FTA's impact Taiwanese economy and current competition with Korea

FTA's impact Taiwanese economy and current competition with Korea

International Business: FDI and TNCs
Winter semester 2014/2015

Pin-chieh Chu (Claire)

28.01.2015

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Agenda

Overview of Taiwans Export Trade

Performance of the TW electronic product
The proportion of Taiwan export country
Overview of Koreas Export Trade
China-Korea FTA
The influence in Taiwan industry after China-Korea FTA
Opinions about how to cope with the impact of China-Korea FTA
Question

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Overview of Taiwans Export Trade

FTD in 2014 Q3 : 112.66% (TWs FTD has exceed 100%a long time ago)
2014, Q1~Q2 performance of Taiwans Export trade
...
...
...

FTD foreign trade degree of dependence

Source: Ministry of Finance, R.O.C

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Performance of the TW electronic product

Performance of electronic products

Annual growth rate%

50
45
40
35
30
25
20
15
10
5
0

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The Proportion of Taiwan Export Country

Proportion of Export market in 2013

others
22%

China (incl.HK)
+2.2% 40%
Europe
9%

-3.5%

ASEAN-6
-1.2%
USA
10%

19% +3.9%

** ASEAN-6: Indonesia, Malaysia,

the Philippines, Singapore and Thailand, Brunei
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Overview of Koreas Export Trade

FTD has exceed 100% since 2011

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China-Korea FTA

Progress of China-Korea FTA

China becomes Koreans biggest export partner: 2003
Negotiations and Agreement :2012
Agreement made official : 2014 Nov

Main purpose of China-Korea FTA:

China-Korea trade volume reach :$300bil USD(currently $220 bil USD
= China-USA trade volume, China-Korea trade volume 50%
Chinas share of Korean exports:12 25%(2001~2010)
Competitor in China market:
Taiwan, Japan,
ASEAN(Investment Agreement)
increase competitiveness of the China market

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The influence in Taiwan industry after China-Korea FTA

3~5 years after China-Korea FTA comes into force

Manufacture industry output recession: 1.59 3.85 (=260 billion

Taiwan dollars)
Most affected industry:, polarizer industry.
Petrochemical industry: cheaper & closer to northeast China
market, 90% export to CH (tariff 6.5~10%, KR:0% after FTA)
Panel industry: TW panel replace by KR (lost: $ 1.5 billion NTD)

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Opinions about how to cope with the impact of China-Korea FTA

FTA global coverage KR: TW: 62.6% : 9%
FTA Tariff free ?

Optimist:
Quality is the competiveness

Export amount to US(tariff

free)
KR:TW= 71.5%:64.2%
Quality> FTA
GATT had done the most
part of free trade
Information Technology
Agreement: 1997

Pessimist:
The benefit of FTA Tariff free
Export amount to US(tariff
free)
can because things that
doesn'tt have
competitiveness had been
through out of the us market
(100% Tariff free)
Only solution : FTA with
US
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Question:
Are you a optimist or pessimist in the situation of previous slide?

As a Foreign Direct invertor, do you still think Taiwan is a good place for your
investment? Why?

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