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Taiwan's Market Access Ranking Drops to Second-worst in the World: WEF

Apr 17, 2014 | By Judy Li

Taiwan ranks 137th in the “market access” sub-index of the "enabling trade" index of the "Global Enabling Trade Report 2014" published recently by the World Economic Forum (WEF). Among the 138 economies covered in the report, Taiwan's ranking in “market access” is second from the bottom, down six places from 131st in the previous report.

Taiwan's ranking in the overall enabling trade index, however, is up five places to 24th in the world and sixth in Asia, after Singapore, Hong Kong, New Zealand, Japan, and Australia but ahead of Malaysia and South Korea.

The "Global Enabling Trade Report" is published every two years by the WEF to assess the quality of institutions, policies, and services facilitating the free flow of goods over borders and to their destinations. At the core of the report, the "enabling trade" index benchmarks the performance of 138 economies in four critical areas: market access, border administration, transport and communications infrastructure, and regulatory and business environment.

The “market access” sub-index measures the extent and complexity of a country's tariff regime, as well as tariff barriers faced and preferences enjoyed by the country's exports in foreign markets. An official of Taiwan's Cabinet-level National Development Council (NDC) indicates that Taiwan is at the point of being marginalized in the global trade arena as it faces higher tariff barriers than many other economies. The weighted average tariff rate of Taiwan's exports currently stands at 6%, higher than Singapore's 4.2% and South Korea's 5.3%. For most countries in Southeast Asia, including Thailand, Indonesia, Vietnam, and Malaysia, the rate is lower than 4.5%.

Deputy Economics Minister Woody T. J. Duh points out that today Taiwan's free trade agreement (FTA) coverage rate is only 9.69%, much lower than the 36.81% rate of its major trade rival, South Korea. This means that South Korea enjoys more than US$36 worth of preferential tariff rates, or tariff-free treatment, for each US$100 in exports, while for Taiwan the preferences are worth less than US$10.

So far Taiwan has inked FTAs with New Zealand, Singapore, and four countries in Latin America, in addition to its Economic Cooperation Framework Agreement (ECFA) with China. By contrast, South Korea has signed FTAs with nine countries and economic blocs including Chile, Singapore, ASEAN (Association of Southeast Asian Nations), India, EU, Peru, the United States, Turkey, and Canada.

Taiwan's economic officials worry that if a proposed FTA between South Korea, Japan, and China is completed, then Taiwan will lose an estimated US$16.8 billion in external trade and, as a result, suffer a drop of 1.15% or about US$4.55 billion in GDP, a reduction of US$6.19 billion in social welfare, a decline of 2.75% or about US$7.76 billion in real exports, and a contraction of 4% or about US$9.1 billion in real imports.

The trade disadvantages under which Taiwan is currently forced to labor cost the island US$16.8 billion in lost external trade last year, or 3% of its total. (JL)


Taiwan's Rankings in Global Enabling Trade Index in 2014
Item
Rank in 2012
Rank in 2014
Change in rank
Market access
101
121
-20
Border administration
31
18
+13
Transport &communications infrastructure
19
15
+4
Regulatory & business environment
22
18
+4
Overall enabling
29
24
+5
Source: WEF

Average Tariff Rate of External Trade of Taiwan and S. Korea
Year
Taiwan
S. Korea
Tariff rate (%)
Global rank
Tariff rate (%)
Global rank
2010
6.2
124
5.8
110
2012
6.2
130
5.7
78
2014
6.0
136
5.3
55
Source: WEF

FTA Coverage Rate of Economies in Asia
Economy
Coverage rate (%)
Singapore
70.77
S. Korea
36.81
Japan
18.25
Taiwan
9.69
Source: NDC


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