Chen inks trade deal with Guatemala

Taiwan signed a free-trade agreement (FTA) with Guatemala Thursday in a bid to strengthen bilateral relations with the Central American country and expand the global market for Taiwanese products.

President Chen Shui-bian (陳水扁) signed the agreement in Guatemala City, at a ceremony with Guatemalan president Oscar Berger Predomo. The agreement will take effect on Jan.1.

The agreement is expected to help balance Guatemala's trade deficit with Taiwan. Last year, Guatemala imported Taiwanese products costing US$170 million but only exported products costing US$4 million to Taiwan.

Based on the agreement, Taiwan will provide for tariff-free trade on agricultural products including coffee. In addition, Guatemala will be allowed to export 60,000 tonnes of sugar to Taiwan, which consumes only 150,000 tonnes of sugar per year.

"We hope to export more products to Taiwan and import Taiwan's textile fabrics, bicycles and other products to Guatemala," Berger said.

Chen said that Taiwan will become an important gateway through which Guatemala can export its products to Asia.

"Taiwan's familiarity in the market in Asia will help Guatemala broaden its market in the region," Chen said.

In early August, six of Taiwan's diplomatic allies in Central America and the Caribbean (Guatemala, El Salvador, Nicaragua, Honduras, Costa Rica and the Dominican Republic) signed a free-trade agreement with the US. The Central American-Dominican Republic Free Trade Agreement provides for tariff-free trade between the countries.

Combined with that agreement, Taiwan's new FTA with Guatemala may help Taiwanese products gain indirect tariff-free market access to the US.

"Taiwan can export its products to Guatemala first. After being processed, they can be further sold to the US," Minister of Economic Affairs Ho Mei-yueh (何美玥) said.

Together with the FTA, two other agreements involving sea transportation and air freight were also signed by both sides Thursday. According to Minister of Transportation and Communications Lin Ling-san (林陵三), Taiwan's experience in operating quality international airlines will be shared with Guatemala, which has no airlines accepted by US. Currently, two million Guatemalans living on the west coast of the US rely on El Salvadorean airlines to return home for visits. Guatemala is keen to improve its airlines so that it can share in that market. Early next year, Guatemala will send a team to observe the operations of China Airlines and EVA Air.

In an interview with the Guatemalan newspaper Siglo Veintiuno, President Chen yesterday reiterated Taiwan's resolution to assist in Guatemala's development.

For example, Chen said, US$17 million will be given to broaden part of CA-9 Highway that connects Guatemala City and El Rancho. Also, a special project has been proposed that would provide US$250 million in assistance to Taiwanese investing in the nation's diplomatic allies in Central America.