MOEA

From A Welcome Change of Course to Time for Reflection

John Chen-Chung Deng Minister

Ministry of Economic Affairs

January 22, 2015 1

MOEA

MOEA

2

Contents

1.Global Trade Challenges and Opportunities

A. Challenges

B. Opportunities

2.Taiwan’s Strategy

A. Trade Policy Measures

B. Trade Promotion Measures

C. Industry Policy Measures

3.Conclusion

MOEA

MOEA

3

Global Trade

Challenges and Opportunities

1

MOEA

4

Challenges Challenge 1: The Slowdown of Global Trade Growth

- mainly caused by Changes in Vertical Specialization

Source: World Bank, GLOBAL ECONOMIC PROSPECTS , JANUARY 2015

MOEA

5

Challenge 2: The Industry Value Chain Interruption Crisis

and the Need to Improve Industry Capacity

⊙Taiwanese companies have always served as a foundry for

European and American brands in the global ICT supply

chain.

⊙After Mainland China and Taiwan entered the WTO in 2001

and 2002, respectively, cross-strait economic policies began

to become more liberalized.

⊙ In recent years, as the effect of export generated by

Taiwanese investment in Mainland China has gradually

weakened, China’s local ICT industry has grown significantly.

MOEA

6

Challenge 3:Climate Change and Green Economy

⊙Environmental trade has already become an international

trend.

⊙Disputes over issues related to environmental trade have

become more frequent in the WTO.

⊙ These disputes have already had an obvious impact on

several countries, and could also become a major obstacle

for Taiwan’s trade in the future.

MOEA

7

Challenge 4: Burgeoning Regional Economic Integration

and Taiwan’s Marginalization Crisis

⊙The prevalent in regional Integration

– if our pace in terms of contributing to regional Integration

doesn’t speed up, we will face a serious marginalization

disaster.

⊙ It is necessary for us to try hard to catch up

and accelerate our pace in contributing to regional

economic integration in order to keep our international

competitiveness up and allow our economy to grow in a

sustainable fashion.

MOEA

8

Opportunities Opportunity 1: The U.S. has become Taiwan’s 2nd Largest

Trading Partner

In 2014, the US replaced Japan as Taiwan’s 2nd largest trading partner

Rank Country Total Trade Exports Imports Percent of Total Trade

--- Total, All Countries 588.0 313.8 274.2 100.0

1 Mainland China & HK 174.4 124.7 49.7 29.7

Direct trade with Mainland China 130.2 82.1 48.0 22.1

2 UNITED STATES 62.3 34.9 27.4 10.6

3 JAPAN 61.6 19.9 41.7 10.5

4 SINGAPORE 28.9 20.6 8.4 4.9

5 KOREA,REPUBLIC OF 27.5 12.7 14.8 4.7

Note: Ranked by total trade.

Source: Taiwan Customs Administration

Unit: US$ billion；%

MOEA

9

Opportunity 2: The Rapid Economic Development of Emerging

Markets

⊙Rapidly growing emerging markets, a burgeoning middle

class, high demand in infrastructure, and higher consumer

spending.

⊙First, demand in building infrastructure entails promoting

transport infrastructure, improving the medical education

system and developing the manufacturing industry.

⊙Second, in terms of greater consumer spending, rapid

growth in the economy and population generates higher

income and consumption, which further leads to mounting

domestic demand.

MOEA

10

Opportunity 3: The strategy to Divide our Export Market

is Gradually Taking Effect

⊙Our exports to the U.S. in 2014 increased by 7.1%, to

Japan by 3.6%, and to Europe by 3.5%. These figures

show better results than the export growth of 0.4% to

Mainland China (excluding Hong Kong).

⊙Our export share to Mainland China in 2014 was 26.2%,

and declined 0.6% from the 26.8% in 2013.

⊙We can see that our exports to developed countries

have grown, while for Mainland China, export

dependence declined.

MOEA

11

Opportunity 4: Climate Change and Green Opportunity

⊙ On Nov. 12th, 2014, the U.S. and Mainland China delivered the

“U.S.-China Joint Announcement on Climate Change”, which

enabled the Green Development model to become an

international economic focus of the future.

⊙Given the fact that the U.S. and Mainland China are both our

main export destinations for environmental goods and services,

their new green economic policy will result in new demand for

green products and services.

⊙If the plan can be realized, it would be good news for Taiwan.

MOEA

12

Opportunity 5: Smart City

⊙Smart City presents a new possibility for Taiwan’s ICT Industry,

because our ICT businesses are equipped to find new niches in

the international market with existing capacity and resources.

⊙Government’s vision to industrialize the Smart Life concept

1.In the Domestic Market：

A. Become an innovative industry in Taiwan.

B. Be a new niche for the ICT industry.

C. Improve citizens’ quality of life.

D. Safeguard Taiwan’s sustainable development.

2.In the International Market：

A. Create a new brand for Taiwan in the global market. B. Offer a solution to the global urbanization problem. C. Contribute to global efforts in addressing climate change and

environmental deterioration.

MOEA

13

Taiwan’s Strategy

2

MOEA

14

Trade Policy Measures 1. Actively Participate in RTA

⊙Taiwan signed only four FTAs with our allies in Central

America between 2000 and 2008.

⊙Aside from signing ECFA and 18 other cross-strait

agreements, Taiwan has also successfully signed

economic cooperation agreements with New Zealand

and Singapore, respectively.

⊙A key element of our international trade policy right now

is to enter the TPP and RCEP negotiations.

MOEA

15

2. Enhance Economic and Trade Relation with the U.S.

⊙ The TIFA meetings remain the most important

platform for dialogue and discussion between Taiwan

and the U.S. on bilateral trade and economic issues.

⊙We will take advantage of TIFA framework to deal

with issues of mutual concern to demonstrate our

commitment to liberalization. With all the efforts we

have made, we would like to see the U.S. render its

support when Taiwan makes an official request to join

the TPP.

MOEA

16

Trade Promotion Measures

⊙Goods Export Transformation Action Plan.

⊙11 key markets for trade promotion: Mainland China, India,

Indonesia, Vietnam, the United Arab Emirates, Egypt, Brazil,

Mexico, Turkey, the United States, and Germany.

⊙Strengthening the North America Region Economic and

Trade Cooperation Plan.

Advanced

Economies

Mainland

China

Emerging

Markets

MOEA

17

Industry Policy Measures - Overall Industrial Policy

⊙ In the face of challenges brought about by liberalization and

globalization, enterprises need to actively adjust their

makeup to respond to increased international competition.

⊙ The government has, taking into consideration Taiwan

industry’s current situation, formulated the draft“ Industry

Upgrading and Transformation Action Plan.

⊙ In addition, the Executive Yuan has mapped out a “traditional

industry renewal plan” aimed at accelerating the upgrading

of traditional sectors through various methods, including

innovation, cross-disciplinary integration, new market access,

integration of new elements, and so on.

MOEA

18

Conclusion

3