July Brings New FTA with Taiwan

A free trade agreement between Taiwan and Honduras, one of the ROC’s 23 diplomatic allies, came into effect July 15. Ambassador to Honduras Lai Chien-chung and Honduran Foreign Minister Angel Edmundo Orellana Mercado ratified the pact at the presidential office in Tegucigalpa, the capital of the Central American country.

Benefiting immediately from the FTA were 3,881 items exported from Taiwan, a figure that represents 61.9 percent of all exports to Honduras, most of which are industrial products. In return, Taiwan waived custom duties for 6,135 imported items, representing 69.4 percent of imports from its diplomatic ally, the Bureau of Foreign Trade under the Ministry of Economic Affairs stated.

Moreover, starting from 2017 the ROC will not place import duties on 93 percent of Honduran goods exported to Taiwan, and the Central American state will allow 70.3 percent of merchandise from Taiwan to enter its market without charging any tariffs, the bureau added.

According to statistics released by the ROC Ministry of Finance’s Directorate General of Customs, bilateral trade between Taiwan and Honduras in 2007 was valued at US$66 million. Currently, Taiwan enjoys a US$20 million trade surplus with the Latin American nation.

“Signing an FTA with a country that has diplomatic ties with Taiwan will help improve relations and boost trade,” BOFT Deputy Director Hsu Chun-fang said July 21.

The deputy director cited the example of the Taiwan-Panama trade pact that took effect Jan. 1, 2004 to support her argument. According to data compiled by the Directorate General of Customs, the value of trade between Taiwan and Panama increased by 104 percent from US$128 million in 2003 to US$259 million in 2007.

The new FTA will ease the passage of Honduran goods into the Asia-Pacific region and increase the flow of Taiwanese merchandise into Latin America, Hsu said. “In addition, with this agreement, there will be many opportunities for Taiwan and Honduras to jointly develop the North American market,” she added.

Although the FTA between Taiwan and Honduras only took effect this month, it was part of an agreement that includes El Salvador and was first signed May 7, 2007. The trilateral FTA was sealed in San Salvador, the capital of El Salvador, after four rounds of negotiations that took place the year before. The FTA between Taiwan and El Salvador came into effect in March this year, after representatives from the two countries ratified the agreement in February.

Under the terms of the deal, 3,590 items, or 57.1 percent of all goods exported from Taiwan to El Salvador are tariff-free. In return, Taiwan abolished customs duties on 5,688 items, or 64.4 percent of all merchandise imported from El Salvador.

The Central American nation will also enjoy tariff-free privileges on sugar exports of up to 35,000 tons for the first year, ROC Ambassador to El Salvador Carlos Liao said in March. The amount of sugar exported duty-free is expected to increase to 50,000 tons in the second year and 60,000 tons in the third year. “Taiwan used to import sugar from El Salvador indirectly, but now we can do so directly,” Liao said.

The FTAs between Taiwan and its two diplomatic allies in Central America are expected to help create opportunities for increased exports of industrial products and enhance bilateral economic and trade relations, the ROC Ministry of Foreign Affairs stated.

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