Trade Relations Between Taiwan and South Asia Under the New Southbound Policy

Published in: Defense Strategy & Assessment Journal, Volume 9, No. 4 (Autumn 2019), pages 1–25

Posted on RAND.org on December 13, 2019

by Rafiq Dossani

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This paper discusses the prospects for Taiwan's economic relations with South Asia, focusing on trade issues. The summary picture that emerges is that economic relations between Taiwan and the countries of South Asia largely focuses on India, that economic relations are relatively low compared to Taiwan's economic relations with the rest of the world, and that these economic relations are largely confined to "old economy," low value-added items for both imports and exports. This suggests that Taiwan's progress to a modern economy, driven by intellectual property built around its digital industries—information and communication technologies (ICT), in which Taiwan plays a globally central role, has not connected with similar industries in South Asia, such as India's software services industry. Put another way, South Asia is not part of the supply chain that Taiwan manages in new-age industries in ICT. We consider possible reasons: (1) Inadequate policy emphasis on new-economy industries and the services sector in Taiwan, perhaps due to established supply chains in East Asia and Southeast Asia; (2) Difficulties of doing business in South Asia due to tariff and non-tariff barriers. We also consider whether there are genuine opportunities for a dramatic change in the economic relations between Taiwan and South Asia, and explore policy options that policymakers on both sides should consider.

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