Export tariffs removed, trade barriers eased and Customs rules simplified
By Janice Heng, Lee Seok Hwai and Alvin Foo, The Straits Times, 8 Nov 2013
SINGAPORE and Taiwan inked an extensive trade pact yesterday, in a landmark move that will give firms here more access to the Taiwanese market and aid the latter in its quest to broaden its international profile.
The free trade deal, which is Taiwan's first agreement with a top trade partner, will remove tariffs immediately for all of Taiwan's exports to Singapore.
About 97 per cent of Singapore's exports to the island will also be tax-free. Customs duties for the other products will be eliminated within 15 years, allowing trade between both economies to surpass last year's $49.7 billion.
Other benefits include fewer barriers to trade in services and investment, simpler Customs rules, and more government procurement opportunities.
"The agreement will further enhance and deepen trade and investment flows between both sides," said Trade and Industry Minister Lim Hng Kiang.
Taiwan is Singapore's eighth largest trading partner. Singapore firms, which invested almost $5.9billion in Taiwan in 2011, will gain mainly in services and procurement, as tariffs are already quite low for goods, said CIMB regional economist Song Seng Wun.
The Agreement between Singapore and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Partnership, or ASTEP, will also have an impact beyond the two islands, said analysts.
China watcher Li Mingjiang at the S. Rajaratnam School of International Studies said it could pave the way for Taiwan to have stronger ties in South-east Asia. "It opens the door for more participation of Taiwan in regional economic and trade activities."
Taiwan's top official here, Mr Hsieh Fa-dah, agreed. He hoped ASTEP could be a model for other countries, showing "it is possible to enter such an agreement with Taiwan any time". The deal is Taiwan's second with a country to which it has no formal ties, after one with New Zealand in July.
Taiwan's Ministry of Foreign Affairs said the pact with its fifth largest trading partner should help pave the way for Taiwan to join regional free trade areas like the Trans-Pacific Partnership.
The signing indicates improving ties between Taiwan and China since 2008, and may "provide a positive momentum for cross- strait relations in coming years", said Associate Professor Li.
Beijing said yesterday it did not object to the move but stressed that it is against Taiwan having official ties with countries.
It is now up to Taiwan's legislature to ratify the pact. The opposition Democratic Progressive Party has welcomed it and said it will give the "necessary support".
One firm looking forward to it is Taiwan Tobacco and Liquor Corp, which began exporting its Taiwan Beer brand here last year. It said the removal of duties would reduce costs and boost the brand's competitiveness here.
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