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Benefits of the US-Taiwan FTA » State by State
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Virginia  
The United States has always been one of Taiwan・s most important trading partners. Trade flow between Taiwan and the United States in 2006 was valued at $61.2 billion. Taiwan is the 9th largest trading partner of the United States, its 11th largest export market overall, and the 5th largest customer for U.S. agricultural products.
U.S. investment in Taiwan reached $15 billion in 2006, 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.
In 2006, Virginia・s exports to Taiwan amounted to $151 million, accounting for 0.6% of U.S. exports to Taiwan. Leading industries in Virginia include tobacco, semiconductors and related equipment, aircraft and spacecraft parts, pharmaceuticals, transportation equipment, auto parts, paper and office machine parts. As the birthplace of the Internet and a leading center of software development, Virginia．s high-technology economy continues to expand. There are more than 10,900 high-tech companies operating in Virginia. Northern Virginia itself is the 2nd largest R&D center for high-tech industry, next only to Silicon Valley; its software industry ranks 3rd in the U.S. With reduced tariffs on essentially all goods and services under an FTA, Virginia・s leading industries would see not only greater demand for their products but would also benefit from lower costs from Taiwan.
Regarding foreign direct investments, more than 700 foreign-owned companies are established in Virginia. Among those, three Taiwanese companies have investments in the areas of chemical products, scrap metal recycling and the container transportation business. 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 Virginia. In addition, Taiwan・s unique culture, economy, geographical location as well as its extensive network in Asia will offer more opportunities for Virginia-based companies to expand their reach into the Asia-Pacific region.
The U.S.-Taiwan FTA will bring immediate and long-term significant benefits to Virginia. Some industry-specific examples are listed below:
(1) Opening markets for Virginia・s chemicals exports: Chemicals represent Virginia・s leading export to Taiwan, with nearly $19 million in 2006. Taiwan currently imposes, on average, a 5% tariff on chemical goods. Under the U.S.-Taiwan FTA, Taiwan would eliminate duties on such goods, providing Virginia chemical companies with new opportunities in the Taiwanese market.
(2) Opening markets for Virginia processed foods: Processed foods make up Virginia・s one of largest exports to Taiwan, with sales of $17 million in 2006. While its exports of processed foods are presently subject to tariffs, the U.S.-Taiwan FTA will allow processed foods from Virginia to enter Taiwan duty-free, creating direct opportunities for many Virginia companies to increase their sales to Taiwan.
(3) Opening markets for Virginia・s autos and auto parts: Transportation equipment is Virginia・s leading export. At present, Taiwan levies average import tariffs 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 Virginia・s top exports.
(4) Opening markets for Virginia beef: The beef industry is the second largest source of Virginia・s farm cash receipts. Taiwan・s current import duties on U.S. beef are as high as $0.137 per pound; the U.S.-Taiwan FTA will remove duties on Virginia beef, allowing the state・s exporters increased access to Taiwan・s market.
(5) Opening markets for Virginia poultry: Poultry is the leading source of Virginia・s farm cash receipts. U.S. poultry exports currently face duties as high as 20% on both fresh and frozen products to Taiwa. The U.S.-Taiwan FTA will directly result in increases in exports of poultry from Virginia, by allowing Virginia farmers better access to Taiwanese consumers.
(6) Opening markets for Virginia apple producers: Apples also represent one of Virginia・s key agricultural products. Taiwan・s current import duties on U.S. apples are as high as 20%. Under the U.S.-Taiwan FTA, Taiwan・s tariffs on apples will be tremendously reduced, creating opportunities for Virginia farmers to increase their exports to Taiwan・s market.
(7) Opening markets for Virginia tobacco producers: In Taiwan, the current import duties on U.S. tobacco are as high as 20%. As a leading tobacco exporter in the U.S., Virginia exported $560 million worth of tobacco in 2006. Under the U.S.-Taiwan FTA, Taiwan・s tariffs on tobacco will be eliminated, allowing Virginia crops to gain access to Taiwan・s market.
The trade between Taiwan and the U.S. far exceeds that between the U.S. and many of its FTA signatories. Looking at U.S. trade with FTA signatories such as Jordan and Morocco, for example, the Taiwan-U.S. trade level is 38 and 50 times greater, respectively. For Virginia・s industries, the strengthening of Taiwan・s existing relations with the U.S. accordingly translates into real and immediate benefits.
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 Virginia will similarly convey strong support for the U.S.-Taiwan FTA to the Bush Administration.
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