1. Items and Scale 1. The items and scale of the early harvest
goods under the Economic Cooperation Framework Agreement (ECFA) are based on the
tax regulations and trade information exchanged between the two sides at the first
formal negotiations on January 26, 2010.
2. According to mainland China's 2009 customs data on tariff
regulations and trade, Taiwan's total exports to mainland China of the 539 early
harvest items on the Taiwan list amounted to US$13.84 billion in 2009, representing
16.1% of Taiwan's total cross-strait exports by value.
3. According to Taiwan's 2009 customs tariff regulations, mainland
China's total exports to Taiwan of the 267 early harvest items on the mainland list
amounted to US$2.86 billion in 2009, representing 10.5% of the mainland's total
cross-strait exports by value.
4. Comparison of the Early Harvest Lists
| Mainland List (Mainland Tariff Reductions) |
Taiwan List (Taiwan Tariff Reductions) |
| Industry |
Items |
Amount (US$1 billion) |
Industry |
Items |
Amount (US$1 billion) |
| Petrochemical |
88 |
5.944 |
Petrochemical |
42 |
0.329 |
| Textile |
136 |
1.588 |
Textile |
22 |
0.116 |
| Machinery |
107 |
1.143 |
Machinery |
69 |
0.474 |
| Transportation equipment |
50 |
0.148 |
Transportation equipment |
17 |
0.409 |
| Other |
140 |
4.997 |
Other |
117 |
1.53 |
| Agriculture |
18 |
0.016 |
|
|
|
| Total |
539 |
13.838 |
Total |
267 |
2.858 |
5. The ratio of the items and values of the Taiwan and mainland
China early harvest product lists is 1:2and 1:5, respectively
6. Regarding method of tariff reduction, the two sides have adopted
different tariff escalations and will reduce tariffs to zero in three years during
the two-year implementation period for the early harvest lists:
| Mainland's Planned Tariff Reduction Schedule |
Taiwan's Planned Tariff Reduction Schedule |
| Tariff Escalation |
1st Year of Early Harvest Plan(2011.1.1) |
2nd Year of Early Harvest Plan(2012.1.1) |
3rd Year of Early Harvest Plan(2013.1.1) |
Tariff Escalation |
1st Year of Early Harvest Plan(2011.1.1) |
2nd Year of Early Harvest Plan(2012.1.1) |
3rd Year of Early Harvest Plan(2013.1.1) |
| 0<X<=5 |
Zero tariff |
|
|
0<X<=2.5 |
Zero tariff |
|
|
| 5<X<=15 |
5% |
Zero tariff |
|
2.5<X<=7.5 |
2.50% |
Zero tariff |
|
| 15<X |
10% |
5% |
Zero tariff |
7.5<X |
5% |
2.50% |
Zero tariff |
2. Impact of Early Harvest Plan on Taiwan's Industries
1. Softening the competitive threat Taiwan facing in
the Mainland market from ASEAN products
One-fifth of the products on the Mainland list (Mainland Tariff
Reductions) include Taiwan products that face intense competition from ASEAN products,
both strongly competitive and less competitive items, including plastic materials
(PC, PP, etc.), synthetic fiber raw materials like p-Xylene, plastic making machinery,
instruments parts, and camera modules.
Taiwan has competitive advantages over ASEAN countries, but high
tariffs weaken the competitiveness of Taiwanese products: For example, petrochemical
raw materials like vinyl chloride (5.5% tariff), butanol (5.5% tariff), lithium
ion batteries (12.0% tariff).
2. Opportunity to take market share from Japan and Korea
in Taiwan's competitively strong industries
Of the total items on Mainland list (Mainland Tariff Reductions),
17% enjoy a considerable competitive advantage over competing Japanese and Korean
products, such as bicycles and components thereof, petrochemical raw materials,
machine tools, other polyester non-deformed fabric, and other discharge lamps. Early
harvest treatment will make these products more competitive in the mainland market,
helping Taiwan to take market share from Japan, Korea and other countries.
3. Early entrant market opportunities for Taiwan's agricultural
industry and traditional SMEs
Half of the products on the Mainland list (Mainland Tariff Reductions)
are in sensitive traditional industries, products made by SMEs, and agricultural
products, including automobile parts, water heaters, filters, small home appliances,
hand tools, accessories, underwear, shoes, socks, bags and luggage and other products
and orchids, bananas, tea and other agricultural products. These products currently
face tariff rates of 10% or higher in the mainland.
Including these products under the early harvest plan will help
companies to expand in mainland market, develop new market opportunities, increase
the scale of Taiwan's industries, and promote industrial development. It will also
create new job opportunities since most of these products are in labor intensive
industries.
4. Protecting Taiwan's agricultural and traditional SME
industries
Taiwan list (Taiwan tariff reductions) consists mainly of petrochemical
products (plastic materials and miscellaneous chemicals) and industrial machinery
and parts thereof. In the bicycle and textile sectors, most items on the list are
intermediary components and parts. Apart from mainland products already allowed
into Taiwan, nearly half of the products are items that both sides have mutually
opened up their markets to.
Regarding Taiwan's sensitive traditional industries, SME-intensive
industries and agricultural products, import items controlled by the mainland, and
products subject to anti-dumping duties will not be included on the Taiwan list
(Taiwan tariff reductions).