Canada’s trade with Taiwan is expected to increase again this year, but despite efforts by both countries, the trade imbalance in Taiwan’s favor continues to rise even more quickly.
Canada became Taiwan’s fourth-largest world market in 1984 with imports of $1.22- billion, a 32.2 per cent increase from the previous year. Imports consisted mainly of textiles, footwear and consumer electronics.
Canadian exports – mostly coal, paper products, copper and grain – increased by only 15.8 per cent during 1984 to $400-million.
While exports to Taiwan this year are expected to reach $500- million, imports are likely to reach between $1.4-billion and $1.5- billion. “I think there is a sudden realization in Taiwan of the importance of Canada as a market, and that they have a vested interest here,” said Lorne Seitz, senior vice-president of the Canadian Chamber of Commerce.
The Taiwanese are very sensitive to their trade imbalance with Canada, but they are even more sensitive to their $10-billion (U.S.) trade imbalance with the United States, and often discriminate in that direction, said Frank Petrie, president of the Canadian Export Association. “We have to keep reminding them about Canada,” Mr. Seitz said. “Where we have a risk is that in their concern to balance their trade with the U.S., they buy more things from them that they could buy from us, such as coal.” The Taiwanese must realize that Canada’s trade deficit with them is proportionately as great as the United States’, he said.
While it is expected that Taiwan will continue to import large quantities of traditional natural resource products, “extremely good opportunities” now exist for consultants and products in the areas of hightechnology, energy, telecommunications and transportation, Mr. Seitz said.
An $8-billion (U.S.) project was started recently to develop mass urban transit systems in the capital city of Taipei and the southern port city of Kaohsiung over the next 15 years. “Even if we can’t get whole projects, I think Canadians can be very successful in going after parts of projects,” Mr. Seitz said.
Government spending as a whole is set to increase by about 11 per cent in 1984-85, fueled by an economy that has been strengthened in the past few years by strong export demand, according to a recent report by the Royal Bank of Canada.
Taiwan’s exports account for approximately half of its gross national product and it relies heavily on foreign trade because of limited natural resources and high population density. Over 18 million people live on the 36,000-square-kilometre island.
The Taiwanese Government will also reduce its import tariffs over the next five years.
However, it is not expected that these new export opportunities for Canada can by themselves redress the trade imbalance. Taiwan is expected to make some positive moves: A recent Canadian trade delegation to Taiwan, for example, lobbied for an increase in imports of Canadian coal and metal products, and for Taiwan to buy all of its grain from Canada, rather than just some of it as it now does.
It also suggested that Taiwan buy some products from Canada that it usually buys from Australia, since its trade with Australia is practically balanced.
The lobbying efforts may meet some resistance, however. According to Chih Chen, director of Far East Trade Service Inc. of Toronto, a trade promotion company linked to the Taiwanese Government with branches around the world, “there is a market for everything, but you have to reduce your price. If your products were competitive, you would have more chance to sell them in Taiwan.” Canadian wheat prices are higher than those in the United States, he pointed out.
Statements such as those anger exporters. “I won’t accept that (our prices are not competitive),” Mr. Petrie said. “Canadian exports to the United States are generally high, and if our products are competitive there, they must also be in Taiwan.” He said the exchange rate has put Canada at a disadvantage with respect to European competitors, but has been an advantage over the United States.
The mix of imports from Taiwan also seems to be changing in favor of the industrial sector, according to Peter Dawes, senior vice-president of the Canadian Importers Association. “It is becoming more technologically advanced and electronically oriented than before, with engineered products and consumer products.” Despite import quotas, however, the mainstays of the imports will likely continue to be textiles and footwear, Mr. Dawes said.
Because Canada does not officially recognize the Taiwanese Government, businessmen in both countries agree that the solution to improved trade relations is for Canadian businesses to open an unofficial trade office in Taiwan.
The Chamber of Commerce is studying the idea. “Its purpose would be to assist Canadian companies to do business in Taiwan, identifying opportunities, and acting like a trade commissioner,” Mr. Seitz said.
It would also serve to make sure that Canada is listed as a source for tenders for government and private sector contracts, Mr. Petrie said. Many contracts list only the United States as a source.
While some Canadian business groups take pains to point out that they are non-partisan, they agree that Canadians have suffered from the lack of political ties, in part because they have thought it more prudent to pursue opportunities in officially sanctioned countries, and in part because conducting business in Taiwan can be more difficult. “Canada is not well known in Taiwan as a market,” Mr. Seitz said. “There really isn’t a knowledge of Canadian capabilities and sophistication.” “It is difficult for Taiwanese businessmen to get visas to come to Canada,” Mr. Chen said. “They must get them in Hong Kong, and that takes three to four weeks.” As well, Canadians wishing to visit Taiwan must obtain visas in the United States.
Conversely, “the problem with Canadian businessmen is I don’t think they consider Taiwan a very important market,” Mr. Chen said. “They have to send us some high level people to promote their products.” “There is a degree of frustration and disappointment (in Taiwan) that there appears to be a lack of interest (by Canadians),” Mr. Dawes said. “Taiwan can be incredibly valuable to Canada, and doing business there a pleasure. They do business in a very straightforward, efficient mannner.” The Toronto-Dominion Bank, which has had an office in Taiwan since 1975, and has a “very sizeable exposure (there) on a percentage basis,” has been “extremely happy with it,” said Terence Glossop, the bank’s general manager of international marketing. “The fact that we are still there, while we have closed other offices in the Far East, in Jakarta and Bangkok, and opened others, speaks for itself. Trade is expanding rapidly. “There have been some problems with loan losses with Taiwanese companies recently, but not with our bank, luckily,” he said. “And although English is not widely spoken, certainly we’ve managed quite well. We’ve always had an expatriate manager and assistant manager.”