Thu, Nov 07, 2019 - Page 1 News List

Taiwan biggest trade spat beneficiary

WORD OF WARNING:The dispute has proven to be a lose-lose situation for the US, China and rest of the world, and the situation is likely to worsen, a UN report said

Staff writer, with CNA

The US-China trade dispute that began last year has hurt the economies of both nations, but helped others by diverting production to their markets, with Taiwan the biggest beneficiary, a UN report released on Tuesday says.

The UN Conference on Trade and Development (UNCTAD) paper said the increase in tariffs imposed on Chinese goods led to a 25 percent decline, from US$130 billion to US$95 billion, of US imports of tariffed products in the first half of this year.

Several export-oriented economies, including Taiwan, Mexico, the EU and Vietnam, have benefited from trade diversion effects, and Taiwan has been the biggest winner, said UNCTAD economist Alessandro Nicita, the author of Trade and Trade Diversion Effects of United States Tariffs on China.

The paper puts the trade diversion effects — increased imports from nations not directly involved in the dispute — for the first half of this year at about US$21 billion, implying that the amount of net trade losses corresponds to about US$14 billion.

The report says that the diversion to Taiwan — which it labels a province of China — of the production of goods for export to the US from China resulted in additional exports from Taiwan to the US of about US$4.2 billion in the first half of the year.

That was more than the additional US$3.5 billion, US$2.7 billion and US$2.6 billion in exports to the US by Mexico, the EU and Vietnam respectively during the same period, it says.

Most of the costs resulting from the increase in tariffs on Chinese goods was passed down to US consumers and companies, Nicita said.

“US consumers are paying for the tariffs ... in terms of higher prices,” Nicita wrote. “Not only final consumers like us, but importers of intermediate products — firms which import parts and components from China.”

“The longer the trade war goes on, the more likely these losses and gains will be permanent,” he wrote.

The biggest increase in exports from Taiwan came primarily in the office machinery and communications equipment sectors, while office machinery has been the hardest hit sector in terms of Chinese exports to the US market, with Washington’s imports falling by almost US$10 billion.

By sector, the dispute has led to increases of US$2.83 billion in office machinery exports, US$491 million in communications equipment exports and US$287 million in electrical machinery exports by Taiwan to the US in the first half, the report says.

Taiwan’s trade data echoed the trend of exports being diverted from China to Taiwan.

In the first nine months, the nation’s overall exports fell 2.5 percent from a year earlier to US$242.3 billion, but its exports to the US were up 17.7 percent at US$34.06 billion, Ministry of Finance data showed.

The UNCTAD report was the subject of discussion yesterday at the Legislative Yuan in Taipei, as lawmakers on two committees raised questions about its findings.

Minister of Finance Su Jain-rong (蘇建榮) told the Finance Committee that he was upbeat about the industrial restructuring seen in Taiwan as a result of the trade dispute.

Taiwanese investors have been building a “non-red supply chain” by moving some of their production capacity from China, which was a positive step for Taiwan’s economy in the long term, he said.

At a Foreign Affairs and National Defense Committee meeting, Vice Minister of Economic Affairs Wang Mei-hua (王美花) said that many orders had been diverted to Taiwan and many Taiwanese businesspeople were returning home, which helped drive production of some sensitive technologies, such as servers and routers, back to Taiwan.

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