• A Triad of Advocacy Advances  -  By Don Shapiro 
• Knocking Down Technical Barriers - By Don Shapiro

A Triad of Advocacy Advances — By Don Shapiro

AmCham’s Retail, Tax, and Transportation Committees each find one White Paper issue resolved.

The stars appeared to be in alignment in recent weeks as various government agencies announced three policy changes that effectively resolved protracted issues from AmCham’s annual Taiwan White Paper. The three issues cover a broad swath of concerns: liberalizing imports from China by removing tableware from the banned list, clarifying the scope of “Taiwan-source income” for income-tax purposes, and allowing the use of electronic invoices to help expedite express cargo shipments.

The government’s prohibition on the import of made-in-China porcelain or china tableware and kitchenware had been one of the priority items of the Chamber’s Retail Committee for the past several years. It was a particularly frustrating issue for the committee because the rationale for the ruling appeared to be so nebulous. Whereas many other items were clearly banned from importation from China because domestic Taiwan industry arguably would be damaged by the competition, the local ceramics industry is not even equipped to produce Western-style tableware sets in large quantity. Still, that did not prevent the ceramics manufacturers association from objecting to relaxation of the China-import ban, arguing that local companies might conceivably wish to enter this line of business.

In the meantime, the government’s Industrial Development Bureau (IDB) signed off on exceptions to the ban when presented with applications by restaurant chains seeking a convenient source of supply. Eventually the IDB tired of approving one-off waivers and approached the Bureau of Foreign Trade, which added tableware to the agenda of its next China-import-ban review meeting. When the association this time did not even bother to attend the session, held in August, the category was released as permissible for import.

Despite the very gradual whittling down of the list of products under control, more than 2,000 products of Chinese origin are still listed as forbidden. Many of these are agricultural products, which in every country tend to be politically sensitive. But in a number of other cases – such as chocolate candy bars with peanuts or other fillings – the justification for continued blockage seems much less clear.

Regarding “Taiwan-source income,” AmCham’s Tax Committee had long appealed to the Ministry of Finance (MOF) to clear up confusion over the tax treatment of payments to overseas entities for services performed entirely offshore. This month the MOF issued a ruling, “Guidelines for Determining Taiwan-sourced Income as Defined under Article 8 of the Income Tax Law,” that provides just such clarification along the lines that the White Paper had suggested.

For example, income earned by foreign enterprises that render services outside Taiwan will not be considered Taiwan-sourced if the foreign enterprise has no fixed location of business or agent in Taiwan – or if there is a fixed location or agent but they were not involved in providing the particular service rendered.

The third recent change, also announced this month by the MOF, came in the form of revised “Regulations Governing Customs Clearance Procedures for Express Consignments.” Paper invoices will no longer have to be attached to express export shipments as long as the express cargo company possess digital invoice storage and retrieval systems and can provide Customs with immediate perusal and printout of the relevant files when required.

This revision had been requested by AmCham’s Transportation Committee, which noted that it would enhance Taiwan’s trade competitiveness and was also in line with the paperless clearance project being promoted by the World Customs Organization.

“Getting solutions to three issues for three different committees was a nice way to end the summer,” said AmCham President Andrea Wu. “Let’s hope we can maintain a similar momentum through the rest of the year.”

 — By Don Shapiro

Knocking Down Technical Barriers

A recent bilateral conference discussed how to keep product standards from interfering with trade.

With tariff levels around the world having dropped substantially, non-tariff barriers have emerged in recent years as the major impediment to the free flow of trade. In particular, the category known as Technical Barriers to Trade (TBTs) has been a matter of growing international concern. The term refers to the use of standards or technical regulations (or the procedures for assessing conformity to those standards and regulations) in ways that hinder international trade instead of furthering a legitimate regulatory objective. 

In recognition of the growing relevance of this subject, the American Institute in Taiwan (AIT) and the Bureau of Standards, Metrology and Inspection (BSMI), a unit of Taiwan’s Ministry of Economic Affairs, cooperated on August 31 in putting on a one-day conference. Speakers from government agencies and the private sector in both countries addressed questions of how standards are set, what governments can do to assure compliance with World Trade Organization (WTO) obligations to prevent TBTs, and what recourse is available to companies that consider themselves as victims of TBT measures. 

Among the presenters were Jeff Weiss, senior director for TBT at the Office of the United States Trade Representative (USTR); Joe Weresynski, international trade specialist with the Department of Commerce; Elise Owen, who represents the American National Standards Institute (ANSI) in this region; and various officials from BSMI. 

The conference proved useful in several respects, says Matthew O’Connor, an economic officer at AIT. It provided an opportunity to “develop contacts and confidence between the key players on the two sides,” he notes, as well as helping to spread the word about “what TBTs are and what rights companies have under the WTO Agreement.” 

As an example of a TBT issue that was successfully resolved, officials from the Commerce and State Departments earlier this year convinced the Taiwanese authorities to formally accept U.S. Department of Transportation standards for tube trailers, resulting in the opening of a US$100 million annual market in Taiwan for American products. The U.S. company involved thanked the Commerce team for the “persistent support rendered and the outstanding results delivered.”  

Issues that could rise to the level of constituting TBT concerns have frequently made an appearance in AmCham Taipei’s Taiwan White Paper, particularly in the Retail Committee position paper. An example is the requirement that country-of-origin labels be attached to each pair of socks offered at retail, even when the socks are sold as six-packs. The importer must open the pack, remove and label each individual pair, and then reseal the unit – a labor-intensive exercise that adds significantly to cost. 

Other examples in the White Paper pertain to toys, sunglasses, and lighting products. In these categories, Taiwan has set Chinese National Standard (CNS) requirements based on international standards. Yet BSMI will not recognize inspection reports from overseas laboratories, necessitating the conducting of time-consuming and costly redundant inspections by domestic labs.

Some of the broader themes found in the White Paper were also echoed during presentations at the conference. One such theme is the importance of transparency, both in setting standards and in the conformity assessment procedures, so as to avoid the development of trade barriers. Another leitmotif was the desirability of adopting international standards as much as possible, instead of devising unique national approaches. Wu Chue-wen, deputy director of the National Standards Division at BSMI, reported that an ongoing program to align CNS standards with international standards had achieved 74% uniformity as of this April.

The conference also touched on some of the possible mechanisms to reduce the burden of TBTs. Two governments, for example, may enter into a Mutual Recognition Agreement (MRA), as Taiwan and the United States have done for test reports on IT equipment and other items. On a multilateral scale, the NAMA (Non-Agricultural Market Access) negotiations under the WTO’s Doha Round have sought to establish agreed-upon standards for certain industry categories.

At the national level, another potential tool is the use of a Suppliers’ Declaration of Conformity (SDoC) system, which puts the onus on the manufacturer or exporter to document that the product has met all regulatory obligations. When testing is required, it allows for more flexibility by removing the stipulation that the tests be done in certain designated labs.

O’Connor said the August 31 event was a good start in furthering bilateral communication on TBT issues and would be followed up with additional future contacts. 

 — By Don Shapiro