Transcript Taiwan and FTA Negotiations

FTA Practice
Chih-Peng Huang
Director General
Bureau of Foreign Trade, MOEA
10 May 2007
Agenda
1.
2.
3.
4.
5.
6.
7.
Introduction
Recent development of RTA/FTAs
RTAs/FTAs in the context of the WTO
APEC’s responses to the RTAs/FTAs
Content of an RTA/FTA
Taiwan’s response to the RTAs/FTAs
Conclusion
1. Introduction (1/2)
Different stages of economic integration
Preferential
Trading Area
- Lower trade
barriers
among members
Free Trade Area
- All trade barriers
in goods removed
among members
but retains
barriers with ROW
Customs
Union
- Free trade
among
members &
adopt common
external trade
policies
Common
Market
- Customs
Union status
plus free
movement of
labor & capital
Economic
Union
- Common
market status
plus
harmonization
of fiscal and
monetary
policies
1. Introduction (2/2)
EFTA
Canada
EC
United
States
Egypt
China
Israel
Morocco
CARIFORUM
Japan
Bahrain
Jordan
Mexico
Chinese
Taipei
Thailand
GCC
ECOWAS
ESA
Panama
Korea
ASEAN
India
CEMAC
Singapore
MERCOSUR
SACU
Australia
Chile
S. Africa
N. Zealand
Notified RTAs
Under Negotiations/Signed
Proposed
2. Recent development of RTAs/FTAs (1/9)
Economic Rationale
 search for larger markets
 deeper integration
 defensive necessity
 lock out competition
 lock in investment
 More secure access to
developed markets than
GSP programs
Political Reasons
 increase bargaining
power
 prevent backsliding on
political/economic
reforms
 ensure or reward political
support
2. Recent development of RTAs/FTAs (2/9)
Major Regional Economies
Europe
The Americas
Asia
2. Recent development of RTAs/FTAs (3/9)
European Bloc
Israel
1975
S.Africa
1999
Mexico
1999
Chile
2002
Mercosur
FTA
EEA
1994
(Switzerland Not a Member)
FTA
FTA
FTA
FTA
Under Discussion
EFTA
1960
EU 27
1957: Treaty of Rome (EC)
1992: Maastricht Treaty (EU)
May 2004: EU Expanded to 25 Members
2007: EU Expanded to 27 Members
FTA
9 Nations in North Africa
and Mediterranean
2. Recent development of RTAs/FTAs (4/9)
Americas Bloc
FTAA
34 Members
(Excl. Cuba)
USA
NAFTA
(1994)
CACM
•
Israel (1985)
•
Jordan (2000)
•
Singapore (2003)
•
Chile (2003)
•
Australia (2004)
•
Morocco (2004)
•
Korea (2007)
•
Bahrain
•
Colombia
•
Peru
- Under Negotiation
CAFTA-DR (2005)
Mercosur
(1995)
•
Thailand
•
S. Africa
•
Panama
•
New Zealand
•
Malaysia
•
Egypt
2. Recent development of RTAs/FTAs (5/9)
Asian Bloc
ASEAN +3 (China, Japan
& Korea) Initiative
China-Hong Kong;
China-Macau
CEPA(2003)
Japan-ASEAN FTA
(Completion in 2012)
AFTA(1992)
ASEAN-China FTA
(Completion in 2010)
New Zealand-Australia
CER(1983)
Japan:
Singapore (2002),
Mexico (2005)
Malaysia
Philippines
Korea:
Chile (2003)
EFTA
Singapore
Singapore:
Japan (2002),
New Zealand (2000),
EFTA (2002),
Australia (2003),
USA (2003),
Jordan (2004)
New Zealand: Australia (1983),
Singapore (2000)
Australia:
New Zealand (1983),
Singapore (2003),
USA (2004),
Thailand (2004)
Chile
2. Recent development of RTAs/FTAs (6/9)
ASEAN

Signed
•
•

AFTA (ASEAN FTA)
China
AFTA results




Under negotiation
•
Japan, Korea, India,
Australia/New Zealand
CER, EU


GNP↑10%
Business cost↓20%
Annual GDP contribution US$50 billion
Intra-trade increased from US$82.44
billion (1993) to US$175.20 billion (2003)
ASEAN-China results


ASEAN exports to China ↑48%
China exports to ASEAN ↑55.1%
2. Recent development of RTAs/FTAs (7/9)
Japan

Signed
•
•
•
•

Mexico
Malaysia (JMEPA)
The Philippines
Singapore (JSEPA)



ASEAN, Australia,
Chile, India, Korea,
New Zealand, Thailand,
Vietnam



GDP contribution to Japan 0.002%
JMEPA results

Under negotiation
•
JSEPA results
GDP contribution to Japan 0.06%
Two-way trade↑US$7.4 billion
The first FTA to include the agricultural
sector
Japan-ASEAN FTA results

Annual GDP contribution to Japan to be
1.1 trillion YEN
2. Recent development of RTAs/FTAs (8/9)
China

Signed
•
•
•
•
•
•

ASEAN
Chile
Hong Kong (CEPA)
Macao (CEPA)
Pakistan
Thailand
Under negotiation
•

ASEAN+1 results






The largest FTA in terms of population (1.7
billion people)
GDP US$2 trillion
Trade US$1.2 trillion
ASEAN exports to China ↑48%
China exports to ASEAN ↑55.1%
GDP contribution to ASEAN 1%; to China
0.3%
Australia, Iceland,
Indonesia, Mercosur,  China-Hong Kong CEPA results
 HK exports HK$0.99 billion CEPA goods to
New Zealand,
 Two-way trade↑US$7.4 billion
Singapore
 The first FTA to include the agricultural sector
2. Recent development of RTAs/FTAs (9/9)
The proliferation of RTAs continues...
28
180
26
24
22
20
160
RTAs in force as of February 2005
By year of entry into force (left-hand scale)
and cumulative (right-hand scale)
140
120
16
100
14
80
12
10
60
8
40
6
4
20
2
0
0
19
58
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
No. of RTAs
18
Goods
Services
Accessions
Cumulative
A
A
Decisions, Declarations, etc
Dispute Settlement Understanding
Trade Policy Review Mechanism
TRIPS Agreement
A
List of MFN Exemptions
List of specific commitments
General Agreement on Trade in Services
Schedule of Tariff
Concessions
Safeguards
Import Licensing
Subsidies & Couterv. M
PSI
Rules of Origin
TBT
TRIMs
Antidumping (GATT VI)
Customs valuation (VII)
SPS
Textiles and Clothing
Agriculture
GATT 1994
Marrakesh Agreement establishing the WTO
3. RTAs/FTAs in the Context of the WTO (1/4)
The Multilateral Trade
Legal Texts
… on a shelf
3. RTAs/FTAs in the Context of the WTO (2/4)
Provisions governing the conclusion of RTAs by WTO Members
GATT 1994
Understanding on the
Interpretation of Article
XXIV
Enabling Clause
Article V
General Agreement on Trade in Services
Article XXIV
3. RTAs/FTAs in the Context of the WTO (3/4)
Ministerial Declaration (14 Nov 2001)
Doha RTAs mandate
4.
We stress our commitment to the WTO as a unique forum for
global trade rule-making and liberalization, while also
recognizing that regional trade agreements can play an
important role in promoting the liberalization and
expansion of trade, and in fostering development.
29.
We also agree to negotiations seeking to clarify and improve
disciplines and procedures under the existing WTO provisions
applying to regional trade agreements. The negotiations shall
take into account the developmental aspects of regional trade
agreements.
3. RTAs/FTAs in the Context of the WTO (4/4)
Drafted Ministerial Declaration ( 18 Dec 2005)
1.
2.
3.
4.
Mandate of the
HK Ministerial
Declaration
Reconfirm RTAs as an important element to foster
liberalization and promote development.
Highlight other disciplines such as transparency to ensure the
complementarity of RTAs with the WTO.
Vow to a provisional decision on RTA transparency [by 2006].
Text-based negotiations and decision for adoption by end of
2006.
 Definition of the ‘substantially all the trade’ requirement;
 The length of RTA transition periods; and
 RTA development aspects.
4. APEC’s responses to the RTAs/FTAs (1/5)
I. APEC FTAAP Initiative — ABAC Proposal

FTAAP feasibility study proposed by businesses (APEC
Business Advisory Council) since 2004

No consensus reached by APEC in 2004-2005

Findings of FTAAP feasibility study conducted by
ABAC/PECC in 2006

Bigger welfare gain for APEC as a whole than any type of
existing sub-regional and bilateral FTAs

Not feasible in near term but can be a long-term goal
4. APEC’s responses to the RTAs/FTAs (2/5)
I. APEC FTAAP Initiative — Taiwan’s Perspective

Reasons for Taiwan’s supporting FTAAP

Negative impacts of RTA/FTA proliferation
•
•


SMEs placed at competitive disadvantage
Discriminatory treatment for nonmembers
Economic integration is a right way forward for APEC
due to close trade ties, complementarity and high degree
of mutual dependency among APEC member economies.
The difficulties in initial stage of process are well
understood and expected.
4. APEC’s responses to the RTAs/FTAs (3/5)
I. APEC FTAAP Initiative — 2006 APEC Economic Leaders’
Meeting Declaration (FTAAP part) (1/2)



Noted that our business communities have highlighted the
implications of the growing number of diverse FTAs in the AsiaPacific and that other regional arrangements are emerging.
Reiterated our commitment to greater economic integration in the
Asia-Pacific region and pledged to strengthen our efforts towards this
end.
Shared the APEC Business Advisory Council’s (ABAC) views that
while there are practical difficulties in negotiating a Free Trade
Area of the Asia-Pacific at this time, it would nonetheless be
timely for APEC to seriously consider more effective avenues
towards trade and investment liberalization in the Asia-Pacific
region.
4. APEC’s responses to the RTAs/FTAs (4/5)
I. APEC FTAAP Initiative — 2006 APEC Economic Leaders’
Meeting Declaration (FTAAP part) (2/2)

While affirming our commitments to the Bogor Goals and the
successful conclusion of the WTO/DDA negotiations, we instructed
Officials to undertake further studies on ways and means to
promote regional economic integration, including a Free Trade
Area of the Asia-Pacific as a long-term prospect, and report to
the 2007 APEC Economic Leaders’ Meeting in Australia.
4. APEC’s responses to the RTAs/FTAs (5/5)
II. APEC Model Measures for FTA

APEC’s chapter-specific model measures


Reason: Difference in provisions, especially rules of origin of
various FTAs incurs extra cost for businesses and government
agencies.
Objective:
•
•

serve as reference in negotiating FTAs (non-binding and
voluntary in nature)
increase coherence and convergence of various FTAs of member
economies
Timeline: complete all 14 chapters of model measures by the
end of 2008 (Six RTAs/FTAs chapters are completed in 2006).
5. Contents of an RTA/FTA (1/2)
width



depth




WTO

Trade in Goods
Trade in Services
Sanitation and
Phytosanitation
Technical Barriers
Government Procurement
Investment
IPR
Dispute Resolution
WTO Plus







Labor
Environment
Protection
E-commerce
Cooperation on
Customs
Competitiveness
Trade Facilitation
Consumer Safety
5. Contents of an RTA/FTA (2/2)
Effects of RTAs on the multilateral system are manifold
Positive
 economies of scale
 laboratories for change
 provide competition
 attract FDI
 allow countries to hone
negotiating skills
Negative
 strains negotiating capacity
 dampens enthusiasm for
multilateral negotiations
 creates vested interests
 labyrinthine rules of origin
 trade and investment
diversion
 weakest countries left out
6. Taiwan’s Response to RTAs/FTAs (1/8)
Background

In the second half of 2000


November 2001


Four major trading partners (i.e. Singapore, New Zealand, Japan and the
United States), member countries of Central America Common Market and
Panama put on the priority list of singing FTAs by Executive Yuan
August 2002


Start to promote the signing of FTAs
The President indicated signing FTAs with our major trading partners as our
main economic strategy.
May 27, 2004

Executive Yuan declared signing an FTA with the United States was our top
priority.
6. Taiwan’s Response to RTAs/FTAs (2/8)
Progress Report on Major Trading Partners

United States

Japan

Singapore

New Zealand

Philippines
6. Taiwan’s Response to RTAs/FTAs (3/8)
Progress Report on Diplomatic Allies


Panama

First round of negotiations in October 2002

Concluded in August 2003

Entry into force on January 1, 2004
Guatemala

First round of negotiations in March 2005

Concluded in September 2005

Entry into force since July 1, 2006
6. Taiwan’s Response to RTAs/FTAs (4/8)
Progress Report on Diplomatic Allies

Nicaragua




El Salvador and Honduras




First round of negotiations in September 2004
Signed on June 16, 2006
Approved by both parliaments; waiting for the exchange of
corresponding instruments of ratification
First round of negotiations in May 2005
Concluded on November 24, 2006
Signed in May 2007
Dominican Republic


First round finished in October 2006
Second round to be held in mid 2007
6. Taiwan’s Response to RTAs/FTAs (5/8)
Taiwan-Panama FTA complying with WTO rules
Substantially all trade
GATT XXIV
Reasonable length of time
Not to raise barriers to trade
TAIWAN
97% tariff lines to be duty free
in 10 years
95% tariff lines to be duty free
PANAMA
6. Taiwan’s Response to RTAs/FTAs (6/8)
The Taiwan-Panama FTA
Ch.1 Initial Provisions
Ch.2 General Definitions
Ch.3 National Treatment and Market
Access for Goods
Ch.4 Rules of Origin
Ch.5 Customs Procedures
Ch.6 Safeguard Measures
Ch.7 Unfair Trade Practices
Ch.8 Sanitary and Phytosanitary Measures
Ch.9 Measures on Standards, Metrology
and Authorization Procedures
Ch.10 Investment
Ch.11 Cross-Border Trade in Services
Ch.12 Financial Services
Ch.13 Telecommunications
Ch.14 Temporary Entry for Business
Persons
Ch.15 Competition Policy, Monopolies and
State Enterprises
Ch.16 Intellectual Property
Ch.17 Transparency
Ch.18 Administration of the Agreement
Ch.19 Dispute Settlement
Ch.20 Exceptions
Ch.21 Final Provisions
6. Taiwan’s Response to RTAs/FTAs (7/8)


Taiwan-Panama FTA results ( Jan 1, 2004 in force)
Growth rate (compared to 2003)
2004
2005
2006
Two-way trade
112%
96%
71%
Panama exports to Taiwan
260%
286%
469%
Taiwan exports to Panama
104%
86%
50%
Taiwan- Guatemala FTA results ( Jul 1, 2006 in force)
Compared to 2005
 Two-way trade↑25.4% (2006)
 Guatemala exports to Taiwan↑ 101% (2006)
 Taiwan exports to Guatemala↑ 10.5% (2006)
6. Taiwan’s Response to RTAs/FTAs (8/8)
TW-Guatemala in force 07/01/2006
TW-El Salvador-Honduras
to be signed in mid 2007
United States
Japan
TW-Dominican Republic
2nd Round in 2007
TW-Nicaragua signed 06/16/2006
TW-Panama in force 01/01/2004
The Philippines
Singapore
TW-Costa Rica
TW-Paraguay
Signed or enforced
Under negotiations: Diplomatic Allies
New Zealand
Major Trading Partners
7. Conclusion

Regional integration is an inevitable trend; the alternative is
marginalization

Support the multinational trading system

Active pursuit of FTAs with our major trading partners and
diplomatic allies

FTA is not a miracle cure: increased competitiveness is a must

Develop the knowledge-based economy to secure Taiwan’s role
in the global supply chain

Improve the investment environment to entice countries to enter
into FTAs