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Chih-peng Huang Director General Bureau of Foreign Trade August 19, 2009

Political and Economic Analyses of Free Trade in the Asia Pacific. Chih-peng Huang Director General Bureau of Foreign Trade August 19, 2009. Outline. I. Taiwan’s International Situation. II. Development of the Asia Pacific free trade. III . Taiwan’s Trade Situation.

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Chih-peng Huang Director General Bureau of Foreign Trade August 19, 2009

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  1. Political and Economic Analyses of Free Trade in the Asia Pacific Chih-peng Huang Director General Bureau of Foreign Trade August 19, 2009

  2. Outline I.Taiwan’s International Situation II.Development of the Asia Pacific free trade III. Taiwan’s Trade Situation IV. The Current cross-strait situation: Cross-Strait Economic Cooperation Framework Agreement (ECFA) V. Conclusions

  3. I. Taiwan’s International Situation Countries around the world have participated in regional economic integration in addition to trade liberalization under the WTO’s multilateral structure in recent years. Particularly, the US and European countries have made rapid progress while the start of regional economic integration in Asian countries has been relatively late. Recently, there has been a climate of negotiating and signing FTAs in the Asia Pacific area.Because of its unique politic position, Taiwan has been excluded from the Asia Pacific economic integration framework.Regardless of ASEAN plus one, ASEAN plus three or any other FTAs, each will cause a definite impact on Taiwan. China, in particular, has been actively involved in signing FTAs in the Asia Pacific region, causing major economic and political influence on Taiwan. Facing thise trend of Asia Pacific free trade, we must understand Taiwan’s international situation, confront Asia Pacific economic integration cautiously and comprehend the future of Taiwan's economy and trade in order to response appropriately. 1. Diplomatic Relations with 23 Nations Worldwide Taiwan’s International Situation 2. Participation in International Economic and Trade Organizations: WTO, APEC, OECD, WSC/GAMS 3. The Stalemate for Taiwan to Negotiate FTAs with Other Countries

  4. Diplomatic Relations with 23 Nations Worldwide

  5. Profiles for the 12 Diplomatic Allies in Central and South America Area (thousand km² ) Area (thousand km² ) 48 107 0.26 23 0.39 112 0.6 21 28 131 76 407 Data source: 2009 MOFA *countries that have signed FTAs with the R.O.C.

  6. Profiles for the DiplomaticAllies in Africa and Europe Area (thousand km²) Area (thousand km²) 11.3 1 17 274 0.00044 Data source: 2009 MOFA

  7. Profiles for the 6 DiplomaticAllies in the South Pacific Area (thousand km²) Area (thousand km²) 27.6 0.458 0.811 0.026 0.181 0.021 Data source: 2009 MOFA

  8. 2. Participation in International Economic and Trade Organizations WTO • Objectives: • Upgrade of Taiwan’s trade rank • Strive for Taiwan’s trade benefits APEC OECD WSC/GAMS

  9. WTO Rounds of Trade Negotiations under the Auspices of the GATT/WTO

  10. Agriculture NAMA Services Rules Intellectual Property Environment Development Trade Facilitation Dispute Settlement WTO WTO Doha Negotiation : 9 issues • Mandate：Nov. 2001 the Doha Ministerial Declaration set the Doha Development Agenda (DDA). • Objective：Promoting global economic development through international trade liberalization. • Timeframe：Has not to set because of several setbacks. • Problem：Developed members (EU,US) are not willing to substantially reduce the tariffs in agricultural goods and domestic support while developing members (Brazil, India) are not willing to expand market access in NAMA and Services. • Progress：The chairs of Ag and NAMA issued texts on modalities in July 2007 to launch a horizontal negotiation and subsequently issued 4 revised texts in February, May, July, and December 2008. However, the chance to conclude the negotiation was lost because of major differences in agriculture special safeguard mechanism (SSM) between main members. Thus, WTO Director-General Pascal Lamy cancelled the ministerial meeting which had originally been planned.

  11. Participating in Asia Pacific Economic Cooperation (APEC) APEC Introduction • Date of establishment：1989 • Number of economies：21（Large scale differences in economic development exist among member economies; developing countries are the majority within APEC. Chinese Taipei’s accession to APEC, as well as that of both China and Hong Kong, took place in 1991.） • Scale of Economic background： • Population of more than 2.7 billion • Occupies 44% of the world trade • Holds 54% of global GDP

  12. APEC Structure Leaders’ Meeting APEC Business Advisory Council Sectoral Ministerial Meetings Ministerial Meeting Senior Officials Meeting (SOM) APEC Secretariat Committee on Trade and Investment (CTI) Budget and Management Committee (BMC) SOM Steering Committee on ECOTECH (SCE) Economic Committee( EC) Policy level SOM Special Task Groups Working Groups (WG) Working level

  13. MOEA’s Participation in APEC • APEC Economic Leader’s Meeting (2009/11/14-15) • Annual Ministerial Meeting (2009/11/11-12) • Ministers Responsible for Trade (2009/7/21-22) • Senior Official Meeting (3-4 times/year) • Committee on Trade and Investment (3 times/year) • Sub committee meetings (1-3 times/year) • Sectoral Ministerial meetings on SME, Energy and mining （once every 2 years）

  14. Since 1989, Taiwan has been invited to participate in the OECD’s Dynamic Non-Member Economies（DNMEs）policy dialogues, seminars and other activities. • Taiwan has been granted observer status in the： • Competition Committee （since 2002） • Steel Committee （since 2005） • Fisheries Committee （since 2006） • OECD observer status is renewable every 2 years. Taiwan’s observer status to the above committees has continuously been renewed and is currently still valid. • As of the end of July 2009, Taiwan has participated in 279 OECD meetings and seminars. OECD

  15. "Governments/Authorities Meeting on Semiconductors" (GAMS) acts as a dialogue mechanism between the World Semiconductor Council (WSC) members of the semiconductor industry and governments. The Director General of the BOFT has represented our government in recent years. Taiwan successfully held the WSC annual meeting in May 2008, which reinforced our importance in the global semi-conductor industry. I believe international cooperation and exchanges in the semiconductor industry will become even closer in the future, and the BOFT will continue to contribute in this regard. WSC/GAMS We signed the Agreement on Duty-Free Treatment of Multi-Chip Integrated Circuits (MCPs), which went into effect on April 1, 2006. This helps promote our related products in the international market. We will work with other signatories to promote the expansion of product coverage and memberships in the future.

  16. DOMINICAN REPUBLIC PANAMA GUATEMALA EL SALVADOR NICARAGUA HONDURAS Signing Free Trade Agreements (FTAs) Taiwan’s Response to RTAs/FTAs UNITED STATES JAPAN SINGAPORE NEW ZEALAND AUSTRALIA EU Signed and in force Under negotiation: Diplomatic Allies Major Trading Partners

  17. n n n n n n n n n n China n n n n n n n • n n • n n n n • n n n n n n n • n n n n n n n The Stalemate for Taiwan to Negotiate FTAs with Other Countries • Currently ： • Signed and in force: Panama, Guatemala, Nicaragua, Honduras and El Salvador. • Export to these five countries is only 0.187% of Taiwan’s total export. P4

  18. II. Development of the Asia Pacific Free Trade The current trend in international trade development is to seek the goals of trade liberalization, trade facilitation and trade security. However, delay in concluding the WTO Doha Round has caused the spread of international bilateral FTAs and accelerated the deepening of regional economic integration in the world. The global economic blocs are shifting from the European and US blocs to the Asian bloc. The software industry in India, the world's manufacturing center in China, and the management techniques of Japan, Hong Kong and Singapore are attracting multinational corporations to Asia.The Asia Pacific has become the world's fastest growing intra-regional trade area.Starting in 2010, the countries of the Association of Southeast Asian Nations (ASEAN) and China will establish a free trade region (ASEAN plus one), wherein each party will be exempted from tariffs on the vast majority of goods from each party. Hence, as the largest free trade region, with a population of nearly 2 billion, it will not only surpass the US and EU but affect the development of the global economy and trade. • The Trend and Present State of Acceleration of Asia Pacific Economic Integration The Trend of Asia Pacific Development 2. Efforts toward Liberalization and Economic Integration in the Asia Pacific Region 3. Development and Response of the Asia Pacific in the Post-Global Financial Tsunami

  19. 1. The Trend and Present State of Acceleration of Asia Pacific Economic Integration • Delay in concluding WTO Doha Round has caused the spread of international bilateral FTAs and accelerated the deepening of regional economic integration in the world. US-South Korea FTA EU-Mexico Free Trade Area ASEAN-South Korea Free Trade Area (set to lower tariffs on most goods to 0% in 2010) North American Free Trade Area（NAFTA） ASEAN-China Free Trade Area (set to lower tariffs on most goods to 0% in 2010) European Union (EU) ASEAN-Japan Comprehensive Economic Partnership Agreement (set to lower tariffs on most goods to 0% in 2018) EU-South Korea ASEAN-India China-Hong Kong-Macao Closer Economic Partnership Arrangement (CEPA) CAFTA－DR ASEAN Free Trade Area (AFTA) Southern Common Market (MERCOSUR) Establishing Free Trade Area of the Americas (FTAA) Japan-Singapore New Age Economic Partnership Agreement ASEAN-Australia + New Zealand Free Trade Area Signed Feb. 27, 2009 Enter into force July 1, 2009

  20. Profile of Asia Pacific Economy and Trade As of 2008, the population of the Asia Pacific region accounted for approximatelyone third of the world; more than half of the countries attained over US$7000 GDP per capita; exports and imports accounted for about one-fourth of the world value. Thus, the future potential of Asia Pacific trade and economic development is limitless.

  21. The Asia Pacific has become the world's fastest growing intra-regional trade area Global intra-regional trade prevailed from 2002 to 2007. The European region represented the highest intra-regional trade value with US$1.7874 trillion in 2002 and increasing to US$ 4.2436 trillion in 2007; the Asian region represented the second highest intra-regional trade value with US$792.3 billion in 2002 and increasing to US$ 1.8898 trillion in 2007;next was the North American region with an intra-regional trade value of US$381.7 billion in 2002 and increasing to US$ 951.2 billion in 2007. As for growth rate between 2002 and 2007, the Asian region has been the world's fastest overall growing intra-regional trade area except in 2004 when its growth was lower than Europe and North America and in 2007 when it was lower than Europe. 16.2% 14.1% 7.7% Unit: US$ billion ; % 39.6% 19.2% 6.6% 15.3% 15.1% 18.6% 26.5% 19.8% 5.1% 9.7% 11.1% 9.8% 83.8% -2.4% 5.8% Data Source : WTO International trade statistics

  22. 2008 Ranking of Global Exporters in Merchandise Trade 1. Data source：WTO Press Release (March 23, 2009) 2. ( ) indicates the ranking in 2007

  23. Acceleration of Asia Pacific Economic Integration —Development and Effects of FTAs in Asia Pacific • 230 FTAs submitted to the WTO and have become effective • Current development of FTAs in the Asia Pacific region • 120 FTAs signed in the Asia Pacific, 35 bilateral FTAs and 6 plurilateral agreements exist among APEC member economies. • Continuous development of ASEAN+1,3,6, but the U.S. has not taken part in any of these. • Trade coverage in the Asia Pacific agreements currently occupies 45% of that within APEC, in another words, there is still more than 50% trade coverage not covered in the FTAs. • Effects • Positive Effects： • Reinforce domestic system advancement to prepare domestic liberalization for both WTO and APEC. • Negative Effects： • Causes trade diversion to non FTA members, which creates unfair competition. • Spaghetti Bowl Effect—divergent rules of origins causes extra administrative costs among exporters and importers, which particularly influences small and medium enterprises. • Due to more than 50% regional trade not covered in the FTAs, a possible trade relation cleavage might be caused between Asia Pacific markets.

  24. Development of Asia Pacific Economic Integration-1

  25. Development of Asia Pacific Economic Integration-2

  26. 2. Efforts toward Liberalization and Economic Integration in the Asia Pacific Region —a brief example of APEC • APEC Pillars • Trade & Investment Liberalization • Facilitation • ECOTECH • 1994 AELM Declaration (Bogor, Indonesia) —Leaders committed to the Bogor Goals of free and open trade and investment in the region. • These goals to be attained in 2010 for industrialized economies and 2020 for developing economies.

  27. APECPillars Three Pillars Facilitation ECOTECH Liberalization Bogor Goals- to achieve free and open trade and investment Shanghai Accord(2001) APEC’s First Trade Facilitation Action Plan, TFAPІ(2002-2006) Help enhance the capabilities of developing economies( eg. the initiative of 「APEC Digital Opportunity Center, ADOC」) Free and open trade and investment no later than 2010 for industrialized economies and 2020 for developing economies Busan Roadmap(2005) Hanoi Action Plan(2006) APEC’s Second Trade Facilitation Action Plan, TFAPⅡ(2007-2010) Establishment of measure indicators of key performance(2008) Common Action Plan, CAP-by CTI and sub committees Individual Action Plan, IAP-by individual economies Improving supply chain connectivity(2009)

  28. APEC’s Efforts toward Liberalization and Economic Integration in the Asia Pacific Region FTAAP P4 Model Measures Before 2006, APEC promoted cooperation among member economies. In 2006 AELM, it was first mentioned that APEC would go toward economic integration. The establishment of FTAAP as a long-term prospect under the regional economic integration strategy report in 2007 Since FTAAP is a long-term prospect, it will not be easy to reach consensus in the short term. The issues related to the FTAAP The model measures have been submitted since 2005. 15 Chapters have been endorsed except 5(Service Trade, Investment, Anti-dumping, Subsidies, Countervailing Duty and Labor Cooperation). Though the model measures have no legal effect, few ASEAN countries doubt the possibilities of model measures transformed into the Chapters of FTAAP. APEC economies gave no response to ABAC’s recommendation that Transpac be one of the possible options to the enlargement of regional economic integration or FTAAP. Therefore, P4 has developed bilaterally, instead of under the framework of APEC.

  29. FTAAP—Long Term Prospect, Hard to Reach Consensus in Short Term • Many countries in the Asia Pacific believe that an FTAAP ought to be consistent with and complementary to the Bogor Goals and its content overruns the framework of WTO. The approaches of promoting FTAAP would be concurrent and multi-optional. • However, countries like China, and other members like Indonesia in the ASEAN believe that FTAAP involves negotiation, and this might have violated the non-binding essence of APEC. Currently, it is suggested to focus on the Bogor Goals. Lack of consensus on when to commence negotiating FTAAP still exists among APEC economies. • May 2008, APEC economies declined to respond to the ABAC’s suggestion of Transpac (or called P-4, members are Singapore, New Zealand, Chile and Brunei) to be the foundation for expanding FTAAP and APEC REI’s possible options. Thus, the promotion of P4 appears in bilateral form, and it has not been promoted under the APEC Structure yet. • US, Australia and Peru scheduled consultation with P4 members in March, 2009, however, Obama’s administration decided to procrastinate to review its FTA policies. • The US already has bilateral FTAs with both Chile and Singapore, thus, for the US, acceding to P-4 focuses mainly on liberalizing trade and investment across the Asia Pacific region and allows P-4 to be one of the Economic Integration tools.

  30. FTAAP—Involves Complicated Issues • The Relationship to the Multilateral Trading System • An FTAAP would need to be comprehensive in WTO terms and all core areas would need to be “WTO plus”. • The Relationship between FTAAP and the 2010 / 2020 Bogor Goals • An FTAAP could be regarded as one possible tangible expression of the Bogor Goals, but it’s orderly implementation should be clearly elaborated. • How to converge and prioritize all core area of works? (Should coverage area include trade and investment only or the whole APEC agenda?) • The Relationship to the Existing and Planned RTAs and FTAs • Further study into existing RTA/FTAs in the region as well as into the rationales behind the lack of RTA/FTAs between some economies, including for example the major economies in the region, would help us understand better the feasibility of an FTAAP. • The Relationship to the APEC Operational Framework • It should be examined whether it is necessary to modify the existing APEC non-binding structure and the possible impact that an FTAAP might bring. • Capacity Building • If an FTAAP eventuates, it would be necessary to assess in a strategic way how the capacity-building needs associated with an FTAAP negotiation would be addressed.

  31. 3. Development and Response of the Asia Pacific in the Post-Global Financial Tsunami • The Impact of the Global Financial Tsunami on the Asia Pacific Economy • Addressing the Global Economic Crisis/ Support the Multilateral Trading System • Taiwan’s Viewpoint on Asia Pacific Economic Integration

  32. The Impact of the Global Financial Tsunami on the Asia Pacific Economy • The export-oriented APEC economies have all experienced the severe impact of the global financial tsunami in 2008. • Taiwan’s export growth of 3.6% lies behind China’s 17.3%, the 5 economies in ASEAN’s 15.7%, Korea’s 13.6% and Japan’s 9.5%. • Taiwan’s 4th quarter exports in 2008 and January through May in 2009 fell 24.8% and 35.1% respectively. • Taiwan’s total export amount in December 2008 fell 41.9%, the main items affected were: electronic products (-43.7%); information and communication products (-19.0%); electrical products (-59.7%) and optical, measuring and medical devices (-69.2%).

  33. Development and Response of Asia Pacific in the Post-Global Financial Tsunami • 2008 APEC Leader’s Statement on the Global Economy: • We welcome the Washington Declaration of the leaders of the Group of Twenty at their Summit on Financial Markets and the World Economy and strongly support the common principles that will guide the Action Plan for financial market reform. • We seek an ambitious and balanced conclusion to the Doha Development Agenda negotiations and hope to reach agreement on modalities next month on the basis of progress made to date. • We strongly support the Washington Declaration and will refrain within the next 12 months from raising new barriers to investment or to trade in goods and services, imposing new export restrictions, or implementing World Trade Organization (WTO) inconsistent measures in all areas, including those that stimulate exports.

  34. Addressing the Global Economic Crisis/ Support the Multilateral Trading System • Many of the export-oriented economies in the Asia Pacific have experienced the impact of global financial tsunami. Thus, addressing the crisis, Asia Pacific would focus its concerns on the following: • Economic crisis and the possible occurrence of trade protectionism • Cooperation to facilitate the capacity building of trade financing and social resilience ( labor retraining, tax reduction and minority assistance) • Experience sharing on stimulus packages and enterprise assistance • Discuss whether to establish surveillance mechanism on reviewing protectionism and stimulus packages • Asia Pacific countries should reinforce cooperation on rejecting protectionism, improving domestic structures, assisting small and medium enterprises and stimulating regional trade and consumption in order to advance the global economy

  35. Taiwan’s Viewpoint on the Asia Pacific Economic Integration • APEC’s reinforcement on economic integration, market expansion and efficiency advancement will help enterprises to gain the benefit of cost-down in order to address the financial crisis and counter the challenges of economic recession • Reinforce cooperation between government agencies and academic institutions to advance study and proposal capacity in order to establish concrete strategy references and comments on integration. • Any economic integration should comply with the basic principles of APEC, e.g. fairness, open regionalism and equal participation, in order to avoid the deterioration of the Spaghetti bowl effect to influence the effect of economic integration that might bring market cleavage. • Continuous cooperation on cross strait relations under bilateral and APEC structures. • FTAAP mainly meets the businessmen’s essential needs. Triggering any negotiations in the short term brings little possibility. However, in the long term, it complies with all economies’ interests and developmental benefits. Thus, Taiwan supports the progressive approach to continuously analyze any possible approaches, and to promote REI with economies that carry the same ideal.

  36. III. Taiwan’s Trade Situation • The Development of Taiwan’s Economy and Trade • Taiwan’s Trade Performance over the Years • Taiwan’s Trade Performance since the Global Financial Tsunami • Export Promotion Plan ( New Cheng Ho Plan)

  37. 1970s 1. The Development of Taiwan’s Economy and Trade Import Replacement Policy (light industry) 1950s Export Expansion Policy (light industry) 1960s Era of Import Replacement and Export Expansion (heavy industry) 2000 ～ present Globalized Operations (developing knowledge- based economy) 1980s Liberalization, Internationalization, and Systematization Policies (strategic industries) 1990s Era of High-tech Industry (10 major emerging industries)

  38. 2. Taiwan’s trade performance over the years Trade Milestones in Taiwan: Taiwan’s foreign trade turned a surplus for the first time in 1971; Taiwan’s foreign trade value exceeded US$100 billion in 1988 and exceeded US$200 billion in 1995. Total trade value has continued to grow rapidly since 2003,exceeding US$300 billion in 2004, exceeding US$400 billion in 2006 andexceeding US$496 billion in 2008, which was more than 120 times greater than in 1971, thus becoming the 18th leading exporter in the world. 2008 496.1 TAIWAN TOTAL TRADE VALUE 2007 465.9 Rapid Growth on Trade 2006 426.7 (Unit: US$ Billion) 2009 371.7 (f) 2004 351.1 1995 217.3 1988 110.2 1971 3.9 Data Source : DGBAS, R.O.C. ;WTO

  39. Taiwan’s trade dependence in recent years Unit :% Data Source: DGBAS, R.O.C.

  40. Taiwan’s Trade Performance from 1998 to 2008 In viewing Taiwan’s import and export value between 1998 and 2008, exports increased an average of 7.4%, from US$112.6 billion to US$ 255.6 billion; imports grew 7.9% in average, from US$105.2 billion to US$240.4 billion, with an accumulated surplus of US$187.5 billion from 1998 to 2008, thus, representing rapid growth in the past 11 years. 10.1% 3.6% 22.8% -16.9% 7.1% 11.3% 8.8% 12.9% 21.1% 10.0% Unit: US$ Billion -9.3% Data source: Taiwan Directorate General of Customs; Compiled by the BOFT

  41. Taiwan’s major export destinations have shifted to China and emerging markets 1989 US$66.3 billion 1998 US$110.6 billion 2008 US$255.7 billion Mainland China 23.5% Mainland China 10.7% Emerging countries: Mainland China, Russia, Brazil, India, the Middle East, ASEAN (Vietnam, Malaysia, Indonesia) Mainland China 39.0% Data source: Taiwan Directorate General of Customs; Compiled by the BOFT

  42. 3. Taiwan’s Trade Performance since 2008 • Formation and Evolution of the Global Financial Tsunami • Taiwan’s Trade Performance since 2008 • Severe Plunge in Taiwan’s Exports since Sep. 2008 • Sharp Decline in Export Orders since June 2008 • Sluggish exports of electronic products and electrical machinery products • Declines in imports of electronic products, machinery, electrical machinery products, organic chemicals, optical instruments, and transport equipment • Definite results gained from efforts to enhance export promotion to 10 target markets • Taiwan's Economy is Expected to Lead the Rebound in the Second Half of 2009

  43. The Global Financial Tsunami: Its Formation Easy money seeking higher returns flows into global stocks, real estate, and commodities, causing rapid increases in prices for real estate, energy, and grain, as well as high inflationary pressure worldwide. After the collapse of the dot-com bubble and the 911 attacks, the US Fed lowers interest rates from 6% to 2% in 2001; the market becomes awash in capital. 1 2 4 3 The US Fed is forced to impose large increases in interest rates. Many US homeowners default on mortgages, go bankrupt, or sharply reduce consumer spending to avoid defaulting. 6 5 As the subprime default rate climbs, the underwriting banks face serious losses and pressure from asset devaluations. After Lehman Bros. collapse in September, credit risk spreads to other banks and financial institutions. This causes financial turbulence, the US dollar declines in value, and the subprime mortgage crisis erupts. Because bonds issued by subprime underwriters, Fannie Mae and Freddie Mac were sold around the world, international finance and the global economy were also seriously affected.

  44. The Global Financial Tsunami: Its Evolution 1 Weakening economy, stock markets and real estate drop together 2 Prices for REITs and structured notes fall Insufficient bank capital leads to the first line of bank collapses 3 4 Crisis of confidence in capital markets 5 When credit is tight, cash is king 6 Banks tighten business credit Insufficient domestic demand, economic decline Low turnover causes businesses to close or lay off employees 10 Low consumer confidence, cutbacks on spending 7 8 9 Unemployment rises

  45. Severe plunge in Taiwan’s exports since Sep. 2008 Due to the rapid slowdown in the international economy caused by the global financial tsunami, Taiwan’s exports have declined for eleven consecutive months since Sep. 2008. According to the latest export performance, a new high was reached with July exports amounting to US$17.3 billion, the first since November 2008; although July exports fell 24.4% compared with the same period last year, it was the smallest drop so far this year. Unit: US$ billion; % Data source: Taiwan Directorate General of Customs

  46. Sharp Decline in Export Orders since June 2008 As for the performance of Taiwan export orders in 2008, although export orders showed a two-digit growth from Jan. to May, the growth rate has slowed down significantly since June. Export orders showed the deepest decline in Jan. 2009 (-41.7%), reflecting the serious impact resulted from the global financial tsunami. However, the rate of decline was smaller in Feb.(-22.3%) and Mar. (-24.3%) due to urgent orders from China; furthermore, Taiwan’s export orders in June 2009 declined the least in eight months, signaling the worst may be over for Taiwan’s trade. Unit: US$ Billion ; %(YoY)

  47. Sluggish exports of electronic products and electrical machinery products Because of soaring raw material and crude oil prices in the first half of 2008, chemical exports grew 16.0% for the entire year. Owing to the global financial tsunami in the second half of 2008, exports of electronics and electrical machinery decreased 3.2% and 8.1% respectively for the entire year. Unit：% Information and communi-ction products Optical instru-ments Transport equipment Iron & steel and articles thereof Machinery Chemicals Electronic products Electrical machinery products Data source: Taiwan Directorate General of Customs

  48. Declines in imports of electronic products, machinery, electrical machinery products, organic chemicals, optical instruments, and transport equipment Because of soaring raw material and crude oil prices in the first half of 2008, imports of crude oil shot up 35.1% for the entire year. Owing to the global financial crisis in the second half of 2008, imports ofelectronic products, machinery, organic chemicals, optical instruments, and electrical machinery products decreased 3.4%, 0.2%, 1.8%, 8.8% and 4.4% respectively for the entire year. Imports of transport equipment plunged 18.7% because of drops in demand for rail transportation and aircraft equipment. unit：% Information and communi-ction products Crude oil Iron & steel and articles thereof Machinery Organic chemi-cals Electrical machinery products Electronic products Optical instru-ments Transport equipment Data source: Taiwan Directorate General of Customs

  49. Definite results gained from efforts to enhance export promotion to 10 target markets Although Taiwan’s exports were severely impacted in 2008, its exports to the ten targeted promotion countries showed a 17.5% growth on average for the whole year of 2008, which was 3.8 times greater than Taiwan’s overall export growth rate (3.6%) during the same period. Unit:% • Red: The actual growth rate • Black: The targeted growth rate Brazil India Spain Indo-nesia South Korea Vietnam Japan Malaysia Russia Turkey Data source: Taiwan Directorate General of Customs

  50. Taiwan's Economy is Expected to Lead the Rebound in the Second Half of 2009 According to data issued by Global Insight Inc., Asian countries showed a remarkable slowdown in economic growth in 2008; the Asian Tigers, in particular, fell into the realm of negative growth in Q4 2008. However, Taiwan and Hong Kong are expected to take lead in rebounding to positive growth in the second half of 2009. Unit：%（YoY） Data source：World Overview, Global Insight Inc., February 14, 2009

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