Taipei, Nov. 22 (CNA) Taiwan’s main fastener industry association called on the government Sunday to weaken the Taiwan dollar to help it offset potentially tougher export competition following the signing of a major regional trade pact earlier this month.
Industry representatives urged the government to allow the local currency to depreciate to boost their export competitiveness, as the Regional Comprehensive Economic Partnership (RCEP) signed last Sunday could seriously threaten some Taiwanese businesses.
Before a meeting with senior government officials, Tsai Tu-chin (蔡圖晉), chairman of Taiwan Industrial Fastener Institute, told the media of the difficulties Taiwan’s fastener sector is facing.
Though Taiwan is the world’s third largest exporter of binding and fastening products, its annual production value fell from NT$176 billion (US$6.17 billion) in 2018 to NT$144 billion in 2019 and could fall as low as NT$110 billion this year.
A key part of that significant drop is the continued appreciation of the Taiwan dollar against the U.S. dollar over the past two years, according to Tsai.
He said the 12-15 percent appreciation of the local currency against the greenback over that time has translated into an annual loss of NT$5 billion for the industry.
It has also faced import duties of 5-30 percent on binding and fastening products exported from Taiwan to the 10 Association of Southeast Asian Nation (ASEAN) economies, Tsai said.
The RCEP signed between the 10 ASEAN states, China, Japan, South Korea, New Zealand and Australia, could pose a serious challenge to Taiwan’s fastener industry, which is already being hurt by currency appreciation, by reducing tariffs for RCEP members, Tsai said.
“Once the industry loses its competitiveness, we will be forced to close down our businesses in Taiwan or move them away from the country,” he warned.
Tsai made the comments before a meeting hosted by Economic Affairs Minister Wang Mei-hua (王美花), in which representatives of the steel, textile, and petrochemical sectors took part to discuss the impact of the RCEP on Taiwanese businesses and potential responses.
The RCEP, which is expected to take effect in the second half of 2021, accounts for 30 percent of the global economy and is the world’s largest trade pact in terms of GDP.
For Taiwan, which depends heavily on foreign trade, exclusion from the RCEP could have significant implications for its economy, especially the above mentioned industries, some local business leaders have recently warned.
However, Justin Huang (黃偉基), secretary-general of the Taiwan Textile Federation, told reporters before the same meeting that Taiwanese textile companies may be better positioned to withstand the blow.
Many of them, he said, moved their production bases to ASEAN countries years ago, and according to RCEP standards, items produced in an ASEAN country will be considered as being made in that country and benefit from tariff cuts when the deal takes effect.
That means that most Taiwanese companies based in ASEAN will not be affected by the RCEP, he said.
Huang also said Taiwan has successfully differentiated its textile products with their outstanding quality and added value and have far surpassed the products made in other Asian countries, leading him to believe that the RCEP will have little impact on Taiwanese textile makers.
Following the meeting, which lasted around two and a half hours, Wang told reporters that most of the representatives expressed greater concern about the continued appreciation of the Taiwan dollar than the RCEP issue.
She said the the government will continue to help manufacturers with industrial upgrading and transformation to boost the value of their products and improve their competitiveness.