Taiwan WTO link adds value for NZ

By BRIAN FALLOW economics editor

Taiwan's prospective accession to the World Trade Organisation will only add to the opportunities it presents as an export market, says New Zealand's representative there, Charles Finny.

Mr Finny heads the New Zealand Commerce and Industry Office in Taipei which represents our interests, given that this country does not recognise the Government of the Republic of China.

The slowdown in the United States has hit Taiwan hard. Its exports contain a high proportion of high-tech goods, such as semiconductors, destined directly or indirectly for the US market.

Taiwan's gross domestic product growth is expected to drop to 3.5 or 4 per cent this year. Enviable as this may be by our standards, compared with the 6 to 8 per cent growth rates recorded over the past 10 years it counts as the doldrums for Taiwan.

It is already starting to affect our exports there. In Taiwan dollar terms our exports were down 7 per cent in the first quarter. Applications for tourist visas have also dropped off.

But the downturn had not been across the board, said Mr Finny. "The people who import milk powder are looking for a record year. The kiwifruit people are hopeful of a good year. And while there has been a belt-tightening in the meat trade overall, it seems to be impacting more on exports from the US than New Zealand. For some reason they were paying top dollar for US meat but there has been some switching to New Zealand product, so meat is having a good year, too."

But if caution is warranted for the next nine months or so, on the other side of that, and regardless of what happens to the US or Japanese economy, Taiwan's accession to the WTO would benefit New Zealand exports.

Tariff reductions would shave $30 million off the cost of New Zealand exports in the first year.

The beef trade would benefit most, Mr Finny said, but there would also be significant savings on dairy products, some fish, apple and kiwifruit.

Some goods now barred altogether, such as nashi pears and persimmons, would gain access to the Taiwan market.

Second, if Taiwan accedes before a launch of a new WTO round - hopefully in Doha, Qatar, in November - further trade liberalisation should follow since it will be a full participant in the round.

Third, while Taiwan remains a member-in-waiting of the WTO, it is not in a position to negotiate bilateral free-trade agreements, for fear of unpicking the accession deals it has already negotiated. Membership would enable it to explore those possibilities.

Under a longstanding agreement Taiwan cannot accede to the WTO before China and at present Chinese accession is being held up by disagreement between Beijing and Washington. The US argues that because of its size, China should not have the same freedom as other developing countries to subsidise agriculture.

The hope would be, Mr Finny said, that such issues could be sorted out and the way cleared for Chinese and Taiwanese accession before the Doha meeting.

But there is always a risk that a serious deterioration in Sino-American relations could delay that.

Direct links between Taiwan and China are severely limited - more often as a result of Taiwan's policy than China's. Mr Finny said that removing the requirement to transact trade through third parties such as Hong Kong would lower costs and benefit Taiwan and the mainland.