China on Thursday last week announced its intention to suspend preferential tariffs on Taiwanese imports after it unilaterally concluded Taiwan’s restrictions on products from China constituted a “trade barrier.”
China’s trade tariff coercion is clearly part of its strategy to interfere in next month’s presidential and legislative elections, but the move is more likely to highlight Taipei’s confrontation with Beijing in the international community.
The Chinese Ministry of Commerce in April launched a unilateral probe into Taiwan’s restrictions on Chinese imports, this month saying that the investigation had concluded that the restrictions were “trade barriers.”
China on Thursday last week then announced that it would end preferential tariffs introduced for selected goods covered by the Economic Cooperation Framework Agreement (ECFA) signed with Taiwan in 2010, starting with 12 items in ECFA Early-Harvest list from Monday next week.
Taiwanese officials have said that China’s unilateral trade investigation and abrupt suspension of tariff reductions on Taiwanese products is “more blatant economic coercion,” adding to its escalating military and diplomatic pressure on Taiwan that aims to interfere in next month’s elections, especially as the pro-China opposition parties’ presidential candidates are trailing the ruling Democratic Progressive Party (DPP) in opinion polls.
Although China and Taiwan are both WTO members, China has never held trade talks with Taiwan in accordance with WTO rules. Despite Taipei’s repeated calls for bilateral dialogue, Beijing has severed official communications since President Tsai Ing-wen (蔡英文) took office in 2016.
Moreover, China has frequently implemented discriminatory bans on imports of Taiwanese goods, forcing Taipei to take measures to protect the rights and interests of local operators and farmers.
The damage from China’s suspension of preferential tariffs is controllable, as the export value of the 12 items affected accounts for only 1.3 percent of total exports, while the overall value of ECFA-Early-Harvest listed exports accounts for less than 4 percent.
Beijing’s repeated imposition of economic restrictions on Taiwanese products for political purposes has driven Taiwanese firms from China to other nations to “de-risk ” their reliance on China.
Official data show that from January to last month, the proportion of exports to China dropped to 35 percent — the lowest in 21 years, while overseas investment in China fell from 44 percent in 2016 to 17 percent in the first half of this year.
Reviewing the trade dispute from a diplomatic perspective, China’s trade pressure should be resisted with resilience and solved within the WTO, not through under-the-table measures.
Lithuania’s dispute with China over its economic coercion could be a good lesson. Vilnius has faced trade bans after allowing Taipei in 2021 to establish a representative office under the name Taiwan. It has filed complaints to the WTO and, with the support of EU member states, requested an investigation to examine China’s non-rules-based trade restrictions.
Some China’s trade measures targeting Lithuania have since been lifted and the Lithuanian government has given its assurance that there would be no change to the name of Taiwan’s representative office in Vilnius.
Taipei has raised trade concerns at the WTO over Beijing’s moves to block imports of Taiwanese fruit without warning. China should be cautious, as further economic coercion could force Taiwan to take cross-strait issues up on the international stage, as a dispute between “two independent states” to gain more international support, which could backfire on the authoritarian nation’s political scheme to “unify” with Taiwan.
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