The Chinese mainland announced it will halt tariff concessions on certain products from Taiwan under the Economic Cooperation Framework Agreement (ECFA), starting June 15, 2024. This move comes in response to trade restrictions imposed by the Democratic Progressive Party (DPP) authorities in Taiwan.
The Customs Tariff Commission of the State Council made the announcement, highlighting that the preferential tariff rates enjoyed by some of Taiwan’s products will be withdrawn. Chen Binhua, spokesperson for the State Council Taiwan Affairs Office, expressed support for the decision during a press conference on May 31, explaining the motivations behind the action.
Trade Imbalance and Responsibility
Chen emphasized that the current economic and trade relationship across the Taiwan Strait is unbalanced, with the DPP authorities bearing primary responsibility. Since the full implementation of the ECFA’s “Early Harvest Program” on January 1, 2011, cross-Strait trade has expanded significantly, promoting economic development on both sides. Trade volume more than doubled over the past decade, rising from $145.4 billion in 2010 to $319.7 billion in 2022.
Benefits to Taiwan
The ECFA has particularly benefited Taiwan’s economy. Recent statistics from the Taiwan authorities indicate that from 2011 to the end of 2023, Taiwan received over $10.1 billion in tariff reductions under the ECFA, while the Chinese mainland obtained less than $1.1 billion in the same period. Exports of Taiwan’s products to the mainland have shown rapid growth, demonstrating the advantageous position Taiwan holds in economic ties.
Future of ECFA Tied to DPP Policies
The Chinese mainland attributes this imbalance to the DPP authorities’ policies and calls for actions to restore balanced trade relations. The decision to halt some tariff concessions signals a significant development in cross-Strait economic relations and raises questions about the future of the ECFA.
The ECFA, as a comprehensive economic pact, was designed to strengthen economic cooperation and reduce barriers to trade. The recent developments underscore the importance of policy decisions by the DPP authorities in shaping the economic landscape between the two sides.
Implications for Businesses and Investors
The change in tariff policies may impact businesses and investors engaged in cross-Strait trade. Entrepreneurs and market analysts are closely monitoring the situation to assess potential economic implications and adjust their strategies accordingly.
Reference(s):
cgtn.com
