stopping in at one of Taiwan's ubiquitous 7-Eleven's this evening on my to work, I was pleasantly shocked to find the four beers pictured above on the shelves and available for purchase. In the land where Taiwan Beer 台湾ビール reigns supreme, quality suds are often quickly pulled from the market, so I wasted no time in buying a Samuel Adams Boston Lager; a Longboard Island Lager and Wailua Wheat Ale, both brewed by the Kona Brewing Company in Kailua-Kona, HI; and a Kronenbourg 1664. And if that wasn't enough, in celebration of the Fourth of July, the local Carrefour from tomorrow will begin offering some Saranac line of beers from the Matt Brewing Company in Utica, NY. Taiwan Beer will eventually reassert itself, and (in)sanity will return to the local beer market, but I plan on enjoying this mini-revolution while it lasts. USA!

All this beer is arriving just in time to drown one's sorrows over the recent hoopla regarding the signing of an Economic Cooperation Framework Agreement 両岸経済協力枠組協議 between China and Taiwan. The businesspeople and the economists are all singing the praises of the fruitful blessings this pact is supposedly going to bring down on the good people of Taiwan (these same folks also are offering some good deals on their own grandmothers if you happen to be in the market for one). Non-economist that I am, I'm having a hard time trying to understand why the Ma Ying-jeou (Ba Eikyū) 馬英九 administration felt the urgent need to get this thing signed and imposed on this country. Hadn't Taiwanese companies already invested billions of dollars in China since the early Nineties, to the point where 40% of Taiwanese exports end up there? Instead of further entangling the Taiwanese economy with that of China's, wouldn't it have made more sense to pursue an ECFA-like pact with a more mature economy, say that of the US, European Union or Japan? Of course, if you look at ECFA as a political, rather than economic, agreement, it all starts to come together. If you're a believer in the glory of a Greater China 中華圏, but don't wish to risk international condemnation by making aggressive, belligerent military threats, what better way to keep the Taiwanese independence movement under control while simultaneously paving the way for the eventual establishment of a Taiwanese Special Administrative Region than by making it all the more difficult for the Taiwanese economy to get rid of the Chinese monkey on its back? It's enough to turn a man to drink. Now where's that Sam Adams I just bought...?

Enough of my ramblings. For the Japanese take on things, the Daily Yomiuri ザ・デイリー読売 has this Yomiuri Shimbun 読売新聞 article ("China-Taiwan deal gives Japan firms pause" http://www.yomiuri.co.jp/dy/business/T100630004001.htm), which isn't quite as excited about the agreement as some stories that have appeared in other foreign media:

"The historic trade pact signed by China and Taiwan on Tuesday will force many Japanese companies to rethink their strategies for this key market--one that could evolve into a powerful economic rival. The economic cooperation framework agreement heavily favors Taiwan companies, cutting tariffs on 539 Taiwan export items to China as opposed to 237 items exported in the other direction. Japan's electronics industry has crafted close links with consortiums of Chinese and Taiwan companies by commissioning them to manufacture their products. But Tuesday's signing has made some Japanese electronics makers wary of a possible rivalry with the so-called Chaiwan alliance. 'We could end up competing against them now,' an executive of a major electronics maker said. Intensified price competition might not be the only headache for Japanese makers. The strong partnership between China, which has a huge market, and Taiwan, which has advanced technology, would be a formidable competitor. Japan's petrochemical industry has been competing with Taiwan companies for customers in China. But if tariffs between China and Taiwan are eliminated, Taiwan companies would be able to offer their products at more competitive prices than their Japanese counterparts. The free trade agreement will slash tariffs on auto parts, fueling concern among Japanese automakers that are planning to ramp up production at their China plants."

On the other hand...

"But the trade agreement could benefit some Japanese industries. Computers produced in Taiwan use many components made in Japan. If Taiwan products become more price-competitive in China--and therefore sell better--Japanese parts makers could reap the windfall."

Nonetheless...

"...a broader partnership between Chinese and Taiwan firms 'will certainly be a threat' to Japanese companies on the global market, a source in the trade industry said. The Japanese government will closely watch whether more items become subject to tariff cuts. It also will pull out all the stops to promote the joint study of a free trade agreement between Japan, China and South Korea, and to resume talks on an economic partnership agreement with South Korea, according to government officials."

If it means Taiwan Beer loses more market share to Tsingtao 青島ビール, then an ECFA can't be totally bad. :)

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