The free trade agreement (FTA) between Taiwan and Nicaragua remains in effect despite the severance of formal diplomatic ties between the two countries on Thursday, the Ministry of Economic Affairs (MOEA) said Friday.
The free trade pact between Taiwan and Nicaragua was signed on June 16, 2006 and took effect on Jan. 1, 2008.
Either party can withdraw from the agreement, and it would take effect 180 days after notification of withdrawal has been given, the MOEA said, but Nicaragua has not provided such notification so the pact remains in effect.
Whether Managua will make a move is unclear, but Taiwan's free trade deal with El Salvador and Honduras is still valid even though El Salvador broke diplomatic ties with Taiwan in 2018.
Even if Nicaragua were to eventually end the agreement, it would have little effect on Taiwan's foreign trade, according to the MOEA.
Taiwan's exports to Nicaragua in 2020 totaled US$22.94 million, accounting for 0.01 percent of its total exports, while it imported US$143.56 million in goods from the Central American country.
Taiwanese businesses that have invested in Nicaragua over the years should also not be affected by the change in diplomatic status, given that they are registered as local businesses, the MOEA said.
Most Taiwanese businesses in Nicaragua are in the textile and tourism sectors, according to the agency.
Source: Focus Taiwan News Channel