A free trade agreement between China and South Korea could mean a severe blow to Taiwan’s textile exports. It’s estimated Taiwan’s exports to China will fall by 30 per cent. Chinese buyers will shift their orders from Taiwan to South Korea in order to get cheaper textiles.

Fabrics, yarn and fibers are among the major textile products Taiwan sells to China. The free trade agreement grants tariff-free status to 85 per cent of the textile items exported to the China market by South Korea in future. Taiwanese industries, including petrochemicals, flat panels, machine tools, textiles and steel, will be affected by the China-South Korea agreement. And these industries serve as the major driver to Taiwan’s export growth.

Taiwanese exporters are concerned over South Korea’s rising competitive edge against Taiwan in the huge China market. South Korea is likely to take a bigger share of the Chinese market. South Korea’s major exports to China are fibers, garments and accessories.

What Taiwan can probably do now is to speed up the pace of signing a trade-in-goods agreement with China in a bid to stem the adverse impact of the Beijing-Seoul free trade agreement. Taiwan and China have held nine rounds of negotiations on the trade-in-goods pact, which is a follow-up deal to the landmark Economic Cooperation Framework Agreement signed by the two countries in 2010.