• Directory of Taiwan

Taiwanese businesses in China will not be able to use 'MIT': MAC

Taipei, April 3 (CNA) An official of the Mainland Affairs Council (MAC) said Saturday that Taiwanese-invested businesses in China will be required to label their products as "Made in China, " ahead of discussions on the issue between the two countries that are expected to begin soon.
Defining the country of origin is an issue that nations often face after signing free trade agreements, said MAC Vice Chairman Liu Teh-shun, because of the complexity of supply chains and production processes.
If Taiwanese businessmen make their products in China, they will have to list China as the country of origin, Liu said, although the origin of their materials and the nationality of the owners of the business will also be taken into consideration.
Some Taiwanese businesses in China have hoped under certain conditions to list their products as "Made in Taiwan" for various reasons.
The issue is pressing because Taiwan and China could soon sign a framework agreement on trade in which products covered under the deal's "early harvest" list would be given tariff reductions or exemptions -- as long as they are made in the two countries.
At the recently concluded second round of negotiations on the economic framework cooperation agreement (ECFA), the two sides agreed to start talks on setting guidelines to establish a product's origin.
At present, Taiwan law defines a product's origin as final country in which a product underwent a substantive transformation, with the value-added rate exceeding 35 percent.
But officials said that items included in the ECFA's "early harvest" list are expected to face stricter origin guidelines.
"If I give you duty-free treatment, I might ask for a higher value-added rate, " said Vice Minister of Economic Affairs Francis Kuo-hsin Liang.
Huang Chih-peng, the director-general of the Bureau of Foreign Trade and Taiwan's lead ECFA negotiator, expected that verification of a product's origin will be stricter than the current 35 percent for "early harvest" items, but guidelines will vary by product category.
"(The guidelines) will be stricter, but whether the value-added threshold will be higher than 35 percent is yet uncertain, " Huang said.
(by Liu Cheng-ching and Lilian Wu)