‘We should also put eggs in the largest basket next to us': KMT's presidential candidate Hou Yu-ih on Taiwan trade

Hou suggested reviving Taiwan's Cross-Strait Service Trade Agreement with China.

Brenda Khoo | December 22, 2023, 11:31 AM



“We should not put all our eggs in one basket, but we should also put eggs in the largest basket next to us,” Kuomintang’s (KMT) presidential candidate Hou Yu-ih said, in a reference to Taiwan's trade relations with mainland China.

'Trade cannot take sides': Hou

Hou was speaking to the media during a campaign event on Dec. 17, according to Focus Taiwan.

“Trade cannot take sides,” he said, as quoted by Taiwan News.

He said that cross-strait trade should continue between Taiwan and China, possibly alluding to the ongoing Economic Cooperation Framework Agreement (ECFA) and the shelved Cross-Strait Service Trade Agreement (CSSTA).

The ECFA is a free trade agreement with China, signed by the then-KMT government and passed into law in 2010. It aims to boost bilateral trade by reducing tariff rates and is focused on trade in goods.

The CSSTA, meanwhile, was signed by China and Taiwan’s then-KMT government in June 2013 to enhance trade between the two economies, by liberalising investment rules in service industries like finance and tourism.

However, the pact was never ratified after mass protests by students and civic groups opposing it in 2014, known as the Sunflower Student Movement.

KMT to join major trade blocs if elected: Hou

Hou’s trade comments also came after China accused Taiwan of imposing a “trade barrier” with the country.

On Dec. 15, Xinhua News, China's state news agency, claimed that Taiwan imposed restrictions on the import of more than 2,500 products from China by the end of the previous month.

It added that this constitutes a "trade barrier" and harms the interests of related enterprises in the mainland and also consumers in Taiwan.

According to Taiwan News, Hou criticised the incumbent Taiwan government’s apparent failure to sign any major FTA nor join any international trade bloc.

Currently, Taiwan has FTAs with nine countries, including Singapore, China, New Zealand, and several other smaller economies.

Hou added that if he becomes Taiwan’s next president, he would help the island join several major trade blocs.

Resuming CSSTA would 'lock' Taiwan's economy into China: Lai

According to Taiwan news agency CNAHou was responding to comments made by William Lai of the Democratic Progressive Party (DPP).

Despite the existing ECFA, ratifying the CSSTA may be seen by some Taiwanese – including Lai – as a step too far, supposedly causing Taiwan's "over-dependence" on China's economy.

Lai, the presidential candidate for the DPP, claimed on Dec. 7 that resuming the agreement would "lock" Taiwan’s economy into China’s, Taipei Times reported.

“It is the wrong policy to push for economic growth by locking Taiwan up to only depend on China’s economy,” Lai said.

“If [the new government and China] sign the agreement, then [Chinese citizens] can come here and open chicken rice restaurants,” he supposedly warned while speaking to residents and market vendors in Taipei.

Taiwan's past efforts to join trade blocs

In September 2021, Taiwan formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP); its application is still pending.

In 2020, Taiwan was apparently blocked by China from joining the Regional Comprehensive and Economic Partnership, which includes all Asean members.

Likewise, Taiwan was reportedly denied entry into the Indo-Pacific Economic Framework by the U.S. in 2022, one U.S. official told Reuters, supposedly due to other countries' concerns of upsetting China.

It should be noted that Taiwan and the U.S. have a bilateral trade framework – the U.S.-Taiwan Initiative on 21st Century Trade – since Jun. 1, 2022, according to Bloomberg.

Unlike the ECFA, this framework excludes tariffs reduction.

In Dec. 2023, both sides had discussions to expand the scope of the framework to resemble that of an FTA.

Hou will be contesting in Taiwan's presidential election against Lai and Taiwan People's Party Ko Wen-je on Jan. 13, 2024.

Top image from 中國國民黨 KMT/Facebook.