Taiwan-Japan Ties: Going from Strength to Strength

On Sept. 22, Taiwan-Japan relations entered a new phase with the signing of a landmark arrangement pertaining to the bilateral liberalization, promotion and protection of investment.
The comprehensive pact, concluded in Taipei by Taiwan’s Association of East Asian Relations Chairman Peng Run-tsu and his Japanese counterpart Mitsuo Ohashi of the Interchange Association, is an important step in the economic development of the ROC. It also opens up a host of new opportunities for local firms and Japanese companies seeking to expand their presence in Taiwan while accessing lucrative regional markets.
Under the arrangement, Taipei and Tokyo will strive to deepen bilateral economic ties, promote expanded trade, clear investment hurdles and better protect investor rights. Equally important, this cooperation recognizes the highly complementary nature of both nations’ industrial structures and will contribute to accelerating the integration of their supply chains.
In capitalizing on Taiwan’s formidable manufacturing clout, leading-edge R&D capabilities, world-class intellectual property rights protection regime and strong rule of law, the pact helps position the island as a top-notch base for global exports, greatly enhancing its luster as a destination for further Japanese investment.
Such a development makes perfect sense. Japan is Taiwan’s second largest trading partner and a major supplier of foreign investment and technological know-how, having invested nearly US$16.5 billion in the island over the past 50 years. In 2010, bilateral trade stood at nearly US$70 billion, an increase of 37.85 percent from 2009.
Underscoring the closeness of ties between the two countries, which have been steadily growing since ROC President Ma Ying-jeou took office in May 2008, the arrangement also reaffirms the importance of the Cross-Straits Economic Cooperation Framework Agreement (ECFA). The history-making pact is enticing Japanese firms to establish offshore backup production bases in Taiwan as they reassess their global strategies following the earthquake and tsunami that devastated the northeastern part of the country in March.
The pact is a welcome development at a time when global economic conditions are becoming increasingly uncertain. It is a strong sign that Taiwan is seen as a liberalized and internationalized business environment, appealing to foreign businesses and multinational firms seeking long-term investment partnerships.
An added benefit of the arrangement is that it helps Taiwan stave off the threat of economic isolation posed by regional integration being carried out under the auspices of the Association of Southeast Asian Nations. Economies around the world can now clearly see the value of working with Taiwan and will be more willing to enter into bilateral trade agreements, further bringing the country into the global economy.
The Taiwan-Japan investment pact is a central component of ROC government economic policymaking geared toward creating win-win outcomes for the country and its international partners. Such arrangements play—and will continue to do so—a critical role in laying the foundations for Taiwan’s sustainable development and continued prosperity.