CIECA News Letter No. 14 / July, 2013 Index Headline News …………………….………...………...…….…P.1 Taiwan Q2 GDP up 2.27 percent Economic indicators flash green after 9 months Special Report …………………….………...………...…….…P.4 ECFA beneficial to Taiwan's pursuit of future FTAs: WTO publication Economic growth to depend on 'three engines': Ma Chambers of commerce urge liberalization Guests From Abroad …………………….………...………...…P.8 Canadian Parliamentary Delegation visit the Republic of China (Taiwan) Farewell Luncheon hosted by Mr. C. Y. Wang in honor of Amb. Pradeep Kumar Rawat, Director General, India -Taipei Mr. Leonardo Vingiani, Secretary General of Italian Association for the Development of Biotechnology, visited Taiwan Mr. Pascal Gondrand from Invest in France Agency called on Mr. Leon Lee, Secretary General of CIECA Mr. Philippe Suinen, CEO of Wallonia Foreign Trade and Investment Agency called on Mr. Leon LEE, Secretary General Economic News …………………….………...………...…….… P.11 Activity Report …………………….……….. .………...…….…P.31 An Outline of Republic of China’s Economics …...………...…….… P.32 2013 Conference Schedule of CIECA …….………...………...…….…P.34 Headline News increase, the government said on Taiwan Q2 GDP up 2.27 percent Wednesday. The better-than-expected Q2 Taipei, July 31 (CNA) GDP growth reflected Taiwan's gross domestic product higher-than-anticipated exports (GDP) posted a 2.27 percent and a mild recovery in private annual growth in the second consumption, the Directorate quarter of this year, beating an General of Budget, Accounting earlier estimate of a 1.98 percent and Statistics (DGBAS) said. 1/36 After seasonal adjustments, GDP growth by 0.05 percentage the country's GDP for the points. April-June period rose 0.59 The DGBAS said private percent from the first quarter and consumption in the second quarter grew 2.39 percent from a year rose 1.61 percent from a year earlier, the DGBAS said. earlier, 0.19 percentage points In the first quarter, Taiwan's higher than an earlier growth economy grew 1.67 percent from a estimate, which lifted the local year earlier. economic growth rate by 0.11 Despite the percentage points. better-than-expected The agency said that fears second-quarter economic growth, over a possible bird flu outbreak the DGBAS did not revise its and concerns about food product forecast of Taiwan's GDP growth safety had an impact on the for 2013, leaving unchanged a restaurant business, while previous estimate of a 2.40 percent increased turnover of the local increase it made in May, when the bourse and a sales rebound in the agency lowered its prediction of local car market helped boost 3.59 percent growth to the current private consumption. level. In the second quarter, capital The DGBAS said it will equipment imports rose 3.95 release a revised GDP forecast on percent from a year earlier, on the Aug. 16. back of increased investment in In the second quarter, semiconductor production merchandise and services exports equipment and aircraft, the rose 4.95 percent from a year DGBAS said. earlier, higher than the previous However, the DGBAS said, estimate of a 4.87 percent increase, overall capital formation, which the DGBAS said, adding that the includes public and private higher merchandise and services investment, fell 3.03 percent from export growth boosted the local the previous year, lower than the 2/36 previously estimated 2.65 percent Economic indicators flash green after 9 increase, reflecting inventory months adjustments amid concerns over an Taipei, July 26 (CNA) early exit by the U.S. Federal Taiwan's leading economic Reserve from its current indicators flashed a green light in quantitative easing measures. June, showing stable economic Australia and New Zealand growth, after flashing yellow-blue Banking Group Ltd. (ANZ) said in for nine consecutive months, the a later research note that it Council for Economic Planning continued to hold a cautiously and Development (CEPD) said optimistic view of a gradual Friday. recovery in the second half of the The agency uses a five-signal year, as the official release system to indicate the state of signaled that Taiwan's economy Taiwan's economy -- red, may have bottomed out. yellow-red, green, yellow-blue and Recent economic indicators blue -- which represent an suggested that the consolidation of economy that is overheating, the U.S. manufacturing sector has robust, stable, sluggish and provided some relief, ANZ said, contracting, respectively. The adding that Taiwan, part of the economic monitoring index rose to international supply chain of many 23 points, which is in the green global brands, would benefit if the signal range, mainly due to signs U.S. recovery accelerates. of improvement in the aspects of The bank forecast that production, trade and Taiwan's economy will expand at consumption. a faster pace in the second half of Meanwhile, the labor and 2013, at around 2.7 percent, financial markets were stable. The resulting in an annual growth of 23 score was an increase from 19 2.36 percent.(2013/07/31 Central for May, with real customs-cleared News Agency ) exports, real machinery and electrical equipment imports, the 3/36 industrial production index and the Hung attributed the decline in manufacturing industry sales index exports in June to public concern each gaining one point. over the possible phasing out of It is the first time the green the U.S. Federal Reserve's light has been seen in 22 months quantitative easing measures . and shows that Taiwan is entering He said he expects a better a period of stable economic economic situation in the second growth, a CEPD official said. half of this year and expressed Hung Jui-bin, director-general hope that the economic indicators of the council's economic research will continue to flash green in July. department, said the leading Meanwhile, Deputy Minister economic indicators have risen for of Economic Affairs Liang 11 consecutive months, while Kuo-hsin said he was happy about coincident indicators increased for the green light and that he expects the third consecutive month in that the economic situation will June. "These results show that turn for the better in the second recovery is underway," Hung said. half of this year. (2013/07/26 He said that while an increase Central News Agency) in capital equipment investment in ------------------------------------------------- the first half of this year signaled Special Report mounting interest in private ECFA beneficial to Taiwan's pursuit of future investment, the expected launch of FTAs: WTO publication new smartphones in the second Brussels, July 28 (CNA) The half of this year is expected to Economic Cooperation boost market demand. Framework Agreement (ECFA), However, weaker foreign signed between Taiwan and China demand caused by economic on June 29, 2010, helps Taiwan slowdowns in the United States, participate in regional economic Japan and China has negatively integration, according to a book affected Taiwan's exports in June, published by the World Trade Hung added. Organization (WTO) in June 2013. 4/36 Apart from being a free trade Paraguay recognized Taiwan while agreement (FTA), ECFA "offers a its Mercosur partners recognized framework through which China is China. expected no longer to object to Similarly, he added, China's Chinese Taipei's negotiations of FTA negotiation with Costa Rica FTAs with third parties," said was formally initiated only a year Craig VanGrasstek, a scholar of after the Latin American country the political economy of trade shifted its diplomatic recognition policy at the Harvard Kennedy from Taiwan to China in 2007. School, in the WTO book "The However, according to History and Future of the World VanGrasstek, "the cross-straits Trade Organization." competition over RTAs subsided In addition to reviewing the with the conclusion of the WTO's creation, achievements and Economic Cooperation obstacles, VanGrasstek also Framework Agreement between describes and analyzes Taiwan and Beijing and Taipei City." China's struggles and development When the two sides signed the within multilateral trading ECFA in 2010, Taiwan's systems. government emphasized that the Before 2010, the regional framework would pave the way trade agreements (RTAs) that for other countries to start FTA or Taiwan and China negotiated were economic cooperation negotiations "caught up with questions about with Taiwan, while the opposing the two WTO members' party criticized the signing of the diplomatic recognition," agreement as a fruitless effort. VanGrasstek pointed out. Three years later, on July 10, The issue arose when Taiwan Taiwan signed an economic was negotiating an FTA with cooperation agreement with New Paraguay in 2004, VanGrasstek Zealand, marking the first free said, noting that the negotiations trade pact that Taiwan has ever became complicated because signed with a developed country 5/36 with which it does not maintain the unemployment rate and signed diplomatic relations. an investment pact with Japan, as The pact, named Agreement well as an economic cooperation between New Zealand and the agreement with New Zealand. Separate Customs Territory of Citing debates on annuity Taiwan, Penghu, Kinmen and reform and the cross-strait service Matsu on Economic Cooperation pact, the president said that he has (ANZTEC), is significant for called for a cease-fire between the Taiwan's integration into the ruling party and the opposition, regional economy and will boost but to little avail. Taiwan's prospects of joining the People ought to engage in Trans-Pacific