Study Shows Benefits To EU Of Asian FTAs

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

07 October 2008

On October 6, the European Chamber of Commerce Taipei (ECCT) released the results of its study on the potential impact of a EU-Taiwan trade enhancement measures agreement conducted by Copenhagen Economics.

The results were released as part of the 2008 ECCT Business Forum on EU-Taiwan Investment and Trade Relations. Martin Thelle, Partner at Copenhagen Economics and leader of the research project gave a presentation summarising the main findings of the study during the forum as well as at the ECCT's Monthly Members Luncheon held on the same day.

According to the study, in order to stay competitive in the global economy, European businesses need a stronger foothold in Asia. But it concluded that in this respect, Europe is lagging behind its main competitors from the US and Japan.

Europe’s new trade strategy, Global Europe, puts open trade and investment with Asian economies on top of the agenda, and it is seen as essential to boost European economic growth and create European jobs. Consequently, the European Commission is negotiating free trade agreements with Korea, India and ASEAN. However, the report observes that while the negotiations with Korea are progressing rapidly, talks with India and ASEAN are moving more slowly.

"If the Global Europe strategy shall deliver significant results to the EU economy, it seems warranted to widen the radar screen and look for more potential partners in Asia," the report states.

The study pinpoints trade enhancement with Taiwan as holding promising potential, and the improvement in relations between Taiwan and mainland China gives Europe a window of opportunity to improve its market access in Asia significantly.

An EU-Taiwan trade enhancement deal also gives Europe an opportunity to get ahead of the US in Asia, the report argues.

The ECCT has estimated that enhancing trade with Taiwan can boost European GDP by up to EUR2bn per year, or EUR20bn over ten years, expanding the output of European producers and creating more jobs in Europe.

Removing Taiwanese tariffs and non-tariff barriers towards the EU will result in the largest expansion of EU exports to Taiwan for EU manufacturers of motor vehicles (EUR1.6bn in additional exports per year), electronics & machinery (EUR1.7bn in additional exports), beverages and tobacco (EUR0.9bn in additional exports), and clothing and textiles (EUR0.5bn in additional exports). Other EU manufacturing sectors will also expand exports to Taiwan (EUR0.7bn additional exports), the study calculates.

For European service industries, the ECCT foresees the largest gains in exports to Taiwan will be made in business services such as engineering (EUR2.0bn in additional exports), transport services such as marine transport and express delivery (EUR1.4bn in additional exports), trade services such as retail & wholesale trading (EUR0.9bn in additional exports), financial services such as banking and insurance (EUR0.5bn in additional exports). Other services will also expand their exports to Taiwan (EUR1.6bn in additional exports).

The report estimates that altogether European exports to Taiwan will increase by EUR11.8bn within a period of 2 to 5 years. These estimates are based on a scenario of eliminating tariffs and non-tariff barriers beyond what was assumed to be included in the WTO Doha Round. However, without a Doha Round, the potential for gains from bilateral trade enhancement measures would be substantially higher, it concludes.

Recommended