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Gov't urged to improve business environment amid looming trade war

Business leaders call on government to encourage return of Taiwanese companies from China.

Business leaders call on government to encourage return of Taiwanese companies from China. (CNA photo)

Taipei, April 4 (CNA) Corporate leaders on Wednesday called on the Taiwan government to improve the domestic business environment to encourage China-based Taiwanese companies to relocate their investment after Washington published a list of Chinese imports that could be subject to additional tariffs, impacting Taiwanese businesses operating in the mainland.

The Office of the United States Trade Representative (USTR) on Tuesday unveiled a list of Chinese advanced technology imports targeted for U.S. tariffs to punish Beijing over its technology transfer policies.

The office has recommended a 25 percent duty covering 1,300 Chinese products be applied to about US$50 billion worth of goods and other actions be taken in response to policies that coerce American companies into transferring technology and intellectual property to domestic Chinese enterprises in exchange for access to the Chinese market.

Sectors subject to the proposed tariffs include industries such as aerospace, information and communication technology (ICT), robotics, and machinery, according to a statement published by the office.

In response, Tsai Lian-sheng, secretary general of the Taiwan-based Chinese National Federation of Industries, said that intelligent machinery and ICT products are Taiwan's main export products, while China is the main manufacturing base for Taiwan's companies, so once the U.S. imposes punitive tariffs on imports from China, it could significantly impact Taiwan's industries operating in China.

Tsai advised Taiwanese businesses to take U.S-China trade relations into account when reaching out to the world and urged them to relocate their production base outside China or back to Taiwan to minimize the impact of the proposed U.S tariffs on their operations there.

Meanwhile, Lin Por-fong, chairman of the Chinese National Association of Industry and Commerce, and Lai Cheng-i, head of the General Chamber of Commerce of the Republic of China, suggested the government urgently address problems in Taiwan's investment environment to encourage China-based Taiwanese businesses to return and invest in Taiwan.

Lin said that although domestic enterprises would like to invest in Taiwan and take advantage of the relatively low cost and risks associated with investing in one's home country, other factors such as the high corporate income tax rate, labor and other policies act as deterrents.

In addition, the United States has introduced investment incentives that could attract Taiwan's major enterprises to invest in the country, leaving companies with inadequate finances and talent in Taiwan, Lin noted, adding that he foresees these small local enterprises going out of business as a result of diminishing orders.

Lai also said that although enterprises can secure technology and strong production management and control operating in Taiwan, there is an increasing exodus of domestic enterprises and professionals due to the unfavorable investment climate in the country. The government needs to take the problems seriously, he added.

However, Ko Pa-hsi, head of the Taiwan Association of Machinery Industry, said the U.S. tariff plan will not have a major effect on Taiwanese machinery companies with factories in China because they mainly sell their products on the Chinese domestic market, instead of exporting them to other countries.

Meanwhile, Taiwan's representative office in the United States said in a statement that it will closely watch further developments after the publication of the list and will communicate with Washington to ensure Taiwan's trade interests are not harmed.

The Ministry of Science and Technology also said it remains to be seen what effects a trade war between the world's two largest economies will have on Taiwan's science and technology sector, adding that it will continue to encourage the industry to be innovative and engage in research and development as a way of enhancing its competitiveness. (By Liao Yu-yang, Chung Jung-feng and Evelyn Kao)