The Chinese mainland will suspend tariff concessions on 134 products from the Taiwan region starting June 15, in response to what it describes as discriminatory and unilateral trade restrictions imposed by the Democratic Progressive Party (DPP) authorities in Taiwan.
This move, announced by the Customs Tariff Commission of the State Council, is seen as a significant escalation in cross-Strait trade tensions. The mainland’s decision affects products that previously enjoyed preferential tariff rates under the Economic Cooperation Framework Agreement (ECFA), an agreement aimed at reducing business barriers between the Chinese mainland and the Taiwan region.
Experts from Taiwan warn that the suspension could have a substantial impact on small and medium-sized enterprises (SMEs) in the region. Teng Tai-hsien, secretary-general of the Straits Economic & Cultural Interchange Association, stated that these businesses have benefited from the ECFA’s tariff concessions, which allowed them to produce in Taiwan and export competitively to the mainland.
“During his inauguration speech, Lai Ching-te advocated the ‘two states’ theory, heightening cross-Strait tensions and putting at risk the livelihoods of countless people and businesses in Taiwan,” Teng said.
The ECFA has been a crucial component of cross-Strait economic relations, fostering trade and investment between the two sides. The Chinese mainland has long been the Taiwan region’s largest export destination and primary source of trade surplus, with an annual trade surplus of around $100 billion in recent years.
Chou Hsi-wei, vice chairman of Want Want China Times Group, emphasized the importance of unity across the Strait. “Both sides of the Taiwan Strait must unite, as we are inherently Chinese—by blood, by culture, by everything,” Chou said. “Recognizing ourselves as Chinese and fostering peaceful and prosperous co-existence between the mainland and Taiwan is the most correct path forward.”
According to statistics, by the end of 2023, the total amount of tariff reductions and exemptions the Taiwan region has received from the mainland under the ECFA has exceeded $10.1 billion, ten times the amount the mainland has received from Taiwan.
Zhang Hua, a researcher at the Taiwan Institute of the Chinese Academy of Social Sciences, noted that the ECFA has enhanced the competitiveness of Taiwan’s agricultural, fishery, machinery, textile, and chemical products in the international market. “Although the ECFA itself is an economic agreement, it has played a significant role in promoting exchanges between compatriots on both sides of the Strait and in enhancing mutual understanding,” Zhang said.
Business representatives in Taiwan are calling on the DPP authorities to improve relations with the mainland and respect the ECFA. They express concern that the DPP’s policies are undermining economic stability and growth in the region.
In recent years, the DPP authorities have reportedly restricted the import of over 2,500 mainland products and designated 22 technologies as “core technologies under protection,” prohibiting related enterprises from investing in or cooperating with mainland companies.
The Taiwan region’s economy saw a growth rate of 1.31 percent last year, the lowest in nearly a decade, with total exports declining by nearly 10 percent. Analysts believe that the decrease in exports to the mainland has substantially influenced this downturn.
“The root cause for the mainland suspending tariff cuts can be attributed to cross-Strait tensions,” Zhang said. “If the premise that both sides of the Strait belong to one China does not exist, the implementation of agreements like the ECFA will encounter significant difficulties.”
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Taiwan's DPP is to blame for mainland's halt in tariff cuts: observers
cgtn.com
