Fri, Aug 22, 2003 - Page 1 News List

Taiwan inks FTA pact with Panama


President Chen Shui-bian (陳水扁) and Panamanian President Mireya Moscoso yesterday signed the landmark free-trade agreement (FTA) between the two nations at the conclusion of the fourth Taiwan-Latin American leaders' summit in Taipei.

"I believe this is just a beginning," Chen said at the signing ceremony. "I hope Taiwan can sign FTAs with other Central and South American countries to increase exchanges in technology and trade."

The FTA with Panama is the first agreement Taiwan has signed with another country.

The pact is expected to take effect on Jan. 1 next year if it is approved by the two countries' legislatures.

The FTA contains a wide range of trade concessions between the two countries, including greater market access and lower duties on agricultural and industrial commodities, services, investment and telecommunications. Intellectual property rights, competition policy and dispute settlement are also important issues included in the pact and are consistent with WTO regulations.

The immediate economic impact of the pact on both countries, however, will be in customs revenues.

When the agreement goes into effect, 6,200 categories, or 71 percent, of Taiwanese products exported to Panama will become duty free, while the same tariff-free measure will apply to 4,160 categories, or 48.49 percent, of Panamanian goods exported to Taiwan.

By 2014, 97 percent of exports from Taiwan to Panama will be duty free, while taxes on 95 percent of Panamanian goods to Taiwan will also be cut to zero.

The pact is a result of five rounds of negotiations held since October last year. At yesterday's signing ceremony, Moscoso praised the FTA achievement.

"This is a historic step for the already solid relations between the two countries," Moscoso said.

During the negotiations with Panama, both sides had disputes over certain products and whether they would be listed as duty-free items. Taiwan agreed to allow beef and a quota of cane sugar imports from Panama to be included as duty-free items but resisted Panama's demands to list rice, cigarettes and passenger vehicles on the tax-free list.

Wu Rong-i (吳榮義), president of the Taiwan Institute of Economic Research, said that Taiwan will benefit more from the agreement despite the concessions Taiwan made to Panama, saying Panama's exports to Taiwan are less than Taiwan's to Panama.

Last year, imports of Taiwanese goods to Panama amounted to US$123 million, and Panamanian exports to Taiwan US$4.8 million. Panama is the 70th largest of Taiwan's trading partners, with over US$42 million in bilateral trade for the year to May.

Taiwan, however, can use Panama as a gateway to the massive American market when Panama is included in the FTA of the Americas, Wu said. Panama also has a free-trade zone, which facilitates Taiwanese business expansion in the American region, he said.

While the signing of the Taiwan-Panama FTA may represent more of a political than economic victory for Taiwan, a lawmaker warned that Taiwanese officials should stand firm when engaging in diplomatic affairs with other countries, instead of turning Taiwan into a cash cow for political favors.

In a column published in a Chinese-language newspaper yesterday, DPP Legislator Parris Chang (張旭成) said it is regrettable that while the Panamanian president is singing an FTA with Taiwan in Taipei, its Vice President Arturo Vallarino was visiting China at the same time.

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