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Taiwan confirms desire for free trade deal with Australia

Sydney Morning Herald, Australia

Taiwan confirms desire for free trade deal with Australia

17 October 2014

By Chris Zappone, News editor, foreign desk

Taiwan has confirmed its desire to forge a trade deal with Australia and rejected suggestions that mainland China could "meddle" in its efforts for deeper regional ties.

"While mainland China’s economic rise has indeed made it an important trade partner to many countries, Taiwan by no means requires the mainland’s approval to enter into trade talks with neighbours," said Taiwan executive Yuan spokesman Sun Lih-chyun.

In a statement that lauded the "deepened" ties and closer trade links between Taiwan and Australia, Mr Sun said his country’s "hope is that the two sides will take this relationship one step further and conclude a free trade agreement that will help bring robust growth to the entire Asian-Pacific economy".

World Trade Organisation member Taiwan, ruled by a rival government to Beijing’s, has been trying to balance deeper regional economic integration with continued political autonomy from Beijing.

While "not currently discussing" a trade deal with Taiwan, a spokesman for the Department of Foreign Affairs and Trade confirmed "Australia has significant economic interests" with it. Taiwan was Australia’s seventh-largest export market last year, the spokesman said, noting that Australia’s exports to Taiwan "have shown sustained long-term growth" that averaged 6.5 per cent a year over the past two decades. Australia’s merchandise exports to Taiwan alone totalled $7.4 billion last year, including nearly $3 billion in coal.

The dispute about Taiwan’s intentions with Australia follows a number of articles in Taiwan’s media, reported also in The Australian, that claimed mainland China was interfering in its drive for FTAs in Asia.

Earlier this month, Taiwan Economics Minister Duh Tyzz-jiun said there were several countries in the region "likely to enter into substantial trade talks with Taiwan this year" but they were holding off because of Beijing’s concerns.

Growing trade ties with China fuel Taiwan’s worries about the island nation’s longer-term political independence, a status the majority of Taiwanese support. The share of Taiwan’s exports to China has widened from 3 per cent in 2000 to nearly 27 per cent last year, according to IHS Global Insight. Recently Taiwan has been playing catch-up in the area of free trade agreements, inking deals with New Zealand, Singapore and five central American nations.

Last month Taiwan’s government rejected a call by Chinese president Xi Jinping to adopt the "one country, two systems" model like the one used by Beijing to absorb Hong Kong after the handover of the territory from British rule in 1997. Taiwanese president Ma Ying-jeou last week urged China to accept democratic reform and signalled "strong support" for Hong Kong’s democracy movement.

Even if trade deal negotiations eventually started between Taiwan and Australia, it is expected they could not begin until China and Australia hammer out their long-awaited free trade deal, expected to conclude by the end of the year.

"There is only so much Taiwan can achieve in international forums without at least the passive acceptance of China," James Laurenceson of the Australia-China Relations Institute at the University of Technology Sydney told Fairfax Media.

A China-Australia FTA would follow Australian deals inked with South Korea and Japan this year. The implications of a Taiwan-Australia deal are wider than simply bilateral trade, said Alan Oxley, chairman of the APEC Study Centre at RMIT. A Taiwan deal would "complete the suite after trade deals with Japan, Korea, and China", easing the creation of a regional FTA, like the Trans-Pacific Partnership, he said.