The Ministry of Economic Affairs (MOEA) yesterday said Taiwanese firms in certain sectors should brace themselves for when the free-trade agreement between the US and South Korea takes effect, which will probably be in January.
The ministry’s warning came after the US Congress on Wednesday approved the long-delayed free-trade pact with South Korea in Washington, which now goes to US President Barack Obama to sign into law.
The ministry said Taiwan and South Korea are very similar in terms of exports structure to the US, with 70 percent composed of electronics, machinery and automobiles.
“Safe sectors” from the trade pact impact are electronics and electrical parts, because Taiwan exports them to the US with zero tariffs, the ministry said in a statement. These products totaled 65.9 percent, or US$22.58 billion, of Taiwan’s exports to the US last year, it said.
However, certain sectors that are not duty-exempt — especially plastics, textiles, garments, chemicals, machinery and panels — would take a hit when the accord takes effect, the statement said.
These products accounted for 34.1 percent, or US$11.84 billion, of Taiwan’s exports to the US last year, it added.
The US is currently Taiwan’s third-largest trading partner with trading reaching US$56.8 billion last year.
In related news, Vice Minister of Economic Affairs Lin Sheng-chung (林聖忠) said on Wednesday in London that Taiwan has obtained the support of the UK for its effort to forge an economic cooperation agreement (ECA) with the EU.
The nation will continue to seek backing from other EU nations in the hope that the trade deal could be signed within two years, Lin told a meeting with a group of Taiwanese businesspeople in London.
Britain is the third leg of Lin’s European tour that has taken him to the Czech Republic and Ireland. The main purpose of the trip is to promote the proposed ECA with EU.
Lin said the EU-South Korea free-trade agreement that took effect on July 1 threatens Taiwan because South Korea is Taiwan’s main competitor in the international market. Therefore the drive for the ECA needs to speed up to protect the interests of Taiwanese businesses, he said.
The European Chamber of Commerce Taipei has expressed its support for the ECA, which according to a study by the consultancy Copenhagen Economics has the potential to deliver considerable economic gains to European businesses, Lin said.
In addition, a resolution adopted on May 11 by the European parliament in support of the ECA has been very helpful to Taiwan’s lobbying efforts in Europe, he said.
According to Lin, since the signing of the Economic Cooperation Framework Agreement with China, Taiwan’s chemical, textile, machinery and vehicle exports to China have gained an advantage over those from Japan, South Korea and ASEAN nations.
Decreases in Taiwan’s corporate income tax and gift and estate tax rates have made the country more attractive to foreign investors, he said.
Many of them have indicated that they plan to increase their investment in Taiwan and use Taiwan as a platform to access emerging markets, he said.
Lin was scheduled to deliver a speech to the British parliament yesterday and will also brief lawmakers on the ECA proposal.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
Apple Inc has been developing a homegrown chip to run artificial intelligence (AI) tools in data centers, although it is unclear if the semiconductor would ever be deployed, the Wall Street Journal reported on Monday. The effort would build on Apple’s previous efforts to make in-house chips, which run in its iPhones, Macs and other devices, according to the Journal, which cited unidentified people familiar with the matter. The server project is code-named ACDC (Apple Chips in Data Center) within the company, aiming to utilize Apple’s expertise in chip design for the company’s server infrastructure, the newspaper said. While this initiative has been
GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said that revenue would rise moderately in the second half of this year, driven primarily by robust demand for advanced wafers used in high-bandwidth memory (HBM) chips, a key component of artificial intelligence (AI) technology. “The first quarter is the lowest point of this cycle. The second half will be better than the first for the whole semiconductor industry and for GlobalWafers,” chairwoman Doris Hsu (徐秀蘭) said during an online investors’ conference. “HBM would definitely be the key growth driver in the second half,” Hsu said. “That is our big hope
The consumer price index (CPI) last month eased to 1.95 percent, below the central bank’s 2 percent target, as food and entertainment cost increases decelerated, helped by stable egg prices, the Directorate-General of Budget, Accounting and Statistics (DGBAS) said yesterday. The slowdown bucked predictions by policymakers and academics that inflationary pressures would build up following double-digit electricity rate hikes on April 1. “The latest CPI data came after the cost of eating out and rent grew moderately amid mixed international raw material prices,” DGBAS official Tsao Chih-hung (曹志弘) told a news conference in Taipei. The central bank in March raised interest rates by