Taipei Times: What is unique about Australia’s economic relationship with Taiwan; in other words, why does Taiwan need Australia, and why does Australia need Taiwan?
Steve Waters: I think the most unique part of this is in terms of “what is the composition of the trade?” Australia is a major supplier of energy and other resources to Taiwan. Taiwan, because of its geography, its size and the composition of the island, does not have its own natural resources. It’s looked to Australia as a major supplier ... It’s a history that goes back a long time.
PHOTO: WANG YI-SUNG, TAIPEI TIMES
China Steel Corp [中鋼] in particular has been a very major purchaser of Australian resources. If we go back maybe eight or 10 years, up to that stage it was the second-biggest individual customer that Australia had, after POSCO [Pohang Iron and Steel Company] in [South] Korea. With the growth of some other markets, that’s no longer the same, but it still is a very major customer along with Taipower [Taiwan Power Co, 台電], in terms of coal, which is the major export here.
In this last year, we managed to sign an agreement for the supply of LNG [liquified natural gas] to Taiwan. This is in fact the largest single trade deal Australia has ever done, anywhere in the world. It’s worth US$40 billion over 20 years, for the supply of LNG.
That’s a very important contract for both sides. The supply of this gas will not start until about 2013, 2014 with the development of the [offshore] Browse [LNG] project. Now what that does for us is that it gives a guarantee for the development of a new project, which is important as far as we’re concerned.
For Taiwan, because there is going to be a shortage of LNG supplies at least until the end of the second decade of this century, it guarantees them a secured supply of LNG, and assures them of their access to what is going to be a limited commodity over the coming years.
Another important part of the relationship that I suppose is different from many other places is that we have a reasonably sized Taiwanese community in Australia — it’s approximately 40,000 Australian-Taiwanese.
That gives the relationship a people-to-people context.
From the strategic point of view, Australia is of interest and importance to Taiwan because we are part of the security triangle in this part of the region, between the United States, Japan and Australia.
For us, 40 percent of our exports go to Northeast Asia. So if there were any instability in this region, our major export markets would be affected. Our major export markets are Japan, China and South Korea — that’s one, two and three; Taiwan comes in at number eight; then you’ve got Hong Kong at number 12 or 13 — it’s been dropping down in recent years.
But if you put all those five markets together, that’s a very important part of Australia’s export markets.
So we are very anxious to encourage a stable relationship between Taipei and Beijing. Therefore, we very much welcome the new atmosphere that now exists since the advent of the Ma administration.
TT: According to figures supplied by your Web site, Australia’s exports to Taiwan declined 5.1 percent year-on-year in 2007. Meanwhile, Taiwanese exports to Australia have increased by 4.9 percent
Waters: The trade ... in round figures this coming year it will be about US$10 billion ... Australian exports to Taiwan will be about US$6 billion; Taiwan’s exports to Australia will be about US$4 billion. So it’s quite a large surplus in Australia’s favor.
TT: But according to the figures, the overall trade has decreased by about 1 percent
Waters: OK, let me explain. There’s a very simple answer to this, and the figures somewhat lie.
If you look at Australian statistics, you will see a decline in exports to Taiwan. If you look at Taiwan’s statistics, you will see an increase in Australia’s exports to Taiwan. If you look at the value of the exports in US dollars, you will see an increase. What’s happening in Australian dollar terms is that the bulk of our exports are in natural resources. Resource contracts are written in US dollars.
In the past 12 months, the Australian dollar has increased so much that the value of our exports has actually declined, because we’re getting US dollars for it. So you’ve got this decline in the figures. It’s one of those things; there are always swings and roundabouts in the currency market.
The strength of the Australian dollar has not only been a problem for us in terms of getting new exports and that sort of thing, but it has also meant ... that we’re getting less for our, in Australian dollar terms, for our exports that were already made. If you look, in actual volume terms you would find there has been a slight increase.
TT: That pretty much answers the question of whether or not it is indicative of a larger trend.
Waters: Well, if the trend is the US dollar, then yes it is indeed [he laughs].
TT: Right. But as far as the trend with Australian-Taiwan trade, is that something that you see increasing?
Waters: Australia-Taiwan [trade] has been increasing at a low to steady rate. There’s been nothing major, except as I said in 2013, when the LNG comes on. That’s going to add US$2 billion a year to our exports, so that’s going to be a pretty big jump.
TT: As China’s economy continues to grow, they’re going to be demanding an increased share of natural resources, not just from Australia but from everyone who’s got them. Is that something that is going to adversely affect Taiwan? How is that going to play out with relation to Australia-Taiwan trade?
Waters: In the competition for the purchase of resources, the downside for Taiwan and the upside for Australia is when countries are competing for resources the price goes up. So we’re not going to complain about that. In terms of being a supplier for Taiwan, Taiwan is well placed because it has a lot of long-term contracts with Australia.
In fact, I’ve visited many of our major resource suppliers, and a common thing that they tell me is that, along with the Japanese, the Taiwanese are amongst their favorite customers in Asia, because they negotiate hard and long for their contracts, but they like long-term contracts. The industry likes long-terms contracts, rather than people that buy on the spot market. The Taiwanese, once they’ve negotiated a contract, they actually stick by the contract, like the Japanese do. So they’re highly valued customers as far as our resource industry is concerned.
TT: [President] Ma Ying-jeou’s [馬英九] administration has pledged to improve ties with China, and is seeking to increase direct transportation links between the two sides of the Taiwan Strait. How is this going to affect Australian companies doing business in Taiwan?
Waters: Over the last few years there’s been an obsession about China. I’ve often said to people here, it’s sometimes difficult to get Australian companies to focus on the opportunities in Taiwan.
In many cases, particularly for small and medium-sized enterprises, they are much better off looking at Taiwan first, because the size of the market here is akin to Australia. The regulatory system here is much better than in the mainland. There are far fewer problems, particularly for people who are new to export — this is a much easier market to crack than the mainland.
That said, it’s not an easy market by any stretch of imagination, but it doesn’t have some of the pitfalls that the mainland market does. I don’t think that the improvement in cross-strait relations changes that.
In short, I don’t see any particular dangers to the system. In the past, some businesses have looked at Taiwan as a doorway to the mainland, and with the opening up that may be even more the case, because you can use Taiwanese expertise even more easily.
As I said to you before, we welcome this whole change in atmospherics between the two sides because of what it does in terms of the region. It just substantially lessens the chances of a conflagration, which has been the worry of people for the past 50 years. That is a major achievement in itself.
TT: Your Web site indicates that about 93,000 tourists and students from Taiwan visited Australia in 2007. What specific programs or policies is Australia implementing to attract Taiwanese tourists and students?
Waters: One of the new ones is this working holiday arrangement, which has been quite interesting.
It’s a scheme for people under the age of 30. They can get a visa for one year to go to Australia, and they can work or take holidays under the visa. We didn’t really do this for Taiwan until about 2005, 2006.
In the first year, we had about 700 people go there for the working holiday. This actually led to some changes in the regulations, in the sense that it was clear that a lot of people from Taiwan were less interested in working than in actually doing a bit of study — particularly in doing some short-term English courses and whatever. So the system was changed so they could do that as well as work or take a holiday.
The following year it was up to well over 2,000, and in the last financial year which finished at the end of June, it was over 5,000. So the number is going up. The word of mouth has gotten very strong.
Interestingly enough, the thing that is different about Taiwan from anywhere else is that nearly 70 percent of the people going from Taiwan are female.
TT: I guess women are smarter. They’re more interested in studying.
Waters: It’s an interesting ... yeah, we’re a bit surprised by those statistics. But as I said, it’s been a very successful program.
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