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ASTEP increases bilateral investment, trade: minister

China Post, Taiwan

ASTEP increases bilateral investment, trade: minister

By John Liu, The China Post

8 November 2013, 12:22

TAIPEI, Taiwan — The economic partnership agreement between Taiwan and Singapore inked yesterday is likely to benefit manufacturing as well as to promote bilateral investment and trade, Economic Affairs Minister Chang Chia-juch (張家祝) said yesterday.

The Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership (ASTEP) contains a total of 17 chapters concerning trade, local regulations, tariff procedures, investment, government purchases, and other areas.

As a free port, Singapore levies no tarifs on most imported products. However, tariffs are still applied on six types of alcohol imported from Taiwan. Under ASTEP, no tariff will be applied on the six alcohol products, including beer. As such, beverage-related businesses will be among those that benefit most from the new agreement.

Under ASTEP, 100 percent of goods exported to Singapore will avoid tariffs, while 99.48 percent of goods imported to Taiwan will be exempt from duties. Depending on the sensitivity of different industries to the free trade agreement’s effects, tariffs will be reduced over five different timeframes: immediately, over five years, over 10 years, over 15 years, or experience an 80-percent tax reduction over five years.

Increase in Investment and Trade

A total of 40 items are excluded from the pact, including pilose antler, rice, pineapples, mangoes and other agricultural products. Tariff reductions on cloth, towels, clothes, bedding products, air conditioners, television sets and other industrial products will be implemented over a 10-year period. Chang said that Taiwan’s industrial products are poised to benefit most from the agreement.

As most products are already duty-free in Singapore, Chang pointed out that ASTEP’s tariff clause will not be the major factor helping local industries. Instead, ASTEP helps both countries by increasing the volume of investment and trade through economic integration. Chang expects that more capital from Singapore will flow into Taiwan in the future.

The ASTEP was signed under the World Trade Organization’s framework. Chang stressed that if excessive imports of certain products occur in the future, economic measures such as anti-dumping, countervailing duties and global safeguard measures may be rolled out to protect local industries. Cross safeguard measures were also part of the ASTEP agreement, which allows tariff reductions to be temporarily halted should an inflow of imports be considered damaging to some local industries.

Chang said that Taiwan’s signing of free trade agreements with other countries depends on the success of the cross-strait service trade agreement that Taiwan just signed with mainland China. Whether the trade and economic relationship with China can be normalized and systematized is a concern for countries which are considering signing trade agreements with Taiwan. The cross-strait service trade agreement is still being reviewed in the Legislative Yuan, and the agreement being drawn up in the house will provide a litmus test as to whether trade and economic ties with mainland China can be normalized, Chang said.