Trade and Investment between Taiwan and Canada

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streamline conformity assessment procedures for telecommunications-related equipment, facilitating trade among its signatories. With the MRA regulations on quality control, companies and markets in collaborating countries are assured equal quality assurance in design and manufacturing. Both countries have recognized strength in Corporate Social Responsibility (CSR) which involves business ethics, relationships with stakeholders, workers, and external customers as influenced by their political and cultural frameworks (Krumwiede et al., 2012). This provides solid and reliable frameworks that each country can base the foundations of business relationships with confidence.

Taiwan and Canada also cooperate within intergovernmental organizations (IGOs) such as APEC and WTO. Despite a lack of formal diplomatic relations between Canada and Taiwan, both countries participate in annual consultations which address trade policies and any bilateral concerns. Canada claims that it “generally supports Taiwan’s full participation in international organizations that do not require statehood as a prerequisite for membership,” as well as its meaningful input and partnership (CTOT, 2016). This level of cooperation gives the nations a good foundation in their partnership and allows for a platform in which they can discuss and manage relevant matters.

5.1 Trade and Investment between Taiwan and Canada

Taiwan is Canada’s fourth largest trading partner in Asia after China, Japan and South Korea. Canada’s main exports in the past 10 years to Taiwan are in resource products such as wood pulp, nickel, iron ore and pork. Taiwan’s main exports to Canada are manufactured goods such as electrical and electronic machinery and equipment. This equipment includes electronic integrated circuits, telephone sets, and monitors and projectors. Other major Canadian imports from Taiwan are motor vehicle parts, articles of iron ore, steel and silver (Library of Parliament, 2011).

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Main exports to Canada in 2013 in Figure 17 demonstrates the variety of ICT goods that Taiwan exports to Canada. The largest portion of exports are electronic circuits (CAD 539.63 million) which compromise a third of total exports, followed by TV receptors, telephones and cellulars, radio navigational aid apparatus, data processing machines/parts, TV, digital and video camera recorders, and photosensitive semiconductors devices. The same figure

demonstrates Canada’s main exports to Taiwan of which more than half are natural resources (CAD 282.27 million), metals, which are the most significant and used to produce ICT products in Taiwan, followed by bituminous coal and lumber. Canada exports CAD 48.68 million worth of electronic integrated circuits which is a small fraction of the electronic products it imports from Taiwan (Dawson Strategic and Ciuriak Consulting, 2014).

Figure 17: Main Taiwan Exports and Imports with Canada

Source: Dawson Strategic and Ciuriak Consulting

Canada and Taiwan are important trading partners due to their level of dissimilarity in

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trade specialization which allows Taiwan to import a large quantity of natural resources from Canada. On the other hand, Canada can import many of its ICT goods from Taiwan. Figure 18 demonstrates the high level of dissimilarity in trade specialization between the trade specialization indicator for Canada and Taiwan, among the other TPP countries. This reflects Taiwan’s highly complementary economic structure to Canada (Dawson Strategic and Ciuriak Consulting, 2014, 20).

Figure 18: Canada’s Trade Specialization Index Correlations with TPP Economies and Taiwan, 2012

Source: Source: Dawson Strategic and Ciuriak Consulting

In terms of ‘Computer and Electronic Production Manufacturing,’ Canada has run a trade deficit with Taiwan in the past decade according to the latest 10-year data. This deficit rose dramatically in 2011 and has steadily been decreasing since. In 2006, the trade deficit was at approximately USD 1.2 billion which is where it remained until a stark increase to USD 2.2 billion in 2011. In 2010, the deficit decreased dramatically to USD 1.6 billion and in 2015 was at the same level as in 2006. Canada runs a significant trade deficit in computer and electronic products with all countries which was USD 24.5 billion in 2015 (Statistics Canada

& US Census Bureau, 2016). Figure 19 demonstrates Canada’s trade deficit in computer and electronic product manufacturing with Taiwan from 2006-2015 (Statistics Canada, 2016 &

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US Census Bureau). The trade balance has remained at a plateaued rate with an increase in 2011 due to increased imports.

Figure 19: Computer and Electronic Product Manufacturing Trade Balance (Canada-Taiwan) in Thousands USD

Source: Statistics Canada & US Census Bureau, 2016

Taiwan, on the other hand, has run a trade surplus with Canada for the last ten-year period with a sharp rise between 2009-2015 due to increased exports. Figure 20 shows Taiwan’s computer and electronic product manufacturing trade balance in thousands USD from 2006-2015 (Statistics Canada & US Census Bureau, 2016).

-2500000 -2000000 -1500000 -1000000 -500000 0 500000 1000000 1500000 2000000 2500000 3000000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Exports from Taiwan to Canada Total Imports from Canada to Taiwan Canada's Trade Balance with Taiwan

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Figure 20: Computer and Electronic Product Manufacturing Trade Balance (Taiwan-Canada) in Thousands USD

Source: Statistics Canada & US Census Bureau, 2016

Taiwan and Canada are not major sources of direct investment to each other. The stock of Canada’s direct investment in Taiwan in 2014 was CAD 188 million which accounted for a 1.6% decrease from 2013 which is illustrated in Figure 21. The stock of Taiwanese direct investment in Canada in 2014 was much lower at CAD 32 million. Taiwan ranked as the 27^th largest source of FDI in Canada among 30 countries which data is available and Canada ranked 49^th in terms of largest source of FDI in Taiwan among 61 countries for which data was available. Data on Canadian direct investment in Taiwan for 2007, 2008 and 2011 as well as Taiwanese direct investment in Canada for 2012 and 2013 were not available. Canada’s investment into Taiwan is demonstrated as fluctuating quite rapidly between the years of 1994-2014, while Taiwan’s FDI into Canada remained at a low and steady rate over the same period. Highest FDI is seen from Canada into Taiwan in 2009, after the 2008 financial crisis and sharply decreased below the Taiwanese investment to Canada in the same year.

0 500000 1000000 1500000 2000000 2500000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Total Exports from Taiwan to Canada Total Imports from Canada to Taiwan Taiwan's Trade Balance with Taiwan

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Figure 21: Canada and Taiwan’s Stock of Foreign Direct Investment (USD millions)

Source: Library of Parliament, 2015