How does the signing of an ECA improve industrial competitiveness?
Contributory factors of an ECA for improving industrial competitiveness include:
A. Reduced production and export costs: when an ECA is signed, as Taiwan reduces its import tariff, domestic businesses may acquire and import at reduced costs raw materials, essential components, and intermediate producer goods, thus reducing production costs for domestic businesses. While on the other hand, as a trade counterpart reduces its import tariff, export products from Taiwan are provided with reduced tariff and non-tariff barriers to trade, thus improving the competitiveness of export products from Taiwan.
B. Provide Taiwan’s businesses in market exploration and development of private brands: as the development of a private brand requires the support of a broad market, the relative limited scale of domestic demand of Taiwan is unfavorable towards the development of an internationally-renowned brand. Therefore, if businesses of Taiwan can be provided with an expansive market via an ECA, then the development of internationally-renowned brands by said businesses could be facilitated.
C. Gradual market liberalization prevents reliance of domestic businesses on tariff protection and turns their attention towards international markets. On the other hand, with respect to vulnerable industries, the Government will adopt in a timely manner industrial adjustment projects to provide businesses with assistance in transformation and in improvement of international competitiveness.