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Foreign trade has been the engine of Taiwan's rapid growth during the past 40 years. Taiwan's economy remains export-oriented, so it depends on an open world trade regime and remains vulnerable to downturns in the world economy. The total value of trade increased more than five-fold in the 1960s, nearly 10-fold in the 1970s, and doubled again in the 1980s. The 1990s saw a more modest, slightly less than two-fold, growth. Export composition changed from predominantly agricultural commodities to industrial goods (now 98%). The electronics sector is Taiwan's most important industrial export sector and is the largest recipient of U.S. investment. Taiwan became a member of the World Trade Organization (WTO) as a special customs territory in January 2002.
Taiwan is the world's largest supplier of computer monitors and is a leading PC manufacturer. Textile production, though of declining importance as Taiwan loses its competitive advantage in labor-intensive markets, is another major industrial export sector. Imports are dominated by raw materials and capital goods, which account for more than 90% of the total. Taiwan imports most of its energy needs. . Reflecting the large Taiwan investment in the mainland, in 2003 China supplanted the United States as Taiwan’s largest trade partner, taking 24% of Taiwan's exports and supplying 9% of its imports. The U.S. , Taiwan’s second-largest trade partner, takes 18% of Taiwan’s exports and supplies 13% of its imports. Taiwan is the United States' eighth-largest trading partner; Taiwan's two-way trade with the United States amounted to about $43 billion in 2003. Imports from the United States consist mostly of agricultural and industrial raw materials. Exports to the United States are mainly electronics and consumer goods. The United States, Hong Kong (including indirect trade with the P.R.C.), and Japan account for nearly 56% of Taiwan's exports, and the United States and Japan provide over 40% of Taiwan's imports. As Taiwan's per capita income level has risen, demand for imported, high-quality consumer goods has increased. Taiwan's 2003 trade surplus with the United States was $9 billion. The lack of formal diplomatic relations with all but 27 of its trading partners appears not to have seriously hindered Taiwan's rapidly expanding commerce. Taiwan maintains trade offices in more than 60 countries with which it does not have official relations. Taiwan is a member of the Asian Development Bank, the WTO, and the Asia-Pacific Economic Cooperation (APEC) forum. These developments reflect Taiwan's economic importance and its desire to become further integrated into the global economy.
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