Taiwan Economic News
Economics Ministry Maps Out Measures to Cushion Impact of Korea-U.S. FTA
6 July 2011
Taipei (CENS)—In an effort to help domestic exporters counter the impact of the South Korea-U.S. free trade agreement, the Ministry of Economic Affairs (MOFA) has proposed to offer tax rebates for imported industrial raw materials and components/parts with average tariffs topping 4.3%.
The measure will affect some 1,000 import items and is included in a package of strategies being mapped out by the MOEA to alleviate the impact of the South Korea-U.S. FTA on Taiwan-made products, notably textile, plastics, machinery, metal products, and large-sized flat panel displays.
During a visit to Huang Chung-chiu, vice economics minister, Kurt Tong, the U.S. ambassador to APEC (Asia Pacific Economic Cooperation) forum, revealed yesterday (July 5) that the U.S. Congress is slated to approve the FTA between the U.S. and South Korea, along with those with Columbia and Panama, by the end of this year. It is estimated that the South Korea-U.S. FTA will hit the road early next year.
Chuo Shi-chao, director general of the Bureau of Foreign Trade, MOEA, pointed out that with the U.S. being Taiwan`s third largest export market, the South Korea-U.S. FTA will produce an impact greater than that of the FTA between South Korea and the European Union, which just took effect this month. “Some 70% of Taiwan-made products compete against Korean products in the U.S. The Korea-U.S. FTA will create greater impact on such Taiwan-made products as textile, plastics, and machinery,” said Chuo.
Most Taiwan-made electronic products will be exempt from the impact, since they enjoy free tariff for the U.S. market under the “International Technology Agreement.” Some, such as large-sized FPD, however, are excluded from the ITA.
Under the Korea-U.S. FTA, tariff will be removed for 95% of the two countries’ products within three years and the remainder will also enjoy free tariff in 10 years.
To alleviate the impact, in addition to tax rebate, the MOEA also plans to help exporters for the U.S. achieve product differentiation and explore new markets. Moreover, it will step up effort signing FTA with major trade partners.
In the first five months this year, Taiwan`s major shipment items for the U.S. included machinery and electric machinery (US$8.56 billion), basic metal (US$1.87 billion), autos and parts (US$1 billion), and plastics and rubber (US$870 million).