On January 1, 2002, 21 days after China officially joined the World Trade Organization (WTO), Taiwan formally became the WTO’s 144th member. According to the U.S. Trade Representative, as part of its accession commitment made to the U.S., Taiwan agreed to substantially increase access for U.S. goods, services, and agricultural exports. How will this impact your business?

Taiwan’s Global Position Is Rapidly Expanding

The WTO indicates that from 1993 through 2000, Taiwan’s global exports and imports rose by 74% and 82%, respectively. Its large import demand reflects a lack of resources. Thus, the island — recognized by the WTO as Chinese Taipei — imports nearly all of its energy, most raw materials, and a diversity of manufactured and agricultural goods. Overall, Taiwan’s increases in multilateral trade have significantly contributed to the island’s per capita gross national product increase of 30% since 1993.

Its well-educated population of 23 million people, advanced infrastructure, strategic location, and generally pro-business attitudes have positioned Taiwan as an attractive investment destination. In turn, this has created an economic powerhouse that, as of mid-2000, maintained the world’s third largest exchange reserves, according to the U.S. State Department.

As Taiwan has prospered, the formerly authoritarian system has evolved into a democracy. On May 20, 2000 the inauguration of President Chen Shui-bian marked the first democratic transfer of power between political parties in Chinese history. Although China’s opposition to Taiwanese recognition as a separate political entity has limited the island’s official diplomatic activity, its broad unofficial relationships with most of the world’s major economies have not inhibited its economic development.

U.S.-Taiwan Trade and Investment Sound

In 2000, U.S. exports to and imports from Taiwan reached $24.4 billion and $40.5 billion, respectively. This represented increases of 50% and 61% since 1993. On a historical-cost basis, U.S. foreign direct investment in Taiwan totaled $6.5 billion in 1999, an increase of 46% since 1996.

Taiwan’s WTO Commitments

Prior to Taiwan’s WTO accession, its simple nominal duty rate averages for industrial and agricultural products were 6.03% and 20.02%, respectively. In January 2002, these were scheduled to drop to 5.78 % and 14.01%.

When Taiwan’s tariff reductions on 3,470 industrial and 1,021 agricultural items are completely phased in over the next several years, these averages will further decline to 4.15% and 12.86%, according to the WTO. As a result, Taiwan imports are predicted to increase by approximately $1 billion.

Sector-Specifc Commitments

Investment in Taiwanese telecommunications services is limited to 20% per person but can rise to 60% if a joint-venture exists with a Taiwanese person. There are no restrictions on the provision of value-added telecommunication services.

Taiwan also will allow the establishment of commercial banks, branches of foreign banks, offshore banking branches of banks, foreign exchange brokerage firms, and credit card institutions. Additionally, there are some regulatory measures in place for some financial service activities.

Foreign insurers with offices in Taiwan may provide life, accident, and health insurance. Yet, certain organizations establishing branches must have a specific minimum net worth.

Need Information on Your Sector?

To obtain Taiwanese or other country tariffs on your products, visit www.worldtariff.com, a fee-based information service, or contact the U.S. Department of Commerce’s Trade Information Center website at www.trade.gov/td/tic/ or call 1-800-USA-TRADE.

This article appeared in January 2002. (CB)

John Manzella
About The Author John Manzella [Full Bio]
John Manzella, founder of the ManzellaReport.com, is a world-recognized speaker, author and an international columnist on global business, trade policy, labor, and economic trends. His latest book is Global America: Understanding Global and Economic Trends and How To Ensure Competitiveness.

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