TAIPEI, Feb 25, 2022, CNA. Taiwan will stop honoring its free trade agreement with Nicaragua starting on July 1 after some businesses asked for a buffer period in the wake of the Central American country’s unilateral termination of the pact in December 2021, Focus Taiwan reported.
Nicaragua switched its diplomatic recognition from Taiwan to China on Dec. 10, 2021, and decided on Dec. 15 to abolish the Taiwan-Nicaragua FTA, which was signed on June 16, 2006 and took effect on Jan. 1, 2008.
According to the decades-old pact, either party was allowed to withdraw from the agreement, which would take effect 180 days after notification of the withdrawal being given.
Calling Nicaragua’s unilateral move to avoid the pact a “major breach of contract,” Taiwan’s Bureau of Foreign Trade (BOFT) said in a statement Friday that the government has decided to stop carrying out the pact.
Some businesses, however, have expressed the wish for a buffer period ahead of the end of the pact’s implementation, leading the BOFT to decide to not stop honoring it until July 1, it said.
Some businesses made the request because they ordered goods from Nicaragua under the FTA, and the delivery of the goods was delayed due to global shipping congestion amid the COVID-19 pandemic, the BOFT said.
Nicaragua has stopped issuing preferential certificates of origin based on the Taiwan-Nicaragua FTA, but companies who want to take advantage of preferential tariffs under the FTA before the July 1 deadline can still do so, according to the trade agency.
Companies can apply by submitting a certificate of origin for Nicaraguan products issued by the Nicaraguan Export Center (CETREX) and an importer’s declaration of origin, the BOFT said.
According to BOFT data, bilateral trade between Taiwan and Nicaragua totaled US$166.5 million in 2021, of which Taiwan’s exports to the former ally was US$22.94 million.
That accounted for a mere 0.01 percent of Taiwan’s total exports last year, the BOFT said, meaning that the end of the FTA will have little impact on Taiwan’s foreign trade.
The products Taiwan imported from Nicaragua were mainly frozen shrimps, frozen beef briskets and tendons, crude and refined sugar, frozen lobsters, coffee beans, dried sea cucumbers, and steel and metal scrap, according to the government data.