As the US celebrates its 225th year of independence, we as a country are particularly thankful for our many friendships, among them a vibrant economic partnership with Taiwan.
The US and Taiwan enjoy a special, mutually beneficial two-way trading relationship. According to US Department of Commerce data, Taiwan is the US' eighth largest two-way trading partner.
Taiwan has moved up the ranks to become our seventh largest export market and has maintained its position as our seventh largest import supplier. Taiwan trade data shows the US is by far the island's most important two-way trading partner. US exports accounted for nearly 18 percent of total Taiwan imports in 2000, which were valued at US$25.1 billion.
Foreign investment further demonstrates the close economic relationship between the US and Taiwan.
Over US$10.7 billion dollars have been invested in Taiwan by US firms, with US$1.3 billion invested in 2000 alone. These investment flows make the US the largest foreign investor in Taiwan.
Likewise, Taiwan has also been a leading investor in the US for many years. Not only Taiwan's large enterprises, but also Taiwan's small and medium-sized enterprises, the backbone of Taiwan's dynamic economy, make investments in the US. Additionally, Taiwan is home to the world's fourth largest foreign exchange reserves, the majority of which are held in US dollars and include US government bonds. Such holdings represent an additional form of Taiwan "investment" in the US economy.
The US was among Taiwan's largest single recipient of foreign investment accounting for 17 percent (US$861 million) of Taiwan's total foreign investment. Total foreign investment in Taiwan almost doubled from the previous year, reaching US$7.6 billion, of which more than 17 percent (US$1.3 billion) was invested by the US.
Continuing attraction
Despite the current economic downturn, Taiwan's investment climate continues to attract US investors. Taiwan guarantees foreign firms national treatment and unrestricted trade-related capital flows as well as ensures the protection of investments and property rights.
Additionally, Taiwan has relaxed local content requirements and has recently lifted the 50 percent ownership limit on foreign portfolio investments. With such efforts, the US looks forward to ever-increasing investment in Taiwan.
In the multilateral arena, the US and Taiwan continued cooperation with other APEC economies, not only to promote free and open regional trade, but also to facilitate the bridging of the "digital divide" present in the Asia-Pacific region.
Taiwan's commitment to regional capacity building in areas including paperless e-commerce trading and purchasing, SME technical assistance, and supply chain management will ensure deeper regional and digital integration.
The US will continue to support Taiwan's efforts in the Asia-Pacific region's digital future. Additionally, the US also continues to wholeheartedly endorse Taiwan's accession to the World Trade Organization (WTO). With Taiwan's bilateral consultations with all major WTO members basically finalized, and the swift conclusion of US-China and EU-China bilateral agreements last month, the removal of major obstacles to WTO membership is fueling expectations for Taiwan's entry before year end.
Provided that all outstanding issues regarding China's accession are resolved during the WTO Working Party meetings in Geneva, the US anticipates Taiwan's entry as early as October. Although Taiwan has not yet entered the WTO, it has already begun to demonstrate its commitment to the global trade regime.
Liberalizing economy
Specifically, Taiwan has continued to liberalize its economy and adhere to a variety of WTO standards including facilitating a sound investment climate, establishing product standards, sanitary and phytosanitary measures as well as better protection of intellectual property rights.
More fundamentally, WTO accession will further reinforce Taiwan's own efforts to dismantle protected monopolies and improve the competitive climate inside Taiwan, particularly the regulatory system.
The steps that Taiwan is currently taking to open its economy are certain to encourage additional foreign investment. While Taiwan is already pursuing good macro-economic policies, ensuring that its statutory and regulatory environment measure up to world standards is critical for strengthening its free market economic system.
The US has been a robust economic partner with Taiwan for many years. Taiwan's membership in the WTO will only further enhance that relationship.
Nonetheless, both the US and Taiwan will encounter challenges in their fruitful economic relationship. By working through the disagreements inevitable in any long-term relationship, both sides have invariably benefited.
The US and Taiwan will continue to work cooperatively on reducing market access barriers and other impediments that hinder Taiwan's economic openness as well as a variety of issues including strengthening intellectual property protection and liberalizing its telecommunications market.
Although Taiwan's trade surplus with the US declined slightly last year, both sides need to cooperate in monitoring the trade balance in the months and years ahead to ensure our markets remain open, or become more so, to each other.
Taiwan has long been a special trading partner of the US. We are committed to ensure that the US-Taiwan economic relationship continues to prosper.
The US looks forward to the new cooperative efforts, opportunities and challenges that will continuously strengthen and enhance our partnership with Taiwan in the years to come.
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