Taiwan will seek to sign investment agreements with the U.S. and European Union to head off competition from South Korea after its main rival completed a free trade deal with the U.S., an official said Friday.
Taiwan hopes the deals to encourage mutual investment could pave the way for broader agreements to cut or curtail import duties, said Taiwan Board of Foreign Trade official Tai Wan-rong.
South Korea completed its long-delayed free trade pact with the U.S. on Wednesday, three months after its other free trade pact with European Union came into effect.
Taiwan has had little success in pushing for free trade deals because its major trading partners, including the U.S. and European Union, recognize Beijing instead of Taipei. China claims Taiwan as part of its own territory not entitled to any trappings of a sovereign state. The two sides split amid civil war in 1949.
Taiwan sees South Korea as its top rival in trade. Officials view South Korea's nearly 20 percent export growth in September as a sign of the strength of its economy. Taiwanese exports grew 10 percent in the same month.
The South Korean free trade deals will put Taiwanese exports of textile, machinery, auto parts and plastics goods at a disadvantage, Taiwanese industry leaders in those sectors say. However, Taiwanese computer and chip exports will not be so negatively affected because of agreements Taiwan has signed with the EU and U.S. exempting those products from tariffs.
To head off competition from South Korea, the Taiwan government has sought to widen its tariff free status with China, its largest trading partner.
Under a broad trade deal signed last year, China cut tariffs on more than 500 Taiwanese products. Another 4,000 items _ including thin-film display panels _ are up for negotiation.
However, South Korea is also seeking to sign a free trade pact with China, which also is its biggest trading partner.
"South Korea has aggressively sought regional integration to bolster not only exports but industrial and other bilateral cooperation, all of which will pose a threat to Taiwan's export-driven economy," said Liu Ta-nien, an economist with Taiwan's Chunghua Institute of Economic Research.