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nealer and fimbres • taiwan and regional trade organizations
Taiwan’s Trade Relations
Although Taiwan is a prominent regional investor and export link
in the Asian supply chain, its commercial importance is not reflected in
its inclusion in regional trade deals. This is in part because of Taiwan’s
ambiguous international status and uncertainty over its sovereignty, which
is considered a prerequisite for membership in many multilateral agreements
and bodies. Other contributing factors include China’s political opposition
and Taiwan’s own domestic resistance to entering into FTAs. If Taiwan cannot
find a way to integrate itself more deeply into the economic and commercial
architecture of the Asia-Pacific, its competitive position will be significantly
eroded. Speaking to the Economist in March 2014, President Ma expressed his
concerns regarding trade marginalization:
External trade accounts for 70% of Taiwan’s economic growth.
Taiwan has long performed well in external trade, but in the past
10 years or so, countries around the world have signed free-trade
agreements (FTA). Many countries want to do business with
Taiwan, but when it comes to signing a FTA with us, they become
hesitant, because of our diplomatic predicament. 8
In 2014, Taiwan’s GDP stood at $505.5 billion and total exports were
around $310 billion. 9 With exports accounting for such a large component
of Taiwan’s economy, any drag on trade will be a major hit to the economy.
If Taiwan continues to be excluded from trade deals, its export-oriented
economy will be significantly harmed as Taiwan’s exports will fail to compete
with exports from FTA or preferential markets. Joshua Meltzer of the
Brookings Institution points out,
The recent successful completion by Korea—a competitor with
Taiwan across a range of products—of FTAs with the EU and the
United States provided a useful example of some of the costs to
Taiwan of not participating in these Asian FTAs…. Korean goods
now have preferential access to the two largest developed country
markets where all tariffs will go to zero. This means that Korean
exports of apparel, LCD televisions and bicycles to the EU—all
goods in which Taiwan competes—will face zero tariffs while
Taiwan exports of these goods face tariffs of twelve, fourteen and
fifteen percent, respectively. 10
8 “Straight from Mr. Ma’s Mouth,” Economist, March 28, 2014 u http://www.economist.com/blogs/
banyan/2014/03/interview-taiwans-president.
9 American Chamber of Commerce in Taipei, “2015 Taiwan White Paper,” Taiwan Business Topics,
June 2015 u http://www.amcham.com.tw/white-papers-2.
10 Meltzer, “Taiwan’s Economic Opportunities and Challenges.”
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