The U.S.-Taiwan Partnership: Expanding Growth, Discovering Opportunity

John Chen-Chung Deng Minister

Ministry of Economic Affairs February 10, 2015

At CSIS

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Outlines A.Introduction B.Taiwan’s Economic Prospect C.Taiwan’s Challenges D.Taiwan’s Opportunities E.Conclusions

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Introduction

Ministry of Economic Affairs (MOEA) •International Trade: trade negotiations, trade promotion, and enhancing trade relations with trading partners

•Industrial Development: assisting businesses in R&D, developing and maintaining industrial zones, and developing programs to connect between schools and businesses.

•Investment Promotion: attracting foreign investment, and assisting Taiwanese companies to invest abroad.

•Small and Medium Enterprises: assisting SMEs in improving their managerial skills, production capabilities & marketing.

•Energy Policy Formulation, and •Power, Water and Gasoline supply

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Taiwan’s Economic Prospect

Expected 3.22%~ 3.8%

growth (2015)

Thanks to US recovery

and easing monetary

policies in major

economies

The Purchasing

Managers' Indices(PMI)

8.7% growth so far in

2015 also shows mild

recovery.

Expected Export

growth 3.56% (2015)

Boost by smart

devices, 4G related

products

Special attentions

should be paid to a. oil prices

b. softened PRC

growth.

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United States US $62.3 Billion

Japan US $61.6 Billion

Hong Kong US $44.2 Billion

Singapore US $28.9

Billion

Korea US $27.5

Billion

Taiwan’s Challenges

Excellence in manufacturing, but room for improvement in trade in services.

Insufficient added-value created

Not enough R&D injection

Slow branding development

A. Export Oriented Economy

Dependency on Electronics & ICT Industries ; need new

flagship industries

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United States US $62.3 Billion

Japan US $61.6 Billion

Hong Kong US $44.2 Billion

Singapore US $28.9

Billion

Korea US $27.5

Billion

Taiwan’s Challenges

More transparency, coherence and

internationalization in regulatory regime

Limited market and investment instruments

Room for improvement in G2G & G2B

communication

Slow Liberalization Reform

B. Low FDI Stock

Pale performance compared with Asian neighbors

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United States US $62.3 Billion

Japan US $61.6 Billion

Hong Kong US $44.2 Billion

Singapore US $28.9

Billion

Korea US $27.5

Billion

Taiwan’s Challenges

Concentration of Export markets

Export Items are not diversified

C. New Market Needed

Booming Regional Economic Integration

&

FTAs

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Japan US $61.6 Billion

Hong Kong US $44.2 Billion

Singapore US $28.9

Billion

Korea US $27.5

Billion

Taiwan’s Opportunities A. Green Economy and sustainable development

• ICT Integration, nano-technology applications with sustainable development concepts.

• UN Green Economy and procurement, APEC Environmental Goods Initiative, WTO EGA negotiations, and Environment Chapters in FTAs

• Taiwan’s exports in pollution control, energy saving equipment, green materials and carbon capture related equipment are growing.

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Highway Electronic Toll Collection System

Taipei U Bike System

Smart Buses

Based on the strong ICT industry and create Taiwan a new image for smart lifestyle;

Offer solutions which will address the global urbanization problem (Highway Electrical Toll Collection System(ETC), Ubike, Smart buses, etc.);

Become a global leader in contributing to efforts to use smart and digital solutions to address consumer needs, real time services, climate change and environmental deterioration;

Taiwan’s Opportunities

B. Smart and Digital Life Styles

Taiwan’s Opportunities

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Taiwan is a good neighbor in Asia Pacific. Bilateral Economic Framework Agreement with Mainland China signals that Taipei and Beijing know how to manage the relations with each other. Bilateral trade agreements with non-diplomatic allies proved that Taiwan is able to enter meaningful economic relations through FTAs with trading partners without causing political tensions.

Singapore (ASTEP)

New Zealand (AZTEC) Taiwan-Japan BIA also shows that Taiwan is able to expand economic ties by all kinds of instrument.

TPP members

RCEP members

C. Signing ECAs and Joining Mega FTAs

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FTA Coverage

About

77%

FTA Coverage About

10%

Sources：Global Trade Atlas Navigator 2013 Database

Signed: 8 countries (7 FTAs)

In Effect: 8 countries (7 FTAs)

FTA Coverage

About

38% Signed: 50 countries (12 FTAs)

In Effect: 47 countries (9 FTAs)

FTA Coverage

About

18% Signed: 15 countries (13 FTAs)

In Effect: 15 countries (13 FTAs)

Signed: 60 countries (22 FTAs)

In Effect: 32 countries (21 FTAs)

A. For Taiwan, trade liberalization is not an option, but an imperative.

Conclusion

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B. The international community should accept Taiwan as a member, and US’s open, strong and clear support is crucial.

IV. Conclusion

19th largest economy

in the world

TPP and

RCEP

The high quality

ANZETC and ASTEP

3rd Best investment

environment in the world

Protection of IPR

19th largest economy in the world, and

Taiwan’s trade with other Asia-Pacific

countries has doubled in the past

decade with an extensive, closely-knit

network in supply chains.

According to Business

Environment Risk

Intelligence, 2013

have proved that

Taiwan is qualified to

join any high-standard

RTA.

In preparation to join the

TPP and RCEP, Taiwan

is accelerating its

unilateral liberalization

efforts.

Impressive legislative

strides for the

protection of IPR.

Recent amendments to

2014 Trade Secret Law

could bring Taiwan into

conformity with

international standards.

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0

1

2

3

4

5

6

7

8

United States Japan EU Hong Kong MainlandChina

2014 Taiwan’s export growth to key trading partners

%

C. Taiwan-U.S. Trade Relations still Going Strong

Conclusion

The US replaced Japan as Taiwan’s 2nd largest trading partner in 2014

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USA 47%

UNITED KINGDOM

11%

AUSTRALIA 8%

JAPAN 10%

CANADA 6%

FRANCE 3%

GERMANY 2%

NEW ZEALAND 2% OTHERS

11%

Taiwan Overseas Student Destination in 2013

Conclusion

Key activities to enhance bilateral economic and trade relations with the USA

Source: Ministry of Education, ROC(Taiwan)

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Conclusion

Key activities to enhance bilateral economic and trade relations with the USA

JAPAN, 11%

HK, 8%

THAILAND, 6%

PHILLIPINES, 4%

SINGAPORE, 8%

AUSTRALIA, 3%SPAIN, 3%

FRANCE, 13%

UK, 6%NETHERLANDS, 3%

SWISS, 6%SWEDEN, 1%

GERMANY, 4%

CANADA, 4%

USA, 21%

Foreign Banks Branch Number Ranking in Taiwan in 2014

Source: Financial Supervisory Commission , ROC(Taiwan)

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• The 2014 TIFA meeting was productive in 6 key areas: investment, IPR, pharmaceuticals and medical devices, TBT, agriculture, and multilateral and regional cooperation.

Continue the Trade and Investment Framework Agreement (TIFA) talks

• 52 Senators and 114 House of Representatives have expressed their support for Taiwan’s participation in the TPP.

• Taiwan’s decent annual import of nearly USD$ 300 billion is up for grab.

Seeking U.S. support to join TPP

Conclusion

Key activities to enhance bilateral economic and trade relations with the USA

Thank you