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Taiwanese businesses in China will not be able to use 'MIT': MAC

2010/04/03 21:44:25

Taipei, April 3 (CNA) An official of the Mainland Affairs Council(MAC) said Saturday that Taiwanese-invested businesses in China willbe required to label their products as "Made in China, " ahead ofdiscussions on the issue between the two countries that are expectedto begin soon.

Defining the country of origin is an issue that nations oftenface after signing free trade agreements, said MAC Vice Chairman LiuTeh-shun, because of the complexity of supply chains and productionprocesses.

If Taiwanese businessmen make their products in China, they willhave to list China as the country of origin, Liu said, although theorigin of their materials and the nationality of the owners of thebusiness will also be taken into consideration.

Some Taiwanese businesses in China have hoped under certainconditions to list their products as "Made in Taiwan" for variousreasons.

The issue is pressing because Taiwan and China could soon sign aframework agreement on trade in which products covered under thedeal's "early harvest" list would be given tariff reductions orexemptions -- as long as they are made in the two countries.

At the recently concluded second round of negotiations on theeconomic framework cooperation agreement (ECFA), the two sides agreedto start talks on setting guidelines to establish a product's origin.

At present, Taiwan law defines a product's origin as finalcountry in which a product underwent a substantive transformation,with the value-added rate exceeding 35 percent.

But officials said that items included in the ECFA's "earlyharvest" list are expected to face stricter origin guidelines.

"If I give you duty-free treatment, I might ask for a highervalue-added rate, " said Vice Minister of Economic Affairs FrancisKuo-hsin Liang.

Huang Chih-peng, the director-general of the Bureau of ForeignTrade and Taiwan's lead ECFA negotiator, expected that verificationof a product's origin will be stricter than the current 35 percentfor "early harvest" items, but guidelines will vary by productcategory.

"(The guidelines) will be stricter, but whether the value-addedthreshold will be higher than 35 percent is yet uncertain, " Huangsaid.

(by Liu Cheng-ching and Lilian Wu)