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EU – Taiwan Trade and Investment Factfile - 2007

 

 

 

Overview

 

2006 was once again a year of growth for EU–Taiwan trade relations, with an increase of 6.8% in trade volume, according to Eurostat, the European Union's statistical office. The bilateral trade volume climbed to €39.4bn. This is high, but still not as high as the record year of 2000 (more than €43bn).

 

Taiwanese exports to the EU grew particularly strongly last year, an increase of +9.7% to €26bn. By contrast, EU exports to Taiwan were far less dynamic, with a growth rate of only 1.5%, and a volume of €13bn. This leaves a trade deficit of €13bn for the EU – almost 20% larger than in 2005.

 

In 2006, Taiwan was the EU's 10th largest supplier of goods and its 23rd biggest customer. Overall, Taiwan is the EU's 14th largest trading partner worldwide, and its 10th largest outside the European continent. In Asia, Taiwan is the EU's 5th largest partner, with a bilateral trade volume slightly smaller than EU–India trade, 1/3 of trade with Japan and 1/6 of trade with China.

 

In 2006, the EU became the largest foreign investor in Taiwan, both in flows and stocks.

 

People-to-people exchanges grew swiftly, with more and more visitors both ways and an increasing interest from Taiwan's students for the EU's higher education opportunities.

 

Key figures

€40bn: EU – Taiwan bilateral trade

6.8%: growth rate of EU – Taiwan trade in 2006

Number 1: EU first foreign investor in Taiwan

 

 

1. Trade Relations

 

 

1.1 Trade in goods

 

There are discrepancies between Eurostat trade statistics and Taiwanese customs statistics, among others due to variations in the exchange rates. Unless otherwise indicated, figures cited come from Eurostat. All figures refer to the EU-25, i.e. the EU with 25 Member States, and do not take into account the 2 new Member States (Romania and Bulgaria) which joined the EU  on January 1st, 2007.

 

 

Trade in goods between the EU and Taiwan picked up again in 2006, with a growth rate of 6.8%, after a flat 2005. The overall trade volume reached €39.4bn, which is still under the record of year 2000 in Euro value, but actually probably exceeded year 2000 in volume, if variations in exchange rates are taken into account. The bilateral trade exchanges have thus fully recovered from the downturn of the years 2001 to 2003.

 

Growth observed in 2006 was mainly due to the dynamism of Taiwanese exports to the EU (+9.7%), reaching €26.1bn. EU exports to Taiwan remained sluggish (+1.5%) for the second year in a row, at €13.2bn. This poor result of EU exports can be explained by a combination of factors, among which the limited growth of private consumption in Taiwan, the high level of the Euro, the remaining barriers to trade and the lack of interest shown by EU operators for the Taiwanese market.

 

The EU's deficit also grew to the very high level of €12.9bn, with a cover rate (i.e. the share of EU imports from Taiwan covered by its exports to Taiwan) falling to just over 50%. This is the second worst cover rate for the EU in Asia (after China, with only 33%).

 

 

Taiwan's exports to the EU in 2006: strong growth (+9.7%)

EU exports to Taiwan sluggish (+1.5%)

EU deficit growing (€12.9bn)

 

 

 

 

Trade in goods between the EU and Taiwan

Eurostat, billion Euros

 

1999

2000

2001

2002

2003

2004

2005

2006

EU exports to Taiwan

12.0

15.1

13.4

11.9

11.0

12.8

13.0

13.2

Annual growth rate

 

+25.8

-11.3

-11.2

-7.6

+16.4

+1.6

+1.5

EU imports from Taiwan

21.3

28.3

26.0

23.2

22.4

23.6

23.8

26.1

Annual growth rate

 

+32.9

-8.1

-10.8

-3.4

+5.4

+0.9

+9.7

Total

33.3

43.4

39.4

35.1

33.3

36.4

36.9

39.4

Annual growth rate

 

+30.3

-9.2

-10.9

-5.1

+9.3

+1.4

+6.8

Balance for the EU

-9.3

-13.2

-12.5

-11.3

-11.4

-10.7

-10.8

-12.9

 

 

 

 

 

 

1.2 Trade in services

 

 

Trade in services plays a growing part in the bilateral trade relation, representing in 2005 about 13% of the trade in goods. However, after two years of rapid development in 2003 and 2004, there was a pause in 2005. These exchanges with Taiwan still make up a small part of the EU's total trade in services – only 0.8%, while Taiwan represents 1.6% of the EU's trade in goods. This is an indication that there might be room for expansion.

 

The EU's trade in services with Taiwan generates a trade surplus in favour of Europe. At €1.2bn in 2005, this surplus is not sufficient to compensate the more than 10bn deficit on trade in goods.

 

More than €5bn annual trade in service

 

 

Trade in services between the EU and Taiwan

Eurostat, billion Euros

 

2001

2002

2003

2004

2005

EU exports to Taiwan

2.0

2.0

2.3

3.1

3.2

EU imports from Taiwan

1.8

1.8

2.0

2.1

2.0

Total

3.8

3.8

4.3

5.2

5.2

Balance for the EU

0.2

0.2

0.3

1.0

1.2

 

 

 

 

 

 

1.3 Rankings: imports, exports, overall trade volume

 

 

        Taiwan was the EU's 10th largest source of imports in 2006, accounting for 1.9% of the EU's total imports. In size, Taiwan is comparable to Brazil as a supplier to the EU, and to about one third of Japan. It is still a larger supplier than India or Canada.

 

        Taiwan is the EU's 23rd client, purchasing 1.1% of the EU's total exports. It ranks far behind other Asian countries like Korea (which buys twice as much EU goods), Japan (three times as much) or China (five times as much).

 

        Overall, Taiwan is the EU's 14th largest trade partner, with a trade volume comparable with Brazil or India. However, it is bound to slip down in the rankings if EU exports to Taiwan do not pick up.

 

Taiwan: the EU's 14th largest partner

  the EU's 10th non European partner

 

The triangular trade between Taiwan, China and the EU should be taken into account when analysing EU–Taiwan trade flows. Taiwanese-owned companies operating in China, importing components from Taiwan, and having their final clients in the EU, play a crucial role. It is estimated that Taiwanese-owned companies make up 10 to 20% of China's exports. China's exports to the EU accounted for more than €190bn in 2006. Taiwan's direct exports to the EU amounted to €26bn, but part of Taiwan's exports to China (more than €70bn, including Hong Kong) also end-up as components in products re-exported to the EU.

 

Part of Taiwan's exports to China end-up as components in products re-exported to the EU.

Taiwan-owned companies in China export at least €20bn to the EU.

 

The EU's trade with its main Asian partners

Eurostat figures, Year 2006, € billion

 

China

Japan

Korea

India

Taiwan

Trade volume

255

120

61

46

39

EU exports

63

45

23

24

13

EU imports

191

76

38

22

26

Balance

-128

-31

-15

2

-13

Cover rate (exports/imports)

33%

59%

61%

109%

50%

 

1.4 Evolution of EU-Taiwan trade over time

Source for figures in chapter 1.4: Taiwanese customs statistics

 

According to Taiwan customs statistics, the EU – Taiwan overall trade volume (imports + exports) went through three major phases during the past 15 years:

 

1990-1998: period of strong growth (average annual growth of more than 8%), thanks to the dynamism of both Taiwanese exports to the EU and EU exports to Taiwan, resulting in a balanced bilateral trade

 

1999-2002: sharp decrease in bilateral trade, first due to the fall of EU exports to Taiwan (1998-2000), then in 2001 to the parallel decrease of Taiwanese exports to the EU. The bilateral trade volume fell to its lowest in 2002, sliding down to figures comparable to year 1995. The EU's trade deficit with Taiwan established itself as durable.

 

2003-2006: trade volume picked up again, reaching again peak level of 2000 in year 2004 and growing even more in 2006. However, the EU's deficit did not show signs of diminishing, but on the contrary of increase, with Taiwanese exports to the EU as the main driving force of the bilateral trade relation.

 

EU's trade deficit with Taiwan expanded by 20% in 2006

 

 

 

The EU is consistently Taiwan's number four largest trading partner, after China, Japan and the US. It accounts in 2006 for around 10% of Taiwan's external trade. The historical evolution of EU-Taiwan trade is parallel to the evolution of US-Taiwan trade, but the EU is very gradually catching up.

 

The US was Taiwan's largest trade partner until 2001 but this position was taken over by China in 2002, and Japan became second largest partner in 2003, relegating the US to third position. The specific dynamism of the cross-straits trade relation and the growing trend of economic integration in East Asia underpin these recent changes.

 

The EU: a consistent 4th largest trading partner for Taiwan

 

 

 

Taiwan's trade with China expanded by 16% in 2006

 

 

 

 

1.5 Trade by Member States of the European Union

 

The EU's single market and free circulation of goods in this market make it difficult to attribute specific trade flows with non-EU economies to one individual EU Member State in particular. Figures in chapter 1.5 are based on Taiwanese customs statistics.

 

Germany is the largest trade partner for Taiwan among EU countries, followed by the Netherlands, the UK, France and Italy. Germany represents about one fourth of Taiwan's trade with the entire EU. These five countries together account for more than 2/3 of the EU – Taiwan trade volume.

EU countries having smaller volumes of trade with Taiwan very often show high levels of growth. Slovakia's trade with Taiwan almost doubled in 2006, for the second year in a row; and growth rates reached 64% for the Czech Republic, 33% for Austria, 28% for Poland, 22% for Hungary.

 

 

 

Only Germany, France, Austria, Sweden and Ireland had trade surpluses with Taiwan in 2006, but this surplus shrank significantly as compared to 2005 for Germany and France. The largest deficits were registered with the Netherlands, the UK, Spain, Italy, Hungary and Poland.

 

Exports to Taiwan grew relatively fast for Poland (+43%), Austria (+42%), Slovakia (+30%), Denmark (+24%) and Finland (+21%). They shrank significantly for Hungary (-44%), France (-13%) or Spain (-9%). Taiwanese exports to Slovakia and the Czech Republic doubled, and they grew by 44% to Hungary, 26% to Poland, 24% to Austria.

 

Taiwan has a trade deficit with 4 EU Member States

 

 

 

 

 

 

 

1.6 Structure by products

Eurostat 2006 figures

 

 

EU imports from Taiwan are traditionally highly concentrated on electronic and computer products. This type of equipment makes up more than half of total imports from Taiwan. The product group ''office and telecom equipment'' alone accounts for more than €10bn (out of 26bn). In this group, Taiwan provides almost 9% of the EU's imports from the world and is the EU's 4th largest supplier.

 

In 2006, however, the structure of imports from Taiwan changed slightly as compared to previous years. Firstly, within the category of electronic and computer equipment products, LCD display devices and computer parts occupy a growing share, while the share of finished products, such as laptop computers, tends to diminish. This reflects the fact that Taiwanese IT companies increasingly build final products either in China or in the EU, closer to the market. Secondly, the share of more traditional industrial products in Taiwan's exports to the EU grew significantly in 2006, with considerable increases on petroleum sub-products, steel or chemicals.

 

 

40% of Taiwan exports to the EU are office/telecom equipment

 

 

 

 

 

 

 

 

European Union, Imports from ... Taiwan

 

 

 

 

 

Rank

SITC Rev.3
Product Groups

Mio euro

Share of total EU imports

%

 

 

 

 

 

11

TOTAL

26.139

1,94 

100,0

 

 

 

 

 

95

Agricultural products

78  

0,09 

0,3

55

Energy

140  

0,04 

0,5

8

Non-agricultural raw materials

192  

0,06 

0,7

4

Office/telecom. Equipment

10.672  

8,77 

40,8

6

Power/non-electrical mach.

1.142  

2,76 

4,4

6

Transport equipment

1.819  

2,36 

7,0

17

Chemicals

665  

0,64 

2,5

21

Textiles and clothing

597  

0,77 

2,3

15

Iron and steel

426  

2,27 

1,6

 

 

 

EU exports to Taiwan were in 2006, as usual, spread more evenly between diverse categories of products than Taiwanese exports to the EU. Electrical machinery and computer related equipment are still the first product groups. The category of transport equipment shows contrasting results, with a diminishing trend in cars and aircraft, and a growing trade in railway rolling stock. On the whole, industrial products such as chemicals (the demand of which is linked to Taiwan's exports) grew relatively strongly, while consumer products, such as food and beverages, or luxury goods, remained flat.

 

 

 

40% of EU exports to Taiwan are made of 4 major items:

- chemicals / pharmaceuticals

- office / telecom equipment

- machinery

- transport equipment

 

 

 

 

 

 

 

 

 

 

 

 

 

European Union, Exports to ... Taiwan

 

 

 

 

 

rank

SITC Rev.3
Product Groups

Mio euro

Share of total EU exports

%

 

 

 

 

 

23

TOTAL

13.226

1,14 

100,0

 

 

 

 

 

22

Agricultural products

740  

1,08  

5,6

52

Energy

50  

0,11 

0,4

11

Non-agricultural raw materials

110  

0,11 

0,8

11

Office/telecom. Equipment

1.509  

2,59 

11,4

22

Power/non-electrical mach.

1.201  

0,99 

9,1

28

Transport equipment

934  

0,64 

7,1

22

Chemicals

2.071  

1,14 

15,7

24

Textiles and clothing

262  

0,76 

2,0

20

Iron and steel

285  

1,32 

2,2

 

 

 


 

 

2. Investment Flows and Stocks

 

Foreign Direct Investment statistics are very difficult to put together in a globalised world, where the businesses do not necessarily have clear-cut geographical roots. For this reason, investment statistics must be treated with caution.

 

 

2.1 The EU's FDI in Taiwan

Source of statistics: Taiwan Ministry of Economic Affairs

 

The EU, largest foreign investor in Taiwan

 

In 2006, foreign direct investment (FDI) from the EU into Taiwan reached a record level, with additional new investment worth more than USD 7bn, according to statistics from Taiwan's Ministry of Economic Affairs. Last year, investment from the EU accounted for more than half of all incoming new foreign investment in Taiwan. Even if part of this unusually high figure can be explained by technical transfers of property of existing investment from a local subsidiary to European headquarters, several major new investment projects have also taken place.

 

As a result, the EU's stock of foreign direct investment in Taiwan more than doubled to USD 15bn. More than half of this comes from the Netherlands (USD 9bn), followed by the United Kingdom (USD 4bn) and Germany (USD 1.7bn). Now accounting for 20% of all FDI in Taiwan, the EU has become the largest foreign investor, ahead of the United States and Japan.

 

 

 

 

 

 

2.2 Taiwan's FDI in the EU: small and diminishing

Statistics: Eurostat

 

Taiwanese businesses could invest much more in the EU

 

Overall, Taiwan's FDI in the EU is unimpressive, and far from corresponding to the level of trade relations. According to Eurostat data, the stock of Taiwanese direct investment in the EU fell to around €700m at the end of 2003, which is less than investment from the Philippines (€860m), and not comparable any more with investment from Korea (€3.6bn) or Singapore (€14bn). Flows of investment from Taiwan to the EU over the past years have been disappointing, and often negative. Even if investment from Taiwanese companies registered as originating in Hong Kong is taken into account, the picture is still grim, and there is, according to statistics from Taiwan's Ministry of Economic Affairs, less Taiwanese FDI in the EU than in Africa.

 

 

 

 

 

 


3. European Presence in Taiwan and People-to-People Exchanges

 

3.1 Europeans in Taiwan

 

A growing number of European nationals and businesses

 

Up to 10.000 Europeans are estimated to live in Taiwan. The community of European nationals has been growing steadily over the past years.

 

The Taipei European School constitutes a good measurement for this: it had 60 students in 1990, 400 in 2000 and around 1000 in 2007, more than 40% of them being EU nationals.

 

The European Chamber of Commerce Taipei (ECCT), which represents the interests of European businesses in Taiwan, now has more than 620 individual members and 380 corporate members, up 10% from a year ago.

 

Sixteen Member States of the European Union have offices in Taipei, and the European Commission is also present with the European Economic and Trade Office.

 

As for temporary visitors, the Taiwan Tourism Bureau counted more than 170.000 arrivals of European nationals in 2006, out of whom 100.000 were on business trips.

 

3.2 Taiwanese visitors to the EU

 

More than 330.000 visas were issued to Taiwanese visitors by EU countries in 2006. This represents a 10% annual increase, for the third year in a row, and 50% more than ten years ago. However, this represents less than 4% of visits overseas, and a far smaller number than visits to Japan (1.2 million) or to the United States (600.000).

 

More than 300.000 Taiwanese visitors to the EU

 

 

 

 

3.3 Taiwanese students in the EU

 

Studying in Europe: a growing trend for Taiwanese students

 

Taiwanese students continue to show growing interest in the EU's higher education opportunities. More than 12 000 students left to study in Europe in 2006 – twice as many as ten years ago. It is estimated that there are more than 25 000 Taiwanese studying today in Europe, since the average studying time is over two years. Students from Taiwan have taken advantage of the numerous opportunities offered to them by EU Member States and by the European Commission to obtain grants and scholarships. Fifteen Taiwanese students benefited in 2006 from the European Commission's ''Erasmus Mundus'' programme, which funds studies in Masters courses in Europe.

 

 

 

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