The Ministry of Economic Affairs on Saturday said it would provide NT$18 billion (US$576.87 million) in aid to help petrochemical exporters after China suspended preferential tariffs established under the Economic Cooperation Framework Agreement signed in 2010.
The ministry decided to offer the assistance after Minister of Economic Affairs Wang Mei-hua (王美花) met with about 50 representatives from the local petrochemical industry a day earlier, a ministry source said.
On Thursday last week, the Chinese Customs Tariff Commission announced that it was suspending preferential tariffs for 12 petrochemical products, including propylene and paraxylene, citing trade barriers imposed by Taiwan on similar products.
Photo: CNA
The government has described the move as a politically motivated attempt to pressure Taiwan ahead of the Jan. 13 presidential and legislative elections.
The ministry is to assign NT$6 billion from the Industrial Development Bureau to help petrochemical firms produce value-added products and an additional NT$2 billion from the International Trade Administration to explore foreign markets, the source said.
The ministry is also to allocate NT$10 billion from its special budget to aid industries in the post-COVID-19 pandemic era to make up the rest of the NT$18 billion, they said.
The source said the suspension of preferential tariffs was unlikely to have an immediate material impact on the local petrochemical industry.
However, the effects of the reinstated tariffs are likely to be felt up and down the supply chain in the long run, because much of the local petrochemical industry consists of joint products — those generated within a single production process, the source said.
Taiwanese petrochemical exporters selling products to China have to shoulder tariffs of 1 to 6.5 percent, the ministry said.
Wang on Friday told reporters that Taiwan’s exports of petrochemical products to China totaled about US$1.8 billion in the first 11 months of this year.
This was just a small fraction of the country’s total exports of US$392.56 billion during the same period.
Some of the industrial representatives attending the meeting with Wang said they were concerned about the effects of Beijing’s intensified efforts to expand petrochemical production and exports amid an economic slowdown in China.
However, other representatives said that many petrochemical exporters had started diversifying markets from China to other markets, such as Southeast Asian countries, India, the US and Europe.
During the meeting, Wang said that the government would accelerate help for the local petrochemical industry to find its market niche.
Wang added that the government would also help Taiwanese firms roll out differential products from those made by their foreign counterparts, while continuing to push for intelligent, low-carbon production to boost global competitiveness.
The ministry would put more effort into assisting local petrochemical exporters in exploring foreign markets by holding economic forums, which would allow them to meet foreign buyers and seek business opportunities.
In addition, the ministry would work with Taiwan’s representative offices, the government-sponsored Taiwan External Trade Development Council and industrial associations to send delegates overseas to promote Taiwan-made petrochemical items.
While many exporters in the petrochemical industry have seen no immediate impact from China’s actions, Yueh Chun-hao (岳俊豪), a section chief of the government-funded Industrial Technology Research Institute (工研院), expressed concerns that Beijing would also suspend preferential tariffs for Taiwanese machine tools and automotive parts, hitting small and medium-sized enterprises.
Through last month, China accounted for about 35 percent of Taiwan’s total exports this year, down from 40 percent in recent years, the ministry said.
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