The Economic Impacts on the Taiwanese High-Technology Industry Should China, Japan, and South Korea Sign the Free Trade Agreement

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University of Reading

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Pre-sessional Course Block 4
September 2010

The economic impacts on the Taiwanese high-technology industry should China, Japan, and South Korea sign the free trade agreement

|Name: Li, Cing-Yang (Clayton) |

|Date: 17/ Sep/ 2010 |

Content Page

Abstract 1

I. Introduction 1

II. Economic effects on China, Japan, and South Korea if they sign the FTA 2

III. Analyze advantages and disadvantages in the Taiwanese
high-technology industry and what the impacts on the industry if China, Japan, and South Korea sign the FTA 4

A. TFT-LCD industry 4

B. Semiconductor industry 7

C. Communication industry 8

IV. Reactions of Taiwan to become more competitive if China, Japan, and South Korea sign the FTA 9

A. Cooperate with other countries as soon as possible 9

B. The role of government and public foundations 10

C. The reaction of the Taiwanese high-technology industry 11

V. Conclusion 12

Reference 14
Abstract

The Free Trade Agreement (FTA) between China, Japan, and South Korea will have great influences on the Taiwanese economy. High-technology industry is a main industry of export in Taiwan. Therefore, if the tree countries sign the FTA, the outcome will result in potential changes in trade for the Taiwanese high-technology industry. This essay will analyze the potential changes in trade between the proposed signatories of the FTA, and use SWOT and statistics analysis to discover the impact any such agreement will have on the Taiwanese high-technology sector, and then discuss potential options and solutions for Taiwan. The Taiwanese high-technology firms should develop unique characteristics and enhance the additional value of their products. Moreover, the Taiwanese government can reduce tax and focus on educating high-technology talents. Consequently, the Taiwanese high-technology firms will become more competitive in the world market if China, Japan, and South Korea sign the FTA.

I. Introduction

The FTA between China, Japan, and South Korea is an important subject related to the area of economic cooperation. Many experts do a lot of research on the topic. However, there is seldom research talking about how Taiwan should react if the FTA becomes reality. High-technology industry is a main industry of export in Taiwan, especially in TFT-LCD (Thin film transistor liquid crystal display), semiconductor, and communication industries. However, the Taiwanese high-technology industry faces recession recently because of some internal (political problems between China and Taiwan, conflicts between the government and firms, and offshore migration of the Taiwanese high-technology industry) and external factors (changes of international cooperation, progress of producing skills in other countries, and growth of other developing countries). The FTA between China, Japan, and South Korea will cause a lot of negative effects in the Taiwanese high-technology industry because of the removal of tariffs and non-tariff barriers (limitation of import volume, limitation of export volume, or price control) between China, Japan, and South Korea. The Taiwanese high-technology firms will fear that the elimination of tariffs and non-tariffs barriers will cause the Chinese, Japanese, and South Korean...
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