Taiwan, Japan sign protection pact(2011/9/23)

September 23rd, 2011 | Categories: 2011 | Tags:

Taiwan and Japan yesterday signed an investment protection accord, signaling a breakthrough in economic cooperation that could lead to the signing of a free-trade agreement one day.
After more than a year of negotiations, Taiwan and Japan signed the 「Arrangement for the Mutual Cooperation on the Liberalization, Promotion and Protection of Investment (投資自由化、促進及保護協議),」 which is expected to take effect by the end of the year pending legislative approval.
Taiwan and Japan already enjoy close business ties despite the lack of an investment protection accord. With the signing of the agreement yesterday, both countries will have a set of guidelines to safeguard mutual investment activities, Vice Minister of Economic Affairs Hwang Jung-chiou (黃重球) said.

「Japanese enterprises are conservative and prudent in investing overseas. Now that we have a government-level pact, it will entice more small and medium-sized Japanese companies to invest in Taiwan,」 Hwang said.
Potential investments span petrochemicals, chemicals, machinery, biotechnology and digital content, he added.

Minister of Economic Affairs Shih Yen-shiang (施顏祥) said Taiwan has actively sought FTAs with other economies for the past three years, adding that its improved regional economic status, especially after the signing of the Economic Cooperation Framework Agreement (ECFA) with China last year, had led to the signing of the bilateral investment pact with Japan.
Another factor that accelerated the pact signing was Japan has been trying to find a backup overseas production base after the devastation wrought by its March 11 earthquake and tsunami, Shih said.
Such a production base will help Japan weather supply chain disruptions if disasters were to strike again in the future.
There has been a surge of interest from Japanese firms inquiring about the investment climate in Taiwan after the disasters, Shih said.
The investment pact was signed by Taiwan’s Association of East Asian Relations Chairman Peng Run-tsu (彭榮次) and Japan Interchange Association Chairman Mitsuo Ohashi.
Ohashi hailed the pact as a milestone in Japanese and Taiwanese relations and expressed hope that it would deepen future collaborations.
Under the pact, Taiwan and Japan agreed to settle trade disputes via international arbitration agencies. Further liberation of investment sectors will be discussed by the establishment of a commission when the pact takes effect, while companies from the two sides can enjoy the same benefits as local counterparts when investing in each other’s territories, according to the Ministry of Economic Affairs.
Despite signing the cross-strait ECFA in late June last year to offer tariff cuts for each side, Taiwan and China have yet to sign an investment protection accord as both parties have not failed to agree on an arbitration mechanism in the event of disputes.
After China, Japan is Taiwan’s second-largest trading partner and it is the fourth-largest foreign investor in Taiwan. Bilateral trade totaled nearly US$70 billion last year, government data showed.
Meanwhile, plans to sign an open-skies agreement as well yesterday were delayed because negotiations are still under way, Hwang said.
“Taiwan and Japan are still in talks on the agreement,” he said.
The open-skies agreement would allow Taiwanese airlines to offer flights to Japanese airports, except those in the Tokyo area because Narita Airport has an agreement with local residents to limit arrivals and departures.

Source: http://www.taipeitimes.com/News/biz/archives/2011/09/23/2003513928
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