MANAGUA – Nicaragua’s bilateral trade with Taiwan has the potential to grow at a triple-digit rate in the coming years, thanks to a pending free-trade agreement that is expected to enter into force before the end of the year, according to a Taiwanese trade delegation that visited Managua last week.
The free-trade agreement between Taiwan and Central America, signed by Nicaragua Sept. 13, is expected to be ratified within the next two months, said Hsin-hua Wu, deputy director of Taiwan’s bureau of foreign trade and head of the trade mission.
Nicaragua is expected to be the third country to ratify the free-trade pact with Taiwan, following Panama in 2004 and Guatemala earlier this month.
Bilateral trade between Panama and Taiwan has grown 190% in the past three years under the trade pact, and there is no reason to believe that the same trend will not extend to Nicaragua,Wu said.
Even without the free-trade agreement, bilateral trade between Nicaragua and Taiwan has grown substantially in recent years. Nicaragua’s exports to Taiwan reached $8.6 million in 2006, for a 30% increase from the year before. This year’s exports to Taiwan are expected to surpass $12 million, marking an additional 40% growth.
Nicaragua, meanwhile, imports around $39 million annually in Taiwanese products, mostly in fabrics, paper and clothing accessories.
The Taiwanese delegation visiting here last week expressed interest in increasing purchase orders of Nicaraguan coffee, seafood and meat products. The delegation also showed interest in some non-traditional Nicaraguan exports such as noni, a tropical fruit that is thought to have healing powers.
The Taiwanese mission, which stopped in Nicaragua as part of a Central American tour, is expected to commit itself to $7 million in purchase orders between the five countries on the isthmus.
The mission also expressed interest in investment here, noting that Taiwanese investment in Nicaragua already represents $223 million and could grow in the future, especially in the area of free-trade industries.
Wu touted Nicaragua’s cheap labor force – the lowest paid in the region – as a “competitive” edge for the country. But he noted that increasing investment is “more complicated” than increasing trade, and will require more time and feasibility studies.
Wu did, however, stress that there was confidence in the new Sandinista government. President Daniel Ortega, whom many expected would be the next to sever ties with Taiwan in favor of mainland China, has maintained – and arguably strengthened –Nicaragua’s relations with the Asian nation.
Taiwan’s President Chen Shui-bian visited Nicaragua in August and called Ortega his “best friend.” In exchange for its continued recognition of Taiwan, Chen donated to the Nicaraguan government a new 60-megawatt power plant and $1.1 million to help finance the Sandinista government’s “Zero Hunger” poverty relief program (NT, Aug. 31).
To further institutionalize bilateral relations between the two countries, Taiwan hopes that Nicaragua’s National Assembly will soon ratify the free-trade agreement, which would enter into force 30 days later.
Once in effect, 5,797 Nicaraguan products would be able to enter into the Taiwanese market tax-free, including beef exports, which are currently taxed $10 per kilo.
The trade agreement would also allow more than 3,300 Taiwanese products to enter into Nicaragua tax-free.
In addition to the market in Nicaragua and the rest of the region,Wu admitted that part of the Taiwanese delegation’s interest in Central America has to do with gaining better access to the United States through the Central American Free-Trade Agreement with the United States (CAFTA).
By establishing businesses in Nicaragua, Taiwan could use Nicaragua as a bridge to export into the United States under the terms of CAFTA, under which Nicaragua was given preferential terms for the export of textiles and apparel.
