Taiwan and Canada have always enjoyed close, mutually beneficial economic and trade relations. In 2016, Taiwan’s total value of imports from Canada reached $1.2 billion US, while Canada imported $3.8 billion US from Taiwan in the same year. Taiwan’s top exports to Canada were mostly in the technology field and included such products as integrated electronic circuits, machinery components, auto parts, airplane and helicopter parts and electronic processors. Canada’s top exports to Taiwan included mainly raw materials such as bituminous coal, nickel, lumber, pharmaceutical products and iron ores.
While the trading relationship between Taiwan and Canada is strong in traditional areas, such as commodities and raw materials, Canada stands to miss significant opportunities if it fails to broaden and formalize its ties with Taiwan. For instance, Canadian companies and products already benefit from Taiwan’s strong commercialization capacity; however, Canada stands to gain even more from Taiwan. It is one of the leading investors in Asia and excels in building supply chains that use Asia’s vast market and cost advantages while protecting intellectual property. Formalization and diversification of trade can benefit Taiwan as increased commercialization of Canadian companies allows it to take advantage of Canada’s strength in the fields of information technology, energy, agri-food and service sectors.
Furthermore, Taiwan invites Canada to further expand R&D partnerships, such as with the Industrial Technology Research Institute, which could open a greater range of opportunities for Canada’s high-tech startups. Taiwan also encourages Canadian companies’ participation in its fast-growing energy market, especially concerning the area of renewable-energy technologies. Canada stands to benefit from more open and formalized trade in this potentially unlimited and fast-growing field. An investment agreement between Taiwan and Canada would bring mutual economic benefits and facilitate a more open and non-discriminatory investment environment for both sides. It also has the added advantage of protecting investors, creating job growth and upgrading industrial sectors in both countries.
To facilitate this end, my government encourages Canada to recognize Taiwan’s impressive commitment to regulatory reform and continued liberalization as a pathway to a comprehensive and progressive agreement for the Trans-Pacific Partnership. Taiwan also encourages high-level visits of Canadian federal and provincial economic ministers and entrepreneurs. While these would be important steps, others should be taken in the meantime, starting with the negotiation of a foreign investment promotion and protection agreement (FIPA). Because of Taiwan’s and Canada’s trade complementarity, increased trade and investment will unlock opportunities without imposing competition in sensitive areas. Canada has signed FIPA agreements with 43 countries and is currently in negotiations with nine other trading partners. Canada had FIPA agreements with China (2014) and Hong Kong (2016). Taiwan is the only country in the region that does not have or is not in negotiations for a FIPA with Canada. Our avoidance of double taxation agreement, which came into force on Jan. 1, 2017, has already laid a strong foundation for a future FIPA agreement. Therefore, Taiwan strongly encourages the Canadian government to launch Taiwan-Canada FIPA negotiations as soon as possible.
This would benefit Canada greatly. A 2016 report by Export Development Canada pointed out that more Canadian enterprises are relying on outward investment and foreign affiliates to penetrate foreign markets. This approach allows them to increase production efficiency, capture consumption growth in emerging markets, tap trade networks among developing countries and overcome barriers to market access. Thus, a FIPA with Taiwan would strengthen Taiwan’s and Canada’s global trade advantage.
A FIPA would be mutually beneficial for both countries and it would augment recent developments in the ease of trade and friendly relations between Taiwan and Canada. Those developments include daily flights between Vancouver and Taipei, which started in the summer of 2017. In 2016, Taiwan was Canada’s fifth-largest trading partner in Asia and 11th largest in the world. Canada’s two-way trade with Taiwan exceeds its trade with Australia or Brazil. While this forms a bedrock for economic growth, both countries stand to benefit from a formalized and open trade and investment relationship. A Taiwan-Canada FIPA would go a long way in realizing the goal of building a competitive trade relationship for the 21st Century.
Chung-chen Kung is the representative for the Taipei Economic and Cultural Office in Ottawa. Reach him by email at teco@on.aibn.com or by phone at (613) 231-5080.
