Taiwan Applies to Join Regional Trade Pact
On September 22, the Executive Yuan announced that Taiwan had formally applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Taiwan submitted its application documents to New Zealand, which acts as the depositary for the trade bloc and whose government circulated the application among the other member states.
Cumulatively, CPTPP’s 11 members account for more than 13% of global GDP, and represent a population of nearly 500 million, or 7% of the world’s total. Members also constitute over 24% of Taiwan’s total trade. Currently led by Japan, the CPTPP was formed after the U.S. under then-president Trump withdrew from the Trans-Pacific Partnership Agreement (TPP). China applied to join the trade bloc on September 16, a move that has drawn significant attention and perhaps pushed Taiwan to quickly submit its own application.
National Development Council Minister Kung Ming-hsin said he expects that Taiwan’s annual GDP growth will increase by over 2% if Taiwan is accepted into the CPTPP, and contract by 0.56% if it is not. He added that if the island’s bid to join is successful, several sectors would be negatively affected, with agriculture, automotive, and auto parts being the hardest hit. However, if Taiwan is rejected, Kung said that the petroleum, plastic, steel, rubber, chemical, construction materials, and service industries could face stiffer trade barriers.
Central Bank Maintains Interest Rates and Tightens Property Market
On September 23, Taiwan’s Central Bank (CBC) announced that it will maintain key interest rates for a sixth consecutive quarter. The discount rate will be kept at 1.125%, the lowest in Taiwan’s history. Additionally, the bank raised its forecast of Taiwan’s economic growth rate this year to 5.75% and estimated that next year’s growth rate will be 3.45%. The bank based its forecasts on Taiwan’s better-than-expected economic performance in 2021 and effective management of the pandemic.
The CBC also increased credit controls for the housing market, prohibiting grace periods for individual purchasers of second homes in Taiwan’s six special municipalities (Taipei, New Taipei City, Taoyuan, Taichung, Tainan, Kaohsiung), as well as Hsinchu City and County. In addition, the bank lowered the mortgage ceiling for land purchases and industrial parks. The latest controls mark the third time since December last year that the CBC has sought to rein in property speculation. Explaining the adjustments, the bank referenced the Joint Credit Information Center’s findings that 82.6% of second homeowners in Taiwan are concentrated in the aforementioned municipalities.
Foodpanda Slapped with NT$2 million Fine from FTC
The Fair Trade Commission (FTC) announced on September 17 its plans to fine online food delivery platform Foodpanda Taiwan Co. NT$2 million. FTC Vice Chairperson Andy Chen stated that Foodpanda denied partner restaurants the ability to price dine-in and take-out options differently and to reject pick-up orders. Chen stated that these restrictions violate the Fair Trade Act. In addition to the fine, the FTC ordered Foodpanda to end such practices immediately.
The market for food delivery services in Taiwan is currently dominated by FoodPanda and UberEats. The FTC pointed out that if the number of restaurants signing exclusive partnerships or deals with food delivery platforms continues to increase, further concerns over violations of fair trade laws and regulations could arise.
Foodpanda stated that it has not yet received relevant documents from the FTC regarding the fine, and thus does not have a complete understanding of the commission’s decision. The company added that it will determine whether to file an administrative appeal after it is able to review the FTC’s findings.