Taipei Representative David Lin discusses the challenges and opportunities for Asia and the UK
The UK will face new challenges and opportunities in forging the best possible trade deal or new partnership with the EU through Brexit negotiations after Article 50 of the Lisbon Treaty is triggered by the end of March 2017. At the same time, the EU needs to explore more openings to develop closer trade and investment ties with non-EU countries around the world, especially its major trading partners.
In light of Asia’s economic dynamism, it is expected that the Brexit process will have significant implications for the UK’s major trading partners in Asia, including Japan, Singapore and Taiwan. In fact, the UK may have already launched or planned preliminary talks on free trade deals with some countries in the region.
Despite the uncertainty caused by Brexit, Taiwan continues to see the EU as an important economic partner and has done everything possible to secure closer cooperation with the UK and other EU member states in areas of mutual interest. As a major trading nation with a GDP exceeding US$520 billion in 2015, Taiwan has developed its strengths in outbound investment, high-tech industry clusters, R&D capabilities, competitiveness and innovation to promote economic and trade cooperation with the EU as a whole.
Taiwan and the UK have a long-established, robust partnership in trade and investment, and we trust this trend will continue in the future. Moreover, since 1998 Taiwan has ranked among the UK’s 14 key markets for expanding exports. With two-way trade volume totalling around US$5.6 billion in 2015, the UK is Taiwan’s third largest trading partner in Europe, while Taiwan is the UK’s sixth largest in Asia.
In addition, the UK is currently Taiwan’s fifth largest source of foreign direct investment, with cumulative investment reaching over US$7.6 billion. About 300 British companies are now operating in Taiwan, including Jardines, GSK, HSBC, Standard Chartered and Barclays. At the same time, the UK now attracts most of Taiwan’s direct investment in the EU, and over 180 Taiwanese companies have operations in the UK.
Therefore, it is evident that both Taiwan and the UK would benefit greatly from closer economic cooperation in a wide range of areas, including trade and investment agreements.
Our government is now integrating public and private resources to further develop five key innovative industries for the future: an Asian Silicon Valley (the internet of things), biotechnology, intelligent machinery, green energy and defence. We believe that developing these industries will, in addition to strengthening existing cooperation between Taiwan and the UK, create new opportunities for collaboration. For instance, the Taiwan-UK smart city forum proposed for this spring could pave the way for more cooperation in this important field.
As the UK forges new relations with Asia, I would like to present three brief points:
- Enhancing Taiwan-UK trade and investment relations – an opportunity for an FTA or BIA
Based on the existing economic partnership between the two countries, we believe that the promotion of a Taiwan-UK free trade agreement or bilateral investment agreement would be of significant benefit to both sides. We therefore will continue to propose a joint feasibility study on an FTA/BIA to be undertaken as a first step in initiating trade negotiations. We also welcome the establishment of any other workable mechanism, including for instance a bilateral working group, for preliminary exchanges between Taiwan and the UK.
- Expanding substantive Taiwan-UK cooperation in specific areas
Taiwan and the UK already hold regular dialogues and consultations on areas of mutual interest, such as the annual consultation on economics and trade, the renewable energy roundtable and the railway industry forum. There are also specific areas with huge potential for greater cooperation, such as offshore wind power, digital communications, smart cities, biotechnology and the cultural and innovative industry.
3. Developing a new sustainable strategy towards Asia
While the EU, given its size, will most likely remain the largest economic partner to the UK during and after Brexit, the UK can and should play a leading role in the future by developing a more comprehensive and sustainable policy towards its major trading partners in the Asia Pacific region. Listing priorities for substantive cooperation based on mutual interest, identifying major and emerging trading partners, launching informal talks for preliminary consultations, and in due course signing free trade deals, including FTAs, BIAs and other economic cooperation agreements, will hopefully be incorporated into such a new Asian strategy.
During a recent visit to Taiwan, UK Minister of State for International Trade Greg Hands said, “The UK has always been a hub of creativity and innovation and I want Taiwan to know we are open for business and will continue to be a reliable ally and trusted partner.
“We want to seize the opportunities open to us and will push for the strongest possible economic links with all important partners around the world, including with Taiwan.” We welcome his statement, and hope that the UK’s new strategy towards Asia will include how and when to launch preliminary trade talks with all its major trading partners.
Representative Lin based the text of this article on an event at Chatham House entitled ‘Asia and the UK: Forging a New Relationship Post-Brexit,’ in which he participated, along with the Ambassador of Japan and the High Commissioner of Singapore.