RESTRICTEDWORLD TRADE
ORGANIZATIONWT/ACC/TPKM/18
5 October 2001
(01-4741)
Working Party on the
Accession of Chinese Taipei
REPORT OF THE WORKING PARTY ON THE
ACCESSION OF THE SEPARATE CUSTOMS TERRITORY
OF TAIWAN, PENGHU, KINMEN AND MATSU
I. INTRODUCTION
1. At its meeting on 29 September-1 October 1992, the GATT 1947 Council of Representatives
established a Working Party, as reflected in the respective Minutes (document C/M/259), to examine the
application of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (hereinafter
referred to as "Chinese Taipei ") to accede to the General Agreem ent  1947 under Artic le XXXIII, and
to submit to the Council recommendations which may include a Draft Protocol of Accession.
Membership of the Working Party was open to all c ontracting parties wishing to serve on it.  Following
the request of Chinese Taipei, circulated in doc ument WT/ACC/TPKM/1, and pursuant to the decision
of the General Council of 31 January 1995, the Working Party was transformed into a World Trade
Organization (WTO) Working Party to negotiate th e terms of accession of Chinese Taipei to the
Marrakesh Agreement Establishing the World Trad e Organization (hereinafter referred to as the "WTO
Agreement ") under Article XII of that Agreement.
2. The Working Party met on 6 November 1992, 15 April 1993, 28 June 1993, 12 October 1993,
17 May 1994, 26 July 1994, 21 December 1994, 28 February 1997, 8 May 1998, 12 May 1999, and
18 September 2001 under the Chairmanship of H.E. Mr . M. Morland (United Kingdom).   The terms of
reference and the membership of the Working Pa rty are set out in document WT/ACC/TPKM/6/Rev.6.
II. INFORMATION PROVIDED
3. The Working Party had before it, to serve as a basis for its discussion, the memorandum on
Chinese Taipei's foreign trade regime (L/7097 and Addenda 1 - 11) and the questions submitted by
Members on the foreign trade regime of Chinese Taipei  together with the replies of the Chinese Taipei
authorities thereto (L/7089/Rev .1, L/7429 and Add.1), and documents Spec(94)28 (Newly Promulgated
or Revised Laws and Regulations ), Spec(94)30 (Description of Serv ice Sectors), Sp ec(94)31 and Add.1
(Special Exchange Agreement), Spec(94)41 (Status Report of the Bilateral Negotiations),  Spec(95)1
and Corr.1 (Checklist of Accession Issues - Prelim inary Responses Provided by Chinese Taipei),
Spec(95)8 (Laws and regulations regarding agricu ltural products), WT/ACC/TPKM/2 (Tariff reductions
for 758 tariff lines effected as from 14 July 1995), WT/ACC/TPKM/3 (Newly Promulgated or Revised
Laws and Regulations), and WT/ACC/TPKM/4 (The  Customs Import Tariff and Classification of
Import and Export Commodities: revised edition of August 1995);  WT/ACC/TPKM/8/Rev.2 and
WT/ACC/TPKM/9/Rev.2 (Information on Industria l Subsidies);  WT/ACC/TPKM/10 (Adoption of
Codex Standards);  WT/ACC/TPKM/12 (Standards for Agricultural and Processed Agricultural
Products);  WT/ACC/TPKM/13 (List of Commodities Subject to Export Restriction and List of
Commodities);  WT/ACC/TPKM/14 and Corr.1 and Add.1 (Additional Questions and Replies
Concerning Domestic Support and Export Subsidies).  In addition, the representative of Chinese Taipei
made available to the Working Party the following material:WT/ACC/TPKM/18
Page 2
Customs Regime:
- Customs Law;
- Rules Governing the Implementation of the Customs Law;
- Implementing Regulation on the Imposition of Countervailing Duty and Anti-Dumping
Duty;
- Rules for the Collection of Customs Fees.
Trade Regime:
General:
- Foreign Trade Act;
- Enforcement Rules of the Foreign Trade Act;
- Regulations Governing the Process of  Objections Against Punishment on
Violation of Foreign Trade Act;
- Customs Import Tariff and Classification of Import & Export Commodities
(June 1998 Revised Edition);
- Consolidated List of Commodities Subject to Import Restriction and
Commodities Entrusted to Customs for Import Examination (January 2000
Edition);
- Regulations Governing Import of Commodities by Business Firms;
- Regulations Governing Registration a nd Administration of Exporters and
Importers;
- Regulations Governing Revenue, Expe nditure, Custody, and Use of Trade
Promotion Fund;
- Rules for Handling Import Relief Cases;
- Import Regulations Codes.
Industrial Goods:
- Regulations Governing Export and Import of High-Tech Commodities;
- Operating Rules for Screening Applica tions to Import Fishing Vessels Using
New Fishing Methods;
- Requirements for Imported Drug Registration;
- Veterinary Drugs Control Act;
- Agro-Pesticide Act;
- Guidelines Governing the Applica tion for and Issuance of Fertilizer
Registration Certificate;
- Operating Regulations Governing the Control of Restricted Methyl Bromide;
- Regulations of the Industrial Development Bureau of the Ministry of Economic
Affairs for Controlled Substances Pu rsuant to the Montreal Protocol.
Agricultural Goods:
- Statute for Agricultural Development;
- Regulations Governing Relief and Aid for Major Agricultural Products
Damages by Importation;
- Guidelines for Screening Applications for Letter of Approval for the
Importation of Livestock and Poultry;
- Guidelines for the Issuance of Written Approval Regarding the Importation of
Aquatic Animals;
- Guidelines Governing Food Companie s Applying to Import Raw Glutinous
Rice/Powder for Processing for Export;WT/ACC/TPKM/18
Page 3
- Operating Procedures Governing Applications to Import Wheat and Operation
of the Stabilization Fund;
- Operating Procedures Governing App lications to Import Wheat Flour and
Operation of the Stabilization Fund;
- Feeds Control Act;
- Guidelines Governing Applications to Import Aduki Beans;
- Screening Procedures and Criteria Governing the Issuance of Written Approval
for the Importation of Dried Betel Nuts (Ta-Fu-Tzu).
Investment Regime:
- Statute for Investment by Foreign Nationals;
- Negative List for Investment by Overseas Chinese and Foreign Nationals;
- Statute for Upgrading Industries;
- Enforcement Rules of the Statute for Upgrading Industries;
- Statute for Development of Medium and Small Businesses;
- Statute for Establishment and Management of Export Processing Zones;
- Aeronautics and Space Industries Development Programme;
- Automotive Industry Development Policy.
Other Texts Affecting Trade:
General:
- Income Tax Law;
- Business Tax Law;
- Statute for Commodity Tax;
- Statute for Foreign Exchange Regulation;
- Fair Trade Law.
Intellectual Property Rights:
Copyright:
- Copyright Law;
- Implementation Rules of the Copyright Law;
- Copyright Intermediary Organization Act;
- Illustrated Contents of 'Each Kinds of Works' in Paragraph One, Article 5 of
Copyright Law;
- Certain amounts of Items 2 and 3 of Paragraph One of Article 87 bis of the
Copyright Law;
- Standard for Compensation for Fair Use of Works in Paragraph4, Article 47 of
the Copyright Law;
- Regulations Governing Application for Approval of Compulsory License of
Musical Works;
- Regulations Governing Regi stration of Plate Rights;
- Implementation Regulation for Suspensi on of Release of Goods Infringing on
Copyright or Plate Righ t by Customs Authority;
- Regulation of Copyrigh t Dispute Mediation;
- Organic Charter of the Copyright Ex amination and Mediation Committee of
IPO, Ministry of Economic Affairs;
- Agreement for the Protection of Copy right between the Coordination Council
for North American Affairs and the American Institute in Taiwan;WT/ACC/TPKM/18
Page 4
- Agreement Concerning the Protecti on and Enforcement of Rights in
Audiovisual Works betw een the Coordination Council for North American
Affairs and the American Institute in Taiwan.
Trademark:
- Trademark Law.
Patent:
- Patent Law.
Standards, Quarantine, Inspection:
Standards:
- Provisional Standard for Hi-Fi and Stereo Equipment.
Quarantine:
- Quarantine Requirements for the Importa tion of Animal and Animal Products;
- Quarantine Regulations on Imported Fishery Products;
- Quarantine Restrictions on the Importa tion of Plants and Plant Products;
- Statute for Prevention and Control of Infectious Animals Diseases;
- Implementation Rules of the Statute fo r Prevention and Control of Infectious
Animals Diseases;
- Regulations Governing the Quarantine at International Ports.
Inspection:
- Commodity Inspection Law;
- Enforcement Rules for the Commodity Inspection Law (Implementation Rules
of the Commodity Inspection Act).
Others:
- Commodity Labelling Law;
- Law Governing Food Sanitation;
- Enforcement Rules of the Law Governing Food Sanitation;
- Law for the Control of Cosmetic Hygiene.
Government Procurement:
- Law of Audit;
- Rules Governing Procuring Goods of Foreign Origin;
- Ordinance Concerning In spection Procedure Governing Construction Work,
Procurement and Dispos al of Properties by Government Agencies.
Others:
- Guidelines for Screening Applications fo r Written Import/Export Approval Regarding
Wild Fauna and Flora Deserving Conservation;
- Wildlife Conservation Law;WT/ACC/TPKM/18
Page 5
- Implementing Regulations of the Wildlife Conservation Law;
- Rules of Royalty Rate for Public Interest Activities.
Trade in services:
Schedule of Commitments:
- Schedule of the Separate Customs Territory of Taiwan, Penghu, Kinmen and
Matsu Concerning Initial Commitments on Trade in Services
(WT/ACC/TPKM/18/Add.2).
Banking:
- Banking Law;
- Guidelines for the Screening and Approv al of the Establishment of Branches
and Representative Offices by Foreign Banks.
Insurance:
- Insurance Law;
- Insurance Company Establishment Criteria;
- Criteria for Approving Foreign Insurance Enterprises and the Governing
Regulation;
- Central Reinsurance Corporation Act.
Securities:
- Securities and Exchange Law;
- Foreign Futures Trading Law;
- Regulations Governing the Standard  for Incorporation of Securities
Companies;
- Rules for the Administration of Securities Investment Trust Enterprises.
Others:
- Broadcasting and Television Law;
- Motion Picture Law;
- By-laws Governing the Execution of the Motion Picture Law;
- Employment Service Act;
- Rules Governing the Approval and Administration of Foreign Specialist and
Technical Personnel Employed by Public  or Private Enterprises and Ranking
Executives Employed by Overseas Chinese or Foreign National Invested
Enterprises.WT/ACC/TPKM/18
Page 6
III. INTRODUCTORY STATEMENTS
4. In his statements the representative of Chinese Taipei inter alia recalled that this Separate
Customs Territory, which encompasses the islands of Taiwan, Penghu, Kinmen and Matsu, was short of
natural resources.  Its only substantial resource - labour - was the source of its strong rate of growth.
The main economic indicators were as follows:WT/ACC/TPKM/18
Page 7Chinese Taipei’s Main Economic Indicators
Annual Changes in Prices Year GNP
(Billion US$)GNP per
Capita
(US$)*Annual Final Budget
(Billion US$) Consumer price
(%)Wholesale price
(%)Unemployment
Rate (%)Foreign
Exchange
(Billion US$)Export Statistics
(Billion US$)Import
Statistics
(Billion US$)
1993 228.6 10,964 42.7 2.9 2.5 1.5 83.6 85.1 77.1
1994 248.3 11,806 39.6 4.1 2.2 1.6   92.5 93.0 85.3
1995 269.1 12,686 42.4 3.7 7.4 1.8 90.3 111.7 103.6
1996 283.6 13,260 40.9 3.1 -1.0 2.6 88.0 115.9 102.4
1997 293.3 13,592 44.8 0.9 -0.5 2.7 83.5 122.1 114.4
1998 269.2 12,360 34.6 1.7 0.6 2.7 90.3 110.6 104.7
1999 290.5 13,235 40.7 0.2 -4.6 2.9 106.2 121.6 110.7
2000 314.4 14,216 76.2 1.3 1.8 3.0 106.7 148.3 140.0
- Since 1960, the "Fiscal Year " refers to the 12-month period beginning from 1 July 1 of the preceding year to 30 June of the designated  year.  The item excl udes repayment of
government debt.
- In 2000, the "Fiscal Year " refers to the 18-month period beginning from 1 July of 1999 to 31 December 2000.  The item excludes repayment of government de bt.
Chinese Taipei’s Expenditure on Gross National Product
Unit: Billion US$
Year Gross National
ProductGross Domestic
ProductPrivate
ConsumptionGovernment
ExpenditureGross Fixed  Capital
FormationIncrease in
InventoryExport of Goods &
ServicesImports of Goods &
Services
1993 228.6 224.3 126.9 35.0 56.4 2.3 98.9 95.2
1994 248.3 244.3 142.6 35.6 60.0 2.0 106.6 102.5
1995 269.1 264.9 155.7 37.7 66.1 1.0 127.1 122.7
1996 283.6 279.6 165.3 40.0 62.9 2.0 132.6 123.1
1997 293.3 290.2 172.0 41.7 66.0 4.2 140.1 133.8
1998 269.2 267.2 159.4 38.2 62.9 3.7 127.7 124.8
1999 290.5 287.9 174.8 37.9 65.8 1.4 139.0 131.1
2000 314.4 310.1 192.8 40.4 72.3 -1.6 168.1 161.8WT/ACC/TPKM/18
Page 8
Chinese Taipei’s Employment Population by Sectors
Unit: 1000 Persons
Year Agriculture Sector Indust rial Sector Se rvices Sector
1993 1,005 3,418 4,323
1994 976 3,506 4,456
1995 954 3,504 4,587
1996 918 3,399 4,751
1997 878 3,502 4,795
1998 822 3,523 4,944
1999 776 3,492 5,116
2000 740 3,534 5,218
Chinese Taipei’s Balance of Payments
Unit: Million US$
Year Current Account Capital Account Financial Account Reserves
1993 7,042 -328 -4,629 -1,541
1994 6,498 -344 -1,397 -4,622
1995 5,474 -650 -8,190 3,931
1996 10,923 -653 -–8,633 -1,102
1997 7,051 -314 –7,291 728
1998 3,437 -181 2,495 -4,827
1999 8,384 -173 9,220 -18,593
2000 8,903 -287 -8,019 -2,477
5. He added that government policies had restructured the economy from agriculture towards
basic and heavy industries.  As part of an import substitution and integration process, intermediate
goods industries were established.  Transportation was streamlined and large investments were made
in new ports, airports and highways.  The Chinese Taipei authorities had also intensified rural
development and supported the moves to improve farm income.  More recently, industrial
restructuring was further promoted.  Educational institutions placed greater emphasis on science andtechnology in order to provide a highly trained workforce.  In the 1990's, economic liberalization and
the internationalization of the economy had continued.  Infrastructure investments, the regulation of
pollution and the privatization of the economy had accelerated.  Employment had shifted from the
agricultural sector to the industrial and service sectors.  The representative of Chinese Taipei also
stated that when Chinese Taipei initiated its import-substitution strategy, exports were mostly
composed of sugar, rice, bananas, tea and processed agricultural products.  Few industrial products
were sufficiently competitive for export.  Gradually the import substitution industries became capableof producing competitive export products.  As a result, the share of exports of traditional products
declined whilst industrial products took an increasing share of exports.  At first, major export items
were labour intensive products such as textiles and plywood.  Recently, electronic goods had become
major export items.  Recent total exports value in US$000 was as follows:
Year Total
1993 85,091,458
1994 93,048,783
1995 111,658,800
1996 115,942,064
1997 122,080,673
1998 110,582,300
1999 121,591,000
2000 148,320,500WT/ACC/TPKM/18
Page 9
Recent total imports value in US$000 was as follows:
Year Total
1993 77,061,203
1994 85,349,194
1995 103,550,044
1996 102,370,021
1997 114,424,665
1998 104,665,300
1999 110,689,900
2000 140,010,600
6. Referring to the direction of the future economic policies, the representative of Chinese
Taipei said that overall global economy expanded steadily in 1997, in contrast, Chinese Taipei’s
economy reached its slowest growth rate that year at 6.8 per cent, the highest in six years.  Economicgrowth for 1995 and 1996 had been 6.0 per cent and 5.7 per cent respectively.  The upturn in Chinese
Taipei’s economy could be attributed to strong private investment and consumption.  In 1997 inflation
was low at the rate of 0.9 per cent, compared with 3.7 and 3.1 in 1995 and 1996.  Trade surplus in
1997 was US$7.7 billion.  For 1998, the economy of Chinese Taipei was expected to grow 5.3 per
cent, with per capita GNP expected to reach almost US$12,030 and consumer prices to rise 1.9 per
cent.  Nevertheless, these expectations would depend on whether public investment projects proceed
according to schedule. An additional source of major impetus to growth would be the private sector as
a result of strength in private consumption, steady improvement in the investment climate and greater
private investment in public projects.  In his statements he also outlined the sectors where Chinese
Taipei would need transition periods to bring sp ecific measures into full conformity with WTO
obligations and said that Chinese Taipei was re ady to assume obligations comparable to those
undertaken by WTO Members with a comparable level of economic development.  The representativeof Chinese Taipei stated that his governme nt would not claim any right granted under WTO
Agreements to developing country Members or to a Member in the process of transforming its
economy from a centrally-planned into a market, free-enterprise economy.
7. Members of the Working Party warmly welcomed the application of Chinese Taipei for
accession to the WTO.  Notwithstanding limitations on its natural resources and the relative size ofthe economy, Chinese Taipei had transformed itself into one of the world's most dynamic trade
centres.  Chinese Taipei's membership of the WTO would strengthen the multilateral trading system.
Members also congratulated Chinese Taipei on its willingness to make the required adjustments
promptly and to only seek a minimum of transition periods in which to bring its economy fully into
conformity with the requirements of the WTO.  Members noted, however, that membership of theWTO required full observance of the MFN and nati onal treatment principles, in particular, GATT
1994 required the grant of any advantage, favour, privilege or immunity granted by any contracting
party to any product originating in or destined for any other WTO Member or other country or
separate customs territory, whether or not a contracting party, to products originating in or destined
for the territories of all other contracting parties.  Similar MFN requirements applied in respect of the
General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of
Intellectual Property (TRIPS).  It also required the taking of comprehensive market access
commitments on goods, including agricultural products, and services, which would be reflected in the
respective Schedules of Concessions and Commitments annexed to the Draft Protocol of Accession.
Several members of the Working Party were of the view that Chinese Taipei should assume a level of
obligations commensurate to that of the developed economy original Members of the WTO, and thatWT/ACC/TPKM/18
Page 10
Chinese Taipei should apply the WTO Agreement fully from the date of accession, without recourse
to any transition periods.
8. The representative of Chinese Taipei acknowledged the importance of observing the
principles of MFN and national treatment in the WTO and the broad scope of that obligation.  He
stated that upon accession Chinese Taipei would fully observe its MFN and national treatmentobligations in respect of any advantage, favour, privilege or immunity granted to WTO Members or
other countries or separate customs territories, unless specifically exempted from its GATS
commitments.
IV. ECONOMIC POLICIES
Foreign Exchange Policies
9. In response to requests from members of the Working Party for information on the foreign
exchange system prevailing in Chinese Taipei, the representative of Chinese Taipei stated that all
current account transactions were free from foreign exchange controls.  As for residents, any company
or individual could freely settle foreign exchange with authorized banks up to an amount of
US$50 million and US$5 million respectively per year.  As for non-residents, any non-resident could
open a NT dollar account with local commercial banks.  However, foreign financial institutions
outside the territory of Chinese Taipei could only deposit locally earned revenue of NT dollars intotheir accounts.  There was no restriction when the remittance was related to an outward/inward
investment project approved by the competent authority.  The foreign exchange rate was determined
by the market, and there were no discriminatory currency practices.   In response to further questions,
he said that enterprises established under the Company Law of Chinese Taipei could freely purchase
the foreign exchange required for imports or for invisible trade settlements through the authorised
foreign exchange banks without any restriction.  There was no restriction on the use of foreign
exchange for overseas investment provided that the investment had been approved by the authorities.
Authorized foreign exchange banks and foreign banks were free to take part in the Chinese Taipei
foreign currency call loan market.  Since 1991, forward foreign exchange transactions had been
permitted.  The representative of Chinese Taipei said that these requirements would be graduallyphased out as market conditions permitted.  He expressed the view that Chinese Taipei's foreign
exchange practices were fully consistent with Article XV of the GATT 1994.
10. Some members of the Working Party noted that Chinese Taipei was not a member of the
International Monetary Fund (IMF) and thus would have to enter into a Special Exchange Agreement
as provided for in Article XV:6 of the GATT 1994 incorporating obligations consistent with Fund
Article VIII.  Some members also expressed concern that elements of Chinese Taipei's foreign exchange
system provided scope for practices that distorted trade flows.  The representative of Chinese Taipeisaid that in the context of accession to the WTO,  Chinese Taipei was prepared to comply with the
provisions of Article XV of the GATT 1994 regarding its foreign exchange restrictions.  He added
that in order to comply with GATT 1994 Article XV, Chinese Taipei had negotiated a Special
Exchange Agreement with the WTO.
- Pricing Policies
11. Some members of the Working Party noted that Chinese Taipei had price controls for the
domestic prices of certain commodities and that there were no price controls applied exclusively to
imports, they requested a full list of the products subject to price controls, and the plans to eliminate
such price controls.  In response the representative of Chinese Taipei stated that price controls applied
primarily in the area of public utilities under control of the Public Utility Rate Commission.  Theproducts specified in the list reproduced in Attachment A to this Report were the only ones subject to
price controls.  In relation to the sale of tobacco and alcoholic beverages, the representative ofWT/ACC/TPKM/18
Page 11
Chinese Taipei stated that minimum profit or pricing of tobacco and alcohol products had been
abolished.  The regulation on the maximum retail margin would cease to be effective when the
monopoly system was formally abolished.  He further added that petroleum, natural gas and liquefied
petroleum gas were subject to price controls in order to maintain stability in energy prices.  Salt, sugar
and fertilizer were subject to price controls to stabilize farmers' income and production costs.  ChineseTaipei intended to phase out price controls as soon as possible, keeping in view the objectives noted
above.  Future liberalization of price controls would take into account the timetable for privatizing
state enterprises which had been involved in exercising price controls, such as the Taiwan Fertilizer
Company, and the Taiwan Salt Industrial Corporation  The Chinese Petroleum Corporation's
monopoly on activities had been phased out since 1996 and price controls on petroleum and liquified
petroleum gas were removed in 2000.  Fertilizer had also been removed from price controls in 1999
due to the privatization of the Taiwan Fertilizer Company.    Some members of the Working Party
noted that they could see no justification for price controls on sugar and salt.  In response, the
representative of Chinese Taipei stated that the price controls on salt were expected to be abolished by
the end of June 2002.   Domestic sugar prices were set by Taiwan Sugar Corporation, which was the
sole supplier of sugar.  The sugar price set by Ta iwan Sugar Corporation took into account the price at
which Taiwan Sugar purchased sugar cane from local growers (which was set 10 years ago accordingto the farmers' production cost at that time), and its own cost of production.   The domestic sugar price
had been decreasing, as the increase in import of sugar (the cost of which was lower), helped to bring
down Taiwan Sugar's cost.  Industrial users of sugar we re consulted, in order to ensure that the price
control would not seriously affect their competitiveness.  There was no discrimination between cane
and beet sugar.  The price control system would be replaced by the implementation of a tariff ratequota system upon Chinese Taipei's accession.  The private sector would be free to import sugar at
out-quota rates.  Upon accession, the private sector would have access to an annual sugar tariff quota.
Therefore, importation of sugar would not be subject to monopoly.  With the private sector free to
import sugar, market prices would be determined by market forces.  It was expected that the oil
product market would be fully liberalized by the end of 2001.  It was not Chinese Taipei's policy toadd to the list of products subject to price control set out in Attachment A to this Report, unless the
economy or a specific sector thereof was in serious difficulty or in a state of emergency.
12. The representative of Chinese Taipei stated that, from the date of accession, Chinese Taipei
would ensure that price controls applied to the products covered in the list reproduced in
Attachment A to this Report, and to any other produ ct, would be applied in a WTO-consistent fashion,
taking account of the interests of exporting WTO Members as provided for in Article III:9 of the
GATT 1994.  The price levels of the goods subject to price controls would be published in accordancewith Article X of GATT 1994.  The Working Party took note of these commitments.
V. FRAMEWORK FOR MAKING AND ENFORCING POLICIES
Powers of Executive, Legislative and Judiciary, Administration of Policies on WTO-related 
Issues
13. In response to requests for information, the representative of Chinese Taipei stated that the
subject matter of international trade, including all matters covered by the WTO Agreements fell
within the power of the government of the Separate Customs Territory.  In the event that measures
taken by local levels of government had an impact upon international trade, those measures became
subject to regulation by the government of the Separate Customs Territory which could overrule or
invalidate measures of local levels of government.  By way of example, he noted that the procurementdecisions of local levels of government were subject to the disciplines of the Government
Procurement Law made by the government of the Separate Customs Territory.  He further noted that a
natural or juridical person whose rights and interests in a matter relating to issues covered by the
WTO Agreements were impaired by an administrative action in Chinese Taipei was permitted to
appeal such action.  In cases of administrative action allegedly contrary to law, such appeal would beWT/ACC/TPKM/18
Page 12
to the Administrative Court.  In cases of an administrative action that was allegedly improper, but not
illegal, an appeal committee, organised by a higher administrative level, drawn from government
officials not involved in the enforcement of the matter at issue, experts from academia and other
experts, would review the matter and recommend a correction to the administrative action.
14. Some members of the Working Party enquired whether international treaties were
self-executing under the law of Chinese Taipei and sought a commitment that Chinese Taipei would
bring its foreign trade laws and regulations into conformity with WTO provisions at the time of
accession.  In response, the representative of Chinese Taipei said that international treaties enter into
force after being duly ratified  and promulgated and would have the same force and effect as domestic
laws.
15. The representative of Chinese Taipei confirmed that Chinese Taipei would fully implement
its obligations under the WTO Agreement and its Draft Protocol of Accession upon accession to theWTO, unless specifically provided in this Report and Draft Protocol.   Further, the government of the
Separate Customs Territory would eliminate or nullify measures taken by local levels of government
in Chinese Taipei that were inconsistent with WTO provisions from the date of accession.  An
illustrative list of the laws that would be amended as part of Chinese Taipei's implementation of its
obligations is reproduced in Attachment D to th is Report.  The Working Party took note of this
commitment.
VI. POLICIES AFFECTING TRADE IN GOODS
16. Chinese Taipei undertook negotiations on market access in goods.  The Schedule of
Concessions reflecting the results of those negotiations  is reproduced in Part I of Annex I of the Draft
Protocol of Accession reproduced in the Appendix to this Report.
Import Regulations
Registration of Importers and Exporters
17. Some members of the Working Party noted that Chinese Taipei required a registered
importer/exporter to clear all imports and exports through its customs.  Further, Chinese Taipei
conditioned registration as an importer or exporter on being an enterprise in Chinese Taipei andmeeting a NT$5 million minimum capital requirement.  These members of the Working Party stated
that they considered that the minimum capital requirement was excessive and could act as a restraint
on trade.  They requested that the minimum capital requirement be eliminated and that registration
should be automatic, open to all individuals and enterprises interested in engaging in import/export
without regard to investment or establishment in Chinese Taipei and conform to WTO rules.
18. In response, the representative of Chinese Taipei stated that the purpose of the registration
requirement was not to restrain trade, but to ensure that importers/exporters had sufficient financialresources to support their import/export operations.  The precondition of NT$5 million minimum
capital requirement had been abolished in September 1997.  With the elimination of that capital
requirement, the only condition for importer/exporter registration was that the enterprise list import
and/or export activities in its profit-seeking enterprise registration certificate.  No fee was charged for
the registration.  Chinese Taipei however would like to retain the registration system, which operatedas an automatic licensing procedure pursuant to the Agreement on Import Licensing
19. The representative of Chinese Taipei stated th at any enterprise including sole proprietorships,
interested in importing and/or exporting and having included in its profit-seeking enterprise
registration certificate export/import or buying/selling as a business item, would be permitted to
register as an importer/exporter.  Registration as a profit-seeking enterprise required maintenance ofWT/ACC/TPKM/18
Page 13
an address in Chinese Taipei, but did not impose minimum investment or similar requirements.  The
registration system to become an importer/export er would conform to WTO rules, including the
automatic licensing provisions of the Agreem ent on Import Licensing Procedures, and would not
restrain trade.  The Working Party took note of these commitments.
Advertising and Trade in Alcohol and Tobacco Products
20. Some members of the Working Party considered that the rules applying to the advertising of
tobacco and alcohol products, which had a stronger effect on imports, should not be used to
discriminate either de facto  or de jure  against imported products.  The representative of Chinese
Taipei stated that under current law, alcohol products could be advertised on television and radio
during specified times.  While beer and wine could be advertised in magazines and newspapers, spirits
could not be advertised in these publications.  New spirits products could be advertised in magazines
for a period of one year following their release onto the market.  The representative of Chinese Taipeialso said that advertising of tobacco products was governed by the Tobacco Hazard Prevention Act,
which came into force on 19 September 1997.   The rules on the advertising of tobacco products were
provided in Article 9 and 10 of the Tobacco Hazard Prevention Act.  The rules set out in these two
articles prohibit the use of certain methods for the promotion or advertising of tobacco products,
restrict the use of periodicals as a medium for the promotion or advertising of tobacco products to 120items per year in periodicals, the types of activities or sponsorship permitted under the name of a
tobacco company, and the display of tobacco products.
21. The representative of Chinese Taipei confirmed that from the date of accession Chinese
Taipei would not use advertising rules to discriminate against imported tobacco and alcohol products.
The one-year limitation on advertising of alcoholic beverages would be eliminated upon accession.He also stated that, upon accession, Chinese Taipei would permit advertising for alcoholic beverages
in all media, subject to regulation in relation to the content and timing of advertising. He further
confirmed that the advertising rules for tobacco and alcohol products and implementation of those
rules would be consistent with WTO requirements from the date of accession. The Working Party
took note of these commitments.
22. Concerning the right to sell and trade in tobacco and alcoholic beverages, the representative
of Chinese Taipei stated that, upon accession, enterprises engaged in the distribution and/or trade of
imported alcohol and tobacco produ cts would not be required to provide information beyond that
requested of firms engaged in the distribution and/or trade of like domestic products in Chinese Taipei
concerning their business plans or corporate structures and that such information would be requested
on the same timetable as applied to the latter firms.  He also stated that taxes and other charges of
whatever character, including licensing and other administrative fees, related to trade and distributionof imported alcohol and tobacco products would not be applied in excess of those applied to firms
dealing with like domestic products.  The Working Party took note of these commitments.
Customs Tariff
23. Several members of the Working Party requested information on the tariff structure of
Chinese Taipei, the existence of bilateral rates of duty, in particular the products covered by bilateraltrade concessions, the existence of mixed duties, whether trade measures were being adopted on a
MFN basis, the level of average effective rates of duty and the actual levels of protection in force.
Some members noted that in 1992 some 413 agricultural and 21 non-agricultural products accounting
for 5.4 per cent of total tariff lines were subject to duty rates ranging from 30 per cent to 50 per cent.
In response, the representative of Chinese Taipei said that since 1 September 1980, Chinese Taipei'stariff had two columns of duty rates.  The differential duty rates in Column II were applied to imports
from countries or areas that granted reciprocal tariff treatment to Chinese Taipei's exports.  At present,
Column II duty rates applied to products from 154 countries or areas which amounted for almostWT/ACC/TPKM/18
Page 14
98 per cent of the total value of imports. Products from the following WTO Members did not fall
within Column II: Angola, Cuba, Djibouti, Republic of the Congo, Estonia, Georgia, Lithuania,
Mongolia, Gambia, Mauritania, Mozambique, Myan mar, Romania, Rwanda, Uganda, Zimbabwe and
The Kyrgyz Republic. The representative of Chinese Taipei undertook that upon accession to the
WTO, MFN treatment would be extended to all WTO Members applying the WTO rules to ChineseTaipei. He added that between 1984 and 1992, the tariff had been revised across-the-board and duty
rates have been lowered by some 50 per cent.  During that same period, 668 items had become duty
free, and 13165 items had their duty rates reduced. An additional tariff reduction in 1995 had further
reduced duty rates on 758 items, with an average duty reduction of 2.8 per cent.  Besides, the duty
rates of 1,358 items had been further reduced in 1998 including 289 items in accordance with the
WTO Ministerial Declaration on Trade in Info rmation Technology products on December 1996.
Further reductions for 750 tariff lines were pending in the Legislature.  At present, the highestnominal duty rate was 50  per cent, but this was levied only in a few agricultural product areas.  The
simple average of nominal duty rates had declined from 30.81 per cent in 1984 to 8.20 per cent in
2000.
24. In response to further questions, the representative of Chinese Taipei indicated that in 1998
out of a total of 8,399 dutiable items, 42 items were subject to specific duties and 114 items weresubject to mixed duties.  The remaining 8,243 dutiable items were subject to ad valorem  duties.  Some
members of the Working Party stated that, in their view, Chinese Taipei should preferably adopt an ad
valorem  approach throughout the tariff in order to increase the predictability and transparency of the
tariff régime.  The representative of Chinese Taipei said that more than 98 per cent of the tariff lines
were already subject to ad valorem  duties.  In future reviews of its tariff system, Chinese Taipei
would take into account the views of members in this respect.
Tariff Rate Quotas
25. Members of the Working Party requested information on Chinese Taipei's proposed new tariff
rate quota system.  In response, the representative of Chinese Taipei stated that following revision of
its system of import restrictions on certain imported products, Chinese Taipei had decided tointroduce a system of tariff rate quotas as described in paragraphs 27-35 below. The representative of
Chinese Taipei provided further information on that scheme in document
WT/ACC/SPEC/TPKM/5/Rev.1. and WT/ACC/SPEC/TPKM/7 and Corr.1.  He further noted that
each tariff rate quota would be  recorded in Part I of Annex I to the Draft Protocol of Accession).
26. The representative of Chinese Taipei stated that for the agricultural and fish products that
were subject to a tariff rate quota regime after Chinese Taipei accedes to the WTO, the quota would
be allocated according to the following methods described in paragraphs 27-35 below, which wouldbe implemented  consistently with relevant WTO rules.
27. The representative of Chinese Taipei stat ed that Tariff Rate Quota (TRQ) allocation
certificates, as import licences, would be in compliance with the Agreement on Import Licensing
Procedures. All commercial terms of trade, including product specifications, origin, pricing,
packaging, etc. would be at the sole determination of the parties engaged in the transaction.  Partial
shipments against a single allocation would be permitted.  Traders would be allowed to import any
product or mixture of products subject to the same TRQ as noted in the tariff schedule.  All products
imported under the TRQ could be distributed freely within Chinese Taipei without further trade-based
restrictions.  Allocation certificates would be freely transferable and tradable, and certificate holders
could have certificates reissued to combine or divide allocations.
28. The representative of Chinese Taipei stated that all applications for allocation of TRQ
quantities would be submitted to the Ministry of Finance (MOF).  Any enterprise registered as an
importer/exporter in Chinese Taipei would be eligible to apply for certificates under each of the quotaWT/ACC/TPKM/18
Page 15
allocations systems.  Any domestic or foreign enterprise, including a sole-proprietorship, meeting the
requirements set out in paragraph 19 above would be permitted to register as an importer/exporter in
Chinese Taipei.  Specific conditions for applying for a TRQ allocation would be published in the
official journal sixty days in advance of the start of the application period.  The application period for
initial allocations should be closed by 30 November of the previous year, unless the timing ofaccession necessitated a change in schedule for the first year.  The application period for reallocations
of unused quotas would be closed by 1 September.  The MOF would grant allocations and publish and
notify the names of recipients and allocations within two weeks of the close of the application period
for the purpose of transfer.
System 1
29. The representative of Chinese Taipei stated that the allocation of tariff quotas would be made
as follows.  Under System 1 (for quotas of chicken meat, pork offal, poultry offal, deer velvet, fresh
pears (excluding European pears), bananas, and pork belly), the initial distribution of allocations for
the first two years, certificates would be issued on a first-come, first-served basis.  Allocations would
be established for commercially viable shipping quantities, but a ceiling of no more than 20 per cent
of the total in-quota quantity would be established in advance and published as part of the allocation
notification procedures.  Allocation certificates would be valid for product arriving between 1 Januaryand 1 September.  The date of arrival would be defined in accordance with Article 5 of the
implementing regulations of the Customs Law of Chinese Taipei as currently in place. Upon request
and proof of signed contract before 1 September, MOF would automatically extend the validity date
of the certificate to cover products arriving on or before 31 December.
30. With respect to the reallocation of unused allocations under System 1, the representative of
Chinese Taipei stated that in any year, if the holder of a quota allocation certificate had not contracted
for import of the holder’s total allocation by 1 September, the unused portion of the allocation would
be reallocated on a first-come, first-served basis.  The date of re-issue would be no later than 15
September.  The re-issued allocation certificates would be valid for products arriving on or before 31
December.
31. The representative of Chinese Taipei stated that  after the first two years, and in each year  in
which allocations were made under System 1, applicants for an allocation of the quota would receive
an allocation at least as large as the average of the amount actually imported by the applicant in the
prior two years.  Any remaining quota amounts or increases in the quota amount would be allocated
on a first-come, first-served basis. any and all fees, charges, deposits, duties, etc. associated with the
allocation process would be made explicit in the advance public notification process, and with the
exception of ordinary customs duties, would be commensurate with the cost of the services rendered.A performance bond would be required to ensure complete utilisation of the allocations.  The bond
would be returned to the applicant after the app licant imports its allocation before its allocation
certificate expires.  The bond would  not be set at a level which could deter full utilisation of the TRQ
or otherwise restrict trade.
System 2
32. In relation to quotas of red bean, liquid milk and peanuts, under System 2, the representative
of Chinese Taipei stated that the initial distribution of allocations would be distributed once a year.
Allocations would be established for commercially viable shipping quantities, but a ceiling of no more
than 20 per cent of the total in-quota quantity woul d be established in advance and published as part
of the allocation notification procedures.  Allocations would be made through a competitive process.An applicant would need to bid by mail in order to obtain its allocation.  Bids submitted would be
arranged in a priority order according to the premium of the bid, which was the amount a bidder was
willing to pay for each unit of the allocation it bids  for.  Quota would be allocated in this order untilWT/ACC/TPKM/18
Page 16
filled.  In situations where some bids offer the same amount of premium and the quota available were
not sufficient to fill each of such bids, the quota would be allocated on a pro rata  basis.  Successful
bidders for allocations would be required to obtain their allocation certificates by paying a non-
refundable premium within thirty days.  The MOF w ould re-allocate the allocations of those failing to
pay the premium accordingly.  Such reallocation process would commence immediately after a periodof twenty-one days for notification. Allocation certificates would be valid for product arriving
between 1 January and 1 September.  The date of arrival would be defined in accordance with
Article 5 of the implementing regulations of the Customs Law of Chinese Taipei as currently in place.
Upon request and proof of signed contract before 1 September, MOF would automatically extend the
validity date of the certificate to cover products arriving on or before 31 December.
33. Concerning the reallocation of unused allocations under System 2, the representative of
Chinese Taipei stated that  except otherwise provided for in the preceding paragraph, by 1 September,the unused portion of the allocation,  would be reallocated through a competitive process.  The date of
re-issue would be no later than 15 September. The re-issued allocations would be valid for products
arriving on or before 31 December.
System 3
34. Concerning quotas of garlic bulbs, dried shiitake, dried day lily, young coconut, betel nuts,
pineapples, mangoes, shaddocks, persimmons, dried longans and longan pulp, sugar (private sector),
mackerel, carangid, and sardine (herrings), under System 3, the representative of Chinese Taipei
stated that the annual distribution of allocation would be divided into one to four segments for
distribution.  Allocations would be established for commercially viable shipping quantities, but a
ceiling of no more than 20 per cent of each segment would be established in advance and published aspart of the allocation notification procedures.  In addition to the announcement made in the previous
year on the number of segments and the quantity of each quota segment announcements would be
made twenty-one days in advance of the start of the application period for each segment amount.
Allocations would be made through a competitive proc ess.  An applicant would be required to bid by
mail in order to obtain its allocation.  Bids submitted would be arranged in a priority order accordingto the premium of the bid, which was the amount a bidder would be willing to pay for each unit of the
allocation it bids for.  Each segment of the quota would be allocated in this order until filled. In
situations where some bids offer the same amount of premium and the segment of quota available
were not sufficient to fill each of such bids, the segment of quota would be allocated on a pro rata
basis.  Successful bidders for allocations were required to obtain their allocation certificates by paying
the non-refundable premium within thirty days.  Th e MOF would re-allocate the allocations of those
failing to pay the premium accordingly.  Such re-allocation process would commence immediatelyafter a period of twenty-one days for notification.
35. The representative of Chinese Taipei noted that except as otherwise provided for in the
preceding paragraph, by 1 September, the unused portion of the allocation would be reallocated
through a competitive process.  The date of re-issue would be no later than 15 September. The re-
issued allocations would be valid for products arriving on or before 31 December.
36. The representative of Chinese Taipei stated that the new Tariff Rate Quota system described
in paragraphs 27-35 above would be implemented by the date of Chinese Taipei's accession to the
WTO.  The Working Party took note of this commitment.
37. The representative of Chinese Taipei stated th at with a view to maintaining a transparent and
open TRQ administration system, upon request from any WTO Member, Chinese Taipei wouldconsult with the Member on the administration of TRQ to ensure that the quota would be allocated in
a transparent, equitable, and non-discriminatory manner and the quota would be fully utilised.  The
Working Party took note of this commitment.WT/ACC/TPKM/18
Page 17
38. Some Members of the Working Party expressed concern that Chinese Taipei’s intention to
allocate tariff quota access by competitive processes may not be consistent with Chinese Taipei’s
tariff commitments.  While acknowledging that there was discussion taking place within the WTO on
the legality of auctioning or tendering of market access entitlements, these Members were of the view
that premiums associated with this method of allocation represented charges imposed on or inconnection with imports that were inconsistent with commitments undertaken by Members under
Article II:1(b) of GATT 1994.  These Members soug ht assurances that Chinese Taipei would modify
its tariff quota allocation system should it be demonstrated in the WTO that charges associated with
allocation by competitive processes were WTO inconsistent.
39. The representative of Chinese Taipei stated that should it be demonstrated in the WTO that
charges associated with allocation by competitive processes were WTO inconsistent Chinese Taipei
would promptly modify its tariff quota allocation system to bring it into conformity with WTO
requirements.  The Working Party took note of these commitments.
Other Duties and Charges (Article II:1(b))
40. The representative of Chinese Taipei stated  that except as provided in the Schedule of
Concessions on Goods (Part I of Annex I to the Draf t Protocol of Accession of Chinese Taipei) all
other duties and charges covered by Article II:1(b) of the GATT 1994 would be bound at the level ofzero.   The Working Party took note of this commitment.
Fees and Charges for Services Rendered
41. The representative of Chinese Taipei said that there were no taxes, charges or fees levied on
imports only.  The trade promotion fee authorized by the Foreign Trade Act had a ceiling of
0.0425 per cent, and was collected on all imports and exports exclusively to promote import andexport trade.  He stated that the Trade Promotion Fee was a very small charge, no more than 0.0425
per cent of customs value (currently only 0.0415 per cent), applied to both imports and exports to fund
trade promotion activities.  He added that in addition to import tariffs and taxes applied equally to
imported and domestic products (e.g., the Commodity Tax, the VAT, and the Alcohol and Tobacco
Tax), the Harbour Construction Dues and the Trade Promotion Fee were the only charges applied toimports.  In response, some members of the Working Party stated that the Trade Promotion Fee did
not appear to be consistent with Article VIII of the GATT 1994.  In response to questions concerning
the Harbour Construction Due, the representative of Chinese Taipei explained that the customs
authorities collected a Harbour Construction Due for goods entering Chinese Taipei through ports.
The levy, introduced in 1948 to fund harbour expansion and maintenance, was imposed at the fixed
rate of 0.4 per cent and did not apply to inter-island trade.
42. Some members of the Working Party stated that they considered that this levy and fee were
inconsistent with Article VIII(1)(a) of the GATT 1994.  These members of the Working Party
considered that the levy and fee discriminated against imports because they were only applied to
imported goods and not to like domestic products and they were not in conformity with Article III of
the GATT 1994.  Some members of the Working Party pointed out that the ad valorem  nature of the
Harbour Construction Dues and the Trade Promotion Fee made it impossible for them to reflect theapproximate cost of the services rendered.  The representative of Chinese Taipei said that both the
Harbour Construction Dues and the trade promotion fee applied to imports as well as exports.  In his
view, the Harbour Construction Dues could be treated as an internal tax or a service fee to improve
port facilities and services.  Chinese Taipei considered both the Harbour Construction Dues and the
trade promotion fee to be service fees as cont emplated under Article VIII of the GATT 1994.  He
acknowledged that 25 per cent of the Harbour Construction Dues proceeds were used to provide
financial assistance to the cities where the harbours were located.  Upon accession to the WTO, theWT/ACC/TPKM/18
Page 18
revised Commercial Port Law would require that any revenue generated through the Harbour
Construction dues be used exclusively for the development of commercial harbours.
43. Some members of the Working Party stated that the levy of 0.4 per cent was a revenue charge
to fund harbour up-keep and expansion based on import taxation, and was not a charge for specific
services rendered.  This levy and the trade promo tion fee should be brought into conformity with
GATT 1994 in advance of Chinese Taipei's accession.  The representative of Chinese Taipei stated
that after reviewing the comments made by Working Party members, Chinese Taipei had decided to
bring the Harbour Construction Dues into conformity with Article VIII of the GATT 1994.  He added
that the Trade Promotion Fee would not be revise d because it was considered in conformity with
GATT 1994 Articles III, and VIII.  In add ition, neither charge would be increased in its level of
application, or included in the taxable base of imports for the purposes of applying domestic taxes
such as the Commodity Tax.  If requested, Chinese Taipei would consult with the Membersconcerning the effect of these measures on their trade.  Some members reserved their position in
relation to the Trade Promotion Fee which they considered incompatible with Chinese Taipei’s WTO
obligations.  These members expressly reserved the right to pursue this issue pursuant to the WTO
Understanding on Rules and Procedures Governing the Settlement of Disputes.
44. The representative of Chinese Taipei confirmed that the Trade Promotion Fee would be
applied in conformity with WTO obligations and would not exceed 0.0425 per cent of the customs
value of the good.  The Working Party took note of these commitments.
45. The representative of Chinese Taipei stated that Chinese Taipei would bring the Harbour
Construction Dues into conformity with Articles III and VIII of the GATT 1994 upon accession. The
Harbour Construction Dues would be based on the cost of the services provided and not applied on anad valorem  basis.  The Harbour Construction Dues would also be applied to all trade, including inter-
island trade.  Within the same time-frame Chinese Taipei would exclude these charges from the
valuation base for the application to imports of domestic taxes, such as the Commodity Tax and the
Tobacco and Alcohol Tax.  The current Harbour Construction Dues were 0.3 per cent of the taxable
base.  The Working Party took note of these commitments.
Internal Taxes Applied to Imports
46. In response to questions, the representative of Chinese Taipei stated that VAT, Commodity
Tax, tobacco and alcohol monopoly tax were applied equally to imported and domestic products.
Commodity tax
47. Some Working Party members sought information from Chinese Taipei on the application of
the special commodity tax.  In response, the representative of Chinese Taipei said that the tax was
imposed on imported goods at the time of importation, and on like domestic goods upon their releasefrom the factory.  For imported goods, the amount of the commodity tax was the taxable value
established in accordance with the Customs Import Tariff, plus customs duties, plus harbour
construction dues multiplied by the tax rate.  For domestic goods, the amount of the tax was
calculated on the basis of one of two methods.  The first method applied when the manufacturer sold
products through wholesalers or if the manufacturer was paid to manufacture the products for others.
The second method considered a 12 per cent promotional expense.  The goods subject to the
commodity tax were: rubber tires, cement, machine-made cool drinks, flat glass, oil and gas, certain
electric appliances and motor vehicles.  Chinese Taipei believed that many Working Party members
had similar practices.  He noted that the 12 per cent promotional expense represented a manufacturer's
typical promotion expense.  The tax allowed a deduction of 12 per cent for promotional expenseswhen goods were circulated not through an exclusive wholesaler or distributor.  Chinese Taipei
considered that it treated imported goods the same as the goods sold through distributors, and did notWT/ACC/TPKM/18
Page 19
discriminate against imports.  The commodity tax was a special excise tax.  The determination of the
tax base had taken into account common practices.  The 12 per cent deduction only applied if the
domestic sales were not through a sole distributor.  In response, some Working Party members noted
that a critical consideration in the application of this internal tax was consistency with national
treatment and other WTO obligations and the avoidance of subsidization.
48. Some members of the Working Party were of the view that the basis for the application of the
commodity tax to imports was artificially inflated because the tax base of domestic and imported
goods were different.  Domestic goods were assessed on an ex factory basis, excluding the cost of
delivery and transfer of the goods to the wholesale level whereas the base for imported goods was the
import value plus transportation, insurance and other customs charges and customs duty.  They also
noted that domestic goods profited by having an additional 12 per cent deduction for promotional
expenses prior to the calculation of the tax.  These members of the Working Party considered thatChinese Taipei should address the central issue of equal application of the tax.  The bases for
calculation of the tax were inequitable, and the incorporation of a 12 per cent differential in the
valuation of imports and domestic products based on the concept of promotional expenses could not
be justified, and should be eliminated prior to accession.  Those members considered that due to the
different tax bases, the tax was applied in a manner th at were not in conformity with Article III of the
GATT 1994.  They stated that Chinese Taipei should eliminate by the date of its accession any
domestic tax measures or methods of applying domestic taxes whose applications vary according to
whether the items were locally manufactured or imported.
49. The representative of Chinese Taipei stated that from the time of Chinese Taipei's accession,
changes to the Commodity Tax would modify the base for the tax.  From that date, the tax would becalculated on the basis of the sale price.  The sale price was the manufacturer's wholesale price for the
current month; if the manufacturer sold directly to retailers, wholesale profit could be deducted from
the selling price.  Deductible wholesale profit rate was determined on an industry-by-industry basis.
Imported goods were taxed on the basis of their CIF value and therefore were not eligible for the tax
adjustment.  He further added that in order to equalise the treatment of domestic and importedproducts, prices of domestic manufactured goods sold directly to retailers contained elements of
wholesale profits which were not included in the tax base.  He further stated that the current practice
of assessing the commodity tax based upon engine displacement of automobiles and the licence plate
tax was fully consistent with Article III of the GATT 1994.  Some members of the Working Party
were of the view, however, that application of a tax based on characteristics such as engine
displacement could de facto discriminate against imports.
50. The representative of Chinese Taipei stated that Chinese Taipei would amend its laws to
remove the 12 per cent allowance provided when goods were circulated not through an exclusive
distributor, and would use selling prices as the base for levying the commodity tax.  He further stated
that Chinese Taipei would eliminate by the date of its accession any domestic taxes, tax assessment
methods or application of them which was inconsistent with Article III of the GATT 1994.  The
Working Party took note of these commitments.
Business Tax:  Gross Business Receipt Tax and VAT
51. Some members of the Working Party asked Chinese Taipei to describe the application of the
business tax, its scope and level of application, the portion of the tax revenue accounted for by
imports, etc.  In response, the representative of Chinese Taipei said that Business Tax applied to the
sale of goods and the rendering of services.  The tax was levied in two forms.  The first form was ageneral sales tax which applied to the business of insurance, banking, investment trusts, securities,
agricultural wholesale, pawn shops and small business operators.  The second form, a VAT business
tax, applied to all other businesses.  The VAT was applied at the rate of 5 per cent, to both domestic
and imported products.   All goods, both domestically manufactured and imported, were generallyWT/ACC/TPKM/18
Page 20
taxed at the point of sale.  Revenue from both kinds of tax imposed on imported goods had
represented 1.24 per cent of total tax revenue in 1999 (1 July 1998 to 30 June 1999).  Chinese Taipei
considered that the imposition of the tax at the point of sale simplified the procedure by levying the
tax on the taxable goods' imported value and the importers' added value jointly, rather than separately.
However, in some cases, to minimise tax avoidance imported goods were subjected to business VATat the time of importation.  The reason for this was that if business VAT was levied at the time of sale,
it was possible that certain imported goods with particular end uses could avoid payment of the tax,
i.e. motor vehicles imported for personal use, or goods imported by a financial institution.  He further
noted that because the tax paid on inputs could be deducted from the tax paid on outputs collected
from purchases, goods imported for use and goods imported for resale were not differentiated at the
time of importation.  In relation to the tax base for calculation of the amount of business VAT
payable, the representative of Chinese Taipei noted that imported goods were taxed on the basis of thecustoms duty paid value plus the commodity tax, if applicable.  The harbour construction dues would
be removed from the tax base.  If the commodity tax was payable, the commodity tax formed part of
the value added, and was counted as the tax base for the business, whether the goods were imported or
manufactured domestically.  In addition, the busines s importer could deduct the input tax from the
output tax and was only taxed for the value added to the goods.  Therefore, there was no doublecounting or "tax-on-tax ".  He added that Chinese Taipei, after examining whether all goods could be
taxed at the time of importation, had found that it was common practice in those economies which
imposed VAT to levy the tax at the time of importation.
Monopoly tax on tobacco and wine
52. Some members of the Working Party sought information on the monopoly tax for tobacco,
wine, spirits and beer.  In their view, there was a serious transparency problem in this sector.  In
response, the representative of Chinese Taipei confirmed that imported tobacco and wine were subject
to a Monopoly Tax, in lieu of customs duty, harbour construction fees, commodity tax and
value-added business tax.  The Monopoly Tax imposed on domestic tobacco and wine products was
assessed on an ad valorem  basis, equivalent to the operating revenue minus all relevant cost and
expenses of the Taiwan Tobacco and Wine Monopoly Bureau (TTWMB) and was considered a sales
tax.  On average, imported tobacco and wines were subject to the Monopoly Tax at the rate of
approximately 120 per cent of the import price.  Some members of the Working Party requested that
Chinese Taipei provide information on cost of production, and indicate how the TTWMB's
methodology to determine the tax rate complied with the GATT 1994, in particular Articles I, III, X,
XI, XVI, and XVII, a list of the taxes applied to imports, their negative rates, the value basis as well
as the methodology used to determine that domestic tobacco, spirits and wine were subject to a taxrate of approximately 185 per cent of cost.
53. Some members of the Working Party reiterated their concerns in relation to the operation of
the Monopoly Tax scheme, particularly in relation to the lack of sufficient transparency in its
operation.  Without the availability of data to calculate domestic costs, it was not possible to
accurately determine whether the Monopoly Tax was equally applied to domestic and importedproducts.  In their view the Monopoly Tax appeared to have a greater impact upon imported products.
They did not consider Chinese Taipei's explanations of the methodology used to determine the
Monopoly Tax adequate, substantiated and verifiable.  It was not possible to conclude that domestic
and imported products were taxed in an equivalent manner.  As there were large discrepancies
between the rates quoted by Chinese Taipei and the information available to national authorities, italso appeared that the tax system was discriminatory.  Those members stated that no transition period
would be appropriate.  Chinese Taipei should either eliminate the Monopoly Tax on imports of wine
and distilled spirits immediately upon accession or replace the Monopoly Taxes with reasonable ad
valorem  import duties, and ensure that internal taxes applied equally to domestic and imported wine
and spirits.  These members of the Working Party disagreed with the view that a system for the ad
valorem  taxation of domestic goods based on net profits of the TTWMB could be considered asWT/ACC/TPKM/18
Page 21
equivalent to a specific tax on imported goods.  It appeared to these members that due to the lack of
transparency mentioned above, there were problems in assessing the consistency of the Monopoly
Tax system with the GATT 1994.  Nevertheless the Monopoly Tax for imported wine, cigarettes and
distilled spirits was significantly higher than the effective tax rate for similar domestic products in
breach of Article III of the GATT 1994.  These members requested, therefore, that the operation ofthe TTWMB be altered prior to Chinese Taipei's accession, to enhance transparency and to operate in
a manner consistent with the provisions of the GATT 1994.  The official monopoly plan ought to be
liberalised and the trade impact of the plan fully  reviewed prior to accession.  The representative of
Chinese Taipei said that due to the alteration of the scheme over recent years, the Monopoly Tax on
imported products tended to be lower than the tax applied to domestic products.  In any event, the
Legislature was determined to repeal the tobacc o and wine monopoly system .  Alcohol and tobacco
products were classified according to production methods and other features, with different tariff ratesand taxes applying to different products.  Classification and tariff and tax rates were carefully
monitored in order to ensure that no discrimination occurred between domestic and imported goods.
54. Some members of the Working Party asked that details be provided of the scheme which
would replace the Monopoly Tax and reiterated that no transitional period was appropriate for a
situation which was in clear breach  of Article III of the GATT 1994.  The representative of Chinese
Taipei responded that public hearings had been completed, and a plan had been developed.  He
provided the Working Party with a summary of the re form plan and said that he considered that the
future regime would improve trade in alcohol and tobacco products.  The new scheme would be
implemented upon Chinese Taipei's accession.
55. The representative of Chinese Taipei stated that, upon accession, the Monopoly Tax would be
abolished and that tobacco and alcohol products would be subject to (i) import duties as reflected in
Chinese Taipei's Schedule of Concessions (Part I of A nnex I to the Draft Protocol of Accession) in the
same manner as other imported products, (ii) the tobacco and alcohol tax, and (iii) business tax.  The
representative of Chinese Taipei also stated that from the date of accession internal taxes and charges
of whatever character related to trade and dist ribution of alcohol and tobacco products would be
applied equally to domestic and imported products, including with respect to domestic distribution
and sales of these products without regard to the ow nership of the enterprise.  The Working Party took
note of these commitments.
Quantitative Restrictions
Area restrictions
56. In the early stages of the Working Party, some members noted that discriminatory area
restrictions were imposed on many products: (i) peaches: limited to imports from Europe and theUnited States; (ii) lemons and limes, grapes, plums, whole ducks, turkey cuts: issuance of import
licenses was suspended except for imports from the United States; (iii) oranges and other mandarins,
including tangerines and satsumas, and grapefruits: imports from the United States were free, imports
from South Africa were limited in quantity;  (iv) apples:  imports from the United States and Canada
were free; imports from other areas were subject to quantitative restrictions.  In response to requestsfrom Members for updated information on area restrictions, the representative of Chinese Taipei
stated that as of May 1999, (i) peaches: limited to imports from Europe and the United States, imports
from Australia and New Zealand were limited in quantity; (ii) lemons and limes: limited to imports
from the United States; imports from Argentina, Australia and European Union were limited in
quantity; (iii) grapes: limited to imports from the United States; imports from Chile were limited in
quantity; (iv) plums: limited to imports from the United States; imports from Australia, Chile and
New Zealand were limited in quantity; (v) whole ducks, turkey cuts: issuance of import licenses was
suspended except for imports from the United States; (vi) oranges: imports from the United States
were free, imports from Australia, European Union and South Africa were limited in quantity;WT/ACC/TPKM/18
Page 22
(vii) other mandarins, including tangerines and satsumas: imports from the United States were free,
imports from European Union and Japan were limited in quantity; (viii) grapefruits: imports from the
United States were free, imports from Argentina, Australia and South Africa were limited in quantity;
(ix) apples: imports from the United States and Canada were free; imports from Argentina, Australia,
Chile, European Union, France, Japan, New Zealand and South Africa were limited in quantity;(x) young coconuts:  imported from the Philippines, Malaysia and Thailand were limited in quantity.
There were also restrictions on cigarettes and bilateral agreements on the importation of beer, wine
and cigarettes.  In the view of some members, the area restrictions and similar exclusive access
accorded for additional agricultural products were discriminatory trade measures inconsistent with the
GATT 1994 and, in particular, the MFN principle.  Those members emphasized that there was no
justification to permit the continuation of such disc rimination.  Chinese Taipei should eliminate those
measures from the date of its accession to the WTO.
57. In response the representative of Chinese Taipei said that the area restrictions and similar
measures operated to maintain the diversity in th e origin of imports and to maintain trade balances
with certain areas, or to facilitate agriculture rest ructuring. Only a small percentage of industrial and
agricultural products were subject to these discriminatory restrictions. Area restrictions for alcoholic
beverages and cigarettes had been eliminated on 1 September 1994.  The tariff rate quota offered as aliberalization measure to be implemented after accession for young coconuts would be distributed as
described in paragraphs 27-35 through procedures consistent with the relevant provisions of GATT
1994 and the Agreements on Agricultur e and Import Licensing Procedures.
58. With regard to automobiles, some members noted that Chinese Taipei's Import
Regulation 209, provided that only motor vehicles from "Europe and the American Continent " may
be imported into Chinese Taipei.  The representative of Chinese Taipei agreed that this restriction was
discriminatory.  It was imposed pursuant to the Automobile Industry Strategic Development Plan.
Chinese Taipei's car industry was currently not a competitive one, as the size of the market was not
substantial enough to allow for economies of scale.  The total production value in 1992 was US$8.2
billion, representing 5 per cent of the total production value of the whole manufacturing sector.Workers directly employed in the car industry were in the number of 120,000. A sudden opening of
the market would result in serious economic and social problems.
59. Some members of the Working Party stated that a transitional period was not appropriate, and
that the area restrictions on automobiles should be eliminated prior to accession.  In response, the
representative of Chinese Taipei undertook to eliminate the area restrictions on automobiles.  Up to
now the liberalisation of car imports had proceeded as follows:  (i) heavy trucks could be imported
freely from February 1994;  (ii) passenger cars could be imported without quantitative restrictionsfrom North America and Europe (excepting Eastern Europe).  Passenger cars from other areas were
currently under either quantitative or area restrictions;  (iii) light trucks and station wagons could be
imported freely from North America and Europe.  Im ports of light trucks and station wagons from
other areas were currently under either quantitative or area restrictions.  He assured the Working Party
that it was not the intention of Chinese Taipei to employ measures not permitted by the WTOAgreement, such as voluntary export restraints or other grey area measures to liberalise automobile
imports.
60. At the request of some members of the Working Party, the representative of Chinese Taipei
provided a comprehensive listing, covering both tariff and non-tariff measures, of all trade preferences
in force.  He added that once area restrictions were eliminated, there would remain no tradepreferences extended on a bilateral basis.  The representative of Chinese Taipei assured the Working
Party that area restrictions would be brought into conformity with the requirements of the WTO
Agreement. He confirmed that area restrictions for alcoholic beverages and cigarettes had been
eliminated from 1 September 1994.WT/ACC/TPKM/18
Page 23
61. The representative of Chinese Taipei stated that area restrictions applying to imports of
certain passenger cars and certain small commercial vehicles, certain automobile chassis and
motorcycles would be eliminated upon Chinese Taipei's accession to the WTO.  Passenger cars,  light
commercial vehicles and certain fish products were the only industrial products that would be subject
to tariff-rate quotas after WTO accession.  For passenger cars and light commercial vehicles, the tariffrate quotas would be increased at the annual rate of 20 percent.  The transition period of the tariff rate
quota system would  be eight years after the acce ssion year.  Chinese Taipei also undertook that upon
its accession, area restrictions on agricultural products, except young coconut which would be subject
to tariff rate quotas, would be eliminated.  These tariff rate quotas would be administered in a manner
consistent with the requirements of the WTO Agreement, in particular the Agreement on Agriculture,
the Agreement on Import Licensing Procedures and GATT 1994.  The Working Party took note of
these commitments.
Import Licensing
62. Several members of the Working Party noted that historically Chinese Taipei had maintained
a complex network of non-tariff measures consisting of quantitative restrictions affecting some 27
items, non-automatic import licensing affecting some 246 items, including 27 items which were
subject to quantitative restrictions and standards inspections, quarantine, labelling requirements, etc.These members requested detailed information on the schemes.  Some members added that the bans
on liquid milk, rice, passenger cars equipped with diesel engines and motorcycles of 150cc or more,
applied by Chinese Taipei were inconsistent with WTO obligations and would have to be eliminated.
These members requested that Chinese Taipei eliminate, prior to accession to the WTO, all import
restrictions inconsistent with the GATT 1994 and the WTO Agreements, in particular the Agreementson Agriculture, Sanitary and Phytosanitary Measures and Technical Barriers to Trade.
63. In response, the representative of Chinese Taipei said that a system of licensing had been
operating in relation to the importation of certain products that consisted of area restrictions,
discretionary licensing and import controls.  Automatic licensing operated to grant an import license
without requiring the Customs to screen the goods.  Discretionary licensing required that the Board of
Foreign Trade issued import licenses for certain products, following approval by consent letter of the
relevant agencies.  In the case of such products, the Council of Agriculture, Industrial Development
Bureau, Department of Health, Environmental Pr otection Administration and other agencies were
required to consent to the issue of licenses for both import controls and discretionary licensing in
respect of products falling within their respective jurisdictions.  Once the importation was approved,
the Board of Foreign Trade issued an import license.
64. The representative of Chinese Taipei stated that as a result of the concerns expressed by
members of the Working Party, Chinese Taipei had decided to establish a "Negative List " system.
The Negative List system would streamline the importation process and replace all pre-existing
licensing requirements, except in cases where the product had essential  security, public order, public
health, or environmental protection implications.  The Negative List would result in the issuing of
licenses by the relevant agencies according to an objective standard, and in a transparent manner.  He
noted, however, that some items on the automatic li cense list would become subject to quantitative
restriction or import ban under the Negative List system, due to the re-categorisation of those items.
For products subject to import monopolies, consent letters would only be granted to importers
enjoying an import monopoly.  The procurement practices of the government agencies enjoying the
import monopoly would be made consistent with Article XVII of the GATT 1994.
65. The representative of Chinese Taipei outlined the operation of its Negative List system under
the June 1997 version as follows.  Items were listed in either Table I (Table of Commodities Subject
to Import Control) or in Table II (Table of Commodities Subject to Conditional Import).  Items listed
in Table I could not be imported unless specially approved by the Board of Foreign Trade or otherWT/ACC/TPKM/18
Page 24
relevant authorities, which were listed in Import Regulations 111/112.  Items listed in Table II
required that an import license be issued prior to importation, by the Board of Foreign Trade or its
designated licensing banks i.e. Import Regulations 121/122.  Tables I and II constituted the Negative
List.  In respect of items that had previously required a license issued by the Board of Foreign Trade
but were not retained in the Negative List, if they  were subject to administration requirement, which
had no trade restriction effect, the Customs were required to carry out an inspection to determine that
all requirements for importation were fulfilled.  The items subject to that requirement were listed in
the "List of Commodities Entrusted to Customs for Import Examination " ("the Entrusted List ").  The
Entrusted List was published together with the Negative List in a consolidated volume arranged by
HS Code number.  The Negative List and the Entrusted List each accounted for 8 per cent of tariff
lines, the remaining tariff items were free of this requirement.  Items contained in Table I were subject
to general import bans, which in respect of most products were justified under Articles XX and XXIof the GATT 1994, whilst others were required to protect domestic sectors.  In the case of bans
necessary to protect domestic sectors, an entitlement to import the necessary quantity could be
auctioned when domestic production fell short of demand.  He stated that upon accession, the items
listed in Table I could be moved to Table II if quotas or tariff quotas were used as transitional
measures.
66. In response to further questions from members of the Working Party, the representative of
Chinese Taipei explained that the decision whether a product should be included in the Negative List
was taken by government agencies.  The legal basis for including items in the negative list was
Article 11 of the Foreign Trade Act, which permitted the imposition of a restriction if the restriction
was necessary to fulfil obligations under international treaties or trade agreements, or for  defencepurposes, social security, culture, human health, environmental protection reasons or to implement
specific policies.  After accession the inclusion of new items would be subject to a review procedure
to ensure WTO consistency.  Although the legislation did not specifically provide for interested
parties to make representations concerning the inclusion of an item in the negative list, existing
practice permitted such representations to be made to decision makers.  The practice of invitinginterested parties to express their view when considering changes to the Negative List would be
continued.  Following accession to the WTO, the number of items included in the negative list would
be substantially reduced; inclusion of new items w ould be subject to a review procedure to ensure
WTO consistency.  He also noted that the effect of the recent Foreign Trade Act was to limit the types
of considerations required to be taken into account by administrators when deciding whether items
were to be included in the Negative List as subj ect to new import licensing requirements.   The
Working Party took note of this commitment.
67. Several members of the Working Party indicated that all bans and restrictions set out in the
Negative List, and the requirements for import lice nsing being issued by more than one regulatory
agency should, be brought into full conformity with the WTO Agreement, especially the Agreement
on Import Licensing Procedures.  In particular, a member of the Working Party noted that some of
Chinese Taipei's stated reasons for restrictions did not appear consistent with WTO requirements, e.g.,restrictions required to protect domestic sectors.  This member requested specific justifications for any
import restrictions maintained or imposed in the future.  A general statement that  import bans, which
in respect of most products were justified under Articles XX and XXI was insufficient to evaluate any
commitment.  In response, the representative of Chinese Taipei noted that although the Agreement on
Import Licensing Procedures allowed Members to have more than one import licensing entity,Chinese Taipei would work towards a system that required import licenses to be obtained from one
regulatory entity only.  Some members of the Working Party said that all import bans, quantitative
restrictions import licensing restrictions, and other non-tariff measures inconsistent with the
requirements of the WTO Agreement would have to be eliminated prior to Chinese Taipei's accession.
Some members of the Working Party said that if Ch inese Taipei believed that certain of its import
bans, quantitative restrictions and administrative requirements were not inconsistent with the
provisions of the WTO, the onus was on Chinese Taipei to demonstrate this.  They requested ChineseWT/ACC/TPKM/18
Page 25
Taipei to modify this list to show: the precise de scription of the product affected by HS number, the
measure or measures applied to each, the specific WTO provisions which justified the maintenance of
the measure or measures and the responsible agency.  If border measures were to be justified to
enforce Technical Regulations or Sanitary and Phytosanitary Measures, the table should also show the
relevant national standard(s) and any international standard(s).  The Working Party would then be in aposition to examine the matter further.  The representative of Chinese Taipei stated that a table
containing the justifications for placing items on the Negative List would be submitted to the Working
Party.
68. The Consolidated List of Commodities Subject to Import Regulations and Commodities
Entrusted to Customs Import Examination was referred to in Attachment C to this Report.  The
representative of Chinese Taipei undertook to notify any changes introduced to the Consolidated List
in accordance with the Agreement on Import Licensing Procedures.  The Working Party took note ofthese commitments.
69. In response to a request that Chinese Taipei produce a plan for the elimination of quantitative
or other non-tariff measures on fish, the representative of Chinese Taipei stated that Chinese Taipei
would eliminate all quantitative restrictions on these products from the date of accession, with the sole
exception of import bans on mackerel, carangid and sardines.  The existing import controls formackerel, carangid and sardines would be replaced by tariff rate quotas which would be distributed, as
indicated in paragraphs 27-35, through procedures consistent with GATT 1994 and the Agreement on
Import Licensing Procedures.   The Working Party took note of these commitments.
70. Some members of the Working Party noted the continued application of non-tariff measures
to imports of certain yachts and recreational fishing vessels and a ban on the importation ofmotorcycles, including those with reciprocating internal combustion piston engines of a cylinder
capacity exceeding 150cc.  These members of the Working Party stated that the restrictions were not
justified under the WTO Agreement.  In addition, some members noted that Chinese Taipei had not
developed appropriate emission standards for motorcycles over 150cc which in itself could preclude
effective market access even if the formal ban was eliminated.  Finally, those members noted thatChinese Taipei restricted motorcycle access on certain major highways in Chinese Taipei.  These
issues would need to be addressed at the time the ban was eliminated to ensure effective market
access for these products.
71. The representative of Chinese Taipei stated that upon accession, Chinese Taipei would
implement a licensing system for recreational fishing vessels that conformed to the automatic
licensing provisions of the WTO Agreement on Import Licensing Procedures and would require
importers to have an approved abandonment/replacement right as applicable to domestically builtfishing boats.  He also stated that Chinese Taipei would eliminate the import ban on motorcycles over
150cc six months after accession to the WTO and would permit their import.  At that time, Chinese
Taipei would implement emission standards for motorcycles over 700cc comparable to international
standards.  The representative of Chinese Taipei al so stated that the restrictions on motorcycle access
to roads would generally apply only to the two major cross-island motorways in Chinese Taipei.  Hestated that restrictions on motorcycle access to roads would not be barriers to market access and that
Chinese Taipei would consult, upon request of a WTO member, regarding road access restrictions and
their effects.  The representative of Chinese Taipei further stated that Chinese Taipei would eliminate
the import ban on passenger cars equipped with diesel engines two years after accession to the WTO.
The Working Party took note of these commitments.
72. The representative of Chinese Taipei said that from the date of accession, Chinese Taipei
would apply its import licensing and quantitative restrictions regime in strict conformity with WTO
Agreements, in particular with the Agreements on Agriculture and Import Licensing Procedures.
Chinese Taipei would also ensure that the distri bution of import licenses, quotas, tariff-rate quotas,WT/ACC/TPKM/18
Page 26
permits or any other means of approval for importation or the right of importation by  all levels of
government would not be conditioned on whether competing domestic suppliers of such products
exist or on performance requirements of any kind, including but not limited to local content or mixing
requirements, the transfer of technology, the conduct of research and development, minimum export
requirements, or on the origin or nature of the en terprise.  Chinese Taipei would ensure that price
increases, if any, in respect of imports by state trading enterprises would be imposed in a manner
consistent with the requirements of Article II:4 of GATT 1994 and Article 4.2 of the Agreement on
Agriculture.  The Working Party took note of these commitments.
73. The representative of Chinese Taipei said that  Chinese Taipei also undertook to eliminate and
not reintroduce or apply import bans, quantitative re strictions, licensing restrictions, or other non-
tariff measures having similar effect which were not justified under specific provisions of the WTO
Agreement. He also noted that Chinese Taipei would not use measures related to customs proceduresand technical product or safety standards and sanitary and phytosanitary measures as disguised
barriers to trade and that any measures applied would be no more restrictive than necessary to
accomplish their legitimate goals.  The Working Party took note of these commitments.
Customs Valuation
74. Some members of the Working Party requested information on the system of customs
valuation in Chinese Taipei.  In response, the representative of Chinese Taipei stated that paragraph 1
of Article 12-1 of the Customs Law reflected the situations in which the transaction price would not
be used as the basis of customs value.  The transaction value would not be used when the invoice
price did not include the cost adjustments provided under Article 12 of the Customs Law and the
importer failed to provide objective and quantifiable information to support the price calculation.  Inaddition, if the Customs had any doubts concerning the adequacy or accuracy of an invoice, it
normally requested the importer to provide an explanation or other evidence to substantiate the
validity of the invoice.  If the importer refuse d to give explanations or the evidence provided
contradicted the facts, and further investigation proved that the invoice price was not the price
actually paid or payable, the Customs could determine that the invoice price would not be accepted asthe customs value.  In such a circumstance, Article 12-2 to 12-6 of the Customs Law provided that the
value was assessed in the following sequence: firstly, the transaction value of identical goods;
secondly, the transaction value of similar goods; thirdly, the deductive value; fourthly, the computed
value; and, fifthly, any other reasonable value.
75. Some members of the Working Party asked whether any minimum import values were used
in Chinese Taipei.   The representative of Chinese Taipei replied that although Article 12 of its
Customs Law provided for use of a duty paying value list which provided a pre-determined value forimported products, the government, by administrative order, had eliminated the pre-determined
values.  The discretionary power had been eliminated as the result of the April 1997 amendment to the
Customs Law.
76. Some members of the Working Party said that some aspects of the customs valuation regime
of Chinese Taipei appeared to be inconsistent with the requirements of the Agreement on theImplementation of Article VII (Customs Valuati on Agreement) in the following respects: the
authority to use the duty paying value list or any reference price mechanisms or other arbitrary lists of
prices used for customs valuation purposes on agricultural and other imports should be eliminated;
and the selection of valuation methods outside the hierarchy provided in the Customs Valuation
Agreement, particularly in the case of valuation of leased and rented goods, should be addressed.They also noted that precise WTO consistent rules on the determination of whether parties were
related when dealing with the customs valuation of transactions between related parties were required;
and provisions giving effect to the WTO Ministerial Decision on Customs Valuation should be
enacted.WT/ACC/TPKM/18
Page 27
77. Some members of the Working Party also expressed concern regarding the practice of
requiring importers to post bonds for prompt clearance of goods, in particular horticultural goods,
based on pre-determined reference prices.  These reference prices were not established in a
transparent manner, were often changed without prior notice and no opportunity was provided for
comment on the rate established.  In the view of these members, this practice had the same effect asuse of reference prices to calculate duties.  In response, the representative of Chinese Taipei stated
that its use of reference prices in determining the amount of the bond to be posted to facilitate prompt
clearance of goods was not inconsistent with the WTO obligations, in particular, the obligation under
the Agreement on Customs Valuation.
78. The representative of Chinese Taipei stated that Chinese Taipei would continue to improve its
current practice of requiring importers to post bonds for prompt clearance of goods in order to make
the bond amount a closer reflection of the actual value of the goods.  Any bond paid would berefunded, if a post-clearance assessment of the customs value of the goods was less than the bond
amount.  Chinese Taipei would, by the date of accession, adopt an equitable, transparent Customs
bonding system for any perishable fruits and vegetables  subject to such requirements that allows for
potentially frequent adjustment to the bond value to take account of prevailing market forces.  The
representative of Chinese Taipei stated that the Customs bonding system would have the followingcharacteristics:
(i) specific bond values would be fixed for each supplier country.  Upon request,
Chinese Taipei Customs authorities would make available to any domestic or foreign
interested party the data, the data source,  and the methodology used in formulating
the reference price upon which the value of the bond was based.
(ii) Adjustments would be made to the specific bond values, as frequently as  necessary,
to take account of prevailing international market prices, and seasonal quality
consideration.
(iii) Alternative data sources would be considered, should representatives of an exporting
country believe that more appropriate and accurate data exist beyond that beingemployed by Chinese Taipei in setting the bond values.
(iv) A mechanism  would be established to provide, at the request of either an exporting
country or Chinese Taipei authorities, for prompt consultations should a question or
concern arise relative to an established bond value.
The Working Party took note of these commitments.
79. Responding to comments from some members of the Working Party detailing other areas
where the customs valuation regime of Chinese Taipei did not concord with the provisions of theAgreement, the representative of Chinese Taipei in dicated that these issues were addressed in the
implementing legislation for WTO accession.
80. The representative of Chinese Taipei confirmed that amendments to bring the Customs Law
into conformity with the Customs Valuation Agreement would be made prior to accession, either by
eliminating the inconsistent practices or amending current laws and regulations to bring proceduresinto line with the Customs Valuation Agreement.  He confirmed that Chinese Taipei would implement
the Customs Valuation Agreement fully upon accession, without recourse to any transition period.  He
further committed that Chinese Taipei would, with a view to resolving specific problems, upon
request, provide information to WTO Members on the methods for determination of customs
valuation of specific products and consult concerning the effect of Chinese Taipei's customs valuationprocedures on their trade.  The Working Party took note of these commitments.WT/ACC/TPKM/18
Page 28
Rules of Origin
81. Some members of the Working Party requested information about the elaboration of rules of
origin in Chinese Taipei whether in the context of free trade agreements or otherwise, and also
requested Chinese Taipei to confirm that its rules of origin for both preferential and non-preferential
trade complied fully with the WTO Agreement on Rules of Origin.
82. The representative of Chinese Taipei said that the Customs Law had been amended in
April 1997 to provide a legal basis for the establishmen t of rules of origin fully consistent with the
WTO Agreement.  The Rules of Origin on Imported Goods set out the criteria for determining origin.
The representative of Chinese Taipei stated that  Chinese Taipei would ensure that its laws and
regulations relating to rules of origin were consistent with the relevant WTO Agreements upon
accession.  The Working Party took note of this commitment.
Preshipment Inspection
83. Some members of the Working Party requested information on whether the services of a
preshipment inspection firm were employed by Chinese Taipei.  The representative of Chinese Taipei
said that Chinese Taipei did not use pre-shipment inspection.  The representative of Chinese Taipei
noted however that Chinese Taipei had amended the Foreign Trade Act in April 1997 to provide the
legal basis for the authority to regulate preshipment inspection activities of firms mandated by foreigngovernments.
84. The representative of Chinese Taipei stated that Chinese Taipei would ensure that its laws and
regulations relating to preshipment inspection would be consistent with the relevant WTO
Agreements, in particular, the Agreements on Preshipment Inspection and Customs Valuation.  The
Working Party took note of this commitment.
Anti-Dumping and Countervailing Duties
85. In response to questions from members of the Working Party the representative of Chinese
Taipei said that in 1984 Chinese Taipei had enacted "The Implementing Regulation on the Imposition
of Countervailing Duties and Anti-Dumping Duties ".  That Regulation provided that countervailing
or anti-dumping duties could be levied on goods found to have received subsidies or to have beendumped and which threatened domestic industries.   In the view of Chinese Taipei the implementing
regulations had been in compliance with the requirements of the Tokyo Round Codes on
Anti-Dumping and Subsidies and Countervailing Measures. In pursuance to the 1997 amendment to
the Customs Law, Chinese Taipei undertook to revise the Regulations to make them consistent with
the Uruguay Round Agreements prior to accession to the WTO and to submit them to the WTO.
86. The representative of Chinese Taipei stated that, Chinese Taipei would ensure that its
legislation on anti-dumping and countervailing duties was in full conformity with the requirements ofthe WTO Agreement, in particular Article VI of GATT 1994 and the Agreements On the
Implementation of Article VI and Subsidies and Countervailing Measures from the date of accession.
Chinese Taipei would also ensure that any anti -dumping or countervailing duties imposed on any
product after its accession were in accordance with the requirements of Article VI of GATT 1994 and
the Agreements On the Implementation of Article VI and Subsidies and Countervailing Measures.The Working Party took note of these commitments.
Safeguards Regime
87. Some members of the Working Party noted that a provision in the Foreign Trade Act, referred
to as the "trade imbalance clause " permitted Chinese Taipei to suspend trade from specific countriesWT/ACC/TPKM/18
Page 29
because of persistent trade deficits and did not specifically authorise the type of actions foreseen in
the Understanding on Balance of Payments Provisions of GATT 1994.  In response to requests for
justification of this provision and measures taken pursuant to it, the representative of Chinese Taipei
said that, in his view, Articles XI, XII, and XI X of the GATT 1994 authorized the maintenance of this
particular provision of the Foreign Trade Act.  Some members of the Working Party disagreed withthis opinion and stated that the provision in question was not in conformity with the requirements of
WTO Agreement, in particular GATT 1994 Articles I, II, XI, XII, XIII, XIV and XIX.  Following
further discussions in the Working Party, the representative of Chinese Taipei agreed that certain
provisions of the Foreign Trade Act were inconsistent with the provisions of the WTO.
88. The representative of Chinese Taipei stated that in April 1997, the Foreign Trade Act had
been revised to address members' concerns about the trade imbalance clause.  This clause had been
replaced with one that was consistent with Article XII of the GATT 1994.  The representative ofChinese Taipei further confirmed that the provisions of the Foreign Trade Act would be implemented
from the time of accession in a manner conforming to the provisions of the WTO Agreement.
Moreover, the representative of Chinese Taipei stated that should a critical balance of payment
situation develop, Chinese Taipei would give preference to those measures referred to in the
Understanding on the Balance of Payments Provisions of GATT 1994 as price-based measures toaddress the situation and would maintain any measures only so long as necessary.  In the circumstance
that Chinese Taipei must resort to measures that were not price-based, Chinese Taipei would
transform these measures into price-based measures within 6 months after implementing the initial
measures.  Moreover, any measures taken for ba lance-of-payment reasons would not be used to
provide import protection for specific sectors, industries or products.
89. The representative of Chinese Taipei stated that, from the time of accession, the safeguards
regime would be fully consistent with the WTO Agreement on Safeguards.  The Working Party took
note of these commitments.
Export Regulations
90. In response to requests for information on any restrictions maintained on exports, the
representative of Chinese Taipei stated that no products were prohibited from export from Chinese
Taipei.  Ammunition, narcotics, protected wildlife, and strategic high-tech products were subject to
strict export controls, and could only be exported under special export permits.  As a result of
measures adopted by importing countries, certain other items such as textiles were subject to an
export licensing system.  In document WT/ACC/T PKM/13 the representative of Chinese Taipei
provided the Working Party with a list of all pr oducts subject to export licensing maintained to
ensure:
(i) the implementation of quantitative restriction arrangements and voluntary restraint
arrangements;
(ii) essential security, the security of supply of certain daily necessities and important
industrial materials, including rice and salt;
(iii) social policies, including narcotics control;(iv) protection of endangered species of wild  fauna and flora, including Formosan land-
locked salmon;
(v) hygiene and health, including eels;
(vi) agricultural development, including bananas, white skin sugar cane, and onions.WT/ACC/TPKM/18
Page 30
91. In order to streamline the granting of an export licence, an automatic electronic export licence
had been adopted.
Export Processing Zones / Economic Processing Zones / Export subsidies
92. Some members of the Working Party requested information on the Export Processing Zones
("zones"), in particular, information on the total value of trade as well as the percentage of zoneproduction.  In response, the representative of Chinese Taipei said that the zones were established
pursuant to the Statute for the Establishment and Management of Export Processing Zones.  The
Statute was amended in 1999 and thereafter renamed the Statute for the Establishment and
Management of Economic Processing Zones.  As  a result, Export Processing Zones were also
renamed Economic Processing Zones.  Investors in the zones were entitled to the following
incentives:
(a) exemption from the following duties and taxes:
(i) customs duties on imported machinery and equipment, raw materials, fuels,
commodities, components, and samples;
(ii) commodity tax on the exported or imported products, machinery and equipment,
raw materials, components, and samples;  and
(iii) deed tax on newly built standard buildings acquired from the zone's Administration
or the buildings legally acquired from the zone's Administration;
(b) no business tax on exported goods and their related labour services, as well as on the goods
purchased by the export enterprises;
(c) due to the exemption from taxes or duties, there was an exemption from the requirement to
keep certain documents and to pay tax deposits etc..  In addition, transfers of property todifferent enterprises within a zone were not subject to the business tax.
93. The representative of Chinese Taipei further added that the zones were managed by the
Economic Processing Zones Administration, Ministry  of Economic Affairs.  Various products and
services were produced in the zones.  The representative of Chinese Taipei noted that there were four
zones in Chinese Taipei.  In 1994, 96 per cent of production in the zones was exported.  UnderArticle 5 of the Statute for the Establishment and Management of Export Processing Zones, most of
the production of the zones was required to be exported.  A certain percentage of the production could
be sold on the local market, provided that it was accorded the same treatment as imported products,
and was subject to customs duties, commodity tax and business tax.  The product of the zones sold in
the domestic market was subject to customs duty on the final product, not on inputs into the product.
If goods produced in the zones for local sale were less than 50 per cent of the annual production, the
zone's Administration would automatically approve the domestic sale of the goods.  If the goodsproduced for local sale were in excess of 50 per cent of annual production, the approval by the zone's
Administration was discretionary.  However, no such application for approval had ever been refused.
The representative of Chinese Taipei added that there was no local content requirement for enterprises
wishing to operate in the zones.  In the past subsidiaries or branches of enterprises could not be
located in the zones.  In January 1990 Chinese Taipei had amended the Implementing Regulation inorder to permit subsidiaries or branches of enterprises to be located in the zones.  The product of
zones which entered the domestic market accounted for only 3-4 per cent of the value of total zones
production in 1994, 6-7 per cent in 1997, 8.19 per cent in 1998 and 11.34 per cent in 2000.  In May
1997 Chinese Taipei had lifted the 50 per cent limit on local sales through amendments to the Statute.
Domestic sales had exceeded 50 per cent of the production of crystal oscillators, electronics testers,WT/ACC/TPKM/18
Page 31
voice synthesizers, capacitor parts, sensors, etc..  Around 41.6 per cent of zones' production had
benefited from the tax exemption granted by the Statute for Upgrading Industries.
94. Some members of the Working Party noted that some of the arrangements providing for fiscal
incentives for businesses located or operating in th e zones appeared to be in conflict with the
provisions of the SCM Agreement and the Agreement on TRIMS.  They requested further informationon the fiscal incentives offered.  In response, the representative of Chinese Taipei indicated that
investments in the zones were exempted from customs duties and the commodity tax on imported
machinery, raw materials, fuels, commodities, components and samples, and the deed tax on the new
buildings purchased from or otherwise acquired from  the zones' Administration.  No business tax was
charged on the exported goods and their related services, nor was the business tax levied on purchases
by those enterprises.  These enterprises were also exempted from applying for tax exemption,
guarantee, relevant bookkeeping, and paying provisional tax.  He further stated that in ChineseTaipei's view those practices complied with the requirements of the WTO Agreement and did not
constitute export subsidies.  Their trade effect, if any, was minimal:  0.185 per cent of total exports.
95. Some members of the Working Party noted that import duty and tax exemptions on goods
imported into the zones were provided for goods not directly incorporated into the exported product.
Direct taxes on the profits from the exports of those enterprises were also exempted.  In their viewthese practices appeared to be in conflict with the SCM Agreement.  Those subsidies could also be
countervailable.  The representative of Chinese Taipei replied that the purpose of the zones was to
create duty-free zones for the production of exports, in order to create an environment where exports
manufactured from imported inputs need not obtain a refund of duties.  This was consistent with the
obligations contained in the WTO Agreement.  The limitation on duty refunds/exemptions on inputsdirectly incorporated into exported products was applied by many developed economies, for the
purpose of administrative expediency, rather than being based on the theory that refunds/exemptions
of duties on imported inputs not directly incorporated into the exported products would unduly
increase the exporters' competitiveness and should not be allowed.  Because the products were
primarily for export, it was therefore not necessary to limit exemptions or refunds to the extent ofproducts directly incorporated into the products exported from the zones.  In fact, in Annex II of the
SCM Agreement, inputs consumed in the producti on process, for which drawback of import charges
was allowed, were defined to cover energy, fuel and oil in the production process and catalysts which
were consumed in the course of their use to obtain the exported product as well as the inputs
physically incorporated.  Because the exports from the zones did not receive "undue " amounts of
refund or exemption the relevant practices did not constitute a subsidy.  The representative of Chinese
Taipei added that the SCM Agreement Annex I "Illustrative List of Export Subsidies " did not contain
the requirement that the input be physically incorporat ed into the exported product.  He stated that the
exemption from corporate income tax for zones  en terprises had been abolished together with the
Statute for Encouragement of Investment at the end of 1990.  The current tax exemption granted to
zone's enterprises also applied to enterprises located outside the zones, whether or not they exported
their products, provided that they met the requ irements set forth in the Statute for Upgrading
Industries.  Consequently, the practice was neither a specific subsidy nor conditional upon export
performance.
96. Some members of the Working Party reiterated that the incentives provided in the zones
appeared to be incompatible with the SCM Agreem ent.  They expected that Chinese Taipei would
ensure that sales into the market of Chinese Taipei  from the zones would be subject to normal taxes,
tariffs, and other border measures.  In addition, these members considered that Chinese Taipei should
satisfy the Working Party that the regime of the zones was consistent with all the requirements of the
WTO concerning the treatment of goods, services and intellectual property.  The representative of
Chinese Taipei replied that Chinese Taipei had decided to levy duties on zone products entering the
domestic market on the basis of ex-factory prices minus value added resulting from manufacturing orprocessing activities in the zones, and would undertake to do so in the future.  The formula to be usedWT/ACC/TPKM/18
Page 32
in calculating the value added by the zones would take into account the relevant practices of other
economies.  He added that Chinese Taipei hoped that the changes to the system would alleviate
concerns that the current system operated as a disincentive for zone products entering the domestic
market.  In May 1997 the Statute was amended and after the amendment, it was renamed the Statute
for the Establishment and Management of Economic Processing Zones.  In the interim, elimination ofthe limits on sale of products into the domestic economy had removed the requirement to export
products from a zone and the proportion of goods exported from the zones had declined over the first
six months of 1998.  While the fiscal incentives previously provided under the Economic Processing
Zones statute could be considered by some members to constitute subsidies, elimination of the export
requirement, in Chinese Taipei ’s view, resolved this issue.
97. The representative of Chinese Taipei confirmed that, from the date of its accession, all taxes,
charges, and measures affecting imports, including import restrictions and customs and tariff charges,applied to imports from abroad into other parts of Chinese Taipei would be applied to zone products
entering the domestic market.  While customs duties would be applied on the basis of ex-factory
prices minus value added resulting from manufacturing or processing activities in the zones, other
taxes, charges and measures would be based on the ex-factory price.  He further added that
preferential arrangements provided to enterprises located within the zones would be extended to all
enterprises whether domestic or foreign and maintained in a WTO consistent manner, in particular
with regard to the principles of non-discrimination and national treatment.  Furthermore, export
requirements or incentives would not be rein troduced.  The Working Party took note of these
commitments.
Internal Policies Affecting Trade in Goods
Industrial Policies Including Subsidies
98. Some members of the Working Party stated th at in Chinese Taipei there were currently in
place a number of official industrial assistance prog rams that could be considered prohibited industrial
subsidies under the WTO Agreement on Subsidies and Countervailing Measures (the SCM
Agreement).  These practices included all export subsidies that were of the type contained in theillustrative list set out in Annex I to the SCM Agreement (including preferential tax rates and other
subsidies contingent upon export performance) and other subsidies contingent upon the use of
domestic over imported goods, as provided for in Article 3 of the SCM Agreement.
99. Some members of the Working Party said that they considered that many of the industrial
promotion plans currently being implemented by Chinese Taipei acted as disguised subsidies.  These
members requested that Chinese Taipei review these measures in light of the WTO Agreement on
Subsidies and Countervailing Measures.  The representative of Chinese Taipei recalled that ChineseTaipei had, as an observer, participated in the meetings of the GATT 1947 Committee on Subsidies
and Countervailing Measures.  He said that Chinese Taipei undertook to notify all relevant laws and
regulations in order to facilitate the Committee's discussion of the industrial promotion plans.
Moreover, Chinese Taipei undertook to notify its subsidy practices according to Articles 25 and 28 of
the WTO Agreement on Subsidies and Countervailing Measures.  In documentWT/ACC/TPKM/8/Rev.2, the representative of Chines e Taipei submitted to members of the Working
Party a draft Notification Pursuant to Article XVI.1 of the GATT 1994 and Article 28.1 of the
Agreement on Subsidies and Countervailing Meas ures.  In document WT /ACC/TPKM/9/Rev.2, the
representative of Chinese Taipei submitted to the Working Party a draft Notification Pursuant to
Article XVI.1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing
Measures.
100. In response to questions about industrial subsidies maintained by Chinese Taipei, the
representative of Chinese Taipei explained that the Statute for Upgrading Industries ("SUI") providedWT/ACC/TPKM/18
Page 33
financial assistance to industry, such as tax exemptions or accelerated depreciation to enterprises in
"newly emerging, important and strategic industries " that were very beneficial to economic
development, and were of high risk and in great need of support.  The representative of Chinese
Taipei explained that to qualify for this assistance, as a "newly emerging, important and strategic
industry ", the enterprise was required to meet the following criteria:  (1) the paid-in or increased paid-
in capital for the investment plan should be over  NT$200 million;  and (2) the amount of the fund
available for the purchase of brand-new machinery/equipment in the investment plan should be over
NT$100 million.  The above criteria for paid-in or increased paid-in capital and the amount of funds
for purchasing brand-new equipment/machinery were different from industry to industry.  He further
explained that the benefits specified in Article 5 of the SUI  (conferring accelerated depreciation of
assets) applied to all enterprises, organized in the form of a company pursuant to the Company Law of
Chinese Taipei, including companies incorporated by foreign investors or entities.  He added that all
industrial sectors could be entitled to receive accelerated depreciation for investment in instruments
and equipment for exclusive use for energy saving, R&D purposes, experiments or inspection of
quality deemed eligible pursuant to Article 5 of th e SUI.  The representative of Chinese Taipei said
that in the fiscal year 1999 the total value of the tax exemptions or tax reductions granted, pursuant to
the SUI , was approximately US$1.45 billion.
101. Some members of the Working Party expressed concern that Article 18 of the Statute for the
Establishment and Administration of a Science-Based Industrial Park ("SSP") constituted a prohibited
subsidy because the business tax was exempted from sales of domestically produced machinery and
equipment sold to enterprises inside such an industrial park, but was imposed on imported machinery
and equipment sold to enterprises inside a park.  In their view, this constituted an import substitutionsubsidy.  Some members of the Working Party pointed out that a similar provision could be found in
Article 17 of the Statute for the Establishment and Management of Economic Processing Zones
(Amended Edition) ( "Amended  law ").  The representative of Chinese Taipei explained that the
business tax was not included in the scope of either Article 18 of the SSP or Article 17 of the
Amended  law. The business tax was, in fact, exempted on machinery and equipment that wasimported for non-resale.  Such imports were covered by the very broad exemption from business tax
under Article 41 of the Business Tax law for goods imported by businesses for "business operations
purposes. "  Some members asked the Chinese Taipei representative why, if this was the case, was
there a need for the preceding article of the SSP, Article 17, which refers specifically to the business
tax and exempts from such tax imports of machinery and equipment into a park.  The representative
of Chinese Taipei explained that the provisions of Article 18 of the SSP and Article 17 of the
Amended Law were redundant to Article 41 paragraph 2 of the Business Tax Law in respect of thebusiness tax.  In light of these concerns, however, the representative of Chinese Taipei stated that the
relevant provisions (proviso) of Article 18 of the Statute for Establishment and Administration of a
Science-Based Industrial Park and Article 17 of the Amended law had been eliminated respectively in
January and May 2001.
102. Some members of the Working Party noted that Article 7 of the Statute for Upgrading
Industries (SUI) gave tax credits to industries investing in particular regions filling criteria to be
determined by the government, and requested more information on those criteria.  The representative
of Chinese Taipei noted that the criteria were whether a particular region was poor or the economic
development was stagnated relative to population, levels of employment, transportation capacity, tax
revenues, the average regular income per family, and the availability of public facilities.  For thispurpose, each year the counties were ranked in a published list which determined levels of regional
assistance.  Chinese Taipei submitted a draft  notification of  the investment tax credit provided under
Article 7 of the SUI in Annex III of document WT/ACC/SPEC/TPKM/8.
103. Some members of the Working Party expressed concern about the transparency of the criteria
used to determine which enterprises would receive assistance under the Statute for UpgradingIndustries and requested information on the scope of application for tax benefits, whether they appliedWT/ACC/TPKM/18
Page 34
to domestic and foreign investors, to all industrial sectors and to specific areas, as well as a
breakdown of expenditures.  In response, the representative of Chinese Taipei said that under the tax
incentive programme, any company for establishing a renowned brand and image exceeding NT$3
million expenditure in a tax year was entitled to a tax credit of 10 per cent of the tax payable in 1993;
if the expenditure exceeded NT$5 million and the company was authorized by the Ministry ofEconomic Affairs to use the symbol of "excellence ", the tax credit was 15 per cent of the tax payable.
Other tax benefits were allocated to all industrial sectors or to particular industrial sectors.  In a recent
period the incentives under the Statute for Upgrading Industries related to the Business Income Tax
had included accelerated depreciation, corporate investment tax credit, institutional shareholders tax
credit and foreign investment loss reserves.  Benefits had also concerned the Deferral of Land Value
Increment Tax, Stamp Tax, Deeds Tax, etc.
104. Some members of the Working Party enquired whether all of the criteria listed in Article 21
of the Statute for Upgrading Industries were required to be established before a business could be
eligible for assistance from the Development Fund.  Those members also requested examples of how
the  government determined when assistance should be paid for other purposes as prescribed by
sub-paragraph 7 of that Article.  The representative of Chinese Taipei said that only one criteria
needed to be satisfied, and that sub-paragraph 6 only applied when none of the other criteria applied.He also explained that the value of the revolving Fund was approximately NT$111.1 billion at the end
of July  2001.
105. Noting that the Statute for the Development of Medium and Small Businesses and the Statute
for Upgrading Industries provided for industrial incentives, some members of the Working Party
requested an estimate of their set-up amount in a recent period.   In response to another question, therepresentative of Chinese Taipei noted that Chinese Taipei had established the Fund for Development
of Small and Medium Businesses in 1992, with a total value of NT$12 billion.  Until March 1998, the
allocated amount of the Fund was NT$9.1 billion.  Fu rthermore, almost all enterprises could qualify
as small or medium sized enterprises.
106. Some members expressed concerns that the tax credit provided in connection with the
creation of internationally recognized brands const itutes an export subsidy and thus prohibited under
the SCM Agreement.  Article 4 of the implementing regulations for the relevant law lists covered
expenses, which include, in part, "expenses for international market investigation for the development
of new products. "  The representative of Chinese Taipei stated that the Regulation on Creation of
International Brands had been eliminated in December 2000. Any future programme in this area
would be consistent with WTO requirements and would not reintroduce prohibited subsidies.  The
Working Party took note of this commitment.
107. Some members of the Working Party also noted that among the measures to support new and
promising industries were tax concessions and that industrial cooperation programmes could be
applied in certain areas.  Reference was also made to the existence of two separate steel prices and the
need to ensure that the lower domestic price was not used to indirectly subsidize the export of steel.
With regard to steel, the representative of Chinese Taipei said that besides direct export price at theworld market level, China Steel Corporation (CSC) maintained a two-tier pricing in the domestic
market.  The higher domestic price offered to customers whose products were sold and consumed in
the domestic market was based on the landed, duty-paid price of imported steel products. The lower
one (i.e. indirect export price), applied to customers who manufactured steel into final products for
exports, was based on the landed, duty-free price of imported steel products.  The indirect export pricewas aimed to ensure that CSC's pricing remained competitive with that of imported steel.  The
two-tier pricing system had been abolished in 1994 and China Steel Corporation had been privatized
in April of the same year.  Prices of China Steel Corporation's products since then had been
determined according to the market condition.  There had been no State intervention in theWT/ACC/TPKM/18
Page 35
determination of prices whatsoever.  Since then the domestic steel market had been free and
competitive.
108. Some members of the Working Party asked how Chinese Taipei proposed to stimulate
development of desirable industries, particularly high-technology and high value-added industries.
The representative of Chinese Taipei said that in addition to the Statute for Upgrading Industries,Chinese Taipei had eased the requirements rela ting to the acquisition of land used for factory
construction and had taken steps to satisfy long term demand for industrial sites.  Chinese Taipei had
also provided medium and long-ter m training programmes to highly qualified personnel in order to
upgrade skill levels, and had developed the necessary infrastructure pursuant to the Development
Plan.
109. In response to additional questions concerning the specific measures taken by Chinese Taipei
to support new and promising industries, the representative of Chinese Taipei indicated that ChineseTaipei supported research and technological development in the areas and technologies identified as
promising and major focuses of attention.  The Mi nistry of Economic Affairs (MOEA) gave priority
to funding scientific research and development.  Such investment had increased yearly.  The MOEA
also contracted with non-profit seeking research institutes to develop "Generic Technology " required
by promising industries.  Promising industries could also enjoy tax incentives, pursuant to Article 8 ofthe Statute for Upgrading Industries. In order to support industries deemed to be "Important
Technology-Based Enterprises ", the following steps were taken.  The  government determined the
generic technologies to be developed for the relevant industries, reviewed  and approved the required
budget and  entered into contracts with non-profit research institutions to execute the required
research.  Fourth, private companies might be invite d to participate in the joint development of the
required technologies, or alternatively, following development of the technology, might be offered the
technology at a market price.  Fifth, the non-profit research institutions might sub-contract specific
research tasks to private companies.  Sixth, if th e private companies had the capacity to develop the
required technology by themselves, the authorities could assist them in obtaining the necessary
finance, or could provide other assistance.  The ten promising industries specified in the six yearDevelopment Plan were as follows: telecommuni cations industry, information industry, consumer
electronics industry, semi-conductors industry, precision machinery and automation industry,
aerospace industry, advanced materials industry, specialty chemicals and pharmaceuticals industry,
medical and health care industry and pollution control industry.  The eight key technologies to support
the development of the above-mentioned new and promising industries are: optoelectronics,
information software, industrial automation, applied materials technology, advanced sensing
technology, bio-technology, resource development and energy conservation.
110. In response to questions from members of the Working Party concerning the incentives
allocated to the use of advanced technology and their consistency with WTO obligations, the
representative of Chinese Taipei said that in addi tion to the funding of research and development by
the MOEA, funds were also allocated for technology import or "Inward Technology Transfer ".
Subsidies applied to the purchase of automation equipment and pollution prevention equipment.  Thesubsidy took the form of a tax credit to purchasers.  Depending on whether the equipment was
imported or of domestic manufacture, different tax credits applied.
111. Some members of the Working Party expressed continued concern regarding the assistance
granted for the purpose of developing the "Top-Ten Emerging Industries. " In their view, such
assistance included practices that constituted import substitution and export subsidies and a widerange of R&D funding.  These members sought assurances that Chinese Taipei had included all such
assistance in its subsidy notifications, emphasizing that such notifications would be without prejudice
to the legal status of such assistance.  The representative of Chinese Taipei assured the concerned
members and the Working Party that (1) the top-te n emerging industries did not now, and would not
in the future, benefit from any measure meeting the definition of a "prohibited subsidy " underWT/ACC/TPKM/18
Page 36
Article 3 of the SCM Agreement, other than those notified, and (2) Chinese Taipei had notified all
domestic subsides that the top-ten emerging industries currently benefitted from, namely, (i) R&D
grants provided under Article 10 of "Measures for Assistance in the Development of New Leading
Products "; (ii) low-interest loan granted under Article 21 of the SUI and (iii) tax credits granted under
SUI Article  6,7,8,9.
112. The representative of Chinese Taipei confirmed that the "Program for the Development of
Critical Components and Parts " was nothing more than an illustrative list of the goods/products
covered by Top Ten Emerging Industries and that the Program involves support or assistance
measures only under the "Measures for Assistance in the Development of New Leading Products."
The Program ceased to be effective on 30 June 2000.  With respect to low interest loans under Article
21 of the SUI, the representative of Chinese Taip ei confirmed that the loans that Chinese Taipei
maintained were not given to a specific enterprise, industry or group of enterprises or industrieswithin the meaning of Article 2 of the SCM Agreement, did not require the purchase of domestically
produced goods or services, and did not constitute an incentive or inducement to purchase
domestically produced goods or services over imported goods or services. With respect to Article 6
tax credits, the representative of Chinese Taipei explained that under Article 6 of the SUI, enterprises
that purchased domestically produced automation machinery and equipment, including "automatic
machine equipment, " received a larger tax credit than if they purchased imported automation
machinery and equipment.
113. The representative of Chinese Taipei confirmed that Chinese Taipei would eliminate the
Article 6 tax credit differential upon accession and would not in the future reintroduce it or any other
tax credit differential that favours domestically produced automation machinery and equipment,including "automatic machine equipment. " The Working Party took note of this commitment.
114. The representative of Chinese Taipei said that the Export/Import Bank (Ex-Imbank) was a
government owned bank which provided financing and insurance schemes.  It provided secured loans
to export firms if the terms of sale provided payment terms of 181-360 days, in order to provide
working capital prior to payment.  Interest accrued on such loans at the rate of 0.75 per cent aboveLIBOR for US$ loans in August 1997.  The bank also provided deferred payment "export credits "
with a duration of more than one year to exporters or importers in relation to shipments of machinery
and equipment, and products including turnkey capital goods.  The amount of the down payment was
not less than 15 per cent of f.o.b. contract value.  Interest was charged at the rate of 6.5 - 7.75 per cent
for US$ loans.  Meanwhile the Bank also provided a fixed rate re-lending facility to overseas banks to
enable the purchase of manufactured goods of Chinese Taipei origin, at the rate of 8 per cent, and 8.25
per cent depending on maturity date.  He added that the Ex-Imbank provided an overseas investmentfinancing system which financed domestic firms seek ing overseas investments.  That system did not
provide a more favourable interest rate than commercial loans from other banks.  Financing by the
Ex-Imbank was not linked to or conditional upon export performance.  The representative of Chinese
Taipei reiterated that no export subsidies were paid to export enterprises.
115. Some members of the Working Party referred in detail to the aeronautics and space industry.
These members requested information concerning the Aeronautics and Space Industries Development
Programme, asked whether private or government owned enterprises had received assistance from the
government and enquired about the use of industrial cooperation programmes in this sector.  In this
connection, a member of the Working Party noted that Chinese Taipei had indicated that it would use
defence operating funds, technical personnel, technology and equipment facilities to assistgovernment-owned and private enterprises in the development of research and the development and
the manufacturing of aeronautics and space products and their associated equipment.  These members
indicated that there could be no exemption, transitional or otherwise from subsidies disciplines for any
sector or product such as the aeronautics and space industry.  The representative of Chinese Taipei
said that the Aeronautics and Space Development Centre of the Chung Shan Science ResearchWT/ACC/TPKM/18
Page 37
Institute  had entered into an agreement with the Taiwan Aerospace Corporation and the Industrial
Technology Research Institute for technology transfer.  If a government entity purchased imported
aeronautics and space products, the Committee for Aviation and Space Industry Development could
enter into a technology transfer agreement without penalty clauses, known as an "Industrial
Co-operation Agreement ".  If the foreign supplier entered such an agreement, the supplier was
required to provide a credit line in an amount equal to a percentage of the purchase price as a
commitment to technology transfer and the purchase of domestic aeronautics and space products.
Private companies that purchased foreign aeronautics and space products were encouraged to enter
into such "Industrial Co-operation Agreements ", and if they did so were recommended to commercial
banks by the government of Chinese Taipei.  If they did not enter such agreements, no such
recommendation was made, and decisions by the banks whether to accord loans to those companies
were taken by the banks.
116. The representative of Chinese Taipei stated that, as provided for in Article 28, any such
measure falling within the scope of Article 3 of the SCM Agreement granted or maintained within its
territory would be notified by Chinese Taipei.  Such subsidies, with the exception of those provided
under Article 12 of the Statute for Commodity Tax, would be repealed upon accession and subsidies
provided to manufacturers of automobiles and motorcycles using domestically developed anddesigned parts would cease no later than 3 years after Chinese Taipei's accession to the WTO.  The
Working Party took note of these commitments.
117. The representative of Chinese Taipei stated that, upon accession, Chinese Taipei would
provide a complete notification of all of its subsidies which were specific to an enterprise, industry or
group thereof (within the meaning of Articles 1 a nd 2 of the SCM Agreement) in conformity with
Article 25 of the SCM Agreement.  The Working Party took note of this commitment.
Technical Barriers to Trade
118. In response to requests for information, with respect to the publication of the laws,
regulations, administrative orders and technical rules and standards, invitation of comments by the
public, inquiry points, consultation agencies and other agencies required under the Agreement, therepresentative of Chinese Taipei said that, currently, only the Regulation for the Establishment of
National Standards promulgated in September 1996 contained a provision  that set forth the length of
time for soliciting comments.  There were nine laws, regulations and administrative orders relevant to
the implementation of the Agreement on TBT in Chinese Taipei.  The respective notifications would
be submitted to the WTO in due course.
119. The representative of Chinese Taipei added that Chinese Taipei had formed a special
committee to deal with and to coordinate all matters  relating to the Agreement. To ensure that the
Agreement was applied by all domestic relevant bodies, Chinese Taipei had promulgated the "Points
of Operation Concerning Enquiries under the Wo rld Trade Organization's Agreement on Technical
Barriers to Trade".  With respect to the publication of the technical regulations, standards and
procedures for assessment of conformity, and to the invitation of comments by the public, details
concerning the enquiry point and consultation agency that were required to be involved under theAgreement were as follows:
(i) notices of proposed or adopted technical regulations, standards and procedures for
assessment of conformity would be published in the monthly Official Gazette of
Standards, distributed by the Bureau of Standards, Metrology and Inspection
(previously the National Bureau of Standards) under the Ministry of EconomicAffairs;WT/ACC/TPKM/18
Page 38
(ii) currently, only the Regulation for the Establishment of National Standards
promulgated in September 1996 contained a provision  that set forth the length of
time for soliciting comments.  Apart from this, there were no explicit rules at any
level of government that set forth the length  of time required for soliciting comments.
In principle, all government bodies would provide a reasonable time period (generally60 days) for presentation comments.
120. In response to questions concerning the registration and certification requirements for
imported pharmaceuticals, cosmetics and medical devices, the representative of Chinese Taipei said
that the requirements and approval standards for the importation of pharmaceuticals, cosmetics and
medical devices did not exceed the requirements applied in some advanced WTO members, and were
the same for imported and domestic goods.
121. The representative of Chinese Taipei stated that recognition of foreign quarantine or other
standards would be dealt with in a manner consistent with Article 2.7 of the Agreement on Technical
Barriers to Trade.  The Working Party took note of this commitment.
122. Some members of the Working Party reaffirmed that Chinese Taipei would need to reform its
standards regime to bring it into conformity with the WTO Agreement on Technical Barriers to Trade,
particularly in the area of notification procedures.  The representative of Chinese Taipei replied thatChinese Taipei was reviewing its standards with a vi ew to bringing them into conformity with the
TBT Agreement and had decided to incorporate notification procedures into the draft amendments to
its relevant laws.
123. The representative of Chinese Taipei also provided examples of particular differences
between its standards and ISO and IEC standards, such as domestic electrical standards, ChineseTaipei television broadcasting systems, the design ation of industrial products, and the requirement of
"weight " certificates for all imports of automobiles.  He said that Chinese Taipei was prepared to
comply with the Agreement on TBT but might need  a transitional period for the rectification of laws
or practices which did not comply with the Agreement.  In response, some members of the Working
Party stated that they considered that a transitional period of general application was not appropriate.
124. Following examination of Chinese Taipei's technical barriers to trade regime, some members
of the Working Party stated that in addition to  taking a commitment to apply the Agreement on
Technical Barriers to Trade from the date of accession, without recourse to a transitional period,
Chinese Taipei should commit itself to eliminate the specific problems members of the Working Party
had identified and which were listed below.  In this regard, some members of the Working Party
stated that, as a condition of its accession, Chinese Taipei would be required to eliminate the
mandatory conformity assessment procedures and standards for imports that were not applied tosimilar domestic goods and were not based on relevant internationally recognized criteria.  Chinese
Taipei would be required to accept equivalent third country standards and regulations in particular, in
the case of automobiles and heavy-duty vehicles, concerning the safety requirements (lightening,
specification of brakes, horns, emission standards and test procedures, fuel consumption, on board
diagnostic systems, evaporative requirements, vehicle noise).  Whenever new standards were imposedby Chinese Taipei, enough time would have to be made available for manufacturers to adapt their
products.  Chinese Taipei would be required to abandon carry-over testing for vehicles whose model
types were unchanged from one year to the next and which were identical in emission-related aspects
with the previous model-year vehicles as well as additional quality control testing when manufacturers
in-house test data were made available Chinese Taipei would be required to provide for a simplifiedhomologation for vehicles supplied in small volumes and to extend to CKD vehicles the same
acceptance of self certification for emissions as applied to BU imports.  The representative of Chinese
Taipei said that because of the high density of cars, Chinese Taipei had serious concerns over
pollution resulting from emissions.  Furthermore, Chinese Taipei's current practice was to accept theWT/ACC/TPKM/18
Page 39
results of tests carried out by the original car manufacturers according to the emission standards set by
Chinese Taipei.  New emission and noise standards were implemented with prior notice of three to
four years.
125. Some members of the Working Party also stated that Chinese Taipei should ensure
compliance with requirements for publication of mandatory conformity assessment procedures andstandards and ensure the establishment of a recommended comment period of 60 days prior to
finalization of such measures.   Chinese Taipei should also eliminate from the date of its accession its
requirements for performance testing of imported livestock.  Chinese Taipei should also replace the
weight certificate system for automobiles with an automobile safety certification system of general
application, which would take effect prior to Chinese Taipei's accession.  It was also noted that the
current requirements for performance testing of imports of livestock were inconsistent with Article 2.2
of the Agreement on Technical Barriers to Trade.  These members requested that all suchinconsistencies with the Agreement on Technical Barriers to Trade be eliminated upon accession.
They also stated that Chinese Taipei shou ld submit its statement on implementation and
administration of the Agreement on Technical Ba rriers to Trade to the Committee on Technical
Barriers to Trade at the time of accession.
126. Some members of the Working Party further stated that Chinese Taipei should confirm that
all relevant laws relating to its technical regulati ons, standards, conformity assessment procedures,
and labelling, including product coverage, would be administered by Chinese Taipei in conformity
with relevant international standards and guidelines .  Chinese Taipei should also undertake that the
controls applied in connection with technical regulations, standards, conformity assessment
procedures, and labelling would be applied in no less favourable a manner for imported products thanfor like domestic products.  Such requirements should be administered in a manner which did not
unnecessarily impede trade or create barriers to imported products, and should not be applied to
imported products in an arbitrary manner, in a way which discriminated between supplier countries
where the same conditions prevail, or as a disguised restriction on international trade.
126bis. Some Members noted with concern that Chinese Taipei was considering adopting a technical
regulation to define whisky that would unnecessarily discriminate against the exports of whiskies to
Chinese Taipei by some Members.  The representative of Chinese Taipei confirmed that Chinese
Taipei would ensure that its definition for whisky would take into account generally accepted criteria
for defining whisky, and would avoid restrictive criteria that resulted in unjustifiable discrimination
among products, and be consistent with the TBT Ag reement.  The Working Party took note of this
commitment.
127. The representative of Chinese Taipei stated that Chinese Taipei would fully apply the
provisions of the Agreement on Technical Barriers to Trade from the date of its accession to the
WTO, without recourse to any transitional period.  The Working Party took note of this commitment.
Sanitary and Phytosanitary Measures
128. Some members of the Working Party asked whether the regulations regarding sanitary and
phytosanitary measures including quarantine and inspection provisions were published and readilyavailable to importers and exporters and whether these measures were based on sound scientific
evidence.  They also asked whether Chinese Taipei would accept the sanitary and phytosanitary
measures of other economies which offered equivalent levels of health protection.  In this connection,
information was requested on certain provisions of the Commodity Inspection Law and its
Implementation Rules concerning the inspection of imports, bilateral arrangements, inspection fees,the inspection quantities and sample quantities, the sanitary requirements obtaining products such as
coconut and palm oil, milk, fresh fruits, poultry, bovine meat, pork.  In response, the representative of
Chinese Taipei said that the most commonly used SPS measures in the agricultural sector were set outWT/ACC/TPKM/18
Page 40
in the Commodities Inspection Law, the Statute for Prevention and Control of Infectious Animal
Diseases, the Plant Protection and Quarantine Act, the Quarantine Requirements on the Importation of
Animal and Animal Products, the Quarantine Restri ctions on the Importation of Plants and Plant
Products, the Law Governing Food Sanitation, the Regulations Governing the Quarantine at
International Port, and the Quarantine Regulation for Cholera on Imported Fishery Products.
129. In response to questions whether Chinese Taipei was prepared to apply phytosanitary
standards in a transparent manner based on scientific evidence, the representative of Chinese Taipei
stated that in developing its standards Chinese Taipei  referred to relevant international biological and
entomological publications.  It also evaluated the probability of harm resulting from the introduction
of the pests or diseases.  In addition, comments  on the proposed measures were often sought from
relevant organisations.  In order to ensure transparency in the future, when a regulation was
promulgated by the authority, it would be notified to the relevant associations and trading partners.The representative of Chinese Taipei also provid ed the Working Party with detailed information on
various quarantine rules and import bans concerning the following products: rice and rice products,
sugar, wheat flour, meat and offal, fish, dairy products, and fruits.  The sanitary requirements for food
stuffs were the same for imported and domestic goods.  Domestic goods were also subject to
inspection in order to maintain effective quara ntine in certain instances.  Goods found to be
contaminated with toxigenic vibrio cholerae  were destroyed.  The regulation on pesticide residue
tolerances had been developed on a "positive listing principle ".  The same tests applied equally to
domestic and imported goods.  The CODEX standards set by FAO/WHO were one of the references
used in determining the pesticide maximum residue limits.  There were no procedures for the
recognition of foreign quarantine or other standards in Chinese Taipei.  Chinese Taipei wasendeavouring to modify standards so that they co mplied with international standards, except where
essential security, animal and plant health considerations, or differences in environment, climate,
geography or important technology considerations necessitated deviations from international
standards.  He stated that even though all safety inspection requirements and standards applied equally
to domestic goods, some phytosanitary requirements only applied to imported goods, when onlyimported goods risked contamination by particular diseases and pests.
130. The representative of Chinese Taipei added that the sanitary requirements for food were set
by the Law Governing Food Sanitation.  The standards set out in that law were developed with
reference to the CODEX standards set by the FAO/WHO.  In setting sanitary standards, Chinese
Taipei used Codex standards with modifications as necessary, to a
 allow a higher level of protection,
if there was a scientific justification, or otherwise as set out in the relevant provisions of paragraphs 1
through 8 of Article 5 of the Agreement on SPS.  He further added that imported products weresubject to mandatory inspection by the Bureau of Commodity Inspection and Quarantine (BCIQ).
The BCIQ's statutory duties were to protect product safety, protect consumers' interests and prevent
the dissemination of plant and animal diseases and insect pests.  The BCIQ applied scientific methods
in its inspection and quarantine practices.  Quarantine regulations were established in accordance with
disease and insect pest variations, and international trends. The BCIQ had entered into arrangementsto recognise the certification,
 issued by inspection and veterinary authorities of certain of its trading
partners.  The determination and publication of infectious animal diseases had been transferred from
the BCIQ to the Council of Agriculture.  Chinese Taip ei had determined that in addition to the List A
and List B animal diseases of the Office International des Epizooties, the following were also among
the infectious animal diseases: Vesicular exanthem a, Erysipelas, Scabies, Bovine ephemeral fever
(Bovine influenza), Gas gangrene, Streptococcal mastitis, Infectious pancreatic necrosis, Wirling
disease and Bacterial Kidney disease.  The plant pests or diseases referred to in the Enforcement
Rules concerned harmful organisms which were fungi, slime mould, bacteria, viroids, phytoplasma,
parasitic plants, nematodes, insects, mites, molluscs, and invertebrates or vertebrates directly or
indirectly causing harmful effects to plants and plant products.WT/ACC/TPKM/18
Page 41
131. The representative of Chinese Taipei added that the importation of fresh fruit was prohibited
from areas where infestations of mango seed weevil, mango weevil, Chinese citrus fly, peach fruit fly,
cucurbit fly or guava fruit fly had occurred.  Fresh fruit could only be imported from areas under
quarantine for Mediterranean fruit fly if the BCIQ approved the quarantine treatment at the place of
origin.  Fresh fruit could only be imported from areas subject to codling moth, apple maggot, plum
curulio, peach twig borer, Mexican fruit fly, West  Indian fruit fly, South American fruit fly or
Queensland fruit fly and lethal yellowing, kaincoper disease, cadang-cadang disease, bronze leaf wilt,
root (wilt) disease, Guam coconut disease, leaf scorch disease of coconuts, and arrowhead scale of
Citrus and red and black citrus leafminer, if imported with a certificate stating that the fruit had been
thoroughly inspected and found free of infestation or has been treated with an appropriate treatment
prior to shipment.  The representative of Chinese Taipei added that there were 449 standards applying
to agricultural and processed agricultural products administered by the Bureau of Standards.  Hefurther added that the implementation of animal and plant quarantine regulations and measures carried
out by the Bureau of Commodity Inspection and Quarantine (BCIQ) has been transferred to the
Bureau of Animal and Plant Health Inspection & Qu arantine (BAPHIQ), Council of Agriculture, from
1 August 1998. In addition, the BCIQ has been operating under a new name, the "Bureau of
Standards, Metrology and Inspection" (BSMI), following reorganization on 26 January 1999.
132. In response to the information presented by the representative of Chinese Taipei on the
sanitary and phytosanitary regime, some members of the Working Party requested that Chinese Taipei
enter a commitment that in implem enting the terms of the Agreement on Sanitary and Phytosanitary
Measures as follows: Chinese Taipei would enforce its sanitary or phytosanitary measures based on
accepted scientific principles and an assessment of the risks involved; follow the notificationprocedures of the SPS Agreement; not maintain a measure unless based on sufficient scientific
evidence; ensure that existing international st andards were applied when they exist; accept the
sanitary and phytosanitary measures of other WTO Members as equivalent, even if these measures
differed from Chinese Taipei's measures or from those used by other Members trading in the same
product, upon demonstration that such measures achieved the appropriate level of sanitary orphytosanitary protection; and,  ensure that sanitary and phytosanitary measures were adapted to the
sanitary or phytosanitary characteristics of the area, including areas within a country or other political
boundary, from which the product originated and to which the product was destined.  Some members
of the Working Party also requested that Chinese Taipei recognize exports as being from pest or
disease free areas and areas of low pest or disease prevalence.
133. Some members of the Working Party stated that new quarantine regulations applying to
air-freighted fresh fruit, whereby inspectors were being sent to the exporting countries to inspect thefruit prior to shipment imposed excessive burdens on importers and acted as a barrier to trade.  The
representative of Chinese Taipei replied that this measure was typically applied by developed
economies.  Chinese Taipei had held intensive discussions with the trading partners that had indicated
they had problems with Chinese Taipei's SPS provisions.  Some of the problems had been resolved,
and technical experts had discussed existing problems.
134. Some members of the Working Party requested that Chinese Taipei eliminate the following
practices from the date of its accession to the WTO without recourse to any transitional period:
quarantine controls applied to imported agricultural commodities without adequate notification,
consultation, or a clear scientific basis for their application; certificates nominally granted for health
sanitation or quarantine reasons which were in fact never granted, and therefore acted as de facto  bans
on importation; and the arbitrary denial of certification with no criteria being made available to traders
to indicate under what conditions certificates can be obtained, and no explanation being given for
non-approval of certification.
135. The representative of Chinese Taipei stated that the ban on imports of live swine due to the
infestation of Porcine Reproductive and Respiratory Syndrome (PRRS) had been removed, and thatWT/ACC/TPKM/18
Page 42
live swine which met the quarantine requirements would be allowed entry into Chinese Taipei from
the date of accession.  The Working Party took note of this commitment.
136. Some members of the Working Party raised various concerns regarding Chinese Taipei’s
practices with respect to application of SPS measures.  In their view, Chinese Taipei had, in the past,
adopted SPS measures without providing notice of the action and the criteria for its application totraders and often bases quarantine areas on political geographical regions, rather than scientifically
justified areas.  In addition, Chinese Taipei had at times failed to base its SPS measures on
international guidelines or recommendations and had in some cases adopted and maintained measures
without sufficient scientific evidence.  In particular, scientific risk assessments that take into account
assessment techniques developed by international organizations had not been provided in some cases.
137. The representative of Chinese Taipei stated that Chinese Taipei would fully apply the
provisions of the Agreement on Sanitary and Phytosanitary Measures from the date of its accession,without recourse to any transitional period and would address the concerns raised by members.  He
also stated that Chinese Taipei would, from the date of its accession, notify to the WTO all relevant
laws, decrees, regulations, and administrative rulings of general application relating to its sanitary and
phytosanitary measures, including product coverage and relevant international standards, guidelines
and recommendations.  The Working Party took note of these commitments.
Trade Related Investment Measures
138. Some members of the Working Party requested information on the investment regime of
Chinese Taipei, in particular the local content re quirements prevailing in the automotive sector.  Some
members of the Working Party said that Chinese Taipei needed to notify its trade-related investment
measures such as the local content requirements for motor vehicles and the mixing requirements inforce for coal and cement production, and specify a schedule for their elimination.   In response the
representative of Chinese Taipei said that Chinese Taipei only maintained local content requirements
on automobiles and motorcycles.  In the case of sm all automobiles, at least 40 per cent of the motor
vehicle plus at least four items from a list of fifteen designated major items were required to be of
local manufacture.  For large automobiles (3.5 to 10 tons), at least 37 per cent of the motor vehicleplus at least three items from a list of fifteen designated major items were required to be of local
manufacture.  For large automobiles over ten tons, at  least 31 per cent of the motor vehicle plus at
least two items from a list of fifteen designated major items were required to be of local manufacture.
For motorcycles, at least 90 per cent was required to be of local manufacture.  These local content
rules applied equally to domestic and foreign enterprises.  He added that a local content requirement
on government procurement of incinerators had been eliminated, but that a local content requirement
on electric locomotives remained.  He noted that this was an exception to national treatment permittedunder Article III of the GATT 1994, as these products were not intended for commercial resale.
139. Some members of the Working Party said that Chinese Taipei needed to notify its trade
related investment measures such as the mixing requirements in force for coal and cement production,
and specify a schedule for their elimination.  The repr esentative of Chinese Taipei said that Chinese
Taipei had no mixing requirements for cement production.  The mixing requirements for coal wereimposed upon importers of coal.  Importers of coal were required to purchase local coal which was at
least 1.41 per cent of the amount of coal that they wished to import.  Chinese Taipei planned to lower
this requirement to 0.72 per cent by the end of 1998.  However, the ratio had actually been lowered to
0.55 per cent as of the end of 1996.  This measure was eliminated in January 2001.
140. The representative of Chinese Taipei stated that Chinese Taipei undertook to eliminate the
existing local content and sourcing requirements applied to the production of automobiles and
motorcycles and the mixing requirement relating to the use of coal upon accession to the WTO.  The
Working Party took note of this commitment.WT/ACC/TPKM/18
Page 43
141. The representative of Chinese Taipei confirmed that Chinese Taipei did not apply any other
measures inconsistent with the Agreement on Trad e-Related Investment Measures  and would not do
so in the future.  The Working Party took note of this commitment.
State-Trading
142. Some members of the Working Party requested that Chinese Taipei provide information on
the State owned enterprises covered by Article XVII of the GATT, and the WTO Understanding on
the Interpretation of Article XVII, operating in Chinese Taipei.  At the request of members of the
Working Party, the representative of Chinese Taipei supplied details of the State enterprises operating
in the energy industry, the agriculture-fertiliser industry, the metals-mining industry, heavy industry,
the petrochemical industry, the paper manufacturing industry, and the tobacco products and alcoholic
beverages industry.  He noted that the Taiwan Chung Hsin Paper Corporation, the Tang Zong Iron
Works Co. Ltd, the Agricultural and Industrial Enterprise Co. Ltd, the Kao-Hsiung Ammonium
Sulphate Co. Ltd, and the Taiwan Tobacco and Wine Monopoly Board (TTWMB) previously owned
by the Taiwan Provincial Government were now owne d by various  Ministries.  He indicated that the
Chinese Petroleum Corporation had enjoyed a monopoly to import crude oil and refined products and
to export refined products.  The import and export monopoly of the Chinese Petroleum Corporation
was eliminated in January 1999.  The Taiwan Sugar Corporation enjoyed a monopoly to import andexport sugar.  All liquid ammonia imports were monopolised by the Taiwan Fertiliser Company,
which also centrally administered purchase and sales, except for imports of waste acid gas.  The
Taiwan Fertilizer Company was privatised in  September 1999.  The Taiwan Salt Industrial
Corporation held a monopoly to import salt, except for imports of industrial salt used in the
production of alkali-chloro.  It was expected to be abolished by the end of June 2002.  Taiwan SugarCorporation supplied all the alcohol requirements of the TTWMB.  The representative of Chinese
Taipei asserted that neither Taiwan Power Company, China Steel Corporation (before it was
privatized) nor Aerospace Industrial Developmen t Corporation enjoyed import or export monopoly.
These enterprises did not enjoy any special treatment in their trade or production activities.  Private
traders could import alcohol and tobacco products using TTWMB as the nominal importer.
143. In response to further questions from some members of the Working Party, the representative
of Chinese Taipei said that the above-mentioned State-owned enterprises were profit oriented and
operated on the basis of commercial considerations.  Purchases by State enterprises in principle were
made by public tender and the purchase decisions were based upon such factors as qualities,
specifications, deliveries and prices.  Non-commercial factors did not come into play.  Area
restrictions applied to two neighbouring economies that were the only instances where purchase
decisions could deviate from commercial consid erations when the amount of the procurement
involved exceeded US$600,000 had been abolished on 1 June 1997.  These State enterprises imported
raw materials for products where production could meet the demand of the domestic market.  The
reselling price of the imported products was determined in the same way as for domestically produced
products.  There was no discrimination against imports.  The purchasing decisions of Taiwan Power
Company and China Steel Corporation (before it was privatized) were also generally based uponcriteria such as quality, specification, delivery and price.  However, since the government of Chinese
Taipei was the largest shareholder in these enterprises, the purchasing decisions were affected by the
government's economic and trade policies.   Some members noted that the State-enterprises were not
subject to the Fair Trade Law and asked how this could be justified in light of Articles XVII and III of
the GATT 1994.  The representative of Chinese Taipei replied that some of the practices of theseenterprises had been exempted from the provisions of the Fair Trade Law for an interim period of five
years to permit the commercial adjustment and their eventual privatization.  This temporary
exemption from the application of the Fair Trade Law had expired in February 1996.  The
procurement by these companies would be governed by the Agreement on Government Procurement
once Chinese Taipei became a signatory.WT/ACC/TPKM/18
Page 44
144. Some members of the Working Party referred to the status and operations of the publicly
owned retail stores which offered buyers between 20 per cent and 30 per cent discounts on identical
merchandise purchased in the free market.  In their view the pricing policies of these stores were
highly irregular.  Prices were fixed in a manner which could undermine sales in the free market as
suppliers were required not to sell at a lower price to open market stores.  There were no limits onpurchases or resale of goods purchased in the publicly-owned retail stores and access was not
restricted to members only.  In response, the representative of Chinese Taipei said that there were 55
publicly owned retail stores in operation.  These stores do not discriminate against imported products
and do not create obstacles to importation and distribution of imported products.  The United
Cooperative Association (UCA) was a private entity co mmissioned by the government to supply daily
necessities to employees of the government and ed ucational institutions.  The rules governing the
negotiation practices contemplated the determination of a base price which was 15 per cent to30 per cent lower than the market price.  Access to  these stores was restricted to members and the
resale of merchandise was prohibited.  In the  PX stores, the selling price was 2 per cent above the
sourcing price to cover the operating expenses.  Some members of the Working Party said that many
privately owned stores used the public stores as sources of supply, which resulted in market
distortions.  Some members of the Working Party also said that the UCA requirement that suppliersnot sell at lower prices to any store in the free mark et appeared to be in conflict with the Fair Trade
Law.  In addition, the operating practices of the UCA and the Military PX stores harmed both
manufacturers who were forced to sell at unrealistically low prices, and private retailers who were
forced to compete with subsidised publicly-owned stores.  Prices in the publicly-owned retail stores
were 15-30 per cent below retail levels, and in many cases manufacturers were forced to supply thesestores at below cost prices.  The publicly-owned retail stores appeared to have up to 40 per cent of
market volume.  This factor, combined with their prices, made it difficult for private retailers to
compete in the market place.  These members considered that the publicly-owned retail stores should
be subject to the Fair Trade Law.
145. The representative of Chinese Taipei responded that the UCA and the Military PXs were not
entirely exempted from the operation of the Fair Trade Law, and that the exemption was limited to the
organisation of the UCA because it fell within the definition of horizontal collaboration among the
stores participating in the organisation of the UCA.   Otherwise, all other business practices of the
UCA were subject to the Fair Trade Law.  He further added that publicly owned businesses did not de
jure or de facto discriminate against imported products and did not create obstacles to the importation
and distribution of imported products in terms either of price or of quantity.  Some members of the
Working Party asked that Chinese Taipei take steps to control the persons allowed to gain access tothe UCA and Military PX stores, the quantity of products allowed to be purchased by the public
employees, establish and publish new procurement and product listing guidelines which reflected
market dynamics, and establish a fairer price setti ng procedure.  These members also asked whether
the UCA and Military PX stores received any subsidisation in their operations.  The representative of
Chinese Taipei said that shopping centres, supermarkets and discount stores in many cases offeredmerchandise at the same or lower prices than those of the Military PX stores.  Because of the prices of
private stores, the incidence of resale of products purchased at Military PX stores was almost
non-existent.  In addition the Military PX Headquarters had made rules to prohibit the resale of
products purchased in the Military PX stores.  Concerning the purchasing decisions of the Military PX
stores, the representative of Chinese Taipei noted that needs of military personnel and the condition ofthe market were examined.  The decision to purchase was advertised in newspapers.  All suppliers,
whether importers of foreign goods or local manufacturers who could meet the limited purchase
volume requirements of the Military PXs stores were eligible to enter into negotiations to supply the
stores.  The Fair Trade Commission, i.e. the administrative agency responsible for enforcing the Fair
Trade Law, had been monitoring very closely the business practices of UCA. It had fined differentUCA stores for their failure to prevent the entry by individuals who did not have legal access to these
stores.  It had also fined several private stores who held themselves out as UCA stores in order to
deceive consumers.  The Fair Trade Commission had looked into the pricing practices of suppliers ofWT/ACC/TPKM/18
Page 45
the UCA stores to see whether there was any abuse of market power by the UCA stores.  As a result
of the Fair Trade Commission's investigati on, the Fair Trade Commission launched a business
correction campaign requiring large-scale marketing entities including, among others, UCAs, to
eliminate as of 1 July 1995 the practice of imposing contractual obligations on suppliers to offer the
most favorable pricing.
146. Some members of the Working Party stated that Chinese Taipei must agree to additional
transparency in the operation of all of its State-trading enterprises, particularly in the area of
agricultural products, e.g. by demonstrating that mark-ups on State-traded imports do not discriminate
against imported goods vis-à-vis  domestically-produced goods, and in the area of export subsidies.
The representative of Chinese Taipei said that the operations of the State-owned enterprises were
based on commercial considerations such as quantity, price, quality, supply stability and risk and that
there was no discrimination against imports.
147. The representative of Chinese Taipei said that the following State enterprises would be
notified as State-trading enterprises under Article XVII for the purposes of the Understanding on the
Interpretation of Article XVII of the GATT 1994: Chinese Petroleum Corporation; Taiwan Sugar
Corporation; Taiwan Salt Industrial Corporation, Taiwan Tobacco and Wine Monopoly Bureau;
China Engraving and Printing Works; Council of Agriculture (rice imports); and Taiwan ProvincialFruit Marketing Cooperative.  The Working Party took note of that commitment.
148. The representative of Chinese Taipei stated that the TTWMB, which was owned and
managed by the Ministry of Finance, would also be notified under Article XVII as long as it maintains
its current nominal import/distribution monopoly and other special privileges under law and
regulation in the distribution, or trade of tobacco and alcohol products.  The Working Party took noteof that commitment.
149. The representative of Chinese Taipei stated that the statutory import/distribution monopoly
would be abolished with the implementation of new laws establishing a tobacco and alcohol tax and
administration system.  The representative of Chinese Taipei also stated that some private trade in rice
and sugar would be permitted as reflected in Part I of Annex I to the Draft Protocol of Accession.  TheWorking Party took note of these commitments.
150. The representative of Chinese Taipei stated that upon accession to the WTO, import and
export procedures of state trading enterprises would  be fully transparent and in compliance with the
WTO Agreement.  In this regard, Chinese Taipei would  provide complete information for any such
activities as required in WTO questionnaire G/STR/3.  In addition, to assist in monitoring
implementation of its commitments, Chinese Taipei would  provide, upon the request of a WTO
Member, specific information, which would be maintained on a confidential basis and not disclosed tothe public, on all elements of particular import transactions by the following state trading enterprises:
the Council of Agriculture (rice imports), the Ta iwan Provincial Fruit Marketing Cooperative, the
Taiwan Tobacco and Wine Monopoly and the Taiwan Sugar Corporation, for so long as those
enterprises met the definition of  state trading en terprises within the meaning of the WTO Agreement.
He further stated that such information would  incl ude all elements affecting the price, such as the
product, quality, grade, contract price, terms of delivery, financing provisions, discounts, government
assistance, transportation, and insurance rates, but may exclude the name of the other party to the
transaction.  The Working Party took note of these commitments.
151. The representative of Chinese Taipei stated that for all state trading enterprises within the
definition of Article XVII of the GATT 1994, Chinese Taipei would ensure that any fees or charges
assessed to importers or end-users by these enterprises would not afford protection in excess of the
tariff rate provided for imports listed in the Schedules in Annex I  to Chinese Taipei's Draft Protocol
of Accession, plus fees and charges consistent with Article VIII of the GATT.  Imports in excess ofWT/ACC/TPKM/18
Page 46
the level of the tariff quotas specified in the Schedules in Annex I to Chinese Taipei's Draft Protocol
of Accession would  not be reserved for state-owne d or state-operated enterprises, and would be able
to  be imported and distributed by private firms and other non-state-trading enterprises.  He stated that
state trading enterprises within the definition of Article XVII of the GATT 1994 would not be used as
a conduit for subsidized exports, nor would notification of these enterprises under Article XVIIexempt them from other requirements under WTO Agr eements, such as Article 4(2) of the Agreement
on Agriculture.  He further stated that Chinese Taipei would not take any measure to influence or
direct these enterprises as to the quantity, value, or country of origin of goods purchased.
Furthermore, Chinese Taipei would not export rice imported under its minimum access commitment.
The Working Party took note of these commitments.
152. The representative of Chinese Taipei also undertook that all State-trading enterprises within
the definition of Article XVII of the GATT 1994 would operate in a transparent manner and incompliance with that Article and with the other re levant Articles of GATT 1994, in particular with
Articles I, II, III, XI and XIII.  The Working Party took note of these commitments.
State Ownership and Privatization
153. Some members of the Working Party enquired whether State owned enterprises would be
privatized.  The representative of Chinese Taipei said that the policy was to privatize most State
owned enterprises.  The statutory framework re quired to implement this policy was in place.
154. In response to further requests for information, the representative of Chinese Taipei stated
that information on the privatization of State owned enterprises could be obtained through the web
site of the Council for Economic Planning and Development. Since 1989, more than 50 offerings
(including CSC's two DR issues in 1992 and early 1997, representing 360 million shares and203 million shares respectively), and several sales of assets had been conducted.  The sales of
government owned companies had yielded total proceeds of nearly NT$ 400 billion, corresponding to
US$12.5 billion (based on 2000 data). Up to Dec. 2000, twenty-four of the targeted SOEs had been
successfully privatized, including, Chung Kuo Insurance Co. Ltd. (CIC), China Petrochemical
Development Corporation (CPDC), BES Engineerin g Corporation, China Steel Corporation (CSC),
Yang Ming Marine Transport Corporation (YMTC) , Liquefied Petroleum Gas Supply Administration,
Yuan Rong Industrial Gas Co., Ltd, Chang Hwa Commercial Bank, First Commercial Bank, Hua Nan
Commercial Bank, Taiwan Business Bank, Taiwan Fire and Marine Insurance Co. Ltd., Taiwan Life
Insurance Co., Ltd, Taiwan Navigation Co. Ltd., Kang  Shan Ropery Factory, Taiwan Development &
Trust Corporation, Taiwan Fertilizer Company, The Farmers’ Bank of China, Chiao Tung Bank, Bank
of Kaohsiung, Taipei Bank, Taipei City Governme nt Printing House, Hsin Sheng Press Enterprise
Co., Ltd., and Taiwan Motor Transport Co., Ltd.  In  addition, 3 plants of the Taiwan Machinery
Manufacturing Corporation (TMMC) have been privatized by private placement. The details of the 24
privatized enterprises were as follows:WT/ACC/TPKM/18
Page 47
Privatized State-Owned Enterprises in Chinese Taipei
Company Date of Privatization% Government
Shareholding
(2000 data)
Chung Kuo Insurance Co. Ltd. 5 May 1994 30.60
China Petrochemical Development Co. 20 June 1994 15.73
BES Engineering Corporation 22 June 1994 0.00
China Steel Corporation 12 April 1995 40.52
Yang Ming Marine Transport Corporation 15 February 1996 42.62
Liquefied Petroleum Gas Supply Administration 16 March 1996 0.00
Yuan Rong Industrial Gas Co., Ltd 1 January 1998 39.82
Chang Hwa Commercial Bank 1 January 1998 23.38
First Commercial Bank 22 January 1998 36.31
Hua Nan Commercial Bank 22 January 1998 37.92
Taiwan Business Bank 22 January 1998 39.35
Taiwan Fire and Marine Insurance Co. Ltd. 22 January 1998 29.03
Taiwan Life Insurance Co. Ltd. 20 June 1998 28.92
Taiwan Navigation Co. Ltd. 30 June 1998 37.42
Kang Shan Ropery Factory 1 August 1998 0.00
Taiwan Development & Trust Corporation 8 January 1999 34.06
Taiwan Fertilizer Company 1 September 1999 45.29
The Farmers' Bank of China 3 September 1999 45.29
Chiao Tung Bank 13 September 1999 33.08
Bank of Kao-Hsiung 27 September 1999 48.85
Taipei Bank 30 November 1999 44.55
Taipei City Government Printing House 31 December 2000 0.00
Hsin Sheng Press Enterprise Co., Ltd. 31 December 2000 0.00
Taiwan Motor Transport Co., Ltd. 1 July 2001 0.00
Recent changes had made it easier for the shares of SOEs to be listed on the Taiwan Stock Exchange
and the OTC market. The revision of legislation had been announced in 2000.  In addition, the priority
shares issued to employees of SOEs had been raised, with each employee now entitled to purchase
shares, equal in value up to 48 months' pay, instead of just 24 months as before.
Privatization Timetable as of 2001
Date Schedule for Privatization
December 2001 Food Products Factory
December 2001 Kao-Hsiung Ammonium Sulphate Corporation
December 2001 Aerospace Industrial Development Corporation
December 2001 Central Reinsurance Corporation
December 2001 China Shipbuilding Corporation
December 2001 Tao-Yuan Furniture Factory
December 2001 Tang Zong Iron Works Co. Ltd.
July 2002 Taiwan Salt Industrial Corporation
December 2002 Taiwan Railway Freight Co. Ltd.
December 2003 Chinese Petroleum Corporation
December 2003 Plastics WorksWT/ACC/TPKM/18
Page 48
Date Schedule for Privatization
December 2003 Lung-Chi Chemical Plant
December 2003 Veterans Pharmaceutical Plant
June 2004 RSEA Engineering Corporation
June 2004 Taiwan Railway Administration
Undecided Chung Hsing Paper Corporation
Undecided Agricultural and Industrial Enterprise Co. Ltd.
Undecided Chunghwa Telecom Co. Ltd.
Undecided Taiwan Machinery Manufacturing Corporation
155. The representative of Chinese Taipei confirmed the readiness of Chinese Taipei to ensure the
transparency of its ongoing privatization program and to keep WTO Members informed of its progress.
He stated that his authorities would provide annual reports to WTO Members on developments in its
programme of privatization as long as it was in existence.  The Working Party took note of this
commitment.
Taiwan Tobacco and Wine Monopoly Bureau (TTWMB)
156. The representative of Chinese Taipei said that the privatisation of the TTWMB was under
review independently of the tax reform plan.  He  provided information concerning the calculation
methodology, and stated that the units used by Chinese Taipei were 1000 sticks for cigarettes, and litres
for alcohol.  He explained that the prices of domes tic wine and tobacco products were equal to the sum
of operating costs plus the Monopoly Tax.
157. With regard to tobacco products, some member s of the Working Party said that the future
operations of the TTWMB should provide equal opportunities to all tobacco product exporters.  The
representative of Chinese Taipei replied that following the reforms the TTWMB would have noregulatory function, nor a monopoly on the distribu tion of tobacco and alcohol products.  The TTWMB
would, pursuant to the Tobacco and Al cohol Administration Law, be rest ructured so that it would only
operate as a business venture.  Within the government of the Separate Customs Territory, the regulatory
functions would be carried out by the Ministry of Finance.  Moreover, the TTWMB would have no
influence upon the market access of tobacco exporters.  He submitted to the Working Party the summaryof the Tobacco and Alcohol Reform Plan re produced in Attachment B to this Report.
158. The representative of Chinese Taipei stated that from the date of accession, TTWMB would be
reformed to bring its operations in the area of international trade and domestic distribution into
conformity with GATT 1994 and the other obligations of the WTO.  He added that Chinese Taipei
would establish an open and equitable trade and dist ribution system in these products and would ensure
national treatment and non-discriminatory treatment for these products.  From the date of accession,
TTWMB would not have a regulatory function concer ning tobacco and alcoholic beverages and would
operate on a commercial basis subject to the same  laws, regulations, rules, decrees, directives,
administrative guidance, policies and measures applicab le to other firms in Chinese Taipei.  Any special
or monopoly privileges granted to TTWMB in the domestic distribution and international trade ofalcohol and tobacco products would be eliminated from that date.  Both domestic and foreign firms
would be eligible to participate in the distribution a nd trade of these products on an equal basis, as noted
in the Schedules in Annex I to the Draft Protocol of Accession.  The Working Party took note of these
commitments.
159. The representative of Chinese Taipei confirmed that from the date of accession, TTWMB
would  be a business operation without any regulatory  function.  Within the government of the Separate
Customs Territory, the regulatory functions would be ca rried out by the Ministry of Finance.  All specialWT/ACC/TPKM/18
Page 49
or monopoly privileges granted to TTWMB in the domestic distribution and international trade of
alcohol and tobacco products would be eliminat ed, and both domestic and foreign firms would be
eligible to participate in the distribution and trade of these products on an equal basis, as noted below
and in the Schedules in Annex I to the Draft Protoc ol.   The representative of Chinese Taipei further
stated that the reform of TTWMB would also in clude the gradual elimination of its monopoly on the
production of alcohol and tobacco  products. Production of tobacco and alcohol products would be
opened to other domestic and foreign firms according to the following schedule:
Time Schedule Category
Stage 1 X brewed alcoholic beverages except beer, reprocessed alcoholic beverages
(fruit), rice spirit
Stage 2 X+1 year cooking alcoholic beverages, distilled spirits, reprocessed alcoholic beverages
Stage 3 X+2 year beer, alcohol
Note: X = Accession Year
160. The representative of Chinese Taipei stated  that any subsidies provided for the domestic
production of tobacco and grapes w ould be bound and gradually reduced as provided for in the Schedule
attached to the Draft Protocol of Accession.  All fi rms producing tobacco or alcohol products in Chinese
Taipei would have access on an equal basis to impor ted and domestic inputs, including any remaining
benefits from such subsidies, for their production and processing activities consistent with the provisions
of the WTO.  He added that Chinese Taipei would, on the implementation date of the Tobacco and
Alcohol Administration Law, begin processing applications fo r firms seeking authorization to produce
alcohol products liberalized in the first stage, and fo r other alcohol products liberalized at other stages,
six months in advance of the date when such activiti es were liberalized, in order to provide new entrants
with the possibility of operating unde r the reform program from its inception.  He further stated that all
enterprises in Chinese Taipei that produce these products would be subject to the same protection,
formalities, fees, and penalties under law, without regard to their ownership or length of establishment.He stated that fees charged would not be ex cessive or unduly burdensome and that penalties for
violation of the Tobacco and Alcohol Tax and Admini stration Laws would not exceed in severity the
penalties applied for similar violations in other sector s.  To ensure adequate transparency after reform,
Chinese Taipei would provide WTO Members with annual reports on the volumes of tobacco and
alcoholic products manufactured in Chinese Taipei and on taxes paid by TTWMB by taxable category.
Until TTWMB was privatized , this report would be accompanied by an annual independent accounting
review of the operations of TTWMB based on sta ndard and customary accounting procedures, including
a fiscal balance sheet that reports on costs, expe nditures, and revenues of TTWMB, and on its profits
and losses. Realizing that sales into the domestic ma rket of large quantities of smuggled or counterfeit
imports of alcohol and tobacco products undermined  Chinese Taipei's market for legally marketed
products, and wishing to discourage such activities in  the future, the representative of Chinese Taipei
confirmed that all contraband smuggled or counterfe it imports of alcohol and tobacco products seized
would be destroyed or otherwise di sposed of, taking into account the practices of WTO Members in a
similar situation, and that Chinese Taipei would take  additional efforts to prev ent such illegal imports.
In this regard, Chinese Taipei would ensure th at certain alcoholic beverage imports would be
accompanied by a certificate of origin similar to that issued by the regulatory authorities in the country
of origin.  The Working Party took note of these commitments.
Government Procurement
161. In response to questions concerning the Chinese Taipei's procurement policies, the
representative of Chinese Taipei stated that the Proc urement Department of the Central Trust of Chinese
Taipei was a non-exclusive procurement agent for government entities and State enterprises which
solicited offers and products from foreign sources.  It did not exercise nor operate as an import
monopoly.  The Trading Department of the Central Trust of Chinese Taipei acted as a non-exclusive
import/export agent for government organisations, public and private enterprises.WT/ACC/TPKM/18
Page 50
162. In response to a series of questions from me mbers of the Working Party concerning tendering
requirements for government procurement contracts,  the representative of Chinese Taipei said that
tender requirements set by the procurement agencies were based on factors such as performance, design,
international standards, domestic standards, or refere nce brands (or equivalents to the reference brands).
Any special tender requirements were clearly described in the tender documents.  The threshold abovewhich open tenders were required was NT$50 million, except in circumstances that allowed for
non-competitive tenders.  The division of contracts in order to avoid the tender threshold was subject to
an administrative penalty. Chinese Taipei's tender no tices were required to contain similar types of
information as that required by the WTO Govern ment Procurement Agreement.  All unsuccessful
bidders were, at their request, informed of the reas ons why they did not win a contract.  There was no
provision for an unsuccessful bidder to appeal  against a decision not to award a tender.
163. In response to questions the representative of Chinese Taipei said that a bidder could be
required to submit a commitment to implement an indus trial co-operation plan (ICP) to the amount of a
certain percentage of the contract price.  Some memb ers of the Working Party said that the increased use
of the requirement that tenderers agree to technolo gy transfers was inconsistent with the Agreement on
Government Procurement.
164. Some members of the Working Party said that Chinese Taipei should apply for and commence
negotiations on accession to the Agreement on Government Procurement (AGP).  The representative of
Chinese Taipei said that Chinese Taipei had careful ly examined the request and had decided to accede to
the Government Procurement Agreement.  He a dded that  prior to acceding to the Government
Procurement Agreement, Chinese Taipei would  take  steps to improve the procedural aspects of the
current practices.  The representative of Chinese Taip ei said that Chinese Taipei had prepared a draft
Government Procurement Law which would replace th e existing procurement requirements set by the
various audit laws and regulations.  The draft Law took  full account of the AGP requirements, including
the establishment of a bid challenge procedure.  Th e Government Procurement Law would take effect on
May 27, 1999.  A Government Procurement Gazette was being officially published from
1 November 1996 after a ten-month long trial publicat ion.  The ceiling limitation of 49 per cent for the
acquisition of interests in existing constructi on firms had been abolished from 3 November 1995.
Foreign experience could be counted in the determ ination of qualification for Class A construction
company licenses.  From 1 June 1997 the area restriction in the procurement practices had also been
lifted.  The issues of the industrial cooperation program (ICP), and the limitation on foreign suppliers'
market access/lowering of the threshold were being dealt with in the accession negotiations for the AGP.
165. Some members of the Working Party noted that negotiations were continuing regarding Chinese
Taipei's commitments regarding product coverage and implementation of procedures associated with the
procurement process.  In particular, additional cl arity was required regarding procedures to address
disputes arising in the context of the procurement a nd contract performance process.  The representative
of Chinese Taipei noted that the contract performan ce process did not fall within the coverage of any
WTO rules.
166. The representative of Chinese Taipei stated that Chinese Taipei had notified the Committee on
Government Procurement of its intention to accede to the Agreement on Government Procurement and
had initiated negotiations to that end by the submission of an offer.   The representative of Chinese
Taipei confirmed that Chinese Taipei would accede to the Agreement on Government Procurement
(GPA) within one year of its accession to the WTO.   If, however, new government procurement laws
necessary to comply with the GPA were enacted  prior to Chinese Taipei's accession to the WTO,
Chinese Taipei would accede to the GPA within one year of enactment of those laws or at the time
Chinese Taipei accedes to the WTO, whichever wa s later.  The Working Party took note of these
commitments.WT/ACC/TPKM/18
Page 51
Agreement on Textiles and Clothing
167. The representative of Chinese Taipei stated that the quantitative restrictions on imports of
textiles and clothing products originating in Chin ese Taipei under arrangements between Chinese Taipei
and WTO Members that were in force on the date prio r to the date of accession of Chinese Taipei to the
WTO would be notified to the Textiles Monitoring Bo dy (TMB) as being the base levels for the purpose
of application of Article 2 of the Agreement on Textiles and Clothing. The representative of Chinese
Taipei stated that for the purpose of Chinese Taipei's accession to the WTO, the phrase "day prior to the
date of entry into force of the WTO Agreement " contained in Article 2.1 of the Agreement on Textiles
and Clothing would be deemed to refer to the day prio r to the date of accession of Chinese Taipei to the
WTO.  To these base levels the increase in growth rates provided for in Articles 2.13 and 2.14 of the
Agreement on Textiles and Clothing would be applied, in stages, from the date of accession of
Chinese Taipei to the WTO.  The Working Party took note of these commitments.
Barter Trade
168. Some members of the Working Party requested  information on the treatment of imports under
barter arrangements.  The representative of Chinese Taipei said that Chinese Taipei had only had
agricultural barter trade with Korea.  Since 1992 th e barter of Korean apples and pears for Chinese
Taipei bananas had been stopped.  In 1997, a new agreement had been made between Korea andChinese Taipei, which provided for barter of Korean apples and pears for Chinese Taipei bananas,
lychees, mangoes, garlic, onions and oranges.  Unde r the existing bilateral arrangement, Korea was
provided with access to the local market in respect of apples (which were currently subject to area
restriction) and nashi pears (which were currently under import ban) up to a specified volume.  He noted
that following the elimination of the area restricti ons on apples and quantity restrictions on nashi pears,
there would be no need to maintain this arrangemen t after Chinese Taipei's accession to the WTO.  The
barter trade arrangement had been terminated from 1 October 1997.
169. In response to further questions concerning purchase requirements, the representative of
Chinese Taipei said that no mandatory counter purchase requirements were imposed.  The current
practice of encouraging the purchase of locally manufactured components was granted to foreign
investors who had exported substantial quantities of  components or parts back to their home countries
but had no monetary implications or value.  Th e purpose of the scheme was to encourage export of
locally made automotive parts by giving a public announcement of the Government's appreciation for
increased export volume by particular suppliers.  The scheme was not a subsidy program nor did it
impose any mandatory requirement to make local purchases.
Agricultural Policies
170. Some members of the Working Party noted that  Chinese Taipei had indicated that it did not
apply subsidies to exports of  products, and accordingly these members stated that Chinese Taipei
should agree to bind its export subsidies at zero in its Schedule of Concessions.  In response, Chinese
Taipei agreed that its schedules would include a commitment to bind export subsidies at zero.  These
members noted however, that Chinese Taipei exported the surpluses of rice generated by artificially high
internal price supports sustained by an import ban on competitive products.  On average from 1990 to1992, exports had represented some 10 per cent of  production and some 160,000 tons.  These members
asked that Chinese Taipei explain how the differen ce between the price paid to producers and the export
price was funded as well as the meaning of the expressi on "a comfortable rate of self sufficiency in rice".
Information was also requested on total price support expenditures of Chinese Taipei and the use of
government assisted loans as provided in the Stat ute for Agricultural Development.  Some members also
enquired whether the import ban on rice was of a general application and requested its elimination.WT/ACC/TPKM/18
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171. The representative of Chinese Taipei stated th at Chinese Taipei's policy was to liberalise the
agricultural sector.  In response to questions, the repr esentative of Chinese Taipei indicated that the price
support mechanisms operated to purchase agricultural products from farmers at guaranteed prices, which
were set above the production cost of the product.  In response to further questions the representative of
Chinese Taipei informed members of the Working Party that Chinese Taipei operated a system to
compensate farmers for damage caused by competition from imports of agricultural products.  Relief
was accorded if producers of major agricultural products suffered serious injury as a result of the
liberalisation of imports due to trade negotiations or policy changes.  If the quantity of such products
imported during the injury period had increased by 20 per cent or more compared with a reference
period of the previous three years; or the imported products had been subsidised or had otherwise
benefited from unfair trade practices.  Serious injury was deemed to occur when the market price fell
below the cost of production.  The sixteen products eligible for relief under the Regulations were asfollows: citrus, apples, plums, peaches, guavas, pears, wax apples, grapes, tea leaves, beef, pork, duck
meat, bred shrimps, pineapples, chicken meat and clams.  In 1995, the legislation was amended to the
"Rules for Redressing Damage to Farmers Caused by Agricultural Imports. "  It broadened the eligible
products to all agricultural products.  The representative of Chinese Taipei also submitted to the
Working Party information concerning the draft Plan on implementation of this program.  Therepresentative of Chinese Taipei confirmed that measures taken to redress damage to farmers caused
by agricultural imports would be included in the calculation of Chinese Taipei's AMS calculations and
AMS reduction commitments according to the Agreement on Agriculture; measures taken for fishery
products would be consistent with subsidy rules as set out in the SCM Agreement.  The Working
Party took note of this commitment.
172. The representative of Chinese Taipei also submitted Information Concerning
Domestic Support and Export Subsidies in  documents WT/ACC/SPEC/TPKM/4/Rev.3 and
WT/ACC/SPEC/TPKM/10/Rev.1.
173. In response to questions, the representative of Chinese Taipei noted that the AMS would be
scaled down consistent with the requirements of  the WTO Agreement on Agriculture, i.e., phase-downs
would be completed by the year 2000.  The purpose of the rice price support was to maintain a stable
food supply and to maintain farmers' income.  The rice price support mechanism consisted of two
elements: planned purchase and supplementary purch ase.  The purchase was made twice in a year
divided into two crops.  Aged ri ce was exported at prices lower than the production costs due to the 
lower quality when compared to new rice.  The Council of Agriculture mandated the Central Trust to
auction off the rice with the base price taking into account the international rice price.  The feed plants,
livestock farming business and aquaculture business could apply to the Council of Agriculture through
the Feedstuff Association for the purchase of feed rice.   The price was set at 90 per cent of the wholesale
price for imported maize at the time of purchase pri ce payment.  The difference between the guaranteed
price paid to producers and the export price was funded by the government budget.  The guaranteed
purchase price was the only price s upport measure employed by Chinese Taipei.  Rice imports needed a
Consent Letter of the Council of Ag riculture.  Because of overproduction consent letters were not given
and rice could not be imported.  He added that soybeans, corn and sorghum were eligible for crop
purchase under the Rice Production and Ricefields Diversification Programme.  In addition, the
importation of soybeans, corn and sorghum had been liberalised, and the duties for those products were
1.5 per cent, 1 per cent and 1 per cent, respectively.  He also stated that Chinese Taipei would gradually
reduce excess rice production.  A proposal on rice imports had been submitted to the Working Party indocuments WT/ACC/SPEC/TPKM/5/Corr.4, WT/ACC/ SPEC/TPKM/5/Rev.1 and Section 1B of the
Schedule of Concessions and Commitments on Goods in Annex I to the Draft Protocol of Accession.
Chinese Taipei's standards for paddy, milled and brow n rice were provided to members of the Working
Party.
174. Some members of the Working Party expre ssed continued concern about Chinese Taipei's
practice of auctioning central rice stocks for export only.  These members noted that only livestock feedWT/ACC/TPKM/18
Page 53
businesses had access to these stocks for domestic use, and only at fixed prices.  In the view of these
members, this practice was an export subsidy.  In re sponse, the representative of Chinese Taipei stated
that in addition to livestock feed businesses, livestock and fish farmers also had access to the rice stocks.
Chinese Taipei did not consider that the practice amounted to an export subsidy.  However, in order to
alleviate members from the concern, the representative of Chinese Taipei stated that purchasers of ricefrom the central stock would not be required to export the purchased rice.  Chinese Taipei also stated
that upon accession, anyone having the right to trade in rice in Chinese Taipei would have access to
aged rice from central stocks on the same terms offered to exporters, and that no further trade-based
restrictions would be imposed.  The Working Party took note of these commitments.
175. The representative of Chinese Taipei stated that the ban on imported rice would be lifted upon
Chinese Taipei’s accession to the WTO. Chinese Taipei intended to structure market access for rice
imports along the lines of Annex 5 of the Agreement on Agriculture. The rice import quota would be144,720 metric tons (calculated on a brown rice basis) in the first year after accession.  Chinese Taipei
agreed to negotiate with interested WTO Members upon accession as to whether there could be a
continuation of this special treatment beyond the first year after accession pursuant to Annex 5 of the
Agreement on Agriculture and to conclude this negotiation no later than 12 months after accession.
With a view to maintaining a transparent rice impor t arrangement, Chinese Taipei would consult with
any WTO Member upon request.  The representative of Chinese Taipei further stated that 1990-92
would be used as the base period in the calculation of rice imports and for any calculations under
paragraph 6 of Section A referred to above as 1990-92 was used concurrently as the base period in
tariff negotiations, as well as the calculations for AMS and SSG trigger price.  In response to further
requests for information on its proposed SSG system, the representative of Chinese Taipei providedmembers of the Working Party with a detailed description of the proposed program in document
WT/ACC/SPEC/TPKM/9/Rev.1.
176. In response to questions concerning exports of sugar, tobacco leaves and bananas, the
representative of Chinese Taipei stated that Chinese Ta ipei's sugar exports fluctu ated with changes in the
United States import quota allocated to Chinese Taipei.  All exports of sugar were to the United States.
The sugar supply was the monopoly of Taiwan Sugar Corporation, which was an enterprise under the
supervision of the Ministry of Economic Affairs with  shares partly held by private parties.  Taiwan
Sugar Corporation had its own sugar cane farms; it also  contracts with farmers for processing the sugar
cane and sharing the sugar made from sugar cane sour ced from such farmers.  The sugar cane growers
could share 55 per cent of the sugar, which in turn could be purchased by Taiwan Sugar Corporation for
export or sale in the domestic market.  The purchas e price was calculated on the basis of domestic price
if the sugar was sold to the domestic market; and on the basis of export guaranteed price or the
settlement price after payment to the Sugar Stab ilization Fund, if the sugar was to be exported.
177. The representative of Chinese Taipei stated that the Sugar Stabilization Fund had been in
existence since 1966 for the purpose of stabilizing sugar export and farmers' income.  The Fund operated
as follows: when the export price was higher than  a threshold payment was made to the Fund; the
payment amount was calculated according to the scale of  the price difference and at a cumulative rate.
When the export price was lower than the export guaran teed price, payment to the farmers for the price
difference was made out of the Fund.  Taiwan Su gar Corporation, however, had to bear the price
difference all by itself.  The export price had been lo wer than the export guaranteed price in recent years.
The price difference had been paid out of the Fund contributed by the price difference resulting from the
export price exceeding the export guaranteed price in the past.   Sugar prices were of two types: one was
for sugar of general use, and the other was for sugar used for processing exported food products.  The
domestic price for sugar of general use was set by the Ministry of Economic Affairs; while the prices for
sugar of export processing use was determined on th e basis of London spot mark et price (F.O.B.) for
sugar plus importation cost.  The food processing co mpanies applied to Taiwan Sugar Corporation for
purchase of the needed sugar and paid the domestic pr ice in the first instance.  When the products were
exported, the differences were settled Since 1 July 1994, the Fund had stopped operating.WT/ACC/TPKM/18
Page 54
178. The representative of Chinese Taipei stated that all tobacco exports were of tobacco purchased
by the Taiwan Tobacco and Wine Monopoly Bureau (TTW MB).  Banana exports were dealt with by the
Fruit Transportation and Marketing Cooperative.  When  the export price of bananas was lower than the
export guaranteed price, the difference was covere d by a fund administered by the Cooperative; when
the export price was higher than the export guarant eed price, contributions were made to the fund
according to the scale of the difference and at a cu mulative rate.  Farmers could choose whether to sell
their products to the domestic market or to the Coopera tive for export.  The prices for domestic sales and
for export were determined according to the demand and supply.  Generally, export prices were higher
than the domestic price.  The representative of Chin ese Taipei also stated that soybeans, maize and
sorghum were purchased by the Provincial Food Bur eau, and summer vegetables were mostly purchased
by the Taipei Agricultural Produce Marketing Comp any on the basis of guaranteed minimum prices.
Guaranteed purchases of wine grap es and wheat had been terminated in the first part of 1997 and 1995,
respectively.
179. Some members of the Working Party requested an assessment of the effect of the price support
programmes operated by Chinese Taipei on the exportation of Chinese Taipei's agricultural products.  In
response, the representative of Chinese Taipei rep lied that he did not consider that the price support
programme constituted a subsidy on exports..
180. The representative of Chinese Taipei stated that upon accession, in accordance with the
provisions of the Agreement on Agriculture, Chinese Taipei would eliminate all of its WTO-inconsistent
quantitative restrictions and bind all tariffs applied on imports of agricultural products listed in Annex I
of the Agreement.  Further, in accordance with Article 3, Part II of the Agreement on Agriculture,
Chinese Taipei would not provide export subsidies,  nor support in favour of domestic producers, in
excess of the commitment levels specified in the Sche dule in Annex I to the Draft Protocol of Accession
and confirmed that from the date of accession, suppor t previously granted for the production of tobacco
and grapes would be calculated into AMS.  Th e Working Party took note of these commitments.
181. Chinese Taipei's commitments on agricultural tariffs, on domestic support and export subsidies
for agricultural products were reproduced in the Sc hedule of Concessions and Commitments in Annex I
to the Draft Protocol of Accession of Chinese Taipei  to the WTO.  The Working Party took note of these
commitments.
VII. TRADE RELATED INTELLECTUAL PROPERTY REGIME
182. Some members of the Working Party noted that  in recent years, Chinese Taipei had introduced
a number of improvements to the protection of intell ectual property rights and that Chinese Taipei was
apparently ready to assume in full the obligations set out in the WTO Agreement on TRIPS.  In their
view the problems faced by Chinese Taipei in this area related to enforcement rather than to the
intellectual property rights legislation itself.  Info rmation was requested with regard to the entry into
force of the Patent Law, the Trademark Law, the Integrated Circuit Protection Law and the Industrial
Design Law.  Information was also requested on the existence of bilateral agreements, the border
measures to combat counterfeiting, the procedures a pplicable to the infringement of intellectual property
rights, the protection accorded to pharmaceutical in ventions, the protection accorded to geographical
indications and to appellations of origin for wines and spirits.
183. In response, the representative of Chinese Taipei said that the Action Plan to Comprehensively
Protect Intellectual Property Rights  approved on 29 June 1993 had set out the following eight directions
for efforts to strengthen the protection of intellectua l property rights:  (i) improving the relevant legal
framework;  (ii) strengthening the relevant administ rative organization; (iii) enhancing the enforcement
of the relevant laws and regulations;  (iv) increa sing education and promotion; (v)  increasing the
capability to negotiate with other economies; (vi) st rengthening investigation and research capabilities;
(vii)  providing adjustment assistance to the i ndustries concerned;  and (viii)  monitoring theWT/ACC/TPKM/18
Page 55
implementation of the plan.  Some members of the Working Party responded that they had noted
continued high levels of piracy of  computer software in Chinese Ta ipei and export of pirated software
embodied in semiconductors.  Members of the Workin g Party expressed concern regarding the failure to
impose penalties, in particular administrative penalti es and seizure of infringing product and machinery
predominately used to produce such products, sufficient to deter piracy.
184. The representative of Chinese Taipei stated that in January 1999 Chinese Taipei had established
the Intellectual Property Office whose responsibility  was exclusively for d ealing with intellectual
property matters.
Copyright and related rights
185. Concerning copyrights, the representative of Ch inese Taipei noted that according to Article 4 of
the Copyright Law, copyrights of economies or territories which have established reciprocity with
Chinese Taipei were protected by Chinese Taipei.  Protection also extended to foreign works publishedfor the first time in the territory of Chinese Taipei , or foreign works which were published in Chinese
Taipei within thirty days of their first publication in territories outside of Chinese Taipei.  Chinese Taipei
had revised the Copyright Law to meet the requi rements of TRIPS.  The main revision includes:
(a)  amending the definitions for public broadcast and public performance;  (b)  giving explicit
protection for performers' performance;  (c)  deletin g provisions concerning compulsory licenses for
translation; and (d)  affording a life-plus-50-years or 50 years term of retroactive protection in
consistency with the obligation under Article 18 of the Berne Convention.  The Amendment had been
promulgated since 21 January 1998, and effective since 23 January 1998, except the retroactive
protection provisions which woul d not take effect until Chinese Taipei's accession to the WTO.
186. In response to a question concerning Chinese Ta ipei's current protection for computer programs,
the representative of Chinese Taipei stated  that  computer programs had been protectable since 1985
under the Copyright Law.  The protection term was 50 years.
187. The representative of Chinese Taipei committed that Chinese Taipei would amend relevant
Articles to protect computer programs as literary works and to extend the term of protection to life plus
50 years or 50 years from date of publication.    The Working Party took note of these commitments.
188. The representative of Chinese Taipei stated  that in his opinion, the Copyright Law was in
conformity with the Berne Convention and the TRIPS Ag reement.  He provided details of the Copyright
Law provisions to the Working Party.  He said th at Chinese Taipei had promulgated one Act and eight
implementing regulations: Copyright Intermediary Organization Act; The Illustrated Contents of Each
Kind of Works in Paragraph 1 of Article 5 of the Copyright Law; The Certain Amount in Item 2 and 3
of Paragraph 1 of Article 87bis of the Copyri ght Law; Regulations Governing Application for
Approval of Compulsory License of Musical Works and Royalties for Use Thereof; Standards forCompensation for Fair Use of Works in Paragra ph 4, Article 47 of Copyright Law; Regulations
Governing Registration of Plate Rights; Implementation Regulations for Suspension of Release of
Goods Infringing on Copyright or Plate Right by Customs Authorities; Regulations of Copyright
Dispute Mediation; Organic Charter of the Copy right Examination and Mediation Committee of the
IPO, MOEA.
189. In response to the assertion by some members of the Working Party that Chinese Taipei did not
appear to protect against the transmission of infr inging copyright material on its cable television
network, the representative of Chinese Taipei indi cated that the Government Information Office (GIO)
had determined that a priority target was a crackdown on illegal cable television networks that
transmitted illegal copyrighted television programmes without authorization.  In the event of such a
transmission being made, the GIO severed the cable connection of the broadcaster and referred the
matter to the prosecuting authorities.  After the Cable TV Law had been promulgated in 1993, the GIOWT/ACC/TPKM/18
Page 56
had the authority to impose fines on those cable TV networks which transmitted copyrighted televisions
programmes without authorization, and refe r cases to the prosecuting authorities.
190. The representative of Chinese Taipei also noted that a bilateral agreement on protection of
copyright with the United States had taken effect on 16 July 1993 and had been reinforced by a bilateral
agreement regarding reciprocal treatment on the priority rights of trademarks and patents of
10 April 1996.  In his view, the agreement in some cases  gave a higher standard of protection than the
Berne Convention.  The text of this agreement was ma de available to the Working Party as well as the
Agreement Concerning the Protection and Enforcemen t of Rights in Audiovisual Works between the
Coordination Council for North American Affairs and the American Institute in Taiwan.  The
representative of Chinese Taipei welcomed any opportun ity of entering into bilateral agreements on the
enforcement and recognition of intellectual prope rty rights with its other trading partners.
191. In this connection, the representative of Chines e Taipei noted that Article 4 of the Copyright
Law provided that copyright protec tion for works created outside Chinese Taipei could be granted on the
basis of reciprocity.  The reciprocity required for granting protection to foreign copyrights could be
established by way of (i) a treaty or agreement, (ii) unilateral action by other economies through their
laws, regulations, or other legal instruments which pr ovide protection to Chinese Taipei's copyrights, or
(iii) customary practices.  Chinese Taipei was willing to discuss with interested parties to find a mutually
accepted way to establish such reciprocity.  In add ition to the reciprocity established with the United
States, Chinese Taipei had decided to protect works originating in the United Kingdom; Hong Kong,
China; New Zealand; Macao, China;  and Switzerland through unilateral administrative action following
those five economies actions protecting works of Chinese Taipei origin.
Trademarks
192. In response to questions, the representative of Chinese Taipei stated that Article 37(7) of the
Trademark Law was applied to provide protecti on for well known foreign marks in accordance with
Article 6 bis of the Paris Convention, i.e. even when the goods were not similar to the goods in respect
of which a trademark was registered.
193. In response to further questions concerning the Trademark Law and the statement by a member
of the Working Party that Chinese Taipei's Inte llectual Property Office applied the standards for
trademark registration in a manner that was not c onsistent with the requirements of the TRIPS
Agreement, the representative of Chinese Taipei prov ided details of the system of protection and the
respective time limits which, in his opinion, were basically consistent with the TRIPS Agreement.  He
stated that the Intellectual Property Office had recen tly adopted several measures to facilitate the
examination process and to maintain consistency.  St atistics revealed that in Chinese Taipei applications
for trademark registration filed by foreign applicants had a consistently high approval rate.  Concerning
the question of geographic denominations of origins,  he confirmed that the Trademark Law did not deal
with geographic denominations of origin.  However, if an application for a trademark was made and the
trademark could cause confusion as to the geographic origin of the marked goods, the application could
be rejected.  If appellations of origin were used as  trademarks their use would violate Article 37 of the
Law.
194. The representative of Chinese Taipei said that the Trademark Law, Articles 4, 5, 23, 25, 34, 37
and 61 had been  amended to achieve:
(i) to broaden the scope of reciprocal granting of the right of priority to cover the situation
where there was no formal agreement but the right of priority was granted to Chinese
Taipei's owner of trademark through practice;WT/ACC/TPKM/18
Page 57
(ii) to include a combination of colours in the group of items that were capable of
constituting a trademark so as to be consiste nt with Article 15 of the TRIPS Agreement;
and
(iii) to extend administrative protection to well known marks by providing that no
applications may be filed for registration of a trademark design which was identicalwith or similar to another person's well- known trademark or mark and likely to cause
the public to form a mistaken belief.  Th is amendment had been passed in April 1997
and has come into force on 1 November 1998.
Geographic indications
195. On geographic indications, he noted that curre ntly, the Trademark Law did not have specific
provisions for the protection of ge ographic indications and appellations of origin for wines and spirits.
However, as a general rule, if a manufacturer's us e of geographic indications as trademarks caused
confusion to the general consumers as to the geographical origin of the product concerned, the
Intellectual Property Office could on its initiative or  upon petition by interested parties turn down the
application of trademark registration or cancel the existing registration, as the case may be, according to
Article 37, sub-paragraph 6 of the Trademark Law.  If  appellations of origin were used as trademarks,
there would be a violation of Article 37, sub-paragra ph 10 regarding indications of origin.  The relevant
trademark application would be turned down or th e registration would be cancelled.  Chinese Taipei
believed that the above protection should meet the requirement for the protection of geographical
indications and appellations of origin c ontemplated in the WTO TRIPS Agreement.
Patents
196. Concerning patents, the representative of Chinese Taipei noted that under paragraph 1 of
Article 42 of the 1986 Patent Law, a patent holder ha d the exclusive right to make, sell, or use his
invention.  Therefore, a product patent gave protec tion to the product no matter which process was used
in the manufacturing of the product.  Paragraph 2 of  the same Article provided that if the patented
invention was a process, the patent protection ex tended to the product using the process in the
manufacturing.  However, if the product was subject to another party's patent, the use of the process
invention required the consent of that other party.  The above rules applied to all inventions, including
pharmaceutical inventions.  The Patent Law, (as amended in 1994) provided statutory bars to an
invention patent in Article 21.  Article 56 of th e amended Patent Law conferred on the patentee of a
patented article and patented manufacturing process the exclusive rights to manufacture, sell, use or
import. Article 80 stipulates that where the product manufactured in accordance with a patented
manufacturing process was under a product patent grante d to others, the owner of such process patent
would not put his process inven tion into practice without the consent of the product patentee.
197. In response to questions concerning whether pha rmaceutical inventions could be the subject of a
product patent giving protection to the product inde pendently of the process with which it had been
manufactured, the representative of Chinese Taipei said that a patent was granted on the invention,
regardless of which process was used in the manufacture of the goods.  He said that the examining
authority could grant extensions of the time limits  for the submission of supplementary information
supporting a patent application.
198. He added that the 1994 Patent Law,  Articles 21, 51, 56, 57, 78, 79, 80, 82, 88, 91, 105, 109, 117
and 122 had been amended to achieve the following objectives:
(i) to delete the requirement of reciprocity in respect of the granting of patents for
micro-organisms, extension of patent prot ection terms and the granting of exclusive
import rights so as to be consistent with  Articles 3 and 4 of the TRIPS Agreement;WT/ACC/TPKM/18
Page 58
(ii) to limit compulsory licensing in re spect of semi-conductor technology to public
non-commercial use or to remedying anti-comp etitive practice, so as to be consistent
with Article 31(c) of the TRIPS Agreement;
(iii) to provide patent owners and his/her exclus ive licensees the right to request destruction
or other necessary disposition of the infr inging goods, raw materials or instruments
used, in connection with the infringement, so  as to meet the requirement of Article 46
of the TRIPS Agreement which calls for gi ving the judicial authority to order
disposition outside the channels of commerce;
(iv) to provide for shifting the burden of proof in respect of process patents as required by
Article 34 of the TRIPS Agreement;  and
(v) to provide for longer term of protection for industrial design, so as to meet the
minimum requirement of 10 years of the TRIPS Agreement.
These amendments had been passed in April 1997 and would enter into force at the time of accession.
Chinese Taipei also committed to amend Article 134 of the Patent Law so that upon accession patents
issued prior to January 1994 that were still in effect  would have a term of pr otection of 20 years and  12
years as from the date of filing for the invention patents and new design patents respectively.  The
Working Party took note of these commitments.
Protection of undisclosed information
199. In response to questions concerning whether Chinese Taipei protected trade secrets, the
representative of Chinese Taipei said that the Trade Secrets Law was promulgated on 17 January 1996.
He assured the Working Party that the protection of  trade secrets would conform with the requirements
of the TRIPS Agreement.
Enforcement
200. Concerning enforcement of intellectual prope rty laws, the representative of Chinese Taipei
noted that in addition to the administrative measures to be taken by the Intellectual Property Office, the
Fair Trade Law and the Commodity Labelling Law al so provided for the protection of intellectual
property.  Article 21(1) of the Fair Trade Law pr ovided that enterprises (i.e. firms or individuals
engaging in trade) could not make any false or mi sleading marking of place of origin or manufacturing
or distribute, export or import goods bearing such marking.  Violators could be fined up to one million
NT Dollars.  The fine had been raised to NT$25 million as a result of the amended Fair Trade Lawwhich had been promulgated on 3 February 1999.  Under the Commodity Labelling Law, importers and
manufacturers were required to include information re lating to the name and address of the manufacturer
on product labels.  An offender found guilty of violatin g this law and failing to rectify the impropriety
within a prescribed time-limit would be punished by a fine of  5,000 to 50,000 yuan (equivalent to
NT$15,000 to NT$150,000).  In the case of grievous offen ce, the violator may also be subject to such
disciplinary action as suspension or cessation of bus iness operations.  In addition, persons using false
designations could be liable under Article 339 of the Criminal Code as having committed the offence of
forgery.
201. Concerning the enforcement of intellectual prope rty rights, the representative of Chinese Taipei
said that Chinese Taipei provided training concerni ng intellectual property rights (intellectual property
rights) to judges, prosecutors and other law enfo rcement officials.  Newly appointed judges and
prosecutors could not practice until they had comple ted an eighteen month training programme which
included an introduction to intellectual property rights .  Additional training was provided to incumbentWT/ACC/TPKM/18
Page 59
public prosecutors.  Chinese Taipei had also taken steps to co-ordinate the relevant agencies in the
enforcement of intellectual property rights.  The P ublic Prosecutors' Office attached to the Chinese
Taipei High Court had conducted five seminars since 1 July 1992 for representatives from government
agencies including Customs, the Government Info rmation Office (GIO), the Board of Foreign Trade
(BOFT), and the Police Administration. Specific public  prosecutors had been appointed  to deal with
intellectual property rights infringement cases.  Public  prosecutors were directed to handle intellectual
property rights complaints expeditiously and to pr ess for harsh sentences whenever the circumstances
warranted.  Judgements which appeared not to have a deterrent effect would be appealed to the High
Court. All prosecutors were direct ed that the discretion to commute  prison terms to fines should be
exercised very carefully in intellectual property rights cases.
202. To facilitate the investigation of intellectual property rights infringement cases, on
31 March 1993, the Public Prosecutor's Office had integr ated all intellectual property rights agencies to
form a task force.  In a letter of 20 August 1996, all prosecutors had been directed to investigate cases
where Chinese Taipei residents infringed copyrights in  the PRC.  If the result of the investigation met
the requirements under Article 251 of the Criminal Procedure Code, prosecutors should prosecute the
case. Article 100 of the Copyright Law provided that  a prosecutor could initiate an investigation and
issue an indictment in the absence of a complaint.  If a complaint had initiated the investigation, Article
100 also provided that the prosecutor could continue with the investigation or prosecution even if the
injured party withdrew the complain t.  When a search warrant and the seizure of goods was considered
appropriate, prosecutors were required to proceed promptly.  In addition to the Copyright Law, all
prosecutors had been directed that the discretion to  not prosecute a case under the Criminal Code should
be exercised very carefully in intellectual propert y rights criminal cases.  Judges had also been
encouraged to impose the heaviest penalties possibl e on intellectual property rights infringers, and
special  intellectual property rights divisions had been established in District Courts.  Specific
prosecutors had been designated to deal with intell ectual property rights cases.  The Public Prosecutors'
Office attached to the Chinese Ta ipei High Court had conducted several on-the-job seminars since
1 July 1992 for new and current prosecutors. The government would continue to hold educational
seminars and courses for new and current prosecutors and judges on a regular basis to keep them
informed of the new developments relating to intellectual property rights issues.
203. To further deter the export of counterfeit computer software, the Board of Foreign Trade of the
Ministry of Economic Affairs promulgated the Gu idelines for Handling Cases Where the Export of
Products related to Computer Programs was Susp ected of Copyright Infringement in 1996.  In this
connection, the representative of Chinese Taip ei noted that in November 1992, export licensing
requirements were introduced for the following products  in order to control the export of infringing
goods:
8473.30.10.00 Computer PC board (only PC boards with semiconductor chips and computer
software within the chip);  8473.30.10.00 Printer PC board (only PC boards with semiconductor
chips containing computer software); 9504.10.00.10 Television video game PC boards with
semiconductor chips containing computer software; 9504.10.00.10 Video games of a kind used
with a television receiver;  9504.90.90.00 Other artic les for funfairs, table or parlour games
(palmtop electronic games c ontaining computer softwa re); 9504.90.90.00 Other articles for
funfairs, table or parlour games (ca ssettes for palmtop el ectronic games); 9504.10.00.20
Cassettes for television video games; 8471.20.00.00 Dig ital automatic data processing machines
(containing in the same hosing at least a CP U and output unit, whether combined or not);
8471.92.20.10 Dot matrix printer; 8471.92.20.20 Laser printer; 8471.92.20.30 Daisy printer;
8471.92.20.90 Other printer; 8524.90.30.00 Recorded data processing system magnetic disks
(only disks containing comput er software); 8524.11.90.00 Other digita l integrated circuits (used
in computers, printers or TV video games a nd containing chips with computer software);
8542.19.90.00 Other monolithic integrated circuits (used in computers, printers or TV video
games and containing chips with computer software);  8542.20.00.00 Mixed integrated circuitsWT/ACC/TPKM/18
Page 60
(used in computers, printers or TV video game s and containing chips with computer software);
8542.80.90.90 Other integrated circuits and micro a ssemblies (used in computers, printers or
TV video games containing chips with computer software).
204. He noted that the export licensing requireme nts on the above computer-related products were
eliminated on 15 July 1998.  Since that date (and pursuant to a memorandum of understanding signed
with the United States) the Customs had been delegate d to examine packages of software consigned for
export, to determine whether they conformed to th e export permit, invoice and packaging list or other
export documents.  The examinations were carried out at random with 30-50 per cent of such exports
being examined.  All exports of an exporter who had been previously found to have exported intellectual
property rights infringing products were subject to inspection, whether or not these exports were
described as computer software.  All exports susp ected of being counterfeit were seized, unless the
exporter could provide evidence to offset such susp icion.  The seized products would be confiscated
when the intellectual property rights right-holder obtained a final judgment from the Courts confirming
that the products were infringing intellectual prope rty rights.  Public Prosecutors were required to
prosecute forgers of documents including documen ts which were used to support the exportation of
intellectual property rights infringing products.  In response to further questions, the representative of
Chinese Taipei noted that CD, VCD, CD-ROM and DVD manufacturers in Chinese Taipei wererequired to inscribe the source identification code (SID) on all CDs, VCDs, CD-ROMs and DVDs
manufactured.  This measure was aimed to further deter the circulation of pirated CDs, VCDs, CD-
ROMs and DVDs.  Concerning pate nts and trademark infringements, the representative of Chinese
Taipei stated that the Anti-Counterfeiting Committee (ACC) under the Ministry of Economic Affairs
worked closely with the Customs and the Prosecutors  Office.  The ACC had been designated as the
coordination agency to assist the effective operati on of the export monitoring system.  The ACC was
responsible for the enforcement of anti-counterfe iting efforts involving trademark, patents and
copyright.  The ACC directed the work of the inte llectual property rights Enforcement Supervisory Task
Force since July 1989.  The ACC was empowered to refer suspected counterfeiting cases directly to the
Courts for prosecution.  Following conviction, the ACC could request the BOFT to impose punitivemeasures according to the degree of seriousness of the offence.  The BOFT could refuse to issue export
permits for a period of one year to the companies concerned.  He added that the inspection by the
Customs emphasized the examination of the produc t name, brand names, qualities, specifications,
product serial numbers, model numbers, countries of  manufacture, net weights etc.  Trademark holders
with sufficient information could file a petition to  the Court for the provisional attachment of the
counterfeit goods or inform the prosecutor.  The Cu stoms could only seize the goods when informed by
the Court or the trademark authority.  If Customs suspicions were aroused concerning the export of
certain goods, it would refer the matter to the A CC.  There was no such mechanism to deal with
imported goods.  He also stated that consultati ons with the United States on the protection for
pharmaceuticals had been concluded.  On 7 July 1993, the Department of Health had issued revised
public notices regarding safety monitoring which applied to all pharmaceuticals regardless of their
origin.
205. In reply to questions concerning border measur es and the seizure by the Customs of infringing
products, the representative of Chinese Taipei indicated that in relation to patented goods, it was
necessary for the right holders to obtain a Court orde r before any seizure could be made by the Customs.
All infringements of intellectual property rights had to be dealt with in the same manner as patent rights.
The only exception was Article 90 bis of the Copyright Law, which provided that right-holders upon the
posting of an appropriate bond could petition the Cust oms to seize imports reasonably suspected to be
infringing copies.  The goods would be confiscate d upon a Court judgment confirming the infringement.
In response to questions concerning the seizure of parts imported into Chinese Taipei for the purpose of
being assembled into infringing goods which would be  exported to a third country, the representative of
Chinese Taipei replied that Chinese Taipei had neve r encountered such a situation, but the goods could
be seized if a Court order was obtained.WT/ACC/TPKM/18
Page 61
206. Some members of the Working Party asked whether any additional measures were planned in
order to combat the infringement of intellectual property rights, taking into account that existing
measures did not appear to be having a suffici ent deterrent effect on certain commercial scale
counterfeiting operations, such as watches.  Some members also noted the continued high levels of
piracy of computer software embodied in se mi-conductors.  These members expressed concern
regarding the failure to impose penalties, in particul ar administrative penalties and seizure of infringing
products and machinery used to produce such products, sufficient to deter piracy.  The representative of
Chinese Taipei replied that Chinese Taipei had issu ed an Action Plan for Enforcement and Protection of
Intellectual Property Rights.  The Action Plan laid down a framework for the improvement of
intellectual property protection, includi ng the upgrading of the standards of protection, the application of
stiff administrative measures, the strengthening of j udicial enforcement and the education of the general
public to respect intellectual property rights.  An inter-agency Task Force had been established to
co-ordinate and supervise the enforcement of in tellectual property rights.  Chinese Taipei was
determined to enjoy a reputation as a territory  that respected intellectual property rights.
207. The representative of Chinese Taipei noted that  efforts to ensure fully conformity with the
Agreement on TRIPS were ongoing.  Amendments to the Trademark Law passed in April 1997 had
entered into force on 1 November 1998.  The amendments to the Patent Law passed in April 1997 wouldenter into force upon accession.  The draft frameworks for the Integrated Circuits Layout Protection Law
had been promulgated on 11 August 1995 and entered into force on 11 February 1996. Some members
of the Working Party expressed their appreciation to the representative of Chinese Taipei for the
information on efforts to implement the TRIPS Agreem ent.  These members re-emphasized the need for
effective enforcement of Chinese Taipei s intellectua l property laws as part of its obligations under the
TRIPS Agreement.  The Working Party took note of these commitments.
208. Recognizing that sales into the domestic market  of smuggled or counterfeit imports of alcohol
and tobacco products undermine Chinese Taipei's market for legally marketed products, and wishing to
discourage such activities in the future, the repr esentative of Chinese Taipei confirmed that all
contraband smuggled or counterfeit imports of alcohol  and tobacco products seized would be destroyed,
or otherwise disposed of, taking into account the pr actices of WTO Members in a similar situation, and
that Chinese Taipei would take  additional efforts to prevent such illegal imports.  In this regard, Chinese
Taipei would ensure that certain alcoholic bevera ge imports would be accompanied by a certificate of
origin similar to that issued by the regulatory authorities in the c ountry of origin in order to combat
counterfeiting.  The Working Party took note of these commitments.
209. The representative of Chinese Taipei stated that  Chinese Taipei would fully apply the provisions
of the Agreement on TRIPS by the date of accessi on, without recourse to any transitional period.
Chinese Taipei would furthermore ensure by the date of accession:
(a) full protection of geographical indications (including against trademarks which contain
or consist of such an indication), as well as of well-known marks (including the
enhanced protection pursuant to Article 16.2 and 3 of  the TRIPS Agreement);
(b) the establishment of a registration system for trademarks which incorporates all
conditions as set out in the TRIPS Agreement;
(c) the amendment of Chinese Taipei Copyrigh t Law to comply with Article 14(1) of the
TRIPS Agreement;
(d) the extension to all WTO members of advantages currently given on the basis of
reciprocity, the elimination of any recipr ocity requirements;  and in particular,WT/ACC/TPKM/18
Page 62
(e) effective enforcement (including implemen tation of the special requirements related to
border measures).
The Working Party took note of these commitments.
VII. POLICIES AFFECTING TRADE IN SERVICES
210. Several members of the Working Party stre ssed that Chinese Taipei must undertake a
substantial package of initial commitments in its  Services Schedule with minimum exceptions from
MFN treatment.  Chinese Taipei engaged in market access negotiations on services with members of the
WTO.  The results of those negotiations are reproduced  in Part II of Annex I to the Draft Protocol of
Accession.  The representative of Chinese Taipei ag reed that Chinese Taipei would schedule its best
offer on maritime services in  the ongoing  WTO nego tiations on services  in Geneva.  He also stated
that an enquiry point would be esta blished as of the date of accession.
211. The representative of Chinese Taipei confirmed that MOTC would license additional
facilities-based operators effective from July 2001; and, consistent with Chinese Taipei’s
commitments under the GATS, there would be no limitations on the numbers of licenses after Chinese
Taipei becomes a member of the WTO. In addition, MOTC would deregulate international voice
simple resale service from July 2001. From that time, market access to services-based competition
would be fully open. The Working Party took note of these commitments.
212. Some members of the Working Party welcomed Chinese Taipei’s commitment to permit
attorneys of foreign legal affairs (AFLA) to establish a partnership with or employ a lawyer licensed
in Chinese Taipei upon Chinese Taipei’s accession to the WTO.  They also noted that Chinese Taipei
would grant AFLA status to all fo reign lawyers who were employed in Chinese Taipei by the date of
Chinese Taipei's accession and who complete a two-year employment period, in accordance with the"Regulation Concerning Chinese Taipei Lawyers' Employment of Foreigners and Administration "
thereof.  The cooperative arrangements between a Chinese Taipei lawyer and an AFLA would not
constitute a violation of provision of Article 50 of the Lawyers' Law.
IX. TRANSPARENCY
213. Some members of the Working Party noted that Article X of the GATT 1994 required that all
laws, regulations, judicial decisions and administrative  rulings relating to trade be published promptly so
that governments and traders could become acquainted with them.  Similarly, Article III of the GATS
required prompt publication (at the latest by the time of entry into force - except in emergency
situations) of all relevant measures of general applic ation which pertain to or affect the operation of the
GATS Agreement.  These members also noted that tr ansparency obligations arose from Article 63 of the
TRIPS Agreement.  They also requested that such laws, regulations, judicial decisions and
administrative rulings relating to tr ade be systematically and immediately translated into a WTO official
language.
214. Some Working Party members emphasized the importance of prior notice of laws, regulations
and other measures affecting trade in goods, services and intellectual property rights, in particular the
right to provide comments on proposed measures prio r to their enactment and implementation.  These
members of the Working Party also noted that some  of the WTO Agreements expressly provided for
such a notice and prior comment process and urged Chinese Taipei to extend the coverage of this
process to all measures related to the WTO.
215. The representative of Chinese Taipei stated that the following laws would be among those
repealed, amended or newly made by the date of accession to the WTO for the purpose of putting into
effect Chinese Taipei's accession commitments:WT/ACC/TPKM/18
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- Foreign Trade Act
- The Commodity Inspection Law
- The Trademark Law
- The Patent Law
- Company Law
- Customs Law Articles
- Statute for Commodity Tax
- Business Tax Law
- The Securities and Exchange Law
- The Certified Public Accountants' Law
- Commercial Port Law
- Lawyers' Law
- Architects' Law
- Statute Governing Privileges and Immunities of the Foreign Missions and their
Personnel in Chinese Taipei
- Law of Pharmaceutical Affairs
- Law Governing Food Sanitation
- The Publication Law
- Central Bank Act
- Banking Law
- Copyright Law
- Copyright Intermediary Organization Act
- Tobacco and Alcohol Administration Law
- Tobacco and Alcohol Tax Law
- Statute Governing the Organi zation of Department of Na tional Treasury, Ministry of
Finance
- Provincial Statute for Monopoly of T obacco and Wine in Taiwan Province
- Customs Import Tariff and Classifi cation of Import Export Commodity
- Statute for Establishment and Management of Export Processing Zones
- Statute for Agriculture Development
- Food Management Law
- Statute for Inspection Procedure Governin g Construction Works and Procurement and
Disposal of Properties by Government Agencies
- Statute for Vocational Assistance for Retired Servicemen
- Law for the Administration of  State-owned Enterprises
- Government Procurement Law
216. An illustrative list of the amendments that woul d be introduced to some of the above-mentioned
laws was reproduced in Attachment D to this Repor t.  The representative of Chinese Taipei further
stated that Chinese Taipei would ensure that fro m the date of accession, all laws, regulations, judicial
decisions and administrative rulings relating to trad e would be published promptly so that governments
and traders could become acquainted with them.  The Working Party took note of these commitments.
217. The representative of Chinese Taipei further stat ed that Chinese Taipei would ensure that from
the date of accession, all laws, regulations, judicial  decisions and administrative rulings of general
application relating to trade in goods, as well as meas ures subject to the transparency provisions of the
GATS and TRIPS Agreement would be translated and published in an official WTO language no later
than 90 days after enactment or issuance.  Such measures would, however, be published in the official
language of Chinese Taipei prior to the date such measures were to be implemented or enforced except
in cases of extreme emergency publi cation would be done on an expedited basis thereafter.  In respect of
enquiry points required to be established under the WTO Agreement or the Draft Protocol, the
representative of Chinese Taipei stated that Chin ese Taipei would establish or designate an enquiry
point where, upon request of any i ndividual or enterprise, all info rmation relating to the measuresWT/ACC/TPKM/18
Page 64
required to be published may be obtained.  Replies to enquiries for information would generally be
provided within 30 calendar days after receipt of  a request.  In exceptional cases, replies may be
provided within 45 calendar days after receipt of a request.  Replies would be complete and would
represent the authoritative view of Chinese Taipei.  The Working Party took note of these commitments.
218. The representative of Chinese Taipei noted the existence of requirements in some WTO
Agreements for prior notice and a reasonable time  to present comments on proposed measures.  He
stated that Chinese Taipei had an open and transpar ent system for adopting laws, regulations and other
measures.
219. The representative of Chinese Taipei stated  that upon accession, Chinese Taipei, would provide,
except in cases of extreme emergency, a period for appropriate authorities, including those of other
WTO members, to comment on all laws, regulations and other measures pertaining to or affecting trade
in goods, services, or TRIPS of at least 60 calendar days before such measures were implemented.   If
prior comment was not possible in such cases of emergency, comments would be accepted and
considered immediately after implementation.  Th e Working Party took note of these commitments.
Notifications
220. The representative of Chinese Taipei said that the latest upon entry to force of the Draft Protocol
of Accession, Chinese Taipei would submit all notifica tions (other than those required to be made on an
ad hoc basis) required by any Agreement constituting part of the WTO Agreement.  Any regulations
subsequently enacted by Chinese Taipei which gave  effect to the laws enacted to implement any
Agreement constituting part of the WTO Agreement would also conform to the requirements of that
Agreement.  The Working Party took note of these commitments.
X. OTHER TRADE AGREEMENTS
221. In response to questions from some members of the Working Party, the representative of
Chinese Taipei stated that Chinese Taipei was not a party to any trade agreement which provided for the
granting of preferences to trade in goods and/or services.
Agreement on Trade in Civil Aircraft
222. In response to questions concerning the aerospace sector, the representative of Chinese Taipei
said that its aerospace industry did not presently have the capability to assemble civil aircraft or compete
internationally.  Chinese Taipei did not provide any subsidies specifically for the aerospace industry.
Some members of the Working Party said that a modern and sophisticated economy such as Chinese
Taipei, which was also a major participant in the globalization of the world's aeronautics and space
industry, should accept the Agreement on Trade in Civil Aircraft upon accession to the WTO.  They
further added that due to the advanced state of th e industrial development of Chinese Taipei and the
plans to expand the aircraft and components industry, the acceptance by Chinese Taipei of theAgreement on Trade in Civil Aircraft was a prerequisite to accession to the WTO.
223. The representative of Chinese Taipei stated th at Chinese Taipei would become a signatory to
the Agreement on Trade in Civil Aircraft at  the same time that it acceded to the WTO.
XI. CONCLUSIONS
224. The Working Party took note of the explanations  and statements of Chinese Taipei concerning
its foreign trade regime, as reflected in this Repor t.  The Working Party took note of the commitments
given by Chinese Taipei in relation to certain spec ific matters which are reproduced in paragraphs 12,
15, 19, 21, 22, 36, 37, 39, 40, 44, 45, 50, 55, 61, 66, 68, 69, 71, 72, 73, 78, 80, 82, 84, 86, 89, 97, 106,WT/ACC/TPKM/18
Page 65
113, 116, 117, 121, 126 bis, 127, 135, 137, 140, 141, 147, 148, 149, 150, 151, 152, 155, 158, 160, 166,
167, 171, 174, 180, 181, 187, 198, 207, 208, 209, 211, 216, 217, 219 and 220 of this Report and noted
that these commitments had been incorpor ated in the Draft Protocol of Accession
225. Having carried out the examination of the fore ign trade regime of Chinese Taipei and in the
light of the explanations, assurances and commitment s given by the Chinese Taipei representatives, the
Working Party reached the conclusion that Chinese Taipei be invited to accede to the Marrakesh
Agreement Establishing the World Trade Organizati on on the terms set out in the draft Protocol of
Accession reproduced in the Appendix to this  Report, including the Annexes thereof.WT/ACC/TPKM/18
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APPENDIX
ACCESSION OF THE SEPARATE CUSTOMS TERRITORY
OF TAIWAN, PENGHU, KINMEN AND MATSU
Draft Decision of [… November 2001]
[The Ministerial Conference,
Having regard to  paragraph 2 of Article XII and paragraph 1 of Article IX of the Marrakesh
Agreement Establishing the World Trade Organi zation, and the Decision-Making Procedures under
Articles IX and XII of the Marrakesh Agreement Establishing the World Trade Organization agreed
by the General Council (WT/L/93),
Taking note  of the application of the Separate Customs Territory of Taiwan, Penghu, Kinmen
and Matsu for accession to the Marrakesh Agreement Establishing the World Trade Organization
dated 7 December 1995,
Noting  the results of the negotiations directed toward the establishment of the terms of
accession of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu to the Marrakesh
Agreement Establishing the World Trade Organi zation and having prepared a Protocol on the
Accession of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
(WT/ACC/…/…),
Decides  as follows:
The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu may accede to the
Marrakesh Agreement Establishing the World Trade Organization on the terms and
conditions set out in the Protocol annexed to this Decision.]WT/ACC/TPKM/18
Page 67
DRAFT PROTOCOL  OF ACCESSION OF THE SEPARATE CUSTOMS TERRITORY OF
TAIWAN, PENGHU, KINMEN AND MATSU TO THE MARRAKESH AGREEMENT
ESTABLISHING THE WORLD TRADE ORGANIZATION
The World Trade Organization (hereinafter referred to as the "WTO "), pursuant to the approval
of the General Council of the WTO accorded under Article XII of the Marrakesh Agreement
Establishing the World Trade Organization (hereinafter referred to as the "WTO Agreement "), and the
Separate Customs Territory of Taiwan, Penghu, Ki nmen and Matsu (hereinafter referred to as "Chinese
Taipei "),
Taking note of the Report of the Working Party on the Accession of Chinese Taipei to the WTO
Agreement reproduced in document WT/ACC/TPKM/ 18, dated ........ (hereinafter referred to as the
"Working Party Report"),
Having regard to the results of the negotiatio ns on the accession of Chinese Taipei to the WTO
Agreement,
Agree as follows:
PART I -  GENERAL
1. Upon entry into force of this Draft Protocol pursuant to paragraph 10, Chinese Taipei accedes to
the WTO Agreement pursuant to Article XII of that  Agreement and thereby becomes a Member of the
WTO.
2. The WTO Agreement to which Chinese Taipei accedes shall be the WTO Agreement, including
the Explanatory Notes to that Agreement, as rectif ied, amended or otherwise modified by such legal
instruments as may have entered into force before th e date of entry into force of this Protocol.  This
Protocol, which shall include the commitments referred to in paragraph 224 of the Working Party
Report, shall be an integral part of the WTO Agreement.
3. Except as otherwise provided for in para graph 167 of the Working Party Report, those
obligations in the Multilateral Trade Agreements  annexed to the WTO Agreement that are to be
implemented over a period of time starting with the entry into force of that Agreement shall be
implemented by Chinese Taipei as if it had accepted that Agreement on the date of its entry into force.
4. The Special Exchange Agreement between the WTO and Chinese Taipei reproduced in Annex
II to this Draft Protocol forms an in tegral part of this Draft Protocol.
5. Chinese Taipei shall at the time of its accessi on to the Marrakesh Agreement Establishing the
World Trade Organization (WTO Agreement) accept the Plurilateral Trade Agreement on Trade in Civil
Aircraft listed in Annex 4 of the WTO Agreement.
6. Chinese Taipei may maintain a measure inconsistent with paragraph 1 of Article II of the GATS
provided that such a measure was recorded in the li st of Article II Exemptions  annexed to this Draft
Protocol and meets the conditi ons of the Annex to the GATS on Article II Exemptions.
PART II - SCHEDULES
7. The Schedules reproduced in Annex I to this  Draft Protocol shall become the Schedule of
Concessions and Commitments annexed to th e General Agreement on Tariffs and Trade 1994
(hereinafter referred to as the "GATT 1994 ") and the Schedule of Specific Commitments annexed to
the General Agreement on Trade in Services (hereinafter referred to as "GATS ") relating to ChineseWT/ACC/TPKM/18
Page 68
Taipei.  The staging of the concessions and commitm ents listed in the Schedules shall be implemented
as specified in the relevant parts of the respective Schedules.
8. For the purpose of the reference in paragraph 6(a) of Article II of the GATT 1994 to the date of
that Agreement, the applicable date in respect of the Schedules of Concessions and Commitments
annexed to this Draft Protocol shall be the date  of entry into force of this Draft Protocol.
PART III - FINAL PROVISIONS
9. This Draft Protocol shall be open for acceptance,  by signature or otherwise, by Chinese Taipei
until 31 March 2002.
10. This Draft Protocol shall enter into force on the thirtieth day following the day upon which it
shall have been accepted by Chinese Taipei.
11. This Draft Protocol shall be deposited with  the Director-General of the WTO.  The
Director-General of the WTO shall promptly furnis h a certified copy of this Draft Protocol and a
notification of acceptance by Chinese Taipei thereto pursuant to paragraph 9 to each Member of the
WTO and to Chinese Taipei.
This Draft Protocol shall be registered in accordance with the provisions of Article 102 of the
Charter of the United Nations.
Done at [… ]  this [date] day of [month] tw o thousand and one ....., in a single copy in the
English, French and Spanish languages, each text being authentic, except that a Schedule annexed hereto
may specify that it its authentic in only one of these languages.WT/ACC/TPKM/18
Page 69
ANNEX I
SCHEDULE CLIII - SEPARATE CUSTOMS TERRITORY
OF TAIWAN, PENGHU, KINMEN AND MATSU
Part I - Goods
Document WT/ACC/TPKM/18/Add.1
Part II - Services
Document WT/ACC/TPKM/18/Add.2WT/ACC/TPKM/18
Page 70
ANNEX II
SPECIAL EXCHANGE AGREEMENT
BETWEEN
THE SEPARATE CUSTOMS TERRITORY OF
TAIWAN, PENGHU, KINMEN AND MATSU
AND
THE WORLD TRADE ORGANIZATION
(HEREINAFTER REFERRED TO AS THE "WTO ")
Whereas paragraph 6 of Article XV of the General Agreement on Tariffs and Trade 1994
(hereinafter referred to as the General Agreemen t 1994), provides that any WTO Member which was not
a member of the International Monetary Fund (hereinafter referred to as the "Fund ") shall, within a time
to be determined by the WTO after consultation with the Fund, become a member of the Fund, or,
failing that, enter into a special exchange agreement with the WTO;
Whereas paragraph 7 of the said Article provides  that such special exchange agreement shall
provide to the satisfaction of the WTO  that the objective of the General Agreement 1994 will not be
frustrated as a result of action in exchange matters by the Member in question, and taking into account
that the terms of such an agreement shall not impose obligations inconsistent with those imposed by the
Fund;
Whereas the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu (hereinafter
referred to as "Chinese Taipei ") desires to accede to the Marrakesh Agreement Establishing the World
Trade Organization (hereinafter referred to as the "WTO Agreement ") in pursuance of Article XII
thereof;
The World Trade Organization
and
Chinese Taipei, acting through its representative duly authorized for this purpose,Hereby agree as follows:WT/ACC/TPKM/18
Page 71
ARTICLE I
Orderly Exchange Arrangements
1. Chinese Taipei shall collaborate with the WTO to promote exchange rates which reflect
underlying economic fundamentals, to maintain orde rly exchange arrangements with other Members of
the WTO, to avoid competitive exchange alterations, a nd to assist, in accordance with Articles II and III
of this Special Exchange Agreement,  in the elimination of restrictions on the making of international
payments and transfers within the multilateral sy stem, and to promote international trade and
investment.
2. Recognizing that the essential purpose of the in ternational monetary system is to provide a
framework that facilitates the exchange of goods, services, and capital among countries, and that helps
sustain non-inflationary economic growth, Chinese Taipei undertakes to assure orderly exchange
arrangements and to promote a stable system of exch ange rates.  In particular, Chinese Taipei shall:
(i) Endeavour to direct its economic and financial policies toward the objective of
fostering sustained, non-inflationary economic growth with macroeconomic stability;
(ii) Permit exchange rates to reflect underlying economic and financial conditions;(iii) Avoid manipulating exchange rates or th e international monetary system in order to
prevent effective balance-of-payments adju stment or to gain an unfair competitive
advantage over other members; and
(iv) Follow exchange policies compatible with the undertakings under this Article.
ARTICLE II
Avoidance of Restrictions on Current Payments and Multiple Currency Practices
1. Chinese Taipei shall not, without the approval  of the WTO, impose restrictions on the making
of payments and transfers related to current account transactions.
2. Chinese Taipei shall not engage in, nor pe rmit its Ministry of Finance, Central Bank,
Stabilization Fund, or other agency, to engage in an y discriminatory currency arrangements or multiple
currency practices except as approved by the WTO.
3. Exchange contracts which involve the currency of any Member or Chinese Taipei and which
are contrary to the exchange control regulations of that Member or Chinese Taipei maintained or
imposed consistently with the Articles of Agreemen t of the Fund or with the provisions of a special
exchange agreement entered into pursuant to paragr aph 6 of Article XV of the General Agreement 1994
or this Special Exchange Agreement, shall be unenforceab le in the territories of Chinese Taipei or in the
territories of any Member.
ARTICLE IIIControls of Capital Transfers
1. Chinese Taipei undertakes that it shall seek to avoid the imposition of capital controls to address
balance-of-payments and macroeconomic objectives.  However, Chinese Taipei may exercise such
controls as are necessary to regulate internat ional capital movements, if these movements are
destabilizing to the balance of payments or jeopa rdize macroeconomic stability, so long as ChineseWT/ACC/TPKM/18
Page 72
Taipei does not exercise these controls in a manner which will restrict payments for current transactions
or which will unduly delay transfers of funds in settlement of commitments.
2. Chinese Taipei undertakes that measures affec ting capital flows will be in accordance with this
Special Exchange Agreement, the General Agreement 1994, and the WTO Agreement.
3. If Chinese Taipei institutes new capital contro ls or tightens existing capital controls, it shall
immediately after instituting or tightenin g such controls consult with the WTO.
ARTICLE IVRestrictions on Payments - General
1. In the event that Chinese Taipei, with the approval of the WTO, as provided in Article II, or
consistent with consultations with the WTO, as provided in Article III, as the case may be, imposes a
measure to restrict payments and transfers fo r balance-of-payments and macroeconomic stability
purposes, it shall:
(a) initiate good faith consultations with the WTO on economic adjustment measures to address the
fundamental underlying economic problems giving rise to the measures; and
(b) adopt or maintain economic policies consistent with such consultations.
2. A measure adopted or maintained under Article II of this Special Exchange Agreement shall:
(a) avoid unnecessary damage to the commercial, economic or financial interests of another
Member;
(b) be temporary and be phased out within a clearly-specified time-frame;(c) be the least burdensome type of action available;(d) be consistent with this Special Exchange Agreement and the economic policies adopted
pursuant to paragraph 1(b) of this Article; and
(e) be applied on a most-favoured-nation treatment basis.3. A measure adopted or maintained under Article III of this Special Exchange Agreement shall to
the extent practicable conform to the provisions set forth in sub-paragraphs (a) through (e) of paragraph
2 of this Article.
ARTICLE VFurnishing of Information
1. Chinese Taipei shall furnish th e WTO with such information with in the general scope of section
5 of Article VIII of the Articles of Agreement of the International Monetary Fund as the WTO may
require in order to carry out its functions under the WTO Agreement.
2. Chinese Taipei shall be under no obligation to furn ish information in such detail that the affairs
of individuals or corporations ar e disclosed.  Chinese Taipei undertakes, however, to furnish the desired
+information in as detailed and accurate a manner as is practicable.WT/ACC/TPKM/18
Page 73
ARTICLE VI
Miscellaneous Provisions
1. For purposes of this Special Exchange Agreement, the term "Payments for current
transactions " means payments which are not for the purpose of transferring capital, as defined by the
International Monetary Fund.
2. The WTO shall at all times have the right to  communicate its views informally to  Chinese
Taipei on any matter arising under this Agreement.
3. Whenever the WTO consults with the Fund on exchange matters or in other appropriate cases
particularly affecting Chinese Taipei, the WTO sha ll take measures, as are satisfactory to the Fund, to
ensure effective presentation of Chinese Taipei's  case to the Fund, including, without limitation, the
transmission to the Fund of any views comm unicated by Chinese Taipei to the WTO.
4. The Understanding on Rules and Procedures Governing the Settlement of Disputes of the WTO
shall apply to disputes arising under this Agreement.
5. This Agreement shall enter into force on the date of entry into force of the Protocol of
Accession of Chinese Taipei to the WTO.WT/ACC/TPKM/18
Page 74
ATTACHMENT A
Price Controls List
The tariff items subject to price controls and their justification and legal basis are as follows:
1. Price Controls Mandated by  Law: Electricity and Salt;
2. Price Controls to Implement Specific Policies:  Sugar; agricultural policy to stabilize farmers'
income and production cost;
3. Price controls on other necessities: Natural gas: mandated by the "Statute for Monitoring
Private Enterprises Operating Public Utilities "; price to be determined by the Public Utility Rate
Commission .
(i) Electricity:  The legal basis for price controls was the Electricity Law;
(ii) Salt: The HS number is 2501.  The legal basis for price control was the Statute for Salt
Administration;
(iii) Sugar.  The legal basis for price cont rol of the sugar sold by the Taiwan Sugar
Corporation was the "Managerial Strategy for Sugar and Future Sugar Import Regime "
published by the Ministry of Economic Affairs;
(iv) Natural gas: The HS number is 2711.21.00.  The legal basis for price control was the
Statute for Monitoring Private Enterprises Operating Public Utilities.WT/ACC/TPKM/18
Page 75
ATTACHMENT B
Revised Summary of the Tobacco and Alcohol Reform Plan (June 2001)
The following outlines Chinese Taipei's intentio ns for the tobacco and alcohol reform plan:
Tobacco and Alcohol Taxes
The TTWMB reform plan includes a classificati on of tobacco products and alcoholic beverages
for the purposes of internal taxes (tobacco and alcohol taxes). Tobacco products are classified into
cigarettes, pipe tobacco, cigars, and others. Cigarette s are subject to specific tax of 590 NT dollars per
1,000 sticks; pipe tobacco, cigars, and others are subject to specific tax of 590 NT dollars per kilogram.
Alcohol products are classified into brewed al coholic beverages (including beer and other
brewed alcoholic beverages), distilled alcohol be verages (including whisky, brandy, rum, gin, and
vodka), reprocessed alcohol beverages, rice wine ( "Mi Chiu "), cooking wine, other alcoholic beverages,
and alcohol.
The reform of the TTWMB will ensure the levy of tobacco and alcohol tax in a transparent and
non-discriminatory manner with equal treatment accorded to imported and domestic products. The
setting of the rates of tariffs and taxes has taken into account the current monopoly tax level, Uruguay
Round "zero for zero " offers, and the practices of comparable economies of the WTO members. The
tariff rates will be incorporated into Chinese Taipei's market access schedules.
Administration of Tobacco and Alcohol Products
This section covers the various aspects of th e administration of tob acco and alcohol products
with the implementation of the reform plan.
The planting and purchase of tobacco leaves are to be arranged between the manufacturers and
tobacco farmers by contracts. Production of cigarettes will not be open to the private sector within two
years after the reform.
In terms of the production of alcohol products, the manufacturing of machinery and equipment
for alcohol and tobacco production, printing of tradem arks, and packaging paper are not regulated in the
Tobacco and Alcohol Administration Law. Production of alcohol products will be open to the private
sector in stages within three years after the implementation of the new system.
Chinese Taipei plans to liberalize productio n/manufacture of wine upon the date of the
implementation of the new system; liberalization of sp irits production will be effected one year after the
implementation of the new system. It is the intention of  Chinese Taipei to attain  full liberalization within
two years.
Any person wishing to engage in the production of alcohol and tobacco products will be
required to obtain permission from the authority.
After the implementation of the new system , tobacco and alcohol manufacturers legally
established will be permitted to import alcohol and t obacco products in bulk for repackaging, provided,
however, such manufacturers shall have authorizati on from the original manufacturers of the imported
products and shall be able to produce the relevant certificates of origin.
In addition, tobacco and alcohol manufactur ers may contract out or accept contract
manufacturing, subject to the appr oval of the competent authority.WT/ACC/TPKM/18
Page 76
In the importation of alcohol and tobacco products , a license is required for an importer of the
products; the license bearer can not have prior reco rd of tax default or criminal offence within a
prescribed time. Chinese Taipei has incorporated se rvices related to the distribution of tobacco and
alcohol products in its draft schedule of specific commitments on trade in services.
The legal and regulatory framework for produc tion and distribution of  alcohol and tobacco
products will not impose particular restriction on foreign firms engaging in related commercial
activities. The time table and rules for liberalizing the production/manufacture of particular tobacco and
alcohol products will apply equally to foreign as well as domestic private firms.
Labelling requirement with respect to tobacco and alcohol products is stipulated under the
Tobacco and Alcohol Administration Law. All alcohol products will be required to be labelled with the
warning "excessive drinking endangers health. "
Product inspection will be governed by the sta ndards established by the health authority and
administered by that authority accordingly.
Advertising and promotion for tobacco products are subject to the Tobacco Hazards Prevention
Act (promulgated 19 March 1997). Chinese Taipei has to  a large extent lifted restrictions and allowed
advertising of beer, wine and other alcohol beverage s on radio and TV in specified time period of the
day. After implementation of the Tobacco and Al cohol Administration Law,  advertising of alcohol
products in all media will be permitted, subject howev er to regulation in relation to the content and
timing of the advertising. All advertising regulation will be consistent with the principle of national
treatment. The advertisement shall not contain cont ents which run counter to public order and good
moral, and public interest; encourage and promote drinking; cause harm to adolescents, pregnant
women's mental or physical well-beings; include fo rged, exaggerated, or false facts or misleading
contents; and any other situations prohibited by the competent authority through public notice.
Trading order will be maintained according to th e Fair Trade Law and other relevant laws and
regulations.
Contraband
Chinese Taipei has incorporated penal provisions into the draft Tobacco and Alcohol
Administration Law to serve the legal basis for enhanced efforts to protect against smuggled and
counterfeit products. The alcohol and tobacco administ ration agency will be given the authority to carry
out inspection on the business operations of manufact urers and traders. Inspection and interception of
contraband will be subject to the Alcohol and Tobacco Administration Law (passed 4 June 1999),
Alcohol and Tobacco Tax Law (draft), Statute for Anti-smuggling Law and Statute for Interception by
the Customs, and other relevant laws and regula tion. Under the new administ ration system, contraband
and counterfeit products will be destroyed or otherwis e disposed of, taking into account the international
practices.
Any violation of the Tobacco and Alcohol Admini stration Law will be subject to administrative
or criminal penalties, depending on th e type or seriousness of the violation.WT/ACC/TPKM/18
Page 77
ATTACHMENT C
The Consolidated List of Commodities Subject to Import Restrictions and Commodities
Entrusted to Customs for Import Examination, J une 1997 Edition, has been deposited with the WTO
Secretariat (Accessions  Division, Room 1126).WT/ACC/TPKM/18
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ATTACHMENT D
Illustrative List of Law Amendments
Title of Law Background of Amendment
Foreign Trade Act Article 6:
The amendment is to remove previous authorization to take trade
restrictive measures when encountering bilateral imbalances of trade.
The new version changes the condition for taking such action toimbalance in international payments.
Article 18:
The amendment deletes the words "drastic or large" in describing the
amount of increase in imports as a condition to initiate domesticsafeguard action.  This is to follow the use of language in theSafeguard Agreement.
The amendment also provides a legal basis for the authority to set
rules to initiate safeguard action as contemplated in the Agreement onTextiles and Clothing.
Article 20.1:
This is a new addition to the Law which is intended to provide the
legal basis for the authority to regulate the pre-shipment inspectionactivities of firms mandated by foreign governments.  It also givesbinding effects of the decisions of dispute resolution panel of the
WTO Preshipment Inspection Agreement on the private parties
concerned, namely, the preshipment inspection company and theexporter.
The Commodity Inspection Law The amendment exercise is to achieve the following three objectives:
(i) to incorporate international standards in the domesticstandard-setting process, so as to ensure that domestic inspectionstandards follow international trends, the inspection regime meets therequirements of the TBT Agreement,(ii) to accord national treatment to foreign products in terms of
application of simplified procedures and exemption which were
previously available only to domestic products,
(iii) to accept and recognize foreign inspection certificates in order
to be in line with the spirit of the TBT Agreement, particularly thatcalling for mutual recognition.
The Trademark Law The amendments to this Law are to achieve the following objectives:
(i) to broaden the scope of reciprocal granting of the right ofpriority to cover the situation wher e the there is no formal agreement
but the right of priority is granted to Chinese Taipei's owner oftrademark through practice,
(ii) to include combination of colours in the group of items that
are capable of constituting a trademark so as to be consistent withArticle 15 of the TRIPS Agreement,
(iii) to extend administrative protection to well known marks by
providing that no applications may be filed for registration of a
trademark design which is identical with or similar to another person'swell-known trademark or mark and likely to cause the public to form amistaken belief.WT/ACC/TPKM/18
Page 79
Title of Law Background of Amendment
The Patent Law The amendments to this Law are to achieve the following  objectives:
(i) to delete the requirement of reciprocity in respect of the
granting of patents for micro-organisms, extension of patent
protection terms and the granting of exclusive import rights so as to beconsistent with Articles 3 and 4 of the TRIPS Agreement,
(ii) to limit compulsory licensing in respect of semi-conductor
technology to public non-commercial use or to remedying anti-competitive practice, so as to be consistent with Article 31(c) of theTRIPS Agreement,
(iii) to provide patent owners and his/her exclusive licensees the
right to request destruction or other necessary disposition of theinfringing goods, raw materials or instruments used, in connection
with the infringement, so as to meet the requirement of Article 46 of
the TRIPS Agreement which calls for giving the judicial authority toorder disposition outside the channels of commerce,
(iv) to provide for shifting the burden of proof in respect of
process patents as required by Article 34 of the TRIPS Agreement,
(v) to provide for longer term of protection for industrial design,
so as to meet the minimum requirement of 10 years of the TRIPSAgreement.
(vi) to extend the term of protection for patents issued prior to
January 1994 that are still in effect upon accession to 20 years and 12years as from the date of filing for invention patents and new designpatents respectively.
Company Law The amendment is to delete the reciprocity requirement for
recognition of foreign companies and public offering of foreign
companies' shares and corporate bonds so as to fulfil Chinese Taipei's
commitments under the GATS.
Customs Law This set of amendments is to achieve the following objectives:
(i) to provide a legal basis for application of tariff-quotas
negotiated by Chinese Taipei as substitution measures for existing
restrictions,
(ii) to provide for a duty of secrecy on customs personnel in
respect of information submitted for assessment of import duties, so asto meet the requirement of Article 10 of the Agreement on CustomsValuation,
(iii) to provide a legal basis for the establishment of the rules of
origin and the authority to require the submission of the certificates oforigin,
(iv) to revise the customs valuation rules according to the
Agreement on Customs Valuation,
(v) to delete the provisions that limit the drawback of import
duties to imports of machinery by certain high-tech or importantcompanies whose products are solely for export,
(vi) to revise the provision relating to determination of normal
value for purposes of anti-dumping administration so as to make it
consistent with Article 2 of the Anti-dumping Agreement.WT/ACC/TPKM/18
Page 80
Title of Law Background of Amendment
Statute for Commodity Tax The amendments are to achieve the following objectives:
(i) to delete rules relating to tobacco and alcohol products as this
part of the Law will be replaced by the new Tobacco and Alcohol Tax
Law, a separate body of law,
(ii) to delete allowance for deduction of 12 per cent promotion
expenses in the calculation of tax base, when goods are not circulatedthrough exclusive distributors, as a reflection of Chinese Taipei'saccession commitment,
(iii) to exclude harbour construction dues from the tax base for
commodity tax.
(iv) to reduce the tax levied on motor vehicles with a displacement
over 2001 cubic centimetres from 35% to 30% within 6 years after theimplementation of this Statute.
(v) to eliminate the tax deduction provided to manufacturers of
automobiles and motorcycles using domestically developed anddesigned parts.
Business Tax Law The amendments are to exclude harbour construction dues from the
tax base of the business tax and to require that the business tax baseshall include tobacco and alcohol ta x as provided in the new Tobacco
and Alcohol Tax Law.
The Securities and Exchange Law Article 54: This amendment is to delete the requirement that the
certain business personnel of securities firms be Chinese Taipeiresidents.
Article 95: This amendment is to delete the limitation that only one
stock exchange can be established in one geographical area,
Article 128: This amendment is to delete the limitation that only
Chinese Taipei residents can be shareholders of a stock exchange in
company form.
The Certified Public Accountants Law The amendment is to delete the reciprocity requirement for foreigners
to take the examination and be qualified as certified public
accountants in Chinese Taipei.
Commercial Port Law To eliminate harbour construction dues, which was levied on ad
valorem basis, and collect harbour service fee based on, inter alia, the
gross register tonnage of vessels entering the harbour, the weight of
cargo loaded and unloaded in the harbour, and the number of
departing passengers in order to be consistent with Article 8 of theGATT 1994.
Lawyers' Law This set of amendments is directed:
(i) to provide a statutory basis for allowing Chinese Taipeilawyers to hire foreigners to work as consultants or legal assistants,
(ii) to delete the reciprocity requirement for foreigners to take the
bar examination and become qualified to practice Chinese Taipei law,
(iii) to provide the statutory basis and qualification standards for
allowing foreign lawyers to practice the laws of their home countriesand international law in Chinese Taipei.
Architects' Law The amendment is to delete the reciprocity requirement for foreigners
to take the architects' examination and become qualified to practice inChinese Taipei.
Statute Governing Privileges andImmunities of the Foreign Missionsand their Personnel in Chinese TaipeiThis addition to the Law is to extend privileges and immunities to
WTO related personnel for purposes of Article 8 of the MarrakeshAgreement Establishing the World Trade Organization.WT/ACC/TPKM/18
Page 81
Title of Law Background of Amendment
Law of Pharmaceutical Affairs This amendment is to lift the restriction on and provide rules for
regulating repackaging of imported pharmaceutical products.
Law Governing Food Sanitation The amendment is to provide the labelling of food products with an
option to use the date of manufacture or the expiry date as a code forproduct identification.
The Publication Law This law was repealed on 25 January 1999.
Central Bank Act The amendment is to replace current limitation on foreign liabilities of
banks operating in Chinese Taipei with reserve requirements.
Banking Law This amendment is to compliment the amendment of Article 23 of the
Central Bank Act in respect of the authority in the setting of thedeposit reserve ratio and reserves for other liabilities.
Copyright Law The amendments to this Law are to achieve the following objectives:
1) To amend the definitions for public broadcast and public
performance;
2) To provide computer programs with the same level ofprotection as that of literary works;3) To include explicit protection for performances;4) To revise the provisions regarding the ownership of workscreated in the course of employment or under commission. These
revisions are aimed at reducing tension which have existed
between the employers and employees under the old law;5) To revise the provisions regarding the moral right ofintegrity in order to accommodate the use and circulation of works;6) To expand the subject matter of works protected by thepublic display rights;
7) To delete provisions mandating the competent authority to
set the minimum prices for the transfer of economic rights ofworks and the royalties for the use of such works. This change ismade because that market mechanism should be allowed todetermine these prices;
8) To delete provisions concerning compulsory licenses for
translations in accordance with TRIPS and the Berne Convention;9) To amend provisions regarding compulsory mechanicallicensing for musical works. This is based on the ideal ofpromoting the circulation of musical works;10) To abolish the copyright registration system;
11) To afford a life plus 50 years or 50 years term of
retroactive protection for works not protected prior to ChineseTaipei's accession to the WTO.
Copyright Intermediary OrganizationActThe new legislation is to promote and to facilitate the use of
copyrighted works by the general public through well-establishedprofessional copyright intermediary organizations, followingexamples from international practices.WT/ACC/TPKM/18
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Title of Law Background of Amendment
Statute for Establishment and
Management of Economic
Processing ZoneThe amendments to this Statute ar e to promote international trade by
means of the following:
1) To replace the original policy objective of export- oriented
by international trade promotion;
2) To expand the scope and depth of business within the zone,
including trade, consultation, R&D and technical services;
3) To encourage investments by the elimination of restrictions
on establishing businesses within the zone;
4) To increase administrative efficiency within the zone by
simplifying the customs clearance process, consistent with theNegative List provided by Article 11 of the Foreign Trade Act;
5) To delete the provision which excludes duty drawback on
imported machinery sold to in-zone enterprises by firms located in
areas where tariff is leviable in order to eliminate the possibletendency to encourage purchase of locally-produced machinery;
6) To eliminate the local sale restriction;7) To provide that the customs duties levied on the products
produced in this zone and sold in the local market shall be based onex-factory prices minus value added attributable to this zone.
Tobacco and Alcohol AdministrationLawFollowing the tobacco and alcohol reform plan, the new Law is to
provide legislative mandate to the administrative authorities for theopening-up of the tobacco and alcohol products. The new Law aimsto achieve the following:1) To provide a legal basis for the authorities to regulate themanufacture and the distribution of tobacco and alcohol products;
2) To provide definitions of tobacco and alcohol products;
3) To forestall international trade disputes by preventing theprevalence of counterfeit products and ensuring establishedstandards are implemented and enforced in the manufacture oftobacco and alcohol products;
4) To protect national health interests by including measures
such as guidelines on labelling tobacco and alcohol products andregulations on advertisements.
Statute Governing the Organization
of National Treasury, Ministry of
FinanceThe amendments of this Statute reflect the administrative
modifications made with the reform of the tobacco and alcohol
monopoly. A department will be added to the current organizationalstructure to implement administrative requirements established in thenew Tobacco and Alcohol Administration Law.
Tobacco and Alcohol Tax Law The new legi slation is to achieve the following:
1) To provide definitions of tobacco and alcoholic beverages;2) To establish a new tax system in light of the reform of thetobacco and alcohol monopoly to facilitate tax collection;3) To establish tax collection procedures to facilitate theenforcement of the new tax regime.
Food Management Law  The amendment to this Law had been made to implement Chinese
Taipei's commitment on lifting the  rice import ban upon accessionto the WTO, and to provide a legal basis for collecting mark-up.
Customs Import Tariff andClassification of Import & Export
CommoditiesIt is amended in accordance with the Schedule of Concessions of the
Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
as annexed to this Working Party Report.WT/ACC/TPKM/18
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Title of Law Background of Amendment
Statute for Agriculture Development The amendments to this Statute are to achieve the following:
1) To introduce competitive pricing system by deleting
"uniform pricing" for exported agricultural products, to complement
the enforcement of the Fair Trade Law and open-marketmechanisms;2) To expand the Statute to include special safeguardprovisions consistent with the WTO Agreement on Agriculture;3) To introduce measures to prevent the monopolization of themarket.
Statute Governing the Organizationof the Public Construction
CommissionThe amendments to this Statute reflect the re-structured and
expanded responsibilities of the Public Construction Commission.
The changes include:
1) To establish a committee within the Commission to handlecomplaints by suppliers on government procurement projects2) To establish an information office within the Commission asa centralized information system on public construction andgovernment procurement projects;
3) To provide technical assistance and support to other
government agencies in matters relating to government procurement.
Statute for Inspection Procedure
Governing Properties byGovernment AgenciesThe statute was repealed on 4 June 1999 as the Government
Procurement Law took effect on 27 May 1999.
Government Procurement Law To mandate government procurement procedures to be consistent
with the rules of WTO Government Procurement Agreement.To institute dispute settlement procedure in the context ofgovernment procurements.
Government Procurement Law took effect on 27 May 1999.
Fair Trade Law The amendment is to achieve the following objectives:
1) To increase the pecuniary burden on persons and enterprises
that violate the Fair Trade Law.
2) To enhance the Commission’s ability to impose more
significant fines on enterprises that do not comply with Commissiondirectives and dispositions.
3) To conform with the principle of "disposing cases through
administrative channels before resorting to the judicial system".
Article 41
With respect to enterprises that violate the provisions of this Law,
the Fair Trade Commission may specify a time period within which
the enterprise is required to cease or rectify its conduct or withinwhich it must adopt corrective measur es; in addition, the Fair Trade
Commission may impose a fine of between fifty thousand andtwenty-five million NT Dollars. If within the specified time-periodthe enterprise fails to cease or rectify its conduct, or to take
corrective measures, the Fair Trade Commission may continue to
specify a time period within which the required to cease or rectify itsconduct or within which it must adopt corrective measures, and mayimpose successive fines of between one hundred thousand and fiftymillion  NT Dollars until the acts in question cease or are rectified oruntil the corrective measures are adopted.
The Statute for the Establishmentand Administration of a Science-Based Industrial ParkTo delete the provision which excludes duty drawback on machinery
sold in this zone in order to eliminate the possibility of encouragingpark-based enterprises to purchase locally-produced machinery.WT/ACC/TPKM/18
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Title of Law Background of Amendment
Telecommunication Act To relax the percentage of foreign equity ownership of local
telecommunication business for direct and indirect investment in
accordance with the commitments made in the Service Schedule.
Law for the Administration of StateOwned EnterprisesTo eliminate the preferential treatment on procurement of locally-
produced material and equipment by state owned enterprises.
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