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Taiwan to use Mexico, Turkey as detours to trade with U.S., EU

Focus Taiwan News Channel

Taiwan to use Mexico, Turkey as detours to trade with U.S., EU

11 February 2013

By James Lee

Taipei, Feb. 11 (CNA) Taiwan will use Mexico and Turkey as gateways to stepping up trade with the United States and the European Union, so as to reduce the impact of the free trade agreements (FTAs) between South Korea and the two major economies, according to the country’s main trade promotion body.

The Taiwan External Trade Development Council (TAITRA) said in a recent document that it will not only set up business centers in Mexico City and Istanbul, but also hold seminars and lead delegations to the two markets to further trade ties.

TAITRA said Taiwan is choosing to have its exports shipped to Mexico and Turkey first before being rerouted to the U.S. and EU because Mexico and Turkey enjoy zero tariffs to the U.S. and EU, respectively.

Taiwanese products shipped from Mexico and Turkey would enjoy lower-tariff or tariff-free access to their intended destinations, according to TAITRA.

"We can benefit from the tariff-free entry from Mexico to the U.S. and from Turkey to Europe," said Simon Wang, executive director of TAITRA’s Market Development Department.

Taiwanese companies can ship components to Mexico and Turkey and then assemble the parts there using the lower labor cost in those countries before shipping them to the U.S. or EU, Wang told CNA.

The U.S.-South Korea trade pact took effect last March, after a similar one between the EU and South Korea went into effect in July 2011.

Under the trade pacts, South Korea can get low to zero tariff treatment on bilateral trade. As South Korea is one of Taiwan’s key trade competitors in the global market, those deals could cause an impact on certain local manufacturing sectors, such as the machinery, plastic and textile industries, TAITRA said.

According to an estimate by the Industrial Development Bureau, Taiwan could lose some US$60 million in textile business to Korean competitors under South Korea’s free trade deal with the U.S.

In addition to Mexico and Turkey, Taiwan will continue its focus on emerging markets, which are expected to be the driver of the global economy this year, TAITRA said.