Taiwan signed a free trade agreement with New Zealand Wednesday, its first with a country that has diplomatic relations with China as it seeks to pursue similar deals regionally and halt a competitive slide.
The agreement was signed at a university in Wellington in a low-key event in an apparent bid to avoid upsetting China.
The “Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu on Economic Cooperation (ANZTEC)” was signed in the name under which the politically isolated island joined the World Trade Organisation in 2001.
Taiwan’s economic and foreign ministers said the pact was considered a barometer and may kickstart the signing of a series of free trade deals between the island and other countries.
“These countries are all watching to see how the agreement will work,” Taiwan’s foreign minister David Lin told reporters following a video link of the signing ceremony.
“Hopefully a similar free trade agreement with Singapore will be signed very soon,” he added.
Taiwan’s has been seeking free trade agreements with its trading partners while former rival China has joined more regional economic blocs.
“Taiwan’s economic ministry welcomes such a great achievement… as we continue to promote Taiwan’s strategy to participate in regional economic integration,” economic minister Chang Chia-chu said.
Currently Taiwan has free trade agreements with Panama, Nicaragua, El Salvador, Honduras and Guatemala, all of them maintaining diplomatic ties with the island.
Dubbed a “comprehensive market liberalisation agreement”, Wednesday’s deal is expected to expand both Taiwan and New Zealand’s market access, according to feasibility studies by both sides.
For Taiwan, the trade deal is expected to boost GDP by $303 million and the total national output by $1.18 billion after 12 years, according to its feasibility study, which also said it is expected to create more than 6,000 jobs.
Taiwan’s manufacturing sector, in particular steel, plastics and car parts, are expected to be the island’s main beneficiaries.
The deal is also set to lower the costs of popular agricultural produce, such as kiwi fruit, apples, milk and beef from New Zealand.
Taiwan levies tariffs of 5-12 percent on milk powder and cheese, leading import items from New Zealand, while import duties on kiwis and apples stand at 20 percent.
“This agreement will enhance New Zealand’s growth prospects through vastly improved links with a major Asian economy,” New Zealand Trade Minister Tim Groser said in a statement.
According to Groser, it will immediately eliminate tariffs for over 70 percent of current exports to Taiwan, and will eventually allow 100 percent of New Zealand goods to enter tariff-free.
Taiwan has been pursuing trade deals in the region to help pave the way to join the Trans-Pacific Partnership Agreement.
New Zealand, like most countries, officially recognises Beijing over Taipei, and already has a free trade deal with China. Taiwan is New Zealand’s 12th largest trading partner, with bilateral trade totalling about $120.7 million.
In 2011, Taiwan forged an investment protection agreement with Japan, as China relaxed previous strong opposition to economic deals between the island and third parties.
The apparent change in China’s policy followed the signing of the sweeping Economic Cooperation Framework Agreement between Beijing and Taipei in 2010.
Taiwan and China split in 1949 at the end of a civil war, but tensions have eased markedly since 2008 after Ma Ying-jeou became Taiwan’s president on a China-friendly platform. He was re-elected last year.
Taiwan, New Zealand sign free trade deal
