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Taiwan to suspend free trade agreement with El Salvador

Focus Taiwan | 11 May 2023

Taiwan to suspend free trade agreement with El Salvador

By Lai Yu-chen and Kay Liu

Taipei, May 11 (CNA) The Republic of China (Taiwan) will suspend implementation of a free trade agreement (FTA) with El Salvador from May 15, following the former Central American diplomatic ally’s decision to repeal the deal, the Cabinet announced Thursday.

The suspension, proposed by the Ministry of Economic Affairs, the Ministry of Finance and the Ministry of Foreign Affairs, was passed at the Cabinet’s weekly meeting that day, and the decision will be sent to the Legislature for deliberation, according to government statement released that day.

Despite the limited impact on Taiwan’s overall trade, Premier Chen Chien-jen (陳建仁) instructed relevant ministries to help Taiwanese businesses explore other markets for their products and procure goods from other countries with which Taiwan has an FTA, acting Cabinet spokesman Lo Ping-cheng (羅秉成) said at a press briefing on the weekly meeting.

Diplomatic ties between El Salvador and Taiwan ended on Aug. 21, 2018, and the foreign ministry of El Salvador announced its plan in December to terminate the trade agreement it signed as a trilateral FTA with Taiwan and Honduras in May 2007, the Bureau of Foreign Trade said in a statement dated April 6 this year.

The 2018 announcement was legally challenged in El Salvador before the government of the Central American country received a favorable final ruling on Nov. 7, 2022, and subsequently announced the end of favorable tariffs on Taiwanese goods.

Taiwan has not received formal notification from El Salvador about its exit from the trade agreement as stipulated in the deal, said the bureau on April 6, when it announced the Taiwan government’s plan to suspend the favorable trade arrangements, 150 days after El Salvador’s unilateral repeal of the trade deal.

At the time, the bureau said exports from Taiwan to El Salvador totaled US$81.58 million, or 0.02 percent of Taiwan’s overall exports in 2022, wile imports from the Central American country stood at US$18.83 million, or 0.004 percent in the same year.

The suspension does not involve Honduras, which also cut diplomatic ties with Taiwan on March 26. Finance Minister Chuang Tsui-yun (莊翠雲) told lawmakers on March 29 that the trade agreement is not linked to diplomatic ties.

Minister of Economic Affairs Wang Mei-hua (王美花) told lawmakers the following day that the fate of the trade agreement will be discussed with the Ministry of Foreign Affairs.

 source: Focus Taiwan