The collapse of the World Trade Organization's Doha Round could be favorable for Taiwan inasmuch as it bolsters the island's chances of securing a free trade agreement with the United States, ROC Deputy Economics Minister Chen Ruey-long said July 27 in an interview with the Taipei Times. The failure of the Doha talks would give the United States more resources to devote to FTA negotiations with Taiwan. Chen believes the next six months will be crucial to determining whether an FTA between Taiwan and the United States is a possibility. For years, the government of Taiwan has been pushing for an FTA with the United States to help avoid becoming marginalized economically as Southeast Asian nations warm to China.
Taiwan's trade surplus with China hit a record US$15.1 billion for the first five months of 2006, according to the Ministry of Economic Affairs. Official figures show exports to China from January to May totaling US$24.5 billion, up 13.2 percent from the same period last year. Semiconductors and flat-panel displays led the export growth, reaching US$4.8 billion and US$4 billion, respectively. An official from the MOEA's Bureau of Foreign Trade said Taiwan's total trade surplus for the period was only US$6.5 billion, smaller than the island's trade surplus with China alone. In other words, if the official volume of trade with China were factored out, Taiwan would in fact have an overall trade deficit.
Taiwan has been displaced by Russia as the world's third largest holder of foreign exchange reserves. This was due largely to the national wealth of oil-rich Russia increasing as oil prices soar, according to officials from the Taipei-based Central Bank of China. As of July 21, Russia's forex reserves reached US$262.9 billion, surpassing Taiwan's US$260.3 billion recorded July 3. Despite the change in ranking, Taiwan has more than enough forex reserves to sustain a healthy economy, according to Chou Ah-ting, head of the CBC's Foreign Exchange Bureau. After June's net outflow of more than US$1.7 billion in foreign capital, Taiwan's forex reserves experienced negative growth for the sixth time in the past year, this time dropping by US$588 million.