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U.S.-Korea FTA to impact Taiwan: economic officials

Central News Agency, Taiwan

U.S.-Korea FTA to impact Taiwan: economic officials

13 October 2011

Taipei, Oct. 13 (CNA) Economic officials said Thursday that a free trade agreement (FTA) approved a day earlier between the United States and South Korea will have an impact on local companies to the tune of around US$11.84 billion per year. The Bureau of Foreign Trade (BOFT) said the U.S.-Korea pact will influence 34.1 percent of all Taiwan-made products exported to the U.S.

every year. Vice Minister of Economic Affairs Huang Chung-chiu said the industries that will face the FTA-induced pressure are mostly in the traditional sector, including textiles, machinery production and the plastics and rubber industry. The BOFT predicted that the biggest blow will be to local textile makers, since over 70 percent of Korean-made textile products will immediately be granted zero tariffs once the pact takes effect Jan. 1 next year.

BOFT Director-General Cho Shih-chao said local makers of pret-a-porter garments and other textile products, which have a tariff rate of up to 30 percent and 12 percent, respectively, will suffer the most. Exported machinery goods and plastic or rubber products to the U.S. both have a tariff rate of up to 10 percent, he added. However, Huang said, the FTA will have relatively limited impact on goods with a tariff rate of lower than 2.5 percent. He added that over 55 percent of Taiwanese sales to the U.S. will remain unaffected, since such sales — mostly information technology products — already enjoy zero tariffs. According to Huang, duty on IT products has been eliminated by an information technology agreement under the World Trade Organization (WTO). Cho said the government will continue lobbying efforts for trade agreements with the E.U., as well as similar agreements and intellectual property rights agreements with the U.S. The U.S. and the E.U. are Taiwan’s third- and fourth-largest trade partners, respectively. (By Lin Shu-yuan and Jamie Wang)