Taipei, June 14 (CNA) Polyvinyl chloride (PVC) , polypropylene (PP), and machine tools failed to make the “early harvest” list of a proposed trade pact between Taiwan and China, leaving Taiwan short of its target of items to receive preferential tariff treatment under the deal.
Taiwan had hoped to include products with an annual export value to China of US$13.6 billion on the early harvest list of an economic cooperation framework agreement (ECFA).
But the 500 items reportedly included on the list after the conclusion of the third round of ECFA negotiations in Beijing on Sunday fall short of the goal because of the exclusion of the three important export items.
A government official, speaking on condition of anonymity, said Monday that the government will try to add PVC, PP, and machine tools to the list to achieve the goal, most likely in last minute talks before finalizing the agreement instead of in a fourth round of bilateral negotiations.
The content of the early harvest list has been closely guarded throughout the negotiations, but some details emerged after Sunday’s talks.
Vehicles were another item excluded from the list, which local media described as “surprising.” But officials said Taiwan did not insist on including vehicles from the early stages of the talks as few locally made cars are made entirely with domestic parts, aside from Yulon’s Luxgen brand.
Local businessmen, however, were disappointed with the exclusion of PVC, PP and machine tools.
As a leading global producer of PP, Taiwan is worried that it could be put at a disadvantage in China’s market as Beijing has already agreed to import PP duty free from Singapore under its trade pact with the Association of Southeast Asian Nations (ASEAN).
Government sources said Beijing didn’t agree to put PP on the list because Taiwan’s PP is more competitive than that of Singapore and would pose a greater threat to China’s domestic PP producers.
Taiwan’s machine tools were another globally competitive sector excluded from the early harvest list. Instead, China agreed to include the categories “industrial machinery” and “machine components”.
Different from the low-end machine tools made in China, Taiwan’s machine tools do not compete head on with Chinese products, but China still balked at giving Taiwan’s machine tools preferential tariff treatment to protect domestic producers.
Meanwhile, several leading local machine tool producers said they will continue to hope for the best before the agreement is finalized but will prepare for the worst.
Enid Tsai, president of Taichung-based Hiwin Technologies, said she was surprised by the exclusion of machine tools but is not pessimistic about the sector’s prospects as local machine tool producers can diversify their markets to cushion the impact.
“Whether our products make the early harvest list or not, we have to improve our technologies to compete with our counterparts in South Korea and Japan anyway,” Tsai said.
“We would risk our own survival if we rely too much on our easy access to the Chinese market for growth but overlook the necessity of improving our technology.” Because China has not yet concluded a free trade pact with either South Korea or Japan, one executive of another local machine tool producer said the exclusion of machine tools from the early harvest list was regrettable but not lethal to the sector.
Another executive, with Hsinchu-based Awea Mechtronic Co., a maker of C-frame vertical milling machines and other CNC machining centers, said China’s refusal to give Taiwan’s machine tools preferential tariff treatment was understandable, as Taiwan’s machine tools are superior to those made in China and constitute a threat.
“Tariff-free status would help us grab a greater share of the Chinese market, but we will not relax out efforts to develop the world market with or without the preferential treatment in China, ” the executive said. (By Lin Shu-yuan, Chang Chun-mao and Maubo Chang) enditem/ls
June 29th, 2010 by 
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Carlton Laser specialises in the subcontract manufacturing of food sorting machines, medical equipment, electrical cabinets and specialist vehicles components, for many blue-chip OEMs.
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