Taiwan, already ÎÚÑ»´«Ã½’s sixth-largest trading partner, has been identified as one of three “new markets” for the province in the latest iteration of its trade diversification strategy.
The provincial government announced earlier this month that it plans to open three new trade offices in Mexico, Vietnam and the small island nation of Taiwan.
It may be unexpected to think that an island in the East China Sea – only slightly larger than Vancouver Island in size and with a population close to that of Ontario and Quebec combined – could be so integral to ÎÚÑ»´«Ã½ trade.
But Taiwan has been an important export market for the province and for goods shipped from other parts of ÎÚÑ»´«Ã½ through ÎÚÑ»´«Ã½ ports. ÎÚÑ»´«Ã½ also relies heavily on imports from the country: Taiwan’s expertise in semiconductors and microchips plays an important part in ÎÚÑ»´«Ã½’s manufacturing sector, with Taiwan providing necessary inputs for Canadian products.
“I thought it was interesting that they’ve put Taiwan in the bucket of new markets, especially since we have such strong trade relations already with Taiwan. And my sense is that they put Taiwan in the new market category because I feel that there is a lot of confusion in ÎÚÑ»´«Ã½ and in British Columbia about Taiwan’s importance to our economy and our prosperity,” said Charles Labrecque, acting vice-president of research and strategy at the Asia Pacific Foundation of ÎÚÑ»´«Ã½.
From surveys done by the Asia Pacific Foundation, Labrecque has found that British Columbians think Taiwan is less important to their economy than it actually is. Taiwan is the sixth-largest destination for ÎÚÑ»´«Ã½-origin exports, worth $1.06 billion in 2022, according to BC Stats. This accounts for a 1.6-per-cent share of total ÎÚÑ»´«Ã½-origin exports. Imports to ÎÚÑ»´«Ã½ from Taiwan in 2021 – the most recent year for which data is available – were US$2.1 billion, according to the province. This means that imports were nearly 250 per cent higher than exports in 2021, when 2021 ÎÚÑ»´«Ã½-origin export data is converted into U.S. dollars.
Given its geography and limitations as an island, Taiwan has a need for natural resources, but its imports in this area primarily come from other jurisdictions. Australia, for example, provided 64 per cent of Taiwan’s thermal coal, 75 per cent of its coking coal and 82 per cent of its iron ore. Most of Taiwan’s imported lumber also comes from Australia, as well as the U.S. and Vietnam.
So, how can ÎÚÑ»´«Ã½ expand its relationship with Taiwan?
Nicolas Schmitt, an economics professor at Simon Fraser University, explains that while Taiwan is able to choose other countries from which to import resources, but ÎÚÑ»´«Ã½ is specifically reliant on Taiwanese products. This is largely because Taiwan is exporting value-added products unique to Taiwan’s manufacturing industry – an advantage that’s more difficult to achieve with commodities and natural resources.
Labrecque says this discrepancy is likely part of the reason the ÎÚÑ»´«Ã½ government is deciding to open a trade office in Taiwan.
It is a good step for the province to take, he said, adding that other provincial initiatives and support are likely to follow once the trade office is established. These might include providing information to British Columbian companies about the opportunities that exist in Taiwan, and helping businesses to take advantage of them.
Labrecque said another important step would be the establishment of a Foreign Investment Promotion and Protection Agreement, which would help encourage Taiwanese businesses to invest in ÎÚÑ»´«Ã½, as ÎÚÑ»´«Ã½ is currently much more invested in Taiwan.
Despite the unbalanced trade relationship between ÎÚÑ»´«Ã½ and Taiwan, and ÎÚÑ»´«Ã½ and Taiwan, Labrecque noted that ÎÚÑ»´«Ã½’s role as a valuable trading partner continues to develop.
“There is a momentum in terms of our trade relations with Taiwan,” said Labrecque.
This article was first published in BIV's print edition. For first access to in-depth print stories and analysis, r.
