Taiwan to Use Mexico, Turkey as Detours to Trade with U.S., EU

TAITRA said Taiwan is choosing to have its exports shipped to Mexico and Turkey first before being rerouted to the U.S. and EU because Mexico and Turkey enjoy zero tariffs to the U.S. and EU, respectively.

Taiwanese products shipped from Mexico and Turkey would enjoy lower-tariff or tariff-free access to their intended destinations, according to TAITRA.

"We can benefit from the tariff-free entry from Mexico to the U.S. and from Turkey to Europe," said Simon Wang, executive director of TAITRA's Market Development Department.

Taiwanese companies can ship components to Mexico and Turkey and then assemble the parts there using the lower labor cost in those countries before shipping them to the U.S. or EU, Wang told CNA.

The U.S.-South Korea trade pact took effect last March, after a similar one between the EU and South Korea went into effect in July 2011.

Under the trade pacts, South Korea can get low to zero tariff treatment on bilateral trade. As South Korea is one of Taiwan's key trade competitors in the global market, those deals could cause an impact on certain local manufacturing sectors, such as the machinery, plastic and textile industries, TAITRA said.

According to an estimate by the Industrial Development Bureau, Taiwan could lose some US$60 million in textile business to Korean competitors under South Korea's free trade deal with the U.S.

In addition to Mexico and Turkey, Taiwan will continue its focus on emerging markets, which are expected to be the driver of the global economy this year, TAITRA said.

(By James Lee)