Trade in Services Agreement Unresolved, Foreign Investors Worry Stock Market Will Be Hit

The wave of anti-trade-in-services protests continues to confront the government. Taiwan stocks fell nearly 100 points on the 20th. Foreign investors and investment advisors are generally unhappy about it, and coupled with noise in international stock markets, there are worries that the index, under the disturbance of domestic troubles, will find it hard to regain momentum.

Amid the anti-trade-in-services atmosphere in Taiwan, there exists both emotional and substantive opposition to mainland China. Foreign investor Merrill Lynch previously said that the mainland China market is like the tiger "Richard Parker" in the film Life of Pi: even if there are some worries, from the perspective of economic development, one must still coexist with it.

CLSA, meanwhile, used the American proverb "no pain, no gain" to describe bilateral trade agreements between any countries, and pointed out that signing this agreement is actually more favorable to Taiwan, as mainland China does not have much interest in Taiwan's limited-potential market. CLSA further stated that the trade in services agreement is a bilateral agreement: mainland China will open 80 service industries, while Taiwan will open 64. From the agreement, Taiwan's 7 major industries - e-commerce, information services, online gaming, cultural and creative industries, transportation, tourism, and finance - are expected to benefit; it also believes that the trade in services agreement is still very likely to pass in May to June.

In addition, the market generally worries that if the trade in services agreement gets stuck, the subsequent goods trade negotiations, which involve substantive tariff issues, will be delayed even more. In particular, the China-South Korea Free Trade Agreement (FTA) may be signed by the end of the year. If the cross-strait trade in services agreement has not yet passed by then, South Korea may be the first to enjoy tariff preferences for goods exported to mainland China. By that time, Taiwan, which overlaps with South Korea in multiple export industries, may find itself at an even greater disadvantage. Foreign investors named Taiwan's panel and plastics and chemicals sectors as the first to bear the brunt.

▲The wave of anti-trade-in-services protests continues to confront the government. Taiwan stocks fell nearly 100 points on the 20th. Foreign investors and investment advisors are generally unhappy about it. (CNA file photo)