US-South Korea Trade Agreements’ impact on Taiwan

USA and South Korea sign trade agreement and effective on March 15, 2012. The agreement will promote the further integration of the US and Korea economies and enhance the competitiveness of US businesses in the world’s 12^th large economy. They reduce their trade barrier and create more job opportunities to domestic people. However they also bring some barrier to their neighborhood, like my country, Taiwan.

South Korea is one of the major competitors of Taiwan in the international arena, and the United States is Taiwan's third largest export; therefore, US-South Korea FTA has some impact on Taiwan. According the survey of Taiwan Institute of Economic Research, the real GDP of Taiwan will decrease 0.04%, total export will decrease 0.06%, total import will decrease 0.09%, and trade balance will reduce $ 22 million. All these numbers show the impact to Taiwan’s internal trade.

Export structure to USA of Taiwan is similar with South Korea, 70% concentrate on information and electronic, mechanical products and automotive-related production. While the FTA effective, Taiwan will have to pay higher tariffs, relative to South Korea. Taiwan's textile industry also took a hit with US-South Korea FTA.

Faced with the impact of the US-South Korea trade agreement on Taiwan, the Taiwan government should quickly make a policy response. And the government of Taiwan try to deal with the problem from impact, Including actively promote Taiwan and the United States signed a trade agreement, promote Taiwan to join the TPP, explore other emerging markets, and assist industrial upgrading and transformation.