Taiwan, Singapore Begin FTA Talks

It has been disclosed that Taiwan and Singapore have begun talks on a free trade agreement (FTA), which both sides are looking to complete within one year.

The completion of such an agreement would represent a breakthrough for Taiwan following the signing of the economic cooperation framework agreement (ECFA) with China at the end of June last year. Taiwan had looked on the ECFA as ending its isolation, hopefully leading to talks on FTAs with other Asian countries, but progress on that front has been slow.

An aggressive FTA strategy by South Korea, Taiwan's main trade competitor, has been causing concern in Taiwan, and the government has said that it is looking at the effects that the South Korea-European Union (EU) FTA could have on Taiwan’s economy when it comes into effect on July 1 this year.

As confirmed by President Ma Ying-jeou earlier this month, a trade treaty with the EU would also be of the highest priority for Taiwan. However, prior to the disclosure of a possible FTA with India earlier this year, its only other move has been the announcement in August last year of the negotiations with Singapore.

It was pointed out that the main attraction of a trade agreement with Singapore for Taiwan is that the two economies are complementary, rather than in competition. There should be no significant problems caused by a reduction in tariffs in either agricultural or industrial products.

While Singapore is not a top export destination for Taiwan’s industrial products, it is likely that the latter’s service sector, particularly finance, would gain the most from an agreement.

May 27^th, 2011

Source: tax-news.com