Singapore Leader Favours Taiwan FTA

by Mary Swire, Tax-News.com, Hong Kong

10 September 2010

Singapore's Prime Minister, Lee Hsien Loong, in interviews, has said that he believes that the signing of a free trade agreement (FTA) between Singapore and Taiwan would quickly lead to similar agreements between Taiwan and other countries within the Association of South-east Asian Nations (ASEAN).

It was announced last month that Taiwan and Singapore would initiate talks later this year on the feasibility of signing a bilateral economic cooperation agreement under the framework of the World Trade Organization. Lee said that the scope of that agreement would be clarified by then.

The completion of such an agreement would represent a breakthrough for Taiwan following the signing of the economic cooperation framework agreement (ECFA) with China at the end of June this year. It was said, however, that a future trade agreement with Singapore would not be called an FTA, to try and avoid giving any problem to China.

However, Taiwan has looked on the ECFA as ending its isolation, hopefully leading to talks on trade agreements with other Asian countries. Taiwan expects that it will be able to accelerate its further integration into Asia’s regional market, through eventual trade talks with its other trading partners, particularly those within the ASEAN, of which Singapore is a member.

Lee confirmed that he concurred with that view, believing that the ECFA has made Taiwan more competitive in the region, and that it will indeed lead to the further trade agreements that Taiwan expects.

He also pointed out that it should be relatively easy to conclude a trade agreement between Singapore and Taiwan as the two economies are complementary, rather than in competition. There should be no significant problems caused by the liberalization of trade in either agricultural or industrial products.

In addition, while Singapore is not a top export destination for Taiwan’s industrial products, it is likely that the latter’s service sector, particularly finance, would gain the most from an agreement, although Lee said that it would require some adjustment by Taiwan given the openness of Singapore to foreign investors.

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