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Viewing cable 08AITTAIPEI1580, TAIWAN: PART ONE OF 2009 NATIONAL TRADE ESTIMATE REPORT
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| Reference ID | Created | Released | Classification | Origin |
|---|---|---|---|---|
| 08AITTAIPEI1580 | 2008-11-07 09:36 | 2011-08-23 00:00 | UNCLASSIFIED | American Institute Taiwan, Taipei |
P 070936Z NOV 08
FM AIT TAIPEI
TO SECSTATE WASHDC PRIORITY 0310
INFO CHINA POSTS COLLECTIVE
AMEMBASSY SEOUL
AMEMBASSY TOKYO
USDOC WASHDC
UNCLAS AIT TAIPEI 001580
STATE FOR EAP/TC, EB/TBB/BTA
STATE PASS TO USTR/BLUE AND WINELAND AND AIT/W
COMMERCE FOR 4431/ITA/MAC/AP/OPB/TAIWAN
E.O. 12958: N/A
TAGS: ETRD ECON EFIN TW
SUBJECT: TAIWAN: PART ONE OF 2009 NATIONAL TRADE ESTIMATE REPORT
REF: STATE 88685
TRADE SUMMARY
-------------
¶1. The U.S. goods trade deficit with Taiwan was $11.9 billion in
2007, a decrease of $3.2 billion from $15.2 billion in 2006. U.S.
goods exports in 2007 were $26.4 billion, up 14.4 percent from the
previous year. Corresponding U.S. imports from Taiwan were $38.3
billion, up 0.2 percent. Taiwan is currently the 10th largest export
market for U.S. goods.
¶2. U.S. exports of private commercial services (i.e., excluding
military and government) to Taiwan were $7.1 billion in 2006 (latest
data available), and U.S. imports were $7.0 billion. Sales of
services in Taiwan by majority U.S.-owned affiliates were $11.2
billion in 2005 (latest data available), while sales of services in
the United States by majority Taiwan-owned firms were $439 million.
¶3. The stock of U.S. foreign direct investment (FDI) in Taiwan was
$16.4 billion in 2007 (latest data available), up from $16.1 billion
in 2006. U.S. FDI in Taiwan is largely in the finance,
manufacturing, and wholesale trade sectors.
¶4. The United States and Taiwan continued to work together to
enhance economic cooperation through the bilateral Trade and
Investment Framework Agreement (TIFA) process. The TIFA, which was
signed in 1994, provides an important mechanism for both parties to
resolve bilateral trade issues and to address the concerns of the
U.S. business community.
IMPORT POLICIES
--------------
Tariffs
-------
¶5. Taiwan comprehensively revised its tariff schedule in 2006, and
continuing unilateral improvement to its tariff structure on
finished goods and raw materials have pushed down the average
nominal tariff rate on imported goods to 5.56 percent from 5.6
percent in 2006.
¶6. However, in order to stabilize commodity prices in Taiwan, the
Executive Yuan (EY) implemented temporary tariff cuts on seven bulk
imports - including wheat, flour, and flour of soybean and corn -
until February 5, 2009, and in addition implemented additional
temporary measures to cover all other types of durum wheat, tomatoes
preserved other than by vinegar or acetic acid, sesames, milk and
cream in powder form, and butter.
¶7. Taiwan is working to pass legislation outlining a new version of
its tariff schedule to meet the World Customs Organization's
Harmonized System (HS) requirements. Taiwan estimates it needs to
reclassify goods in more than 11 percent of its tariff lines. U.S.
industry continues to request that Taiwan lower tariffs on many
goods, including large motorcycles, wine, canned soups, cookies
(sweet biscuits), savory snack foods, vegetable juices, potato and
potato products, table grapes, apples, fresh vegetables, and citrus
products.
¶8. When Taiwan became a WTO Member in January 2002, Taiwan
implemented tariff-rate quotas (TRQs) on small passenger cars, three
categories of fish and fish products, and a number of agricultural
products. On January 1, 2007, in accordance with its WTO
commitments, Taiwan made additional tariff cuts and increased TRQ
amounts on these products. For example, the commodity tax on
passenger cars with engine displacement of over 2000cc dropped from
35 percent to 30 percent, and this rate will remain in place until
¶2011. Also by 2011, Taiwan has committed to fully eliminate TRQs on
small passenger cars.
¶9. Taiwan maintains Special Safeguards (SSGs) for a number of
agricultural products covered by TRQs. SSGs, permitted under Article
5 of the WTO Agreement on Agriculture, allow Taiwan to impose
additional duties when import quantities exceed SSG trigger volumes
or import prices fall below SSG trigger prices. Because Taiwan did
not previously import many of these products, SSG trigger volumes
are relatively low. Over the last few years, Taiwan has imposed
safeguard provisions on poultry imports several times, and SSGs have
also been triggered on several other products, including types of
offal. Imports of affected products usually continue despite
safeguard tariffs.
¶10. Taiwan has eliminated more that 99 percent of import controls,
but 87 product categories still face import restrictions, up from 71
product categories in 2008. Of these categories, 24 require import
permits from the Board of Foreign Trade (BOFT) and 63 are
prohibited. Most of the permit-required categories are related to
public sanitation and national defense concerns and include
ammunition and some agricultural products.
Agricultural and Fish Products
------------------------------
¶11. Beef: Taiwan allows the import from the United States of deboned
beef from animals less than 30 months of age, but requires that
tissues listed by the World Health Organization for Animal Health
(OIE) as Specified Risk Materials (SRMs) appropriate for removal
from animals over 30 months of age are removed from animals less
than 30 months of age as well. Ruminant and non-ruminant products
intended for use in animal feed and pet food -- such as tallow
(including protein-free tallow), lard, poultry and porcine meal --
are banned due to Bovine Spongiform Encephalopathy (BSE) related
concerns, while limited exceptions for pet food have been approved
after a thorough case-by-case review or plant clearance process.
Taiwan does not maintain a BSE-related import suspension on
U.S.-origin protein-free tallow for human consumption.
¶12. The United States has engaged Taiwan intensively to request that
imports of U.S. beef and beef products (and non-ruminant products
subject to the BSE-related suspensions) be resumed consistent with
OIE guidelines and the May 2007 OIE classification of the United
States as controlled-risk for BSE. Taiwan indicates it has
completed its regulatory review on the U.S. request after finalizing
a report on the risk assessment study and a second on-site visit to
U.S. beef slaughter and processing facilities conducted by the
Department of Health (DOH) and experts on its BSE Risk Advisory
Committee. A similar, independent risk assessment on beef products
for animal feeding conducted by the Council of Agriculture (COA) and
its review committee was completed, but progress on the proposed
rule-making process has languished. With the scientific review and
technical work complete, the only step that remains is a final
decision and the necessary administrative procedures to expand
access. While the U.S. Government has pushed hard for opening, the
Taiwan authorities have delayed action in anticipation of negative
domestic reaction, especially from consumer groups.
¶13. Resuming the trade in trade of bone-in beef and other beef
products would increase U.S. exports by $50-100 million based on
pre-ban trade figures and hopes for market growth driven by record
exports to Taiwan of U.S. boneless beef in 2008.
¶14. Organics: In 2007, Taiwan promulgated new "Imported Organic
Agricultural Product and Organic Agricultural Processed Products"
regulations, which will come to effect on January 29th, 2009.
Based on the new regulations, COA will adopt a two-step review
system for raw or processed organic agricultural products. First,
COA will review the equivalence of the international accreditation
organization, and then importers must apply for COA approval for
each batch at importation with the required documentations including
certificates from COA-recognized certifiers. The products can not
claim "organic" on the packaging unless COA approves both steps of
the review. However, COA currently does not recognize any
international accreditation organizations for agricultural processed
products, which may prevent importation of organics after the new
regulations take effect.
¶15. Based on the current volume of trade, these regulations will
affect $10-25 million of U.S. exports.
¶16. Rice: Taiwan's ceiling price mechanism is a major impediment to
Taiwan's fulfillment of its World Trade Organization (WTO)
obligations for rice because the system fails to keep pace with
market conditions. The ceiling price over the past year has been
routinely lower than those bid by U.S. exporters, causing tenders to
fail. As of November 2008, Taiwan has been unable to fill its 2007
country specific quota (CSQ) for U.S. rice under the traditional
public tender portion of the quota. Taiwan has provided numerous
arguments for not filling the 2007 quota and for delaying the 2008
tender schedule. These ranged from not wanting to affect world rice
prices during a global food crisis, to having insufficient funds to
purchase rice, to pointing out unusually high prices of California
medium grain rice that exceed domestic wholesale prices, which would
constitute COA paying a "subsidy" for imported rice.
¶17. Estimated trade impact on U.S rice exporters is $17,280,000
based on the unfilled 2007 U.S. quota of 32,000 metric tons at a
free-on-board value of $540 per metric ton.
¶18. Wood Products: Taiwan recently revised its building codes in
line with international practices, and on October 31st, 2008, the
Construction and Planning Agency of the Ministry of the Interior
announced long-awaited companion fire codes for wood frame
construction. U.S. industry believes the new codes will allow
builders to obtain insurance for construction and further encourage
wood use in construction. Fire codes for heavy timber were not
included in this announcement. However, those interested in using
heavy timber in construction can apply to the Taiwan authorities for
fire resistance testing, though this option is prohibitively
costly.
¶19. According to U.S. industry sources, these building code
revisions may add $10 million to U.S. exports to Taiwan.
¶20. Automobiles and Motorcycles: On November 1, 2007, the Ministry
of Transportation and Communications (MOTC) opened most expressways
to large motorcycles with engine displacement of 550cc or more, and
asked the Directorate General of Highways (DGH) to further study the
feasibility of opening highways to those motorcycles. The deadline
of the study will be in November 2009. The tariff on small
automobiles is 30 percent, that of motorcycles between 250-500cc
displacement is 18 percent, and that of above-500cc-displacement
motorcycles is 20 percent.
STANDARDS, TESTING, LABELING, AND CERTIFICATION
--------------------------------------------- ---
¶21. Over 70 percent of the standards established by Taiwan's Bureau
of Standards, Metrology & Inspection (BSMI) have been harmonized to
some extent with international standards, and BSMI is continuing to
harmonize existing standards with international standards. Taiwan's
Chinese National Standards (CNS), which are based on International
Electro-Technical Commission (IEC) standards, provide rules and
guidelines for products, processes and services.
Agricultural Biotechnology Products
-----------------------------------
¶22. The current Taiwan agricultural biotechnology regulations are
only applied to soybeans, corn and products of soybean and corn. No
bioengineered soybeans or corn may be produced, processed, prepared,
packed, and imported or exported unless they are registered and
approved by the Taiwan Department of Health (DOH) Food Safety Bureau
(FSB). Taiwan has approved 18 of the most widely commercialized
bioengineered corn and soybean events.
¶23. At present, Taiwan only regulates corn and soybeans and their
products derived from recombinant-DNA. According to Taiwan's
current biotechnology regulations, prior market approval for biotech
soybean and corn imports is required for food, feed or processing
use (FFP use). In May 2008, Taiwan implemented registration for
stacked events. While no disruptions to trade have resulted from
Taiwan's biotechnology regulations, newly registered stack events
have added to the growing number of products entering the regulatory
approval pipeline. This increase in applications, combined with
resource constraints in the domestic regulatory infrastructure, may
lead to approval delays.
Alcoholic Beverage Products
---------------------------
¶24. Taiwan has no ingredient-labeling requirements for alcoholic
beverages, though beverages must include a warning label stating
that excessive drinking is harmful to one's health. Since January 1,
2008, alcohol product manufacturers and importers must comply with
the Hygiene Standards for Alcohol Products on antiseptics,
colorants, and additives, or face penalties of up to $90,900.
Importers of alcoholic beverages can submit home country
documentation of sanitary inspection or safety assurances issued by
alcohol product inspection officials or professional alcohol
associations as an alternative to customs-clearance product
inspection.
Automobiles
-----------
¶25. Before 2004, Taiwan's market was open to vehicles that met
either the North American Federal Motor Vehicle Safety Standards
(FMVSS) or the United Nations Economic Commission for Europe (ECE)
vehicle safety standard. In 2004, however, the Ministry of
Transportation and Communication (MOTC) began to phase in ECE
standards in order to harmonize Taiwan with the majority of the
world's markets outside of North America. The new rules took
partial effect for passenger cars in July 2008, and will take full
effect for all vehicles in Taiwan by January 2013.
¶26. Non-passenger vehicles, however, must already meet ECE standards
to be sold in Taiwan. For FMVSS-spec vehicles that have
manufacturer-provided "Self-certification" reports, Taiwan offers an
alternative certification method through its Automotive Research and
Testing Center (ARTC). The process, however, is expensive and
manufacturers complain that ARTC lacks sufficient test facilities
and technical capabilities to conduct the needed tests.
Biotechnology Foods
-------------------
¶27. Taiwan requires labels on foods containing biotechnology corn or
soybeans. All food products containing 5 percent or more
bioengineered soybean or corn ingredients by weight must be labeled
as "Genetically Modified (GM)" or "Containing Genetically Modified."
Highly processed food items (items with no proteins or DNA) do not
require GM labels.
Industrial and Home Appliance Products
--------------------------------------
¶28. Taiwan accepts testing by National Institute of Standards and
Technology-designated laboratories in the United States for
information technology equipment as described in the APEC Telecom
Mutual Recognition Arrangement implemented by the United States and
Taiwan with respect to Phase I on March 16, 1999. Under Taiwan's
Commodity Inspection Act, industrial and home-appliance products,
such as air-conditioning and refrigeration equipment, must meet
safety and Electromagnetic Compatibility (EMC) testing requirements
before clearing customs. US-produced electrical home appliances are
certified by the United States' American National Standard (ANSI) or
meet with Underwriters Laboratories (UL) Standards, but Taiwan's
Bureau of Standards, Metrology, and Inspection (BSMI) requires these
imports comply with Taiwan's International Electro-Technical
Commission (IEC)-based safety standards, fording ANSI or
UL-certified products to undergo duplicative safety testing by
IEC-consistent laboratories.
¶29. Since 2006, BSMI has regulated levels of lead, mercury,
hexavalent chromium, polybrominated biphenyls, and polybrominated
biphenyl ether in electro-technical products. Such products must
pass BSMI-required product testing or production-site inspection. In
addition to existing EMC and safety requirements, television
receivers must be able to receive over-the-air digital television
(DTV) broadcast signals.
Maximum Residue Limits (MRLs)
-----------------------------
¶30. Taiwan's unwillingness to recognize international MRLs while it
takes action to reduce a backlog of over 1,400 MRL applications is
creating a significant level of uncertainty in the U.S. agricultural
industry. Because of the enormity of the backlog, an agreement by
Taiwan to reference Codex and U.S. MRLs, in the absence of Codex
tolerances, is crucial to avoid potential trade disruptions.
¶31. Taiwan's inability to keep pace with requests to establish MRLs
for pesticides has resulted in the rejection of various U.S.
agricultural shipments including wheat, barley, strawberries, and
corn due to residue violations. A particularly visible case has
been the pork ractopamine issue. Taiwan banned the use of
ractopamine domestically without any scientific assessment
questioning its safety. Even though Taiwan officials acknowledge
that there is no health risk due to trace amounts of ractopamine in
U.S. pork, in 2007, Taiwan began testing for ractopamine in U.S.
pork, leading to a drop in imports of non-offal U.S. pork meat.
Under domestic pressure from farmers, Taiwan has strongly resisted
establishing a safe MRL for ractopamine despite having announced its
intent to do so to the WTO in August 2007.
¶32. In response to trading partner concerns, Taiwan recently
established a priority list of 218 MRLs. The Taiwan Department of
Health (DOH) will review applications for these high-priority MRLs
over the next two-to-three years in an effort to reduce the backlog
for establishing pesticide tolerances.
¶33. Based on the pre-ban 2006 trade volume, we estimate that
Taiwan's lack of a safe MRL for ractopamine is affecting $10-25
million of U.S. pork exports.
¶34. Melamine: In the wake of a fall 2008 melamine-contamination
scandal involving adulterated dairy products in China, the Taiwan
Department of Health (DOH) initially set a 2.5 ppm tolerance level
for melamine presence in foods. Due to consumer concerns, however,
the DOH quickly withdrew the 2.5 ppm tolerance and instituted a
"non-detectable" tolerance using the most sensitive testing
equipment available, making the 0.05ppm detection limit adopted for
these tests the de facto tolerance for melamine in foods.
¶35. In late September 2008, Taiwan announced an indefinite import
suspension on all Chinese-made milk, milk powder, ice cream bases,
and dairy-containing beverage/mix, prepared and processed milk
products, ice cream, animal protein products and protein
derivatives, and other products. Taiwan also imposed stringent
melamine scrutiny on products from non-China sources by implementing
a new, temporary test report requirement for imports in three
categories: milk powder, infant formula, and creamers. Under the
new requirements, each batch of the covered products (a total of 20
HS codes) destined for Taiwan that was loaded on board on or after
October 8, 2008 now requires presentation of a melamine-free test
report from a government-certified or appropriately accredited
laboratory at import arrival.
¶36. In the absence of such pre-export certification, the importer
must provide a melamine-free test report conducted by a Taiwan
DOH-accredited laboratory before customs clearance. However, an
exporting country also has the option of seeking a waiver from this
requirement by submitting a letter and supporting documentation to
DOH that explains the country's system of safety controls for dairy
production, processing and distribution, including information on
relevant regulations and test data for melamine.
¶37. We estimate that Taiwan's certification requirement for U.S.
dairy exports is affecting U.S. exports by $10-20 million based on
current trade volume.
Sanitary and Phytosanitary Measures
-----------------------------------
¶38. Taiwan accepts meat and poultry imports from plants approved by
the USDA Food Safety Inspection Service, and also accepts Codex
Alimentarius or U.S. pesticide residue standards on a provisional
basis for a limited number of chemicals used on imported fruits and
vegetables. The slow and cumbersome approval process for new maximum
residue limits for chemical/product combinations, however, poses a
potential threat to current U.S. fresh produce and grain shipments.
Moreover, the United States continues to be concerned that some
Taiwan plant and animal quarantine measures are not necessarily
based on sound science and are more trade restrictive than necessary
to ensure health and safety.