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News Analysis: Shrinking ECFA legacies worry Taiwan industries

Source: XinhuaUpdated: 2024-06-07

TAIPEI, June 6 (Xinhua) -- Industrial sectors in Taiwan are worrying possible impacts of trade countermeasures from the Chinese mainland triggered by separatist actions of the Taiwan authorities.

The mainland announced on May 31 that tariff concessions for 134 tariff items from Taiwan that currently enjoy preferential tariff rates stipulated in the Economic Cooperation Framework Agreement (ECFA) will be suspended from June 15.

The ECFA took effect in 2010 as a comprehensive economic pact aiming to lower commercial barriers across the Taiwan Strait. Under its "early harvest program," the mainland reduced tariffs on 539 goods from Taiwan, while Taiwan dropped duties on 267 mainland goods.

However, instead of gradually reducing or eliminating tariffs and non-tariff barriers on cross-Strait commodity trade as stipulated in the ECFA, the Taiwan authorities, led by politicians from the Democratic Progressive Party (DPP), have unilaterally imposed discriminatory trade restrictions on over 2,500 products from the mainland.

As a countermeasure, in December 2023, the mainland made the first move to terminate ECFA tariff rates for 12 products from Taiwan. Together with the May 31 decision, about 27 percent of the goods from Taiwan listed in the ECFA's "early harvest program" have been removed from the list of products enjoying preferential tariff rates.

The items affected by the May 31 decision cover industries such as petrochemicals, textiles and machinery.

The affected items mostly involve Taiwan's traditional industries, which have a high dependency on the mainland market and face difficulties in expanding to other markets, said Lai Cheng-yi, honorable chairman of the General Chamber of Commerce in Taiwan.

He warned that these sectors might suffer closure of factories and bankruptcy, which will have a major impact on employment on the island.

The Taiwan Association of Machinery Industry told local media that the move may further impact the already lagged export situation of relevant industries, prompting manufacturers to consider expanding their factories on the mainland.

The Federation of Industries in Taiwan said that if the mainland continued halting tariff concessions for products from Taiwan, or even completely suspended the ECFA, many traditional industries in Taiwan, which employ a lot of people, would face severe challenges.

Industrial observers warned that the island's unbalanced industrial structure would further worsen and its economic competitiveness would lower as traditional industries struggle without preferential tariff rates under the ECFA.

Chen Binhua, spokesperson for the State Council Taiwan Affairs Office, said last week that the fundamental reason why the mainland has to halt tariff cuts imposed on some Taiwan products under the ECFA is the separatist acts made by the Taiwan authorities.

These actions seriously undermine the foundation of cross-Strait consultations and the implementation of the ECFA, which was signed on the common political foundation of the 1992 Consensus that embodies the one-China principle, Chen said.

Industrial organizations on the island have been calling on the DPP authorities to resume consultation with the mainland through proper channels.

The reason why cross-Strait consultations on economic and trade issues cannot be resumed is rooted in the separatist attempts made by the DPP authorities and its new leader Lai Ching-te, said Teng Tai-Hsien, secretary general of Straits Economic &Cultural Interchange Association, adding that small and medium-sized enterprises on the island have become "victims of politics."

"People of Taiwan generally hope that the ECFA can be maintained," Teng said. "We sincerely hope that on the basis of the '1992 Consensus,' both sides of the Strait can engage in pragmatic consultations and exchanges, allowing small and medium-sized enterprises to continue enjoying preferential tariff policies under the ECFA."

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