Feb. 21, 1998
AIT Press Release # PR-9810E
Friday, February 21, 1998 in Washington, D.C., United States Trade Representative Charlene Barshefsky announced conclusion of a comprehensive market opening agreement with Taiwan. The agreement, which includes both immediate market access and phased-in commitments, will provide substantially increased access for U.S. goods, services and agriculture exports to Taiwan, the seventh-largest export market for the United States. These measures are necessary for Taiwan’s eventual accession to the World Trade Organization (WTO).
“This comprehensive agreement will dramatically open Taiwan’s markets to U.S. agricultural products, services, and industrial goods,” Ambassador Barshefsky said. “U.S. farmers will see new markets for pork, chicken and other meat products that have never been open to any foreign imports. U.S. exporters of industrial products will achieve levels of market access comparable to that available in other developed countries. And Taiwan will provide broad access for the full range of services, including financial and telecommunication services.”
“Additional multilateral negotiations will be necessary before Taiwan can become a member of the WTO,” Ambassador Barshefsky said. According to standard WTO practice, each acceding country/economy conducts bilateral consultations with any requesting WTO member. With the conclusion of this agreement, only two of the 26 participating members, the European Union and Switzerland, require further consultations. Following the completion of all bilateral market access agreements, WTO members will turn to negotiation and preparation of a formal protocol of accession and working party report, which spell out the full range of rules-related commitments, trade remedies and other matters.
“I am particularly pleased that this agreement addresses issues of key concern to America’s export industries from autos to major infrastructure projects,” U.S. Commerce Secretary William M. Daley said.
“This is a ground-breaking agreement for American agriculture that will open up new export opportunities for a wide range of farm and food products,” U.S. Agriculture Secretary Dan Glickman said. “Taiwan, which is already one of our largest export markets, has agreed to provide new access for U.S. poultry and pork and beef variety meats.”
HIGHLIGHTS OF U.S.-TAIWAN
COMPREHENSIVE MARKET ACCESS AGREEMENT
Industrial Tariffs:
Taiwan will reduce its overall tariff rate to below 5 percent with about two-thirds of the tariff reductions made upon accession. The remainder will be reduced by the year 2002, with limited exceptions to 2004. These reductions will result in savings to U.S. exporters of some US$250 million, based on current export levels. Taiwan has agreed to support APEC sectoral initiatives on energy, equipment and services, environmental goods and services, forest products, toys, chemicals, medical equipment, fish and fish products, gems and jewelry, and telecommunications mutual recognition agreements.
Taiwan has agreed to join all Uruguay Round zero-for-zero initiatives, by eliminating all tariffs on paper, pharmaceuticals, medical equipment, constructions equipment, steel, toys, furniture, agriculture equipment, civil aircraft, and distilled spirits. Taiwan has already participated in the ITA and is an active participant in the ongoing negotiations on ITA II. Thus, Taiwan will join the selective group of WTO members that have agreed to implement all sectoral zero-for-zero initiatives and chemical harmonization: United States, Canada, the EU and Japan.
Automotive Products:
Taiwan agreed to make major changes in its automotive market . These include a sharp reduction of tariffs on imported vehicles; 25-30% decrease in Taiwan’s commodity tax as applied to most U.S. vehicle imports; complete elimination of an existing 9% subsidy on automobile components designed in Taiwan; elimination of 50% local content requirement for auto parts, including an immediate reduction to 40%; and regulatory changes that will allow foreign companies to both lease vehicles and operate used car businesses.
Other Industrial Products:
Taiwan will substantially open trade in chemicals, medical equipment, furniture, toys, steel, paper, construction and agricultural equipment, wood, civil aircraft and distilled spirits.
Government Procurement:
Taiwan has agreed to join the WTO Government Procurement Agreement, which will open its procurement markets to a wide range of U.S. products, including power-generating, transport and power transmission services.
Taiwan will implement a new contract and dispute resolution system regarding government contracts that will provide fairness and transparency in procurements. Taiwan also agreed to a sweeping reorganization of the way it handles contract disputes. In addition, the Public Construction Commission will have the power to conduct binding arbitration on disputes involving government procurement contracts.
Services:
Taiwan has agreed that on accession it will open completely a number of service sectors, including professional services (architects, accountants, engineers, lawyers), audiovisual services, express delivery services, advertising, computer services, construction, wholesale and retail distribution, franchising, and environmental services.
Taiwan agreed to join the list of 69 international signatories to the WTO Global Basic Telecommunications Agreement. However, Taiwan has now agreed that foreign companies can hold a controlling interest in Taiwan communications companies. In addition, Taiwan has agreed to reduce substantially interconnection fees levied on new U.S. telecommunications companies by about 40% within nine months. These charges, which were up to five times higher than those prevailing in other developed country markets, limited the ability of foreign companies to compete with the state-owned telecommunications company, Chung Hwa Telecom. Taiwan also agreed to reach competitive international rates for interconnection charges by the time it privatizes Chung Hwa in 2001.
Taiwan has joined with other WTO members to provide guarantees of substantially full market access and national treatment, in the full range of financial services. Banks, securities companies, and insurance companies will have wide scope for their activities and their preferred form of establishment. The commitments also address regulatory issues, such as eliminating advance approval requirements for new types of insurance policies.
Agriculture:
Taiwan will immediately liberalize its previously closed markets for pork, poultry, and variety meats for U.S. products only. These markets have never been open for any trade. Taiwan has also committed to begin the process of opening its rice market and to open fully markets for pork, variety meats and poultry to all WTO members upon accession by phasing out its tariff rate quota system.
The Agreement provides for immediate access this year for 5000 tons of currently-banned pork, as well as 12,500 tons of U.S. variety meats. This special access, estimated to be worth US$40 million, will continue each year until Taiwan acceded to the WTO. Following accession, the agreement provides for long-term access for U.S. pork products at commercially reasonable tariff levels, which will fall to 15% after a transition period.
The Agreement covers special access for 10,000 tons of U.S. chicken products worth almost US$10 million prior to Taiwan’s WTO accession. Following accession, Taiwan agreed to remove all quantitative limits on chicken imports.
Upon accession, U.S. rice products will have access to Taiwan’s market for the first time. Imports of foreign rice will enjoy an 8% share of Taiwan’s market by 2000, and the U.S. expects to obtain a significant share of these imports.
The Agreement also calls for significant immediate tariff reductions on a broad range of U.S. agricultural products, including potato products, pears, grapes, grapefruit, sunflower oil, and soup.