Why Taiwan matters to Ontario
The recent announcement by Taiwan and Canada to begin talks on a Foreign Investment Promotion and Protection Agreement (FIPA) is welcome news. It is also high time now for Canadian provinces, and Ontario in particular, to follow the lead of the federal government in recognizing Taiwan’s importance and further expanding relations with this economic powerhouse in Asia.
Only a little bigger than Vancouver Island, Taiwan is nevertheless Canada’s sixth-largest trading partner in Asia, and Ontario’s fifth-largest trading partner in the same region. Like Canada, Taiwan embraces the values of democracy, freedom and human rights.
With most economies worldwide shrinking drastically under the impact of the COVID-19 pandemic, Taiwan is more than doing well — it is flourishing. Taiwan’s GDP grew 3.1 per cent in 2020, outpacing most countries. In 2021, the growth rate was 6.1 per cent, the fastest pace in a decade. The country’s strong performance can be attributed to the global demand for its technology products.
As a key hub in the global technology supply chain, the Taiwanese industry plays a pivotal role in the international market. The Taiwan Semiconductor Manufacturing Company has over 50 per cent of the market share in semiconductor foundry business, while Foxconn is the long-term champion of original equipment manufacturers (OEM) in consumer electronics. MediaTek ranks fourth in the top-10 integrated circuit design companies, while ASUS and Acer together account for 14 per cent of the global personal computer market. All of Taiwan’s high-tech companies demonstrate the importance of Taiwan.
Since the launch and implementation of the New Southbound Policy in late 2016, Taiwan has established strong trade and investment ties with Southeast Asian countries, as well as India. As Asia increasingly becomes an engine of global economic growth, Taiwan is an important trading partner that can expand Canada’s trade and economic interests in the Asia-Pacific region. This explains why many multinational companies, such as Google, Microsoft, IBM, Amazon, Apple, Meta (Facebook) and Qualcomm, have chosen to establish their Asian offices or branches in Taiwan.
Taiwan’s economic structure is complementary to that of Canada in general, and Ontario in particular. For example, Ontario’s main exports to Taiwan are autos, metals and soybeans. Taiwan’s largest exports to Ontario are computers, telecommunications equipment and microchips. However, the total bilateral trade between Taiwan and Ontario was only $3.4 billion in 2020, and $2.7 billion for JanuaryAugust 2021. The two regions need to work harder to increase this number. We also look forward to more mutual investment, although investment from Taiwanese companies such as TSMC, Delta International, Bora Pharmaceuticals and LCY Biotech has increased in recent years.
To build a stronger partnership, Ontario and Taiwan can work together on several things, such as supporting Taiwan’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and working towards signing a FIPA between Canada and Taiwan. Multilateral and bilateral agreements fall under the jurisdiction of the Canadian federal government. However, entering into these agreements with Taiwan will benefit Ontario’s international trade and investment.
One measure that Ontario could certainly consider in order to strengthen its ties with Taiwan would be to establish an international trade and investment office in Taipei. This would help Ontario raise its business profile in Taiwan and promote its products there, and attract clean and high-tech investment from Taiwan to Ontario. This is in line with Ontario’s sectoral focus on artificial intelligence, 5G, fintech, digital media, cybersecurity and diversified export markets.
Given the common values of democracy and freedom and the complementary economic structure of the two sides, Taiwan and Canada can work together to help one other fully integrate into and engage with the rest of the Indo-Pacific region.
With sustained economic growth and respect of the rule-base order, Taiwan and Canada will continue to pursue a win-win strategy. Ontario, as Canada’s largest economy, can play an important role in this joint effort.