RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/232 
31 May 2010  
 
(10-2944) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
SEPARATE CUSTOMS TERRITORY 
OF TAIWAN, PENGHU, KINMEN 
AND MATSU 
 
  
 
This report, prepared for the second Trade Policy Review of the Separate 
Customs Territory of Taiwan, Penghu, Ki nmen and Matsu (Chinese Taipei), has 
been drawn up by the WTO Secretaria t on its own responsibility.  The 
Secretariat has, as required by the Agreement establishing the Trade Policy 
Review Mechanism (Annex 3 of the Ma rrakesh Agreement Establishing the 
World Trade Organization), sought clarification from Chinese Taipei on its trade 
policies and practices. 
 
Any technical questions arising from this report may be addressed to 
Sergios Stamnas (tel:  022 739 5382) or Martha Lara de Sterlini 
(tel:  022 739 6033). 
 
Document WT/TPR/G/232 contains the policy statement submitted by 
Chinese Taipei. 
 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu.  Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page iii 
 
 
CONTENTS 
    Page 
SUMMARY   ix 
 (1) E CONOMIC ENVIRONMENT  ix 
 (2) T RADE POLICY FRAMEWORK  x 
 (3) T RADE POLICY DEVELOPMENTS  x 
 (4) S ECTORAL POLICY DEVELOPMENTS  xii 
 (5) O UTLOOK  xiii 
I. ECONOMIC ENVIRONMENT 1 
 (1) I NTRODUCTION  1 
 (2) R ECENT ECONOMIC DEVELOPMENTS  3 
 (3) M ACROECONOMIC POLICIES  6 
 (i) Monetary and exchange rate policies 6  (ii) Fiscal policy 7 
 (4) S
TRUCTURAL POLICIES  8 
 (i) Tax reform 8  
 (ii) Financial reform 8 
 (iii) Privatization 9 
 (5) B ALANCE OF PAYMENTS  9 
 (6) T RADE AND INVESTMENT FLOWS  9 
 (i) Composition of trade 10 
 (ii) Direction of trade 10  (iii) Trade in services 13 
 (iv) Inbound and outbound direct investment 13 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 16 
 (1) I
NTRODUCTION  16 
 (2) G ENERAL INSTITUTIONAL FRAMEWORK  16 
 (3) S TRUCTURE OF TRADE POLICY FORMULATION , IMPLEMENTATION AND EVALUATION  18 
 (i) Executive branch es of government 18 
 (ii) Advisory, planning, and other bodies 18 
 (4) T RADE POLICY OBJECTIVES  19 
 (5) T RADE LAWS, REGULATIONS , AND TRANSPARENCY  19 
 (6) T RADE AGREEMENTS AND ARRANGEMENTS  22 
 (i) The WTO 22 
 (ii) Preferential trade agreements 23 
 (7) T RADE DISPUTES AND CONSULTATIONS  27 
 (i) Dispute settlement in the WTO 27 
 (ii) Other 27 
 (8) I NVESTMENT REGIME  27 
 (i) Direct investment 27 
 (ii) Cross-strait investment 31 
 (iii) Measures to encourage investment 33 WT/TPR/S/232 Trade Policy Review 
Page iv 
 
 
    Page 
III. TRADE POLICIES AND PRACTICES BY MEASURE 34 
 (1) I NTRODUCTION  34 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  35 
 (i) Registration, documentation, and procedures 35 
 (ii) Customs valuation 37 
 (iii) Tariffs 37  (iv) Other charges affecting imports 44 
 (v) Import prohibitions, restrictions, and licensing 45 
 (vi) Contingency measures 46  (vii) Government procurement 47 
 (viii) State-trading activities 50 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  51 
 (i) Registration, documentation, and procedures 51 
 (ii) Export taxes, charges, and levies 51 
 (iii) Export prohibitions, re strictions, and licensing 51 
 (iv) Export operations of government owned enterprises 52 
 (v) Duty and tax concessions 53 
 (vi) Export finance, insurance, and guarantees 53 
 (vii) Export promotion and assistance 53 
 (viii) Free zones (export processing zones, science-based industrial parks and 
free-trade zones) 54 
 (4) M EASURES AFFECTING PRODUCTION AND TRADE  55 
 (i) Taxation and tax-related assistance 55  (ii) Subsidies 58 
 (iii) Trade-related investment measures 59 
 (iv) Standards and other technical requirements 59  (v) Intellectual property rights 65 
 (vi) Government-owned enterprises 72 
 (vii) Competition and consumer protection policy 73 
IV. TRADE POLICIES BY SECTOR 76 
 (1) I
NTRODUCTION  76 
 (2) A GRICULTURE , LIVESTOCK , AND FISHERIES  77 
 (i) Overview 77 
 (ii) Policy objectives 77 
 (iii) Border measures 78  (iv) Domestic support measures 79 
 (3) E
NERGY   83 
 (i) Overview 83 
 (ii) Policy objectives 83 
 (iii) Hydrocarbons and natural gas 83  (iv) Electricity 85 
 (v) Renewable energies 85 
 (4) M
ANUFACTURING  85 
 (i) Overview 85 
 (ii) Policy objectives and measures 87 
 (iii) Selected subsectors 88 Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page v 
 
 
    Page 
 (5) S ERVICES  89 
 (i) Features and multilateral commitments 89 
 (ii) Financial services 91  (iii) Telecommunications and postal services 98 
 (iv) Transport 101 
 (v) Tourism 103  (vi) Professional services 104 
REFERENCES   107 
APPENDIX TABLES  111 
 
 WT/TPR/S/232 Trade Policy Review 
Page vi 
 
 
CHARTS 
I. ECONOMIC ENVIRONMENT 
 
I.1 Product composition of merchandise trade, 2005 and 2008 11 I.2 Direction of merchandise trade, 2005 and 2008 12 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 III.1 Tariff escalation by 2-digit ISIC industry, 2009 41 
 
 
TABLES 
I. ECONOMIC ENVIRONMENT 
 I.1 Selected macroeconomi c indicators, 2005-09 2 
I.2 Basic economic indicators, 2005-09 4 
I.3 Composition of trade in services, 2005-09 13 I.4 Inbound and outbound flows of direct investment (approval basis), by source 
and destination, 2005-08 14 
I.5 Inbound and outbound flows of direct investment (approval basis), by activity, 2005-08 15 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
 II.1 Inbound direct investment prohibitions and restrictions, 2009 29 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Tariff structure, 2005 and 2009 38 
III.2 Preferential trad e agreements, 2009 42 
III.3 Adjustment of customs duties in 2009 (for the period from 5 Oc tober 2004 to 31 December 2009) 43 
III.4 Procurement by origin, 2004-08 48 
III.5 Procurement share by type of procedure, 2004-08 49 
III.6 Direct and indirect tax revenues, 2004-09 55 III.7 Domestic standards and their equivalence to international standards, end-March 2009 60 
III.8 Commodity inspection, by type, 2004-09 61 
III.9 IPR applications and approvals, 2004-09 66 III.10 IP cases investigated and concluded by district public prosecutors' offices, 2005-09 71 
III.11 IP adjudication findings, 2005-09 72 
 IV. TRADE POLICIES BY SECTOR 
 
IV.1 Developments in domestic support to agriculture and livestock, 2002-06 80 
IV.2 GDP in manufacturing, 2005-08 86 
IV.3 Weighted average interest rates on deposits and loans and spreads, 2005-08 93 IV.4 Telecommunications market, 2005-08 98 
 
APPENDIX TABLES 
I. ECONOMIC ENVIRONMENT 
 
AI.1 Merchandise exports by group of products, 2005-08 113 AI.2 Merchandise imports by group of products, 2005-08 114 
AI.3 Merchandise exports by destination, 2005-08 115 
AI.4 Merchandise imports by origin, 2005-08 116 Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page vii 
 
 
    Page 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
 
AII.1 Principal notifications under WTO Agreements, up to 1 March 2010 117 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
AIII.1 Tariff rate quotas and their utilization, 2008 and 2009 119 
AIII.2 Prohibited exports, 2009 120 
AIII.3 Goods subject to commodity tax, 2009 121 
AIII.4 Indicative list of publicly owned enterprises, 2009 123 AIII.5 Enforcement statistics related to competition policy, 2004-09 124 
 
 Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page ix 
 
 
SUMMARY 
 
1. An outward-oriented development 
strategy has brought rapid growth and 
prosperity to the Separate Customs Territory 
of Taiwan, Penghu, Kinmen and Matsu (Chinese Taipei), transforming it into a modern industrial economy and a leading exporter of information technology (IT) 
products.  Since its previous TPR, in 2006, 
Chinese Taipei has pursued further trade and investment liberalization, mainly in the services sector, and is currently taking steps to restructure its economy and trade by stimulating domestic consumption and 
investment.  It is also attempting to improve 
the investment climate in order to attract higher inward direct investment.  Chinese Taipei's investment rate continues to fall considerably short of its saving rate, a gap 
that is reflected in persistently large current 
account surpluses.   
(1) E
CONOMIC ENVIRONMENT  
2. Between 2005 and 2008, Chinese 
Taipei achieved robust economic growth, averaging 4% per year in real terms.  Per capita GDP in nominal terms grew steadily 
during the same period, reaching US$17,507 
in 2008, one of the highest in Asia.  Nevertheless, as a result of the global economic slowdown, the economy contracted by 1.9% in 2009, per capita income declined, and the unemployment rate rose to 5.9%. 
3. Chinese Taipei's growth is heavily 
dependent on exports, mo stly of manufactured 
goods, which are equivalent to some 72% of 
GDP.  The recent global economic crisis has 
therefore had an adverse impact on Chinese Taipei's export-oriented economy, to which the authorities have responded with expansionary monetary and fiscal policies to boost domestic demand, while resisting 
protectionism.  Supported by this domestic 
stimulus package and a strong rebound in Asia's major emerging countries, particularly China, the economy has recovered quickly and is expected to grow by 4.7% in 2010.   4. The sharp drop in global demand 
owing to the global economic crisis has exposed the risks associated with Chinese Taipei's heavy dependence on a few 
manufactured exports, prompting the 
authorities to seek new engines of economic growth and diversify the economy.  Improving the international competitiveness of the services industries is now one of the 
Government's priorities.  Further liberalization 
and deregulation of the services sector could contribute significantly to these efforts.  Sustained growth over the long term will require a rebalancing in the composition of growth, with the focus more on domestic 
consumption and investment. 
5. Chinese Taipei has maintained sound 
macroeconomic policie s during the period 
under review.  It has kept inflation low and 
improved public finances, mainly on account of higher tax revenues.  However, the expansionary fiscal policy implemented since 2008 could put renewed pressure on the fiscal balance.  During the review period, 
Chinese Taipei has continued to pursue 
structural reforms.  For example, as part of a broader tax reform plan, the Government has taken steps to streamline its tax structure, by broadening the tax base, seemingly 
eliminating tax incentives for selected 
industries and reducing income tax rates, thereby rendering the tax system more neutral with respect to decisions concerning the allocation of resources, especially capital.  It has also improved tax collection.  As regards 
capital markets, structural reform has focused 
on promoting the consolidation and efficiency of the financial industry through market-driven M&As, developing the bond market, and opening capital markets to overseas investors.  
Restrictions on capital flows to China have 
also been eased gradually.   
6. As cross-strait economic relations 
have improved during the review period, 
China has become Chinese Taipei's major 
export market and its second-largest supplier.  Other key trading partners are:  Hong Kong, China;  Japan; the United States;  and the European Union.  For more than a decade, 
Chinese Taipei has been a net investor abroad, WT/TPR/S/232 Trade Policy Review 
Page x 
 
 
with outbound direct investment flows almost 
double the amount of inbound direct investment;  China is by far the main destination for capital outflows.  Although the 
ratio of Chinese Taipei's inbound direct 
investment to GDP remains low by regional standards, most sectors are open to inbound direct investment.  However, inbound direct investment is prohibited or  restricted in several 
major sectors on grounds of essential security 
and public health;  these prohibitions are implemented through a negative list or, in the case of investment from China, a positive list.  
(2) T
RADE POLICY FRAMEWORK  
7. Chinese Taipei, a WTO Member since 
1 January 2002, became party to the plurilateral Government Procurement 
Agreement in July 2009.  Despite the 
implementation of certain basic law amendments, the structure of trade policy formulation and implementation have remained unchanged, except for the 
establishment of the Office of Trade 
Negotiations in March 2007 and the Intellectual Property Court in July 2008.   
8. Chinese Taipei's overall trade policy 
objectives have remained governed by its need to be increasingly integrated into the global economy through its active participation in multilateral trade and economic organizations, 
the negotiation of free-trade agreements 
(FTAs), the strengthening of trade facilitation and promotion activities, the elimination of trade barriers in overseas markets and the diversification of these markets.  Since its last TPR, in addition to its existing FTA with 
Panama, Chinese Taipei has concluded 
agreements with trading partners in Central America (El Salvador, Honduras, Guatemala, and Nicaragua) and continues or plans negotiations with others.  It would appear that 
the negotiation of FTAs is becoming 
motivated primarily by economic considerations.  In add ition to its contribution 
to aid-for-trade and trade-related technical assistance activities, Chinese Taipei has 
provided duty-free treatment to selected 
imports from least developed countries (LDCs).   9. Chinese Taipei has made good 
progress in its regulatory reform programme, which allowed for deregulation in numerous 
areas including services, investment, and 
customs.  It has continued to take steps to improve regulatory transparency, including the daily publication of an integrated Cabinet 
Gazette , which is available online.  Most laws 
and regulations are made available through 
government publications and websites.  Chinese Taipei met virtually all its notification requirements under the WTO Agreements on time, except for those relating to import 
licensing procedures and domestic support in 
agriculture (2006, 2007, 2008), which have been subject to some delay since its previous Review.   
(3) T
RADE POLICY DEVELOPMENTS  
10. The tariff is Chinese Taipei's main 
trade policy instrument and a significant, albeit 
declining, source of tax revenue (4.5% of total 
taxes collected in 2009).  Most tariff lines are subject to applied MFN tariffs no greater than 10%, and 30.1% are duty free.  The simple average applied MFN tariff rate remains unchanged, at 7.8%, as no tariff cuts occurred 
during the review period.  The tariff remains 
relatively complex, involving a multiplicity of rates (86 ad valorem,  16 specific, 48 alternate 
duties).  All tariff lines are bound and most applied MFN rates, including higher seasonal 
tariffs on some fruit, coincide with bound 
rates, thereby imparting a high degree of predictability to Chinese Taipei's tariff schedule.  Non- ad valorem  duties, particularly 
in agriculture, tend to conceal relatively high 
ad valorem  equivalents (AVEs);  75 of the top 
100 applied MFN rates involve non-ad valorem  rates.  The peak applied 
ad valorem  MFN rate remains at 500% (deer 
velvet), while the highest tariff rate consists of an AVE rate of 1,069.87% (rolled or flaked 
rice).  The product coverage of tariff rate 
quotas, mainly for agricultural items, has dropped by about 22%.  Customs duties on 30 basic items were temporarily reduced mainly to stabilize commodity prices and to 
help ease inflation.  Similar action was taken 
with respect to the 5% business tax rate on imported wheat, corn, and soybeans;  these Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page xi 
 
 
items are not subject to this tax if produced 
domestically.  The scope of preferential tariff treatment of imports under FTAs now covers an average of 67% of total tariff lines, on top 
of the lines that are already duty free, and 
reduces the simple average tariff rate applied to beneficiaries by up to 5 percentage points.  Harbour-service dues on domestic trade remain 60% lower than those for overseas 
routes, which involve large international cargo 
freighters requiring costlier equipment and services.  
11. Since its previous Review, 
Chinese Taipei has expanded slightly the 
scope of its import bans from 56 to 63 (as of October 2008) ten-digit HS items;  24 items remain subject to non-automatic import licensing.  No quantitative import restrictions 
are in place.  However, Chinese Taipei still 
prohibits inbound cross-strait trade involving some 2,243 tariff lines on security and/or commercial grounds (mostly agricultural items, but also pharmaceuticals, iron and steel, electrical and electronic equipment, and textile 
products).  Goods originating in, or destined 
for, China can now be shipped directly.  Chinese Taipei has never used countervailing or safeguard measures;  however, it maintains five anti-dumping measures on three products.  
Special safeguards are applied in agriculture. 
12. Regulatory changes undertaken over 
the review period relate mainly to dispute settlement cases in government procurement.  
A margin of preference to local suppliers of up 
to 3% remains in place for contracts not covered by the GPA, and bidders may be requested to purchase locally produced goods.  The share of non-Chinese-Taipei suppliers 
rose from 18.1% of the total value of 
government procurement in 2004 to 28.5% in 2008.  Procurement awarded through selective and limited tendering procedures has increased from 25% to 33% of all purchases since 2006. 
13. As a result of the virtual standstill of 
the privatization process, which involved only the "release" of some government shares in a few companies during the review period, 
direct government involvement in the 
economy persists in several areas (e.g. shipbuilding, petroleum, steel, sugar, tobacco 
and liquor, banking, insurance, and rail transport) and statutory monopolies remain (notably in electricity, water supply, and postal 
services).  According to Chinese Taipei 
legislation, government-owned enterprises are only those having de jure  monopoly rights 
and/or in which the Government retains at least 50% of its shares;  once the exclusive 
rights are eliminated, the market is open to 
other operators and the company is considered privatized and therefore perceived as not 
subject to WTO notification in this area.  
Trading activities of government-owned enterprises involve rice, the most important crop, and banknote paper, as well as tobacco, alcoholic beverages, sugar, etc.   
14. Chinese Taipei maintains prohibitions 
and licensing requirements for its exports mainly on grounds of security and public safety;  however, the scope of export 
prohibitions has dropped since its previous 
TPR.  Exports of eel fry (seasonal ban), whale shark, and plants used for pharmaceutical purposes are prohibited;  those of fertilizer, whose domestic prices were temporarily frozen, have been subject to prior approval 
since 2008.  Exemptions and, on a case-by-
case basis, drawbacks are used in order to reduce, if not eliminate, the extent to which import tariffs levied on raw materials (and intermediate goods) used in the production of 
exports feed through to become, in effect, 
export taxes.  During the review period, total drawbacks varied, reaching an average annual rate of 2.79% of the f.o.b. export value.  Similarly, rebates of internal sales taxes are 
used to facilitate trade by ensuring that 
exported goods are not subject to double taxation (in both Chinese Taipei and importing countries).  Since end 2008, a global market expansion plan, including discounted interest rates for loans to exporters, has been in place 
to assist those facing declining orders from 
overseas.   
15. Various forms of assistance, including 
subsidies for production and consequently 
trade, have continued to be provided for agricultural, fisheries, and industrial products and activities.  Following the apparent expiry WT/TPR/S/232 Trade Policy Review 
Page xii 
 
 
at the end of 2009 of the Statute for Upgrading 
Industries, which provided tax incentives to selected industries, the Government plans to 
implement a new, ostensibly non-industry-
specific, incentive scheme aimed at promoting 
R&D, manpower training, operations headquarters, and international logistics and distribution centres, but this had not been 
approved by the legislature by the time of 
completion of this report.  
16. The large majority of Chinese Taipei's 
standards remain voluntary;  in 2009, 18% of 
applied standards were a ligned to international 
standards, down from 25% in 2005.  Maximum residue limit requirements have applied in the area of sanitary and phytosanitary measures, although since 2008 
action has been taken to improve the 
transparency of the risk-assessment procedure for establishing import tolerance, as well as to set and enforce these requirements. 
17. Chinese Taipei amended certain laws 
and regulations to ensure better protection of intellectual property rights, particularly copyrights and patents, where two cases of compulsory licensing occurred over the review period;  it has intensified efforts to enforce 
legislation in this regard.  A number of 
improvements are being undertaken, e.g. with respect to internet piracy and particularly illegal textbook copying on college-campuses. 
18. Competition and consumer protection 
policy has, by and large, remained unchanged.  Certain activities, such as export and import cartels, may be exempted from the application of the Fair Trade Law, if approved by the Fair 
Trade Commission.    
(4) S
ECTORAL POLICY DEVELOPMENTS  
19. The structure of the Chinese Taipei 
economy has not changed significantly since its last Review.  The services sector remains the largest contributor to GDP and employment.  On the other hand, the 
manufacturing sector has shown a relative 
decline in productivity and its contributions to GDP and employment, while the agriculture sector has remained stagnant.   20. Agriculture plays a minor role in 
Chinese Taipei's economy, which relies heavily on imports of cereals, for example, to meet domestic needs.  Agriculture contributes 
just 1.6% to GDP and 5.3% to employment 
(2009), so that its labour productivity is only one quarter of the level of the rest of the economy.  Despite its low contribution to GDP, agriculture is a major recipient of 
government assistance, including border 
protection and domestic  support.  Import 
protection involves some of the highest tariffs in the economy, tariff-rate quotas, and special safeguard measures.  In 2009, the average applied MFN tariff for agricultural products 
(WTO definition), including ad valorem  
equivalents, was 22.1%, compared with 5% for non-agricultural products.  Domestic support includes price stabilization measures, subsidized loans and inputs, and income 
support for senior farmers.  Government 
intervention remains focused on rice.  The authorities envisage replacing the guaranteed price system for rice with a direct payment system, but this is still being assessed and no legislation to this effect has been submitted. 
21. Chinese Taipei is almost entirely 
dependent on imports to meet energy demand.  Although the oil and gas sectors have been 
gradually liberalized, the government-owned 
Chinese Petroleum Corporation remains a dominant player, whose regulated pricing strongly influences the market.  The electricity sector is dominated by another government-run enterprise, which holds a statutory 
monopoly in virtually all segments of the 
sector.  Increasing oil prices, together with price controls, have undermined the profitability of these two companies;  their privatization, along with regulatory and price 
reform, could help to increase competition, 
and hence efficiency, in both sectors.  
22. Manufacturing continues to play a key 
role in the economy;  although its shares in 
GDP have declined slightly (24.9% in 2009) 
and employment (27.2%), it still contributes to 87.5% of merchandise exports.  Chinese Taipei is a leading manufacturer and exporter of high-tech electronic products;  by contrast, Separate Customs Territory of Taiwan, WT/TPR/S/232 
Penghu, Kinmen and Matsu Page xiii 
 
 
other industries such as textiles and motor 
vehicles have become less competitive.   
23. The services sector remains the largest 
contributor to GDP (66.1%) and employment (58%).  Chinese Taipei has continued the gradual opening and reform of its services sector so as to improve competitiveness and market access.  Commercial presence has been 
liberalized in financial, environmental, health, 
and tourism services, and regulatory improvements have been made in professional services and telecommunications, all of which could help attract inward direct investment.  
Nevertheless, some informal barriers remain in 
certain subsectors, and limits on non-Chinese-Taipei investment and other restrictions apply in basic telecommunications, audiovisual services, and air and maritime 
transport.  Despite recent privatization 
measures in banking and telecommunications, the Government retains a strategic position in these sectors, while postal services remain closed to private investment.   
(5) O
UTLOOK  
24. Following the sharp decline in 
exports, and consequently manufacturing, at 
the end of 2008 and beginning of 2009, 
economic activity in Chinese Taipei has quickly recovered owi ng to expansionary domestic macroeconomic policies together 
with the strong rebound in Asia's major emerging countries, especially China.  As a result, the economy is expected to grow by 
4.7% in 2010.  To strengthen international 
competitiveness and attract inbound direct investment, Chinese Taipei would need to undertake further structural reforms in order to improve the economy's flexibility in 
responding to domestic and international 
challenges, including the improvement of cross-strait economic relations, removal of remaining informal barriers to investment, and adoption of international best practices.  A bilateral Economic Co -operation Framework 
Agreement (ECFA) with China could 
considerably improve cr oss-strait relations and 
thereby perhaps clear the way for more FTAs with important trading partners, mainly in the region.  In this way, Chinese Taipei could 
respond to the competitive challenge posed by 
the network of FTAs bein g developed in Asia; 
signing the ECFA is vital for ensuring the competitiveness of domestic industries, further integrating Chinese Taipei into the world economy and attracting inward investment.  
Securing strong trading links at the 
multilateral, regional, and bilateral levels will 
enable Chinese Taipei to strengthen its position in the world trading community and thus help to sustain economic growth.