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Big Advance Seen in Taiwan-Japan Economic Relations

Source: Taiwantrade | Updated: 19 October 2011

The scope of application of the new bilateral investment agreement encompasses investors (natural persons, juridical persons, and other entities) and their investments. The agreement is divided into three main categories: investment promotion, investment protection, and investment liberalization.

The investment promotion provisions include the free outward remittance and utilization of funds; proscription against imposing local content ratios for materials or parts on each other’s investors; sympathetic consideration by the government of one party of the granting of short-term stay or work visas to investors and their employees of the other party who apply to enter for purpose of establishment, development, or management of investment affairs, or the provision of consultation; and regulatory transparency.

In the area of investment protection, the agreement expands the coverage of protection (from the traditional investment in movable property and real estate, protection will now also encompass such assets as technology, intellectual property rights, and securities); provides for reciprocal fair treatment and safety assurance of investors; establishes an international arbitration approach for dispute resolution; and demands that in case of requisition (not limited to land) for public purposes, the government should provide the affected investor of the other part with timely, effective, and adequate compensation.

In the area of investment liberalization, each side affords investors from the other side with national treatment in the establishment, acquisition, expansion, operation, management, utilization, and disposition of invested enterprises. With the exception of reserved items, there will be no restrictions on investors in terms of industries in which to invest; use of capital; establishment of branches; appointment of directors, supervisors, and managers; and sale of invested enterprises. In addition, each side will afford investors from the other side, and their investments, treatment not inferior to the most-favored treatment granted to investors from third countries (that is, most-favored-nation treatment).

Japan is Taiwan’s second-largest trading partner as well as a major source of foreign investment and technology. According to the Ministry of Economic Affairs (MOEA), trade between the two countries approached US$70 billion in 2010; and, over the past 50 years, Japan has invested US$16.5 billion in Taiwan and Taiwan has invested almost US$1.6 billion in Japan.


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