Taiwan, S’pore close to signing FTA
30 January 2013
SINGAPORE: After two years of negotiations, Taiwan and Singapore may be close to signing a free trade agreement.
While Singapore is Taiwan’s sixth biggest trading partner, the FTA, also known as ASTEP (Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership), is not to be underestimated.
Analysts said the accord could set the tone for the island’s economic future in the region.
Singapore Airlines currently offers only two daily flights between Taiwan and Singapore. However, it sees potential for growth once the two sides sign a free trade agreement.
Benjamin Chan, Singapore Airlines’ general manager for Taiwan, said: "It will open up a lot more opportunities for businesses to come into Taiwan, and Taiwanese businessmen to Singapore to explore collaboration and expand businesses."
Airlines are not the only ones that will benefit from the FTA, which focuses mainly on lowering tariffs and opening up the service sector.
For Taiwan, it hopes to gain greater access to Singapore’s financial market. For Singapore, it may seek zero tariffs on its petrochemical and machinery exports. Since Taiwan’s industries are not in direct competition with those in Singapore, analysts expect the accord will prove to be complementary.
Liu Da Nien, director of the regional development centre at Chung Hua Institution for Economic Research, said: "We already have the Economic Cooperation Framework Agreement with China in place. So once we sign the FTA with Singapore, we can work together to explore the Chinese market."
So far, Taiwan has only signed free trade deals with China and a few of its Latin American allies. This puts Taiwan at risk of being marginalised as Asia’s economic integration continues to accelerate.
Now, Taiwan is counting on the trade deal with Singapore to connect the island with the region.
Mr Liu added: "Once we sign the FTA with Singapore, we can form deeper relations with other Southeast Asian countries and sign similar agreements. Our strengths are more complementary with those of Southeast Asian nations."
As the bilateral talks have nearly concluded, Taiwan’s trade officials expect the agreement to be signed before June 2013.