TAIPEI (Taiwan News) — The Legislative Yuan on Tuesday (Dec. 27) approved the nullification of the free trade agreement between Taiwan and Nicaragua, following Nicaragua’s decision to sever diplomatic relations last December.
In a Ministry of Foreign Affairs (MOFA) report published earlier this month, the ministry criticized Nicaragua for not ending the FTA in accordance with international law, Liberty Times reported. The Central American nation did not notify Taiwan in advance and only terminated the agreement based on domestic regulations, which constituted a "major breach of contract" under international treaty law, MOFA said.
MOFA said that in order to completely annul the bilateral FTA, Taiwan’s envoy to the WTO forwarded documents signed by Foreign Minister Joseph Wu (吳釗燮) to Nicaragua’s WTO representative and the WTO secretariat in March. The agreement was officially nullified on July 1.
The FTA came into effect on January 1, 2008, and led to doubled bilateral trade volume, reaching US$160 million (NT$4.92 billion) in 2021, per Liberty Times. During the 13-year period, Nicaragua’s exports to Taiwan increased by eight times, making it the primary beneficiary of the trade agreement.
MOFA pointed out that Nicaragua only accounts for 0.02% of Taiwan’s foreign trade. Imports from Nicaragua included frozen shrimp, frozen beef, steel scrap, and coffee, the ministry said.
There are other alternative sources of those imports, so the impact of the termination of the FTA on Taiwan trade is limited, MOFA said. The case will now be reported to the Cabinet and forwarded to President Tsai Ing-wen (蔡英文) for review.
Nicaragua broke off diplomatic relations with Taiwan on December 10, 2021, and unilaterally abolished the FTA on Dec. 15.