Taiwan’s Current Trade Status and Challenges · supply chains. Opportunities • Taiwan has only...

Taiwan’s Current Trade Status

and Challenges

經濟部國際貿易局 Bureau of Foreign Trade

Ms. Jen-Ni Yang

Director General

August 25, 2016

1

Contents

2

1. Current Status and Challenges

2. Taiwan’s Trade Priorities

2.1 Multilateral and Plurilateral Negotiations

in the WTO

2.2 Progress in TPP / RCEP Participation

2.3 The “New Southbound Policy”

3. Conclusion

Data Source: Global Insight, 15 July 2016 and Customs Administration. Note: 2016 data is projected.

16.7 21.9

14.2 15.5 15.5 15.5

-22.6

21.7 20.0

1.2 1.7 1.0

-13.1

-2.3

12.6

25.4

7.7

12.8 9.2 6.8

-23.4

38.5

12.9

18.8

-2.4 -1.6

1.0

-5.4

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Trade Growth Rates for the World and Taiwan

World Taiwan

1. European debt crisis

2. ECFA signed

3

Global financial crisis


4

1.1 Taiwan’s External Trade Decline

source：The Customs Administration, MOF, compiled by BOFT

Taiwan’s exports/imports have slowed in recent years.

2008 2009 2010 2011 2012 2013 2014 20152016

Cumulative(1-7)Month

Exports 2,581 2,057 2,780 3,129 3,064 3,114 3,201 2,853 1,555

Imports 2,445 1,776 2,563 2,881 2,773 2,780 2,818 2,372 1,278

Annual change of exports 3.7 -20.3 35.2 12.6 -2.1 1.6 2.8 -10.9 -7.7

Annual change of imports 9.6 -27.4 44.3 12.4 -3.7 0.2 1.4 -15.8 -9.2

-40.0

-30.0

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

0

500

1,000

1,500

2,000

2,500

3,000

3,500


5

1.2 Concentration of Export Market Mainland China (including Hong Kong) accounts for

40% of Taiwan’s total exports.

Source: the Customs Administration, MOF (2015 Analysis of International Trade Trends by BOFT)

Growth rate and amount of Taiwan’s exports in 2015

39.0

18.2 12.2

8.5 6.9

-12.4 -14.5

-1.8

-10.5 -3.2

-20.0

-10.0

0.0

10.0

20.0

30.0

40.0

50.0

MainlandChina&HK

ASEAN-10 U.S.A. EuropeanUnion-28

Japan

As% of total Annual Change Rate%


Parts for

Electronic Products,

30.1%

Information, Communication

and Audio-video Products,

10.7%

Base Metals

and Articles

of Base Metals,

8.9%

Optical, Photographic

Cinematographic Apparatus,

7.6%

Machinery

7.5%Chemicals

6.4%

Mineral Products

4.2%

Electrical

Machinery

Products

4.1%

1.3 Concentration of Exported Products

Information,

Communication

and Audio-videoProducts

24.8%

Parts for

Electronic

Products

16.6%

Base Metals and

Articles of Base Metals

9.0%

Machinery

8.0%

Electrical

Machinery

Products

5.1%

Chemicals

3.4%

Optical,

PhotographicCinematographic

Apparatus

1.8% Mineral Products

1.5%

2001 US$126,612.2

million

2015 US$285,343.6

million

6 Source: The Customs Administration, MOF, compiled by BOFT


1. Current Status and Challenges 1.4 Regional Economic Integration

Taiwan lags in FTA coverage.

7

(22.71%, 14)

(76.65%, 21)

FTA’s in force

FTA coverage

(%)

30

100 50 70 10

(64.29%, 14)

(9.74% (note), 7)

Source: Global Trade Atlas Navigator Jan-Oct 2015 statistics, the Customs Administration, MOF of Taiwan

Note: ECFA-only items listed in the early harvest scheme are included

Japan

Taiwan

Korea

Singapore

Mainland China

(33.67%, 15)

FTA coverage rate in some Asian countries

(56.38%, 9)

Viet Nam


1.5 More Black Swans?

8

Brexit

• Highly uncertain before the UK completes its exit negotiation with the EU

The US presidential election in November

• Both candidates are against TPP

Geopolitics

• Terrorist attacks, Syrian refugees pouring into the EU, disputes in the South China Sea

2. Priorities of Taiwan’s trade 2.1 Multi- / Plurilateral negotiations in the WTO (1/4)

9

Background

• WTO members concluded negotiations at Ninth Ministerial Conference held in Bali, Indonesia in December 2013

• The first multilateral agreement concluded at the WTO by all of its Members • TFA will enter into force 30 days after 2/3 of WTO members have domestically ratified and notified

the WTO of their acceptance of this Protocol. The number of ratifications now stands at 90.

Taiwan’s performance

• formally ratified the TFA on September 3, 2015 and become the 15th WTO members have accepted the TFA

• donate CHF 35,000 to help the developing and least-developed countries reap the benefits of the TFA in 2016

• According to the study of Chung-Hua Institution for Economic Research: GDP ↑ $3.8 billion Exports ↑ $3.2 billion Imports ↑ $2.7 billion

Benefit

• Boost global trade • Increase domestic and foreign investment • Export market diversification • Enhance consumer welfare

• expedite the movement of goods • reduce times and costs of customs clearance • transparency the border procedures • predictable release of goods

Trade Facilitation Agreement (TFA)

In May of 2012, Taiwan and other major IT exporting countries initiated the ITA expansion

negotiations, which lasted for three and a half years. The 24 participating members

announced the conclusion of the negotiations on December 16, 2015.

Outcome

The ITA expansion was the first significant tariff reduction deal for goods in 18

years. The annual trade in these 201 products is valued at USD $1.3 trillion per

year, and accounts for approximately 10% of total global trade.

Each member shall apply three-year staging in four equal annual tariff reductions

from July 2016, unless agreed by other members. Extended staging to five or

seven years may be necessary in limited circumstances.

Benefits for Taiwan

The export value of ITA expansion products accounts for 28.7% of Taiwan’s

total exports

Tariff Net Profit: USD $ 820 million

Competitive items: 136 out of 201 on the ITA expansion product list

10

Information Technology Agreement (ITA) Expansion


Negotiation on Environmental Goods Agreement (EGA)

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1. Australia 2. Canada 3. China 4. Costa Rica 5. EU (28) 6. Hong Kong 7. Iceland 8. Israel 9. Japan 10. Korea 11. New Zealand 12. Norway 13. Singapore 14. Switzerland 15. Taiwan 16. Turkey 17. US

• On the basis of the APEC List of Environmental Goods, to expand the product coverage and seek tariff elimination

• Apply the principle of Most Favored Nation once a critical mass of WTO Members participates

• Contribute to green growth and sustainable development

• Bicycles and parts, LED lighting, recycled paper, photovoltaic cells, turbines, pumps, pipes, sound insulation products, waste management machinery, sewage sludge dryers, water filtering or purifying machinery, measuring or checking instruments, etc.

• Launched in July 2014 • 15 Rounds hold till July 2016 • Seek to conclude the negotiation by the end of 2016

Participants

Progress

Goal

Taiwan’s nominations


12

Trade in Servicers Agreement (TiSA)

What is TiSA

A plurilateral trade agreement covers trade in services only.

Negotiations among 23 WTO Members* accounting for 70% of the services

trade in the world

Starting in 2013 and expecting to conclude by the end of 2016

* Australia, Canada, Chile, Colombia, Costa Rica, EU, Hong Kong, Iceland, Israel, Japan, Korea, Liechtenstein,

Mexico, Mauritius, New Zealand, Norway, Pakistan, Panama, Peru, Switzerland, Taiwan, Turkey, US

Objectives of TiSA A high-ambition agreement, that would attract broad participation and which

could be multilateralised in the future Further liberalization in trade in services by improving the market access

commitments and by developing new and enhanced trade disciplines (such as Financial Services, Telecom Services, Ecommerce, Temporary stay of business persons, etc)

Taiwan’s objectives to join TiSA Expand the services export opportunities and upgrade the competitiveness of

Taiwanese services industry Connecting the world by participating in the new service rules making Making Taiwan ready for joining TPP

2. Priorities of Taiwan’s trade 2.1 Multi- / Plurilateral negotiation in the WTO (4/4)

2008 2013

Japan

joined TPSEP

(P4)

2015

Oct. 5

concluded

2017

members’

ratifications, TPP

enter into force

(estimated)

?

Open to

new

members

TPP launched

2005

Nov. 5

Draft

published

2016

Feb. 4

Agreement

signed

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2.2.1 TPP: The Trans-Pacific Partnership (1/5)

Timeline

2. Priorities of Taiwan’s trade 2.2 Progress in TPP and RCEP participation

2015

2.2.1 Features of the TPP agreement (2/5)

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Comprehensive

liberalization

Cross-cutting

New Trade

Challenges

A living

agreement

All items are subject to

negotiations. The

results are presented

in the schedules.

• Goods

• Services

• Government

Procurement

• behind borders” issues

(e.g. : telecom,

intellectual property, etc.

• Regulatory coherence

• SMEs

• Competitiveness and

business facilitation

• development

• Competition policy,

• Labor

• State-owned enterprises,

• Environment

• E-commerce

• new issues and

• new members


source： IMF World Economic Outlook Databases 2015 、The Customs Administration, MOF 15

The total GDP of the 12 TPP members in 2015 was around 27.46 trillion US dollars (37% of the global GDP), higher than both the EU (22%) and NAFTA (28%)

TPP

NAFTA

EU

37%

28% 22%

TPP

TPP 36.91%

Taiwan’s foreign trade

Others 63.09%

The total trade amount between Taiwan and TPP members in 2015 was around 187.9 billion US dollars, which accounts for 36.91% of Taiwan’s total trade

(509 billion US dollars)

2.2.1 Why TPP Matters to Taiwan (3/5)


The Executive Yuan has assigned a Minister without Portfolio to supervise and facilitate the preparation work.

Preparations are focused on the following five areas：

“Gap analysis” between our existing laws and the TPP text, and amendments for implementation

Enhanced domestic

communication and

consultation

Impact assessment

Domestic capacity building

Seeking the

support of TPP

members

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TPP website: http://www.tpptrade.tw/

TPP Facebook: http://m.facebook.com/taiwantpp/

2.2.1 Preparations for joining the TPP (4/5)


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2.2.1 The Challenges and Opportunities of the TPP (5/5)

• Taiwan meets the accession

requirement in Chapter 30

of the TPP.

• Taiwan has been a crucial,

integral part of Asia-Pacific

supply chains.

Opportunities

• Taiwan has only two FTAs

with TPP members.

• Taiwan’s trade regime must

be liberalized to the TPP

level.

• Taiwan has a unique

international status.

Challenges


18

18 The RCEP includes 10 ASEAN member states

and ASEAN's 6 FTA partners.

+China +Japan

+New

Zealand &

Australia

+India

+Korea

ASEAN

(10 Countries) Issues Covered

Trade in Goods Intellectual Property

Trade in Services Competition Policy

Investment Dispute Settlement

Economic and Technical Cooperation

E-Commerce

Other Issues

2.2.2 An Overview of the RCEP (1/3)

Regional Comprehensive Economic

Partnership (RECP) negotiations were

launched in May 2013 and the 14th round

was just held in August.

18


19

Taiwan’s Total Trade

RCEP 57.59%

Others 42.41%

Global GDP

RCEP 30.62%

Others 69.38%

In 2015, Taiwan’s trade with RCEP

members amounted to US$293.3

billion, accounting for about 57.6% of

Taiwan’s total trade.

In 2015, RCEP’s GDP amounted to

US$22.4 trillion, accounting for

about 30.62% of global GDP.

Sources：Statistics of the Customs Administration (ROC); World Economic Outlook Database, April 2016

All participants in the RCEP are among Taiwan’s important trading partners. 2.2.2 An Overview of the RCEP (2/3)


• Terms and Conditions to Join RCEP:

Only after the completion of the RCEP negotiations.

An open accession clause that enables the participation of any other ASEAN FTA partner that did not participate in the RCEP negotiations and any other “external economic partners” (this term has not yet been discussed and defined).

Consensus of all 16 current members is required.

• Taiwan could possibly participate in RCEP’s 2nd stage of negotiations:

After the current RCEP negotiations are concluded, the agreement enters into force, and the new membership requirements are defined, then our accession will be considered by all RCEP members.

20

2.2.2 An Overview of the RCEP (3/3)


2. Priorities of Taiwan’s trade 2.3 The “New Southbound Policy” (1/4)

• 10 countries of ASEAN, countries in South Asia, and Australia and New Zealand.

1. New Scope:

• To enhance economic partnership between Taiwan, ASEAN and South Asia countries through the promotion of multi-faceted links in the areas of trade, investments, SMEs, industrial cooperation, E-commerce and personnel exchange.

2. New Direction:

• Extending trade, investment and industrial cooperation to ASEAN and South Asia market to build up new support to Taiwan’s economic development.

3. New Brace:

21

Trade Two-Way

Investment SMEs

Industrial Cooperation

E-commerce Personnel Training

Six dimensions

Ministry of Economic Affairs has developed a new plan to

promote the New Southbound policy, which focuses on :

2. Priorities of Taiwan’s trade

2.3 The “New Southbound Policy” (2/4)

22

S m a l l a n d

M e d i u m

E n t e r p r i s e s

Financing and credit guarantees

Support SME exports.

23

Comprehensive

T r a d e

P r o m o t i o n s

T w o - w a y

I n v e s t m e n t

Offering customized services

Overseas mechanical vocational training

centers and mechanical marketing alliances

Developing new business models

Economic and trade dialogues

Strategic Taiwan-ASEAN partnerships

Cluster investments in ASEAN and South Asia

Investment safety nets


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E-Commerce

M a r k e t i n g

P e r s o n n e l

T r a i n i n g

Globalization of “Taiwantrade” and promoting

e-commerce trade.

Using e-commerce to access markets: Using

online-to-offline (O2O) marketing, etc.

Globalization of e-business platforms.

Industrial Personnel training

International Marketing Personnel Training.

Strengthening personnel exchanges

I n d u s t r i a l

Cooperation

Bilateral industrial cooperation

Exportation of system integration services and

turn-key plants.


Levelling the playing field for

Taiwan’s businesses

25

Enhancing our

partnerships

with the global

community

3. Conclusions

26

Thank you

Bureau of Foreign Trade http://www.trade.gov.tw/

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