Concessions for Some ECFA Products Will Be Terminated, Taiwan's Industrial and Commercial Circles Were Worried About the Impact on Taiwan's Industries

The Customs Tariff Commission of The State Council of China issued a notice on December 21, stating that the Taiwan region unilaterally adopted discriminatory prohibitions, restrictions and other measures on the export of products from the Mainland, in violation of the provisions of the Cross-Straits Economic Cooperation Framework Agreement (ECFA), and decided to suspend tariff concessions for some ECFA products, with effect from January 1, 2024. For imported products originating in Taiwan, such as propylene, paraxylene and other 12 tax items, the application of ECFA agreement tax rates will be suspended and implemented in accordance with the current relevant provisions.

Since the ECFA was signed and implemented, it has brought many benefits to enterprises and people on both sides of the strait. By the end of 2020, Taiwan’s companies have enjoyed a cumulative tariff reduction of about $7 billion. The Taiwan Chamber of Commerce and Industry pointed out that according to the ECFA early collection list, the goods exported from Taiwan to the mainland can enjoy duty-free items of the original petrochemical 88 items, machinery 107 items, textile 136 items, transport 50 items, and other 140 items, a total of 521 products.

The Taiwan Chamber of Commerce and Industry stated that although the 12 petrochemical products announced to suspend tariff-free benefits this time do not account for a large proportion of Taiwan's overall exports, the psychological impact is greater than the substance. Taiwan's industrial and commercial circles are worried that if the tariff-free concessions for items on the ECFA early harvest list are continued to be canceled, it will have a substantial impact on Taiwan's industrial development and employment stability, and should be faced with caution.

Cross-Strait trade data shows that in recent years, Taiwan's products exported to the mainland have accounted for nearly 40% of its overall exports. Taiwan has continued to enjoy a huge trade surplus from the mainland for many years. Last year, Taiwan's cross-Strait trade surplus reached US$156.5 billion. Taiwan's exports to the mainland clearly support the island's economic development and are directly related to the employment and wage levels on the island, as well as the level of fiscal revenue of the Taiwan authorities and the maintenance of people's livelihood and well-being in Taiwan society.

However, while benefiting from cross-strait trade, Taiwan has been erecting discriminatory trade barriers against the import of products from the mainland for many years. It has imposed import bans on as many as 2,509 items of mainland products, seriously damaging mainland export production enterprises. The interests of Taiwan’s companies with import needs and the well-being of workers have also hindered the economic development of the mainland. Zhu Fenglian, spokesperson for the Taiwan Affairs Office of the State Council, expressed support for the relevant authorities to take measures to suspend tariff reductions for some ECFA products; the mainland expressed the hope that Taiwan would take effective measures to lift trade restrictions on the mainland.

Suspension of the list of products with tariff concessions under the "Cross-Strait Economic Cooperation Framework Agreement"