After two years of negotiation, Taiwan and New Zealand yesterday inked an economic cooperation agreement (ECA) to foster bilateral trade and investment. The signing ceremony took place at Victoria University of Wellington in New Zealand, and was broadcast nationwide in Taiwan.
Taipei Economic and Cultural Office in Wellington Representative Elliot Charng (常以立) and New Zealand Commerce and Industry Office Director Stephen Payton signed the agreement on behalf of their governments.
Under the Agreement Between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC), Taiwan will reduce tariffs on nearly 99.88 percent of New Zealand imports to zero, and phase out all tariffs over the next 12 years, while New Zealand will reduce its tariffs to zero on almost 100 percent of Taiwanese imports.
“The ANZTEC is a high-quality, comprehensive and very good agreement for both Taiwan and New Zealand,” Charng said at the ceremony.
The move is also a “breakthrough” for Taiwan because it is the first time the nation has inked an economic cooperation agreement with a developed country like New Zealand, he said.
Given that Taiwan was New Zealand’s 12th-largest trading partner and New Zealand was Taiwan’s 40th-largest trading partner last year, the agreement is expected to liberalize trade between the two countries, enhance exports of goods and services, and boost foreign investment in the Taiwanese and New Zealand markets, Payton said.
According to the Chung-Hua Institution for Economic Research (CIER), the agreement is expected to increase Taiwan’s GDP by 0.008 percent as a result of initial tariff reductions, a figure that could rise to 0.394 percent after the agreement is fully implemented.
The institute also said Taiwan could see its exports rise by US$144 million and imports increase by US$139 million under the agreement.
However, ANZ Bank economist Raymond Yeung (楊宇霆) was more pessimistic, saying that with bilateral trade totaling just US$1.2 billion, the direct economic benefits of the agreement are likely to be small.
“It was projected that the pact will increase gross output of US$605 million and create 6,256 jobs in Taiwan,” Yeung said in a note.
After witnesses the signing ceremony via a video linkup at a Taipei press conference, Minister of Economic Affairs Chang Chia-juh (張家祝) said the agreement will have little adverse impact on the nation’s economy, but even if there were any, contingency measures have been prepared.
To protect local farmers, the government will reduce tariffs on up to 470 imported agricultural products to zero over a 12-year period, so that the nation’s agricultural market will not suffer negative shocks from intensified market competition under the agreement, Chang said.
The rice market will remain closed to New Zealand rice products, he said.
Yeung said the agreement has high strategic value to Taiwan.
“The special access to the Chinese market through the Economic Cooperation Framework Agreement [ECFA] platform may attract New Zealand businesses to establish a presence in Taiwan,” Yeung said.
“Meanwhile, the first deal with a Trans-Pacific Partnership [TPP] member state will set a precedent for Taiwan to establish similar agreements with other TPP economies, although the progress will continue to be contingent on the state of political affairs,” he said.