The government is working to prepare businesses for the possibility that China could withdraw from its trade agreement with Taiwan, Minister of Economic Affairs Wang Mei-hua (王美花) said, adding that Taiwan is not alone in facing Chinese economic coercion.
In a television interview broadcast on Saturday night, Wang was asked about China announcing the suspension of preferential tariffs on petrochemical products under the Economic Cooperation Framework Agreement (ECFA).
The Chinese Customs Tariff Commission on Dec. 21 last year announced it was suspending preferential tariffs on 12 petrochemical products, including propylene and paraxylene, citing trade barriers imposed by Taiwan on similar products.
Photo: CNA
In addition to Taiwan, Beijing has also use economic coercion against Australia, Canada, Japan, Lithuania and South Korea for its own political ends by leveraging its trade relationships with those countries, Wang said.
Taiwanese exports to China covered by ECFA fell to US$15 billion last year, from US$20.5 billion in 2022, due to China’s economic downturn and its increase in domestic supply in related industries, she said.
“We have discussed with the petrochemical industry in particular and urged them to come up with a long-term plan in response to China’s increase of supply of its own petrochemical industry from the upstream to downstream,” she said.
Taiwan is also not the only country that worries about decreasing petrochemical exports to China, “as with China’s increasing production, the global petrochemical industry also feels the pressure and many worry about it could engage in dumping,” she said.
The government has already held many meetings with other industries covered by the ECFA to help them broaden their client base, Wang said.
Taiwan’s total exports have performed well over the past three years, benefiting from investments by returning Taiwanese businesses due to a US-China trade conflict and from the country’s resilient manufacturing during the COVID-19 pandemic, she said.
The nation’s exports reached US$400 billion annually from 2021 to last year, with a record of US$479.4 billion in 2022, ministry data showed.
On foreign interest, three major companies in the semiconductor industry — ASML Holding NV, Applied Materials Inc and Lam Research Corp — have invested in Taiwan, Wang said.
The government played a facilitating role in securing the three companies’ investments, which would further embed Taiwanese firms in global supply chains, she said.
For example, the land for ASML’s plant in New Taipei City’s Linkou District (林口) required cross-ministerial discussions, and the government also helped in the setup of Applied Materials’ Asian equipment parts logistics center in Taoyuan, aiding in negotiating for the waving of approval for Chinese-made parts not used by domestic companies, she said.
Germany’s Merck Group has also invested in Taiwan, setting up a new semiconductor solutions megasite in Kaohsiung last year, which both the central and local governments worked to facilitate, she said.
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