TAIPEI: Although a free trade zone involving the Association of Southeast Asian Nations (ASEAN) and the Chinese mainland went into effect January 1, the competitiveness of Taiwan's textile industry will not be threatened in the short term, the Taiwan Textile Federation (TTF) said yesterday.

With the formation of the "ASEAN plus One" free trade area, 94 percent of the products in the countries involved will be tariff-free. However, Taiwanese textile products, which rely heavily on the mainland market, will still be subject to tariffs until a proposed economic cooperation framework agreement (ECFA) with the mainland can be signed.

The TTF said that although Taiwanese textile products are subject to an average tax rate of 10 percent, the quality and delivery dates of Taiwanese products are highly competitive, while there is also a stronger petrochemical industry to provide raw materials for the textile business.

Among the Southeast Asian countries, Thailand is more competitive because it has more foreign investment and factories.

Taiwanese businesses, however, also have heavy investments in Vietnam and Cambodia and the formation of the "ASEAN plus One" will not affect their shipments, the government-backed TTF said.

According to the "Ministry of Economic Affairs", textile exports totaled $9.7 billion in 2008, with $3.4 billion going to the mainland.

If textiles, which are expected to be included on the ECFA early harvest list, are given tax-free access after the signing of the trade pact, the textile industry will benefit a lot, the TTF said.

China Daily/CNA

(HK Edition 01/05/2010 page2)