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Benefits of the US-Taiwan FTA » State by State
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Delaware  
Taiwan and the United States share close economic and strategic relationships. Reflecting this strong partnership, trade between both countries has increased steadily over the past 40 years or so, with especially marked growth over the past decade. The United States is now Taiwan・s 3rd largest source of imports (after Japan and China), while Taiwan is the 9th largest trading partner of the United States, its 11th largest export market overall and the fifth largest destination for U.S. agricultural products. In 2006, trade flow between Taiwan and the United States totaled $61.2 billion.
As of the end of 2006, U.S. investment in Taiwan reached $15 billion, making the U.S. Taiwan・s leading foreign investor. U.S. investments in Taiwan are concentrated in the manufacturing sector, especially in electronics and chemicals. Other sectors U.S. companies have invested in include wholesale trade, finance, insurance, and real estate. The U.S. represented the 2nd largest destination for Taiwan・s $8.9 billion foreign direct investment in 2006. Taiwan・s investments in the United States are centered on the computer, electronics and electrical appliances, plastics and rubber, and chemical products industries.
Studies concluded by the U.S. International Trade Commission (USITC) and the Institute for International Economics (IIE) have shown that an FTA between Taiwan and the United States would bring significant benefits for U.S. businesses, farmers, and workers. With reduced tariffs on essentially all trade in goods and services under an FTA, Delaware・s leading industries, including the car manufacturing, chemicals, plastics, biotech, finance, information technology and food processing sectors, would see not only greater demand for their products but also the benefits of lower costs from Taiwan.
Delaware exported $3.89 billion in goods to 136 foreign markets in 2006. Taiwan is the 7th largest market for Delaware exports in the world and the 2nd largest in Asia. Delaware・s leading exports include machinery, chemicals, computer & electronics products, plastics & rubber and primary metal. In 2006, Delaware・s exports to Taiwan amounted to $146 million, accounting for 0.6% of U.S. exports to Taiwan; its share of U.S. trade with Taiwan is relatively small at present. However, the USITC study shows that U.S. industry sectors such as machinery and equipment, motor vehicles and parts, foodstuffs, and financial services will benefit from increased access to Taiwan・s market. It is clear that Delaware can reap enormous gains in the future from closer economic ties with Taiwan.
The U.S.-Taiwan Free Trade Agreement will bring immediate and long-term significant benefits to Delaware. Some industry-specific examples are listed below:
(1) Opening markets for Delaware・s chemicals exports: Chemicals represent Delaware・s leading export, valued at $1.8 billion in 2006. Of this amount, exports to Taiwan reached $38 million. Taiwan currently imposes, on average, a 5% import tariff on chemical goods. Under the U.S.-Taiwan FTA, Taiwan would eliminate duties on chemical goods, providing Delaware chemical companies with new opportunities in the Taiwanese market.
(2) Opening markets for Delaware・s autos and auto parts: Transportation equipment makes up Delaware・s third largest export, with $472 million in 2006. However, there were almost no sales for this item in Taiwan. At present, Taiwan levies an average tariff of 30% and 10% on autos and auto parts, respectively. The U.S.-Taiwan FTA will eliminate these duties, opening up the Taiwanese market to one of Delaware・s most important exports.
(3) Opening markets for Delaware poultry: Poultry is the largest source of Delaware・s farm cash receipts and exports. In Taiwan, the current import duties on U.S. poultry range from $0.47 per pound to $0.74 per pound. The U.S.-Taiwan FTA will directly result in increases in exports of poultry from Delaware by allowing Delaware farmers duty-free access to Taiwanese consumers.
(4) Opening markets for Delaware dairy products: The dairy products industry is one of the key sources of Delaware・s farm cash receipts. Taiwan currently levies a $0.26 per pound import duty on U.S. dairy products. Under the U.S.-Taiwan FTA, Taiwan・s tariffs on dairy products will be eliminated, creating opportunities for Delaware・s exports to Taiwan・s market.
(5) Building a partnership in the bioscience industry: Delaware is home to more than 100 bioscience companies, including industry leaders such as Agilent Technologies, AstraZeneca, DuPont, Dade Behring, W.L. Gore and Associates, Schering-Plough Corporation, and Syngenta. Some companies have already begun leveraging Taiwan・s infrastructure and knowledge resources -- DuPont has established manufacturing bases and an R&D center devoted to research in green energy, circuit materials and flat-panel displays. In addition, Taiwan・s culture, economy, geographical location as well as its extensive network in Asia will offer more opportunities for Delaware-based biotech companies to expand their reach both technically in terms of innovation and geographically into Asia.
(6) Opening markets for Delaware・s financial industries: Delaware has one of the largest concentrations of banking operations in the Mid-Atlantic region. Among these institutions are MBNA America, Bank One Delaware, and Discover Bank, three of the country's largest credit card banks, as well as ING DIRECT and Juniper Bank, pioneers of online banking. The U.S.-Taiwan FTA will lower barriers for these companies to enter Taiwan -- one of the world・s most sought after consumer-credit markets. Furthermore, Taiwan・s close links with other East Asian economies will allow it to serve as a strategic platform for financial services to penetrate the fastest growing region in the world.
(7) Attracting more Taiwanese investment in Delaware: Some Taiwanese companies in the IT, petrochemical, plastics, textile and maritime sectors have registered in Delaware for state tax incentives, though most maintain their actual operations in other states. Under an FTA, however, increased industrial partnership opportunities and venture projects would encourage Taiwanese companies to increase direct investment flow to the state, creating new business opportunities and jobs for the people of Delaware.
Having already recognized the benefit for the State of Delaware made possible by the U.S.-Taiwan FTA, the State Senate and House of Representatives of Delaware passed resolutions supporting the U.S.-Taiwan FTA in 2003, 2005 and 2006. As of April 2007, the U.S.-Taiwan FTA proposal has been endorsed by a total of 64 legislatures in 38 states, the Council of State Governments and the National Association of Secretaries of State. We hope that the administration, the Senate and the House of Representatives of the State of Delaware will further convey strong support for the U.S.-Taiwan FTA to the Bush Administration.
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