Taiwan signs historic pact with Japan

The Arrangement Between Association of East Asian Relations and Interchange Association for the Liberalization, Promotion and Protection of Investment (亞東關係協會與財團法人交流協會有關投資自由化, 促進及保護協議) signed by Taiwan's East Asian Relations Commission Chairman Peng Run-tsu (彭榮次) and the Japan Interchange Association (JIA) Chairman Mitsuo Ohashi (大橋光夫) at the Ambassador Hotel in downtown Taipei, yesterday, marks the beginning of the “most favored nation” treatment Taiwan and Japan would grant each other's investors, and is widely regarded as a symbol of progress in bilateral ties between the trade partnership.

Under the new investment pact, companies of the two countries will be able to export capital and utilize it at their discretion, without any requirements to use a certain sum on domestic material or components.

Meanwhile, Taiwanese investors will enjoy the same national treatment as those for domestic investors in Japan, as well as the most-favored treatment enjoyed by investors from other countries, according to the “most favored nation” principle.

According to the Ministry of Foreign Affairs (MOFA), the pact is the first investment promotion and protection deal that Taiwan has signed with a major trade partner, representing significant progress in Taiwan's strategy of the overall economic development.

“The signing of the agreement marks a major breakthrough in the Taiwan-Japan relationship, and it also is a key step we have taken to change Taiwan's status on the global, as well as Asia-Pacific economic map,” according to President Ma Ying-jeou.

ECFA Catalyzed Taiwan-Japan Pact: Ma

According to Ma, the economic cooperation framework agreement (ECFA) serves as an important catalyst behind the signing of the Taiwan-Japan investment pact.

It is because of ECFA, which granted lowered taxing of commercial exchanges between Taiwan and China, that Japan, being the world's third largest economy and Taiwan's second largest trading partner, found cooperating with Taiwan greatly beneficial, Ma claimed.

The Japanese companies believe that once taxes between the Chinese and Taiwanese markets were lowered, investing in Taiwan would be as productive as so doing in mainland China, Ma explained.

Open Skies Agreement To Be Signed Another Time

The bilateral aviation pact that was said would be signed along with the investment pact would be signed on a different day, said the MOFA yesterday.

According to James Chang (章計平), spokesman of MOFA, the open skies agreement to liberalize commercial aviation services between the Taiwan and Japan is still in the negotiation stage and, despite the fact that technical principles of the agreement have been tackled, it was still “not finalized.”

Chang also downplayed the speculation that China had pressured Japan to cancel the signing of the pact at the last minute, saying that the ministry has not seen nor heard such reports.

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