TAIWAN - Taiwan signed a free trade agreement with Singapore on Thursday that will scrap taxes on Taiwanese exports and give a filip to trade worth some US$28 billion last year, as the island looks to broaden its international profile and reduce dependence on China.
Taiwan has been chasing trade deals since a landmark 2010 pact with China that cemented an economic rapprochement between the two political rivals, but Chinese pressure over Taiwan’s status has kept progress on trade deals slow.
“The pact will increase Taiwan’s competitiveness in the international arena and drive the Taiwanese economy forward,” foreign minister David Lin told a news briefing. “It represents a model for future such pacts going forward.”
China claims Taiwan as a renegade province that it wants to bring back under its control, and has limited the self-ruled island’s participation in international forums, though it does not object to purely economic exchanges.
At the same time, Taiwan’s policy since 2008 of opening to the mainland economically, which culminated in the 2010 ECFA agreement, has seen trade with the mainland rise to about one fifth of Taiwan’s total trade.
The island has sought other trade deals to offset that dependence and also catch up with other rival regional economies as its own growth faces clouds due to uncertain conditions in major export markets.
In July it signed a deal with New Zealand, governing some US$1 billion in annual trade, mostly agricultural imports from New Zealand and Taiwanese electronics exports. Singapore is
Taiwan’s fifth-largest trade partner and fourth-biggest export market. Under the pact, Singapore will eliminate duties on all imports from Taiwan, while Taiwanese taxes on some 83 percent of goods imported from Singapore will be scrapped.
Farm and industrial goods are expected to be the main beneficiaries of the agreement, which also covers areas including investment protection, e-commerce and government procurement.
The Taiwanese government said the pact would increase Taiwan’s GDP by US$700 million and create 6,154 new jobs.
The island’s rate of growth slowed in the third quarter of this year, according to preliminary figures last month, in part due to weak exports.
Taiwan is seeking entry into the Trans-Pacific Partnership, a free-trade deal being discussed between the United States, Japan and other countries in Asia and Latin America.