Taipei, July 19 (CNA) The textile industry is among a number of Taiwanese industries expected to be hit by the South Korea-U.S. Free Trade Agreement (FTA), and the government and industries will have to take precautionary measures to mitigate its impact, researchers said Thursday.
Taiwanese industries that are expected to be hardest hit by the South Korea-U.S. FTA include textiles, machinery, liquid crystal display televisions (LCD TV), plastics and auto components industry, researchers from the Chung-hua Institution for Economic Research (CIER) said in a seminar discussing relevant issues.
The textile industry, especially clothing sector, is expected to take the hardest hit among all industries, said researcher Lin Jun-fu. Lin said the industry is being encouraged to cultivate its global logistics by developing new markets. For example, 95% of all South Korea-U.S. clothing products will be listed as duty-free once the FTA takes effect.
Taiwan's mid- and lower-priced machinery products were also encouraged to work on product differentiation and value-added aspects to mitigate the impact of the FTA, researcher Chen Jia-le said.
Facing a lesser impact will be the LCD TV and auto component industries, researchers said, as Taiwanese LCD TV manufacturers already have a presence in Mexico and Eastern Europe, and Taiwan's auto component products do not overlap with South Korean products in the North America market.
In general, Taiwan is facing a twofold threat after the South Korea-U.S. FTA, Deputy Minister of the Ministry of Economic Affairs (MOEA) Shih Yen-hsiang said. Not only are Taiwanese products disadvantaged by competition from duty-free and low-tariff Korean products, he said, it's also possible that Taiwanese companies will increase their investments in countries that have signed a FTA with the U.S. -- such as South Korea.
Taiwan's government is still trying to work towards a FTA with the U.S., Shih noted, adding that it will take a different approach from South Korea since Taiwan finds itself in a unique political situation.
The FTA agreement has not been ratified by the U.S. and South Korea, giving Taiwan some time to "think and react" before it takes effect, said researcher Liu Da-nien.