Taiwan will endeavour to forge closer economic ties with India and improve efforts to enter into a free trade agreement (FTA) with India, Vice Minister of Foreign Affairs Vanessa Shih has said.
On its part, India should not be self-restrained and move ahead for closer economic cooperation with Taiwan, recognising that increase in bilateral trade will be mutually beneficial, Shih told BusinessLine at Taipei.
BusinessLine was part of an international press group tour visiting Taipei on Taiwan's new initiative of 'Free Economic Pilot Zones (FEPZ).
Shih's remarks are significant given that a new Government is in place at New Delhi since late May this year and that earlier efforts (since the year 2009) to enter into FTA had not made much progress.
Highlighting the trade creation effect of FTAs, Shih pointed out that bilateral trade between Taiwan and New Zealand has shot up (nearly 30 per cent) in the last one year post the signing of economic cooperartion agreement in 2013.
With the Modi-led Government in power at the Centre, there is some optimism that two-way trade and investment ties between India and Taiwan will get further fillip.
In a separate interaction, Michael Y.K.Tseng, Deputy Chief Negotiator, Office of Trade Negotiations, Ministry of Economic Affairs, Taiwan said that Taiwan was ready to enter into a FTA with India.
The feasibility study that was undertaken has now concluded that a FTA would be mutually beneficial, Tseng said.
Indications are that both Taiwan and India will in the coming days take steps towards a trade pact.
A high-level official delegation from Taiwan is expected to visit India during November third week to further industrial cooperation between the two countries.
This delegation will include several Taiwanese businessmen and would visit New Delhi and Gujarat, Paul C.F.Wang, Chief Secretary, Ministry of Economic Affairs said.
Efforts will be taken to have closer industrial cooperation in three areas--Information and communication technology, Textiles and Ship-building, he said.
Taiwan is now looking to fast track further trade liberalisation through the FEPZs as part of its goal to boost its competitiveness and enable it ultimately to become a free economic island.
A law to provide suitable fiscal incentives to FEPZ and also reform the existing regulations around capital, labour and logistics is awaiting the nod of Legislative Yuan (Taiwan Parliament).
This FEPZ experiment is expected to last for about ten years and then a call will be taken as to its extension, say policy makers in Taiwan.
It is widely believed that the FEPZ initiative --signalling further liberalisation of Taiwan's economy--could help Taiwan to join the Trans Pacific Partnership (TPP) and Regional Comprehensive Economic Partnership (RCEP).
Washington has been pushing for TPP, which embraces 11 Pacific Rim countries, including Japan, Canada, Australia and Mexico, while notably excluding China.
The RCEP is more of a China led initiative and Taiwan is keen to be part of this agreement as 57 per cent of its total trade is with the 16 participants of RCEP free trade agreement negotiations.
Exports account for 70 per cent of Taiwan's Gross National Product. Exports to China make up about 40 per cent of Taiwan's total outbound sales.
Meanwhile, the soon-to-be signed China-South Korea FTA has got the Taiwan's policymakers and business community worried as nearly 30 percent of Taiwanese industrial products will be affected.
The China-South Korea FTA could knock down Taiwan's exports by 1.35 percent or US $ 3.75 billion, according to Taiwan Government.
Taiwanese industries including petrochemicals, flat panels, machine tools, textiles and steel will be affected by the China-South Korea FTA.
Given that these industries are the major driver to Taiwan's export growth, the Beijing-Seoul FTA is expected to cost Taiwan dearly.