A new law is in effect, but many questions remain about what compliance will entail.

Without much public attention or internal deliberation, the Legislative Yuan in August 2007 passed a Lobbying Act, billed as one of several proposed “sunshine laws” designed to make Taiwan’s political process more transparent. At the time, legislative elections were coming up in a few months, and the lawmakers were apparently reluctant to appear anti-reform.

The law has now come into effect as of August 8, and at first it left corporate and NGO executives, government officials, and lawyers scratching their heads as to precisely what it means and what is necessary to be in compliance. There are still as many questions as answers, but gradually the situation is becoming clearer. What has become most evident is that lobbying organizations – and the government officials they lobby – will now face a formidable administrative burden of registrations and reports.

In seeking to understand the ramifications of the law on AmCham’s own advocacy program, the Chamber benefited from guidance from the law firm Baker & McKenzie as well as from a workshop conducted by the Ministry of the Interior (MOI), the competent authority under the Act. Without any doubt, AmCham qualifies as a “special-purpose” or special-interest group or individual, one of two general categories of lobbyists provided for under the Act (the second category consists of private, for-profit lobbyist individuals or firms).

Such special-purpose groups or individuals are restricted to lobbying on matters in which they have “involvement.” Although no definition of “involvement” was included in the law or its implementation regulations, AmCham notified the MOI of its belief that it may lobby on all matters of concern to its member companies, based on its Articles of Association’s stated purpose of promoting the “business environment and quality of life of the Members.” The MOI’s response appeared to accept that interpretation, but noted that each registration – a separate application must be filed for every “matter” to be lobbied – needs to explain and support the relevance of that issue to the organization’s goals.

Unfortunately, no consensus has yet been forged within the government on what constitutes an individual “matter.” AmCham’s hope is that the term will be construed broadly, so that all tax matters, for example, could come under a single registration. If separate forms need to be filed for each type of tax problem encountered, both the lobbyist and the ministry involved would soon be inundated with paperwork. Considering the number of issues contained in the Taiwan White Paper, for AmCham narrow categorization would mean the filing of over 100 registrations.

Not all of AmCham’s contacts with the government would come under the purview of the Lobbying Act. The law deals only with elected officials at the central government or city/county levels, as well as higher-level executive-branch officials who are political appointments. The bulk of the Chamber’s advocacy activity is with working-level public servants.

Written or oral communication with such officials as the president and vice president, premier and vice premier, cabinet ministers, political vice ministers, mayors and deputy mayors, and legislators, however, would require advance registration if the intention is to “influence formulation, enactment, modification, or annulment of laws, government policies or legislation.”

For each registration, a lobbying organization is limited to designating no more than 10 representatives, each of whom must sign a document verifying that he or she is qualified to be a lobbyist (not a close relative or business partner of a legislator, for example, and never convicted of certain proscribed crimes). Since different matters are covered by different registrations with different lists of representatives, this provision might cause no small inconvenience when meetings address a range of subjects. At an AmCham session with the Minister of Economic Affairs, for example, separate teams might have to be shuttled in and out of the room depending on whether the topic under discussion at that moment was energy, investment policy, trade matters, or industrial development.

Of course, just getting to see the Minister will no longer be the simple matter of picking up the phone and making an appointment. Based on the AmCham staff’s current estimation, the elapsed time in filing the application, including rounding up the signed forms from all the representatives and then waiting for the government agency’s response, could be as much as one month. If a basic understanding is emerging of the impact of the law on special-purpose groups like AmCham, it is still far from clear what the effect will be on individual companies. As this issue of Taiwan Business TOPICS went to the printer, Baker & McKenzie was preparing a workshop on that subject to be offered to Chamber members. Prior to press time, the firm had received an explanation from the MOI that company advocacy on “specific cases” would not constitute lobbying as covered by the Act, but no definition had been forthcoming to explain just what would constitute a “specific case.”

According to Baker & McKenzie, it seems likely that if a company’s intent is to influence government policy, legislation, or laws, the company would need to engage the services of a qualified and registered lobbyist. Such designated lobbyists must either be individuals with a professional license of some kind (such as a legal, engineering, or medical license) or private, for-profit firms that have lobbying business written into their articles of incorporation. By all accounts, the intention behind enactment of the Lobbying Law was not to discourage lobbying. “The objective of promoting transparency by monitoring who is lobbying whom, and how much money is being spent in the process, is laudable,” says AmCham President Andrea Wu. “But in the drafting and legislating process, it’s quite apparent that not enough thought went into just how the law would work in practice. Then a full year went by between passage of the law and the start of implementation. That was plenty of time to clarify the procedures, but it wasn’t done.” Wu expressed concern that if implemented too restrictively, the Lobbying Law could wind up having a counter-productive effect on the democratic process. “In a democratic system, it’s very important that office-holders receive a free flow of opinion and information from all sectors of society – including businesses and civic organizations. If that flow is blocked, it would badly hamper government’s ability to represent its citizens and respond to their concerns. Therefore this is an issue that AmCham will continue to watch very carefully.”

— By Don Shapiro


Revving up for Big Bikes

As large-displacement motorcycles enter the market, some regulatory approaches may need to be refined.

Following Taiwan’s lifting of a ban on large-displacement motorcycles a few years ago and other regulatory changes, “big bikes” are now gradually making an appearance on Taiwan roads. To take advantage of that market opening, Harley-Davidson, the leading U.S. brand in that segment, last year entered the Taiwan market by appointing Taikoo Motorcycle Ltd. (part of the Swire Group) as its local dealer.

Harley-Davidson is currently raising several requests to the Taiwan government in the interest of enhancing domestic regulatory efficiency. One proposal is that Taiwan follow the example of numerous other countries in harmonizing relevant safety standards and procedures to EU regulations, which are generally becoming accepted as the international industry standards. The company is also asking that product testing be allowed at any accredited test facility – not only those in Taiwan as is now required – by making available to manufacturers a documented process for getting alternative test facilities approved. Europe, Brazil, and Thailand are cited as examples of jurisdictions that permit Harley-Davidson to conduct testing and certification procedures at its own test facilities in the United States.

Harmonization is also an issue with regard to emissions standards. Harley-Davidson is urging Taiwan’s Environmental Protection Administration (EPA) to harmonize its regulations to existing commonly accepted legislation, such as California’s evaporative emissions standards or the European tailpipe emissions legislation. At present, notes Harley-Davidson, Taiwan’s tailpipe emissions standards represent a “significant departure from any other worldwide tailpipe emissions standard.” Like other “unique to Taiwan” regulations that pose problems in other industry sectors, this creates high compliance costs for manufacturers.

For fuel economy standards, in addition, Taiwan requires more testing than other major markets due to the small weight classifications given in the controlling legislation and also because it does not accept “worst-case scenario” methodology. Under the “worst case” concept, a single model (the one with the most serious situation, such as the heaviest bike for emission tests and the lightest for noise tests) is selected to represent the entire family of products. If manufacturers were able to submit “worst case” data to the government, it would enable them to reduce the size of the fleet of vehicles that has to be maintained for testing purposes, while still providing the relevant data that both the regulators and the consumers need for their reference.

Another problem encountered is that the exhaust pressure test carried out in Taiwan is not relevant to Harley-Davidson vehicles due to the separate exhaust and evaporative emissions systems in the architecture of those motorcycles. The company suggests that manufacturers be allowed to propose alternate test methods to verify the integrity of the evaporative emissions system on vehicles of that type.

Finally, Taiwan does not provide clear documentation explaining its procedures for in-country audits (sampling tests to monitor the consistency of production quality), making it difficult for manufacturers to assure compliance. Often the full implications of the regulations are not clear until the product has already entered the market and significant certification expenses have been incurred. As with the fuel economy standards, Harley-Davidson requests that the EPA accept “worst-case scenario” methods for audit testing so as to reduce the testing burden on the manufacturers, on domestic test facilities, and on the EPA itself.