RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/232 
31 May 2010  
 
(10-2945) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
SEPARATE CUSTOMS TERRITORY 
OF TAIWAN, PENGHU, KINMEN 
AND MATSU 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu is attached. 
 
 
Note: This report is subject to restricted ci rculation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu. Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 3 
 
 
CONTENTS 
 
    Page 
I. OVERVIEW:  THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, 
KINMEN AND MATSU IN THE WORLD TRADING SYSTEM 5 
II. TRADE AND ECONOMIC ENVIRO NMENT IN THE SEPARATE CUSTOMS 
TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU:  2006-2009 5 
(i) Macroeconomic situation 5 
(ii) External trade 6 
(iii) Investment 8 
III. POLICY ENVIRONMENT AND REFORMS 9 
(i) Macroeconomic policy 9 
(ii) Sectoral policy 10 (iii) Trade policy 10 
(iv) Domestic reforms 11 
(v) Economic vitalization policy 12 
IV. THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND 
MATSU IN THE WTO 13 
(i) The Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu and the 
Doha Round 13 
(ii) The Participation of the Separate Cust oms Territory of Taiwan, Penghu, Kinmen and 
Matsu in the WTO 16 
V. OTHER MULTILATERAL (REGIONAL) AND BILATERAL TRADE RELATIONSHIPS 16 
VI. FUTURE OUTLOOK 18 
 
 
 
    
 
     
 Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 5 
 
 
 I. OVERVIEW:  THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, 
KINMEN AND MATSU IN THE WORLD TRADING SYSTEM 
1. Since the first trade policy review in 2006, the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu has continued to be a ge nuine supporter of trade liberalization. Foreign 
trade remains the primary economic driving force for the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu as it is an export-oriented  economy;  however, due to the serious impact 
of the global economic recession during the period of  review, the amount of export trade accounting 
for GDP decreased from 68.0% in 2006 to 62.51% in 2009. 
2. Despite the drastic economic dow nturn in 2009, the Separate Cu stoms Territory of Taiwan, 
Penghu, Kinmen and Matsu, remains a true believer in free and fair trade as well as the rules-based 
multilateral trading system, and is committed to the pr omotion of trade liberalization. The multilateral 
trading system under the WTO underpins not only mark et access opportunities abroad for Members to 
promote global economic growth, but also domestic  reforms to improve their respective economic 
efficiency. Consequently, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu 
gives primacy to the WTO as the platform for trade lib eralization and stands firmly in support of the 
successful conclusion of the Doha Round negotiations. 
3. The Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu has put forth 
substantial and fruitful submissions, either indivi dually or as a co-sponsor, since the last review 
period, and continues to work closely with a numb er of negotiating sub-groups  to actively contribute 
to the Doha negotiations. In addition, in 2009, it became the 41st party of the Government 
Procurement Agreement. The aim of these endeav ors is to encourage a freer, sounder and more 
transparent global trading environment. Despite th at, the unsuccessful efforts of WTO Members to 
agree upon the agriculture and NAMA negotiation te xts on modalities in July 2008 were of great 
concern to the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu. Therefore, the 
Government will support any efforts to ensure the fru ition of the envisaged goals of the Doha Round. 
4. Apart from participating in the WTO multilateral trading system, the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu is  also actively engaged in  regional and bilateral 
trade liberalization activities, including the regi onal integration processes under the auspices of the 
Asia Pacific Economic Cooperation (APEC) forum and free trade agreements with trading partners. 
On average, the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu has taken part in 
more than 180 trade-related activities in the APEC forum annually, and has sponsored a number of 
trade liberalization initiatives, including the action plan for cross-border services trade liberalization. 
In response to the adverse effects of the recent  global financial crisis on its economic and trade 
performance, the Government has introduced a seri es of positive measures to facilitate an effective 
recovery. Still, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu believes that 
the continued advancement of the WTO, facilitati on of trade liberalization, and promotion of 
international collaboration are the best long- term policy endeavors to redress the crisis. 
II. TRADE AND ECONOMIC ENVIRONMENT IN THE SEPARATE CUSTOMS 
TERRITORY OF TAIWAN, PENGHU , KINMEN AND MATSU:  2006-2009 
(i) Macroeconomic situation 
5. Economic development in the Separate Custom s Territory of Taiwan, Penghu, Kinmen and 
Matsu underwent a series of fluctuations between 2006 and 2009, with the year 2008 as the WT/TPR/G/232 Trade Policy Review 
Page 6 
 
 
 demarcation. Development in both 2006 and 2007 was marked by steady upward growth in both GDP 
and domestic investment (Table 1). 
6. Nonetheless, due to its limited natural resources and its trade-dependant economic status, the 
Separate Customs Territory of Taiwan, Penghu, Ki nmen and Matsu was seriously affected by the 
hikes in crude oil and raw material prices and the global financial crisis that occurred in the second 
half of 2008. With substantial increase in pr oduction costs, along with major foreign markets 
contracting in light of the economic downturn, si gnificant reductions in both GDP and gross fixed 
capital formation were recorded for 2008 and 2009, with real GDP growth declining to 0.73% and 
-1.87% respectively (Table 1). However, while ma intaining its economic vitality and momentum, the 
Separate Customs Territory of Taiwan, Penghu, Kinm en and Matsu is cautious ly expecting a gradual 
recovery in 2010. 
Table 1:  Key economic indicators, 2002-09  
Indicator 2002 2003 2004 2005 2006 2007 2008 2009(p) 
Gross domestic product         
At current prices 
(US$ million) 301,088 310,757 339,973 364,832 376,375 393,134 402,616 379,408 
Annual change (%) 2.51 3.21 9.40 7.31 3.16 4.45 2.41 -5.76 
At 2006 constant prices 
(NT$ million) 10,074,337 10,443,993 11,090,474 11,612,093 12,243,471 12,975,985 13,070,904 12,826,682 
Annual change (%) 5.26 3.67 6.19 4.70 5.44 5.98 0.73 -1.87 
Per capita GNP in US$  13,716 14,197 15,503 16,449 16,911 17,596 17,941 16,997 
Gross fixed capital 
formation          
At current prices 
(NT$ million)  2,057,650 2,117,282 2,592,909 2,635,451 2,730,670 2,841,353 2,685,662 2,321,264 
Annual change (%) 1.19 2.90 22.46 1.64 3.61 4.05 -5.48 -13.57 
Inflation rate 
(CPI change, %) 
Base period:  2006 =100 -0.20  -0.28 1.61 2.31 0.60 1.80  3.53  -0.87 
Unemployment rate (%) 5.17 4.99 4.44 4.13 3.91 3.91 4.14 5.85 
Average exchange rates: 2002:  US$1=NT$34.58;  2003: US $1=NT$34.42;  2004: US$1=NT$33.43;   2005: US$1=NT$32.18;  
2006: US$1=NT$32.53;  2007: US$1=NT$32.84;  2008: US$1=NT$31.54;  2009: US$1=NT$33.06. 
Note: Data has been updated according to the benchmark re vision of National Accounts re leased on 26 November 2009. 
Source: Directorate-General of Budget, Accounting and Statistics (based on UN 93SNA). 
7. During the review period, manufacturing remain ed one of the major contributors to the 
Separate Customs Territory of Taiwan, Penghu, Ki nmen and Matsu's economic growth. The sector's 
contribution declined to 24.8% of GDP in 2009 (26.5% in 2005), and accounted for 27.1% of total employment in 2009, down from 27.5% in 2005. As for services, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu is  a net importer of services and traditionally runs a deficit in the 
services account. Its services sector continues to be the largest contributor to GDP (68.6% in 2009, an 
increase from 67.1% in 2005) and employment (58. 9% in 2009, an increase from 57.7% in 2005). 
Agriculture contributed 1.6% to GDP in 2009 (1.7% in 2005) and 5.3% to total employment in 2009 (5.9% in 2005). 
(ii) External trade 
8. Trade experienced similar, drastic fluctuations during the review period. Annual growth rates 
of both imports and exports increased steadily over 2006  and 2007, at double-digit levels in the case 
of exports. Trade surplus for the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 7 
 
 
 reached US$27.43 billion in 2007;  however, from 2008, it contracted sharply in the face of the global 
financial crisis and economic downturn (Table 2) . While annual growth rates for both exports and 
imports were still positive in 2008, the growth rat es were -20.3% and -27.5%, respectively, for 2009, 
which were the lowest over the last decade. 
9. The main reasons for these rapid declines in  both production and trade were scaled-back 
demand in both foreign and domestic markets, co mbined with significantly tightened credit. 
Developments in overall trade performance during the review period reflect the severity of the impact 
that the global crisis has had on the economy. The Government nevertheless remains a firm supporter 
of trade liberalization and believes that protectionist measures can only create a vicious cycle that will 
worsen the situation. To this end, precautions have  been taken to ensure th at measures introduced for 
economic stimulus are WTO-compliant. 
Table 2:  Trade statistics, 2002-09 
Unit:  US$ million 
Year Exports Growth rate (%) Impo rts Growth rate (%) Trade balance 
2002  135,316.7 7.1 113,245.1 4.9 22,071.6 
2003  150,600.5 11.3 128,010.1 13.0 22,590.4 
2004 182,370.4 21.1 168,757.6 31.8 13,612.8 
2005  198,431.7 8.8 182,614.4 8.2 15,817.3 
2006  224,017.3 12.9 202,698.1 11.0 21,319.2 
2007 246,676.9 10.1 219,251.6 8.2 27,425.3 
2008 255,628.7 3.6 240,447.8 9.7 15,180.9 
2009 203,674.6 -20.3 174,370.6 -27.5 29,304.0 
Note: The calculation is based on International Merchandise Trade Statistics: Compilers Manual, UNSD. The amount of re-exports and 
re-imports are included. 
Source: Directorate General of Custom s, Ministry of Finance. 
10. The major trading partners of the Separate Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu fall into three main categories: the West  Asia region for energy-related trade;  the Asian 
countries that are partners in the global supply chain, and developed countries such as Japan, the 
United States and the European Union (EU). Speci fically, over the period under review, China was 
the top export destination, accounting for approxima tely 25.3% of total export value on average, 
followed by Hong Kong (14.8%), the Association of Southeast Asian Nations (ASEAN) (14.7%) and 
the United States (12.8%). In terms of imports, Japan remained the leading source, accounting on 
average for 20.9% of the total value, followed by China (13.0%), the United States (11.2%), ASEAN (11.1%), and the EU (8.7%). 
11. Key products exported by the Separate Cust oms Territory of Taiwan, Penghu, Kinmen and 
Matsu included electrical and electronic equipmen t, machinery, and optical instruments and 
accessories, which together made up over 50% of the total value, followed by plastic products, 
mineral fuels and oils, iron and steel, and organic chemical products. As for imports, a similar group 
of products were recorded, with electrical and el ectronic equipment, mineral fuels and oils, and 
machinery products as the primary items (Table 3). WT/TPR/G/232 Trade Policy Review 
Page 8 
 
 
 Table 3:  Key export and import products of the Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu, 2006-09 
Unit: US$ million (% of total trade value) 
Exports Imports 
 2006 2007 2008 2009  2006 2007 2008 2009 
Electrical and electronic 
equipment 82,420 
(36.80) 89,491 
(36.3) 87,065 
(34.1) 75,393 
(37.0) Electrical and electronic 
equipment 48,967 
(24.2) 48,930 
(22.3) 47,179 
(19.6) 39,973 
(22.9) 
Machinery 29,172 
(13.0) 28,541 
(11.6) 27,182 
(10.6) 19,822 
(9.7) Mineral fuels and oils, etc. 36,633 
(18.1) 43,413 
(19.8) 61,952 
(25.8) 37,124 
(21.3) 
Optical instruments and 
accessories 18,008 
(8.0) 19,577 
(7.9) 21,464 
(8.4) 15,808 
(7.8) Machinery 23,574 
(11.6) 23,598 
(10.8) 23,396 
(9.7) 19,031 
(10.9) 
Plastics 13,927 
(6.2) 16,696 
(6.8) 17,189 
(6.7) 14,620 
(7.2) Iron and steel 9,128 
(4.5) 11,444 
(5.2) 14,963 
(6.2) 6,697 
(3.8) 
Mineral fuels and oils, etc. 10,786 
(4.8) 13,749 
(5.6) 18,628 
(7.3) 11,302 
(5.5) Optical instruments and 
accessories 12,007 
(5.9) 12,599 
(5.7) 10,368 
(4.3) 7,111 
(4.1) 
Iron and steel 9,201 
(4.1) 11,073 
(4.5) 11,500 
(4.5) 7,932 
(3.9) Organic chemicals 9,742 
(4.8) 10,236 
(4.7) 10,021 
(4.2) 7,086 
(4.1) 
Organic chemicals 5,909 
(2.6) 8,919 
(3.6) 10,582 
(4.1) 8,098 
(4.0) Misc. chemical products 5,109 
(2.5) 6,252 
(2.9) 6,873 
(2.9) 4,907 
(2.8) 
Vehicles, not railway 6,214 
(2.8) 6,804 
(2.8) 7,418 
(2.9) 6,294 
(3.1) Copper and articles hereof  6,187 
(3.1) 6,524 
(3.0) 6,397 
(2.7) 3,723 
(2.1) 
Iron/steel products 5,542 
(2.5) 6,314 
(2.6) 6,748 
(2.6) 4,390 
(2.2) Plastics 5,607 
(2.8) 5,914 
(2.7) 5,962 
(2.5) 5,114 
(2.9) 
Man-made filament, fabric 3,568 
(1.6) 3,583 
(1.5) 3,323 
(1.3) 2,839 
(1.4) Vehicles, not railway 3,278 
(1.6) 3,374 
(1.5) 3,241 
(1.3) 3,283 
(1.9) 
Source:  Directorate General of Cust oms, Ministry of Finance. 
(iii) Investment  
12. The Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu is not only an 
important FDI recipient but also a major FDI c ontributor in Asia. The amount of inward FDI 
approved in 2006 was US$13.97 billion, an increase of  230.39% from the previous year. For 2007, the 
amount of inward FDI rose to US$15.36 billion (Tab le 4). This rapid increase was mainly due to the 
substantial inflow of FDI to invest in the banki ng, cable television and other manufacturing sectors. 
However, 46.38% and 41.3% reductions in in ward FDI were recorded for 2008 and 2009, 
respectively. This reduction can be attributed to the impact of the global financial crisis beginning in 
late 2008. 
13. Although inward FDI value was moderate vis- à-vis neighboring countries, continuing to 
improve the investment environment remains a key policy for the Government to ensure the 
competitiveness, efficiency and innovation of both manufacturing and services industries. A 
high-quality labor force and strong R&D capacities are also important policy focal points to enhance the appeal for FDI. In this regard, th e 2009-2010 World Economic Forum (WEF) Global 
Competitiveness Index ranked the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu 
as the 12
th most competitive economy in the world, while the latest (December 2009) Profit 
Opportunity Recommendation (POR) report by the Business Environment Risk Intelligence (BERI) 
put it as the world's 5th most profitable investment destination. 
14. Outbound investment from the Separate Custom s Territory of Taiwan, Penghu, Kinmen and 
Matsu reached US$11.96 billion in 2006, which repr esented a substantial 41.44% increase from the Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 9 
 
 
 previous year. A further increase of 37.49% was achieved in 2007. In 2008, outbound investment 
declined by 7.8% but still exceeded US$15 billion (T able 4). In 2009, outbound investment continued 
to decline. The global economic downturn was likely the main reason behind the substantial declines 
in outward investment in both 20 08 and 2009. Nevertheless, in sp ite of the decline in outbound 
investment, the Separate Customs Territory of  Taiwan, Penghu, Kinmen and Matsu's outbound 
investment performance ranked 26th in the world in 2008, 3 notches up from 2007.1  
Table 4:  International investment statistics, 2002-09 
Unit: US$ million 
Year 2002 2003 2004 2005 2006 2007 2008 2009 
Outward investment 10,093.1 11,667.4 10,322.7 8,454.4 11,957.8 16,440.5 15,157.9 10,148.1 
Inward investment 3,271.7 3,575.7 3,952.1 4,228.1 13,969.2 15,361.2 8,237.1 4,835.4 
Source: Investment Commissi on, Ministry of Economic Affairs. 
15. In terms of investment destinations and source countries, more than 75% of the inward FDI to 
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu came from the United States, 
British Overseas Territories in the Caribbean, Jap an, Singapore and EU member countries, while 
around three-fourths of the outbound investment went to the North and Central American regions (the 
U.S. and British Overseas Territories in the Caribbean ) and neighboring Asian economies, particularly 
China, Singapore, Korea, and Viet Nam. 
III. POLICY ENVIRONMENT AND REFORMS 
(i) Macroeconomic policy 
16. Macroeconomic policy continues to focus on the creation of a stable, predictable and 
transparent economic environment, enabling rapid ec onomic growth while maintaining social stability 
and equity. Specifically in relation to trade, po licy objectives are to enable the development of a 
market-friendly economic environment through domes tic reform and outward-looking liberalization, 
underpinned by a pragmatic and flexible approach. 
17. During the review period, building on the pr evious "Challenge 2008" economic development 
plan originally launched in 2002, the Governme nt introduced two key pieces of policy planning, 
namely the "Second-Term Plan for National Deve lopment in the New Century 2005-2008" and the 
"Third-Term Plan for National Development in th e New Century 2009-2012". A core policy initiative 
of the "Third-Term Plan for National Development" is the umbrella policy of "Global Linkage" that 
aims to forge a link between global trade and inv estment networks through both domestic reform and 
multilateral, regional and bilateral economic c ooperation. The Global Linkage policy package 
includes initiatives to foster closer multilateral re lationships and regional integration, and establish a 
competitive environment that is more conducive to business, and regulatory reform to relieve 
businesses of legal and administrative burdens. 
18. In 2008, the "i-Taiwan 12 Projects" was launched with a view to improving the quality of 
both economic and social infrastructures, thus furt her enhancing the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu's attraction as a foreign investment destination. Major 
undertakings include, inter alia , the Pan-island Express Transportation Network, Kaohsiung Free 
Trade and Ecology Harbor, Taichung Asia-Pacifi c Sea-air Logistics Center, and Taoyuan 
                                                      
1 UNCTAD, World Investment Report 2009. WT/TPR/G/232 Trade Policy Review 
Page 10 
 
 
 International Aviation City. Total public invest ment in these projects is expected to reach 
US$121 billion over an eight-year period. Complementing the "i-Taiwan 12 Projects" is the "Global Net Plan", which also aims to attract foreign a nd domestic investors in i-Taiwan and other major 
public projects. 
(ii) Sectoral policy 
Manufacturing sector  
19. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu keeps abreast of 
global trends by pursuing constant  innovation and industrial devel opment toward high value-added, 
and environmentally friendly products. In line with  policy objectives, the Government is promoting 
development of emerging industries such as biotech nology, green energy, and intelligent industries 
(including patent commercialization, electric vehi cles, green building, and cloud computing). The 
Government will also enhance integration of tradition al industries with high-tech industries by raising 
their R&D capacity in order to upgrade these industries and expand their scale. At the same time, since Small and Medium Enterprises (SMEs) c ontribute a significant share to this sector, the 
Government has undertaken initiatives to strengthe n SMEs' R&D and management capacity, and has 
encouraged SMEs to utilize unique aspects of local culture to create competitive advantages for the 
industries. 
Services sector 
20. By enhancing the international competitiveness of its services sector, bolstering R&D and 
innovation, creating diverse services, strengthening  talent cultivation and recruitment from abroad, 
and accelerating deregulation, the Separate Custom s Territory of Taiwan, Penghu, Kinmen and Matsu 
endeavors to enable the services sector to become an engine for increasing added value, creating 
employment, improving the quality of life, and pr omoting economic growth. The Government gives 
priority to promoting the development of services sectors such as medical tourism, international logistics, music and digital content, MICE (M eeting, Incentive, Convention, and Exhibition), 
Taiwanese cuisine globalization, urban renewal,  WiMax, e-commerce, education, and financial 
services. 
Agriculture sector 
21. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu relies heavily on 
imported foodstuffs to meet domestic needs. The G overnment's strategy for its agricultural sector 
aims to develop specialty agriculture, improve product quality and increase output value in order to 
face keen competition in the world markets, given its dense population and small, fragmented land 
holding. The Government also focuses on ensuring the conservation of the environment and 
improving farmers' livelihood so as to promote hea lthy, efficient and sustainable development. 
(iii) Trade policy 
22. As the 18
th largest trading economy in the world2, trade policy has always been one of the 
core policy considerations of the Government . In line with the macroeconomic policy, the 
fundamental directions of trade liberalization a nd the enhancement of global competitiveness, trade 
policies in the Separate Customs Territory of Taiwan, Penghu, Kinmen a nd Matsu include active 
                                                      
2 WTO Press Release, "International Trade Statistics:  Trade to expand by 9.5% in 2010 after a dismal 
2009", PRESS/598, 26 March 2010.  Viewed at:  h ttp://www.wto.org/english/news_e/pres10_e/pr598_e.htm. Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 11 
 
 
 participation in the WTO, OECD and APEC, the establishment of bilateral trade relationships, 
adaptation to regional and international economic in tegration, enhancement of the image of locally 
manufactured products, and promotion of domestic brand names as well as distribution channels in 
overseas markets. 
23. Additionally, in response to global trends in the areas of reforming trade procedures and 
balancing trade security and facilitation, the Govern ment launched the Facile Trade Net (FT Net) in 
2005, which primarily integrated B2G (bus iness-to-government) and G2G (government-to-
government) procedures in trading, customs clea rance and port authorization, as well as online 
inspection and licensing message services. Through th e FT Net, traders are able to apply online for 
import/export permits, certificates of origin, inspec tion or quarantine-related documents. By 2009, 
16 government authorities had already been linked to the FT Net, and the e-application rate has grown 
dramatically from 3.26% in 2005 to 91.27% in 2009, thus loweri ng transaction costs and increasing 
efficiency substantially for traders and government agencies alike. 
24. With a view to improving the efficiency of  trade policy decision-making, the Government 
established the Committee of Global Trade Polic y Strategy Alliance and Arrangement as the 
high-level platform for inter-agenc y policy coordination in 2004. Th e Ministry of Economic Affairs 
(MOEA) serves as the operational arm of this Comm ittee. Under the auspices of the Committee, the 
MOEA is entrusted with convening the Task Force of Global Trade Strategy Alliance and 
Arrangement, composed of senior officials fro m various ministries and 17 working groups, to 
coordinate trade-related issues. The Committee, the Task Force and the working groups are in charge 
of formulating global trade-related strategies and policies. In addition, the Office of Trade 
Negotiations (OTN) under the MOEA was establishe d in 2007 as the principal institution for 
multilateral and bilateral trade negotiations. 
(iv) Domestic reforms 
25. In line with the macroeconomic policy objectives,  the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu continued to undertake a series of domestic reforms during the period of 
review, and has continued since, with the aim of improving economic efficiency, removing unnecessary business hurdles and lowering operational costs. 
Tax reform 
26. Various steps have been taken to reform th e tax system. In a major effort to promote 
economic development, pursue social justice, upgrade international competitiveness and uphold a sustainable environment, a high-level steering body  for tax reform undertakings, the Tax Reform 
Committee (TRC), was established in 2008. The T RC focused primarily on the taxation system, 
including income tax, estate and gift tax and cons umption tax reform, as well as tax administration, 
including streamlining taxation procedures and enhanc ing the protection of taxpayer rights. The TRC 
completed its mission in 2009. 
Promotion of Industrial Innovation 
27. The main vehicle for the Government to promot e industrial development hitherto has been the  
Statute for Upgrading Industries (SUI). The SUI provided various tax incentives and contributed to 
the development and upgrading of industries. Neve rtheless, in accordance with the built-in sunset 
provision, the SUI expired at the end of 2009. In or der to continue providing incentives for industrial 
innovation and development, the G overnment has submitted new legisl ation (Statute for Industrial WT/TPR/G/232 Trade Policy Review 
Page 12 
 
 
 Innovation (draft), SII) as the successor to the SUI;   the Legislative Yuan is deliberating the SII 
during the latest session. 
Intellectual Property Rights (IPR) Protection 
28. The enhancement of IPR protecti on is highly valued by the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu and is one of its top policy priorities. The latest action plan, 
which began in 2009, includes enhancement of  inspection work, awareness and education 
programmes, campus IPR protection, and international cooperation issues. 
29. A specialized Intellectual Property (IP) Court was established on July 1, 2008. The IP Court 
operates at the same level as the High Administrative Court and hears cases relating to patents, 
trademarks, copyrights, optical disk management, tr ade secrets, and integrat ed circuits. A small group 
of patent examiners from the IP authority (i.e. TIPO ) are also assigned to the IP Court to assist judges 
in solving cases concerning technical matters. The IP Branch of the High Prosecutors Office was also 
set up on 1 July 2008, with designated prosecutors  responsible for coordinating prosecution of IP 
criminal cases in respective jurisdictions. 
30. The IP legal framework and its application and enforcement by the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu have been in full compliance with WTO/TRIPS 
since it joined the WTO in 2002. Among the recently  enacted laws during this review period are the 
new Patent Attorney Act, the P2P clause, the IS P liability limitation clause under the Copyright Act, 
and an amendment to the Copyright Collectiv e Management Organization Act. With the 
establishment of the IP Court and newly emerging IP  issues, the Government is currently preparing 
revisions to both the Patent Act and the Trademar k Act, with the objective of expediting the IP 
examination process and ensuring high-quality exam ination work. As a result of the joint and 
concerted enforcement efforts by TIPO, the IPR poli ce, prosecutors and customs officials, as well as 
the implementation of certain measures to counter in fringement cases, IPR protection in the Separate 
Customs Territory of Taiwan, Penghu, Kinmen an d Matsu is recognized internationally for its 
achievements. 
Ease of doing business 
31. In order to promote investment and to bring practices in line with international trends, the 
minimum capital requirements for new company regist ration were abolished in  2009. Other important 
measures brought in by the Government since the l ast review to simplify company start-up application 
procedures include:  abolishing the system of uni fied certification for profit-seeking enterprises;  
revising the Enforcement Rules of the Labor Insura nce Act;  simplifying the procedures for extending 
coverage of labor and health insurance, and;  sh ortening the time for the review and approval of work 
rules. These deregulatory and administrative stream lining measures have reduced nearly 50% of the 
processing time for business start-ups. 
(v) Economic vitalization policy 
32. To mitigate the recent financial crisis and ec onomic downturn which have  adversely affected 
the Separate Customs Territory of Taiwan, Penghu,  Kinmen and Matsu, a policy stimulus package 
called the "Economic Vitalization Package" was laun ched in 2008. With its comprehensive coverage, 
the policy package is underpinned by four policy pill ars:  the encouragement of private investment, 
expansion of public spendi ng on public construction projects, assistance of private businesses' access 
to financing resources and the promotion of trade. Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 13 
 
 
 33. In terms of measures taken to encourage privat e investment, the focus has been on promoting 
major private investment projects to reach an aggr egate amount of NT$4 trillion within four years. To 
achieve this objective, the functions of the exis ting Coordination Office for Investment Promotion 
(COIP), under the Ministry of Economic Affairs (M OEA), were re-enforced to facilitate the removal 
of investment obstacles by assigning designated o fficials specifically to assist each project to 
completion. In addition, the Government released  government-owned land as required to meet the 
needs of industrial development in each city and co unty and to promote enterprise start-up investment. 
A four-year rent-free and six-year half-rent preferential scheme for the leasing of government-owned land was also implemented with appli cations opened until the end of 2009. 
34. With respect to assisting private businesses' access to financing resources and promoting 
trade, a special task force was created to pr ovide assistance to private businesses in accessing 
operational funding. The main purpose of the task force is to coordinate with financial institutions not 
to foreclose on loans and other financing resour ces from well-functioning firms that are suffering 
from short-term difficulties. The Full Deposit Guar antee scheme was also implemented in late 2008 
till the end of 2010 to ensure the stability of the financial system. 
35. Furthermore, a special trade promotion scheme was initiated to facilitate the expansion of 
trade and the diversification of export markets. In line with the policy to expand public funding on 
public construction projects in tandem with the effort  to offset the growing unemployment rate and to 
revitalize the economy, the Government introduced the "Economic Revitalization Policy Project to 
Expand Investment in Public Works" and a series of short and longer term employment promotion 
packages in late 2008. These undertakings will be im plemented between 2009 a nd 2012, with up to 
NT$500 billion being invested in the Public Works Investment Projects over the four-year timeframe. 
IV. THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND 
MATSU IN THE WTO 
36. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu plays an important 
role in the global supply chain, and its dependenc e on external trade is relatively high (reaching 
115.9% in 2009). As trade is the engine for its  economic development, the Government duly 
acknowledges the crucial importance of trade and s upports the strengthening of WTO functions that 
serve to promote an open, transparent and rules-based multilateral trading system. 
37. Since its accession, the Separate Customs Terr itory of Taiwan, Penghu, Kinmen and Matsu 
has faithfully implemented its commitments and ob ligations under the WTO and brought its laws and 
regulations into conformity with WTO norms.  
38. As a developing Member, the Separate Custom s Territory of Taiwan, Penghu, Kinmen and 
Matsu has opened its domestic market to the exte nt that all its tariff lines are bound. The simple 
average bound tariff rate went down slightly betw een the years 2006 and 2010, from 8.11% to 7.85%, 
respectively. A further reduction on a few tariff lines  will take place in 2011, arriving at the average 
final bound rate of 7.81% when its accession commitment is fully implemented.  
(i) The Separate Customs Territory of Taiw an, Penghu, Kinmen and Matsu and the 
Doha Round 
39. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu is itself highly 
dependent upon international trade. Therefore it s eeks a meaningful and balanced outcome for the 
Doha Development Round that provi des substantial market access oppor tunities to all Members, with 
fair and transparent rules, enhanced implementa tion of trade facilitation measures and appropriate WT/TPR/G/232 Trade Policy Review 
Page 14 
 
 
 flexibility provided to developing Members.  It al so believes that early completion of the Doha Round 
would give a major boost to the recovery of the gl obal economy. Since the launch of this Round, it 
has endeavored to engage fully in the negotiations  on all fronts. It has also joined a number of 
like-minded negotiating sub-groups, such as the Group of Recently Acceded Members (RAMs), the 
Group of 10 (G10), the Friends of Anti-dumping Nego tiations (FANs) and various Friends in Services 
Negotiations to address issues of common interest. 
40. It campaigns particularly strongly on behalf of the RAMs for recognition within the WTO of 
the extensive commitments alread y made at the time of their accessions to the WTO, and for 
appropriate flexibilities to be provided that ensure eq uality and balance in this round, especially in the 
negotiations on Agriculture, Non-Agriculture Ma rket Access (NAMA) and trade in Services. 
Agriculture 
41. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, as a net food 
importer, fully recognizes the importance of sustai nable development of Members' agriculture and 
safeguarding their non-trade concerns. Therefore, it is of the view that during the DDA agricultural 
negotiations, considering the multi-functionality of agriculture, trade libera lization in the sector 
should proceed in a gradual manner. It also holds that the specific agricultural environment among Members shall be taken into due and fair consideration, and that  the concerns and interests of 
exporters and importers be accomm odated in a balanced manner. 
Non-Agricultural Market Access (NAMA) 
42. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu believes that the 
NAMA negotiations of the Doha Round need to pr ovide substantial market access opportunities to 
deliver a meaningful and balanced outcome for all Members and  improve economic development. 
With a view to achieving these objectives, it h as been actively participating in the NAMA 
negotiations, promoting and supporting several sect oral initiatives, and addressing the importance of 
eliminating non-trade barriers in this Round.  
Trade in services 
43. Services are considered one of the three key ma rket access pillars of the Doha negotiations. 
The importance of services to the economic development of all Members is ever-increasing. Therefore, the Separate Customs Te rritory of Taiwan, Penghu, Kinmen and Matsu 
believes that an ambitious outcome in Services ne gotiations would make a significant contribution to 
the world economy and promote development. In addition, it continues to emphasize the importance of negotiations on rules under the GATS, which have a bearing on market access. It particularly hopes 
that Members can reach consensus on the horizon tal disciplines for domestic regulations by the 
conclusion of this Round. 
Rules 
44. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Mats u supports negotiations 
aimed at clarifying and improving the disciplines of tr ade rules, and in particular the improvement of 
the existing Anti-Dumping Agreement so as to pr event the erosion of market access opportunities 
under the Doha Round resulting from abuse or misuse of anti-dumping measures. On the issue of fishery subsidies, it believes in the need for establis hing an effective fishery management system, with 
appropriate arrangements to prevent over-fishing an d to help mitigate nega tive social and economic 
consequences during domestic reform process. Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 15 
 
 
 Trade-Related Aspects of Intellectual Property Rights (TRIPS) 
45. Regarding the establishment of a multilateral sy stem of notification and registration of 
geographical indications for wines and spirits, th e Separate Customs Terr itory of Taiwan, Penghu, 
Kinmen and Matsu believes that participation in this  system should be on a voluntary basis. Hence, it 
co-sponsors the Joint Proposal. With regard to GI-e xtension issue, it holds the view that neither the 
necessity nor urgency for GI extension has been de monstrated. As to the relationship between TRIPS 
and the Convention on Biodiversity (CBD), while  recognizing the problem of misappropriating 
genetic resources and traditional know ledge should be dealt with, it advocates that technical issues 
should be clarified beforehand. 
Trade and environment 
46. With a view to enhancing the mutual supportiv eness of trade and environment, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu supports the strengt hening of information 
exchange and cooperation between the WTO and th e multilateral environmental agreements (MEAs), 
and the clarification of the relationship between their existing rules as well. It also holds the view that 
for a successful outcome, it is crucial that the ne gotiations follow its mandate and not prejudice the 
WTO rights of any Member that is not a party to  the MEA in question. For a more sustainable 
development of the global economy, the Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu continues to support the liberaliza tion of environmental goods and services. 
Trade facilitation 
47. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu recognizes that the 
advancement of trade facilitation on a global scale wi ll drive down the costs of transactions and thus 
contribute to the expansion of international trade. Therefore, with the aim of concluding a practical 
and binding agreement and given the major achie vements in promoting trade facilitation initiatives 
thus far, it is also willing to share its experi ence in this regard with other WTO Members. 
Trade and development 
48. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu supports the idea of 
providing meaningful market access, diversifica tion of production and su pply, and trade-related 
technical assistance and capacity building to the developing country Members, especially Least-
Developed Country (LDC) Members, so as to facilitate  their integration into the international trading 
system and global economy. It believes that development factors s hould be taken into consideration in 
all DDA negotiations. 
Review of the DSU 
49. As the Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu has itself been an 
active participant in the dispute settlement mechanis m as a third party, it shares with other Members 
an interest in enhancing the rights of third parti es. It has worked closely with Members to further 
clarify and improve the current DSU provisions. On  one of the issues concerning transparency, it 
agrees that panel and Appellate Body hearings be opened to WTO Members, and on a case-by-case 
basis to the public. WT/TPR/G/232 Trade Policy Review 
Page 16 
 
 
 (ii) The Participation of the Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu in the WTO 
Agreement on Government Procurement (GPA) 
50. In fulfilment of its WTO accession commitm ents, and following long and intensive 
negotiations, the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu became the 
41st party to the plurilateral Agreement on Government  Procurement (GPA) on 15 July 2009. Parties 
to the GPA are welcome to participate in its gove rnment procurement mark et, and it will similarly 
encourage its domestic companies to participate in the markets of other GPA parties. At the same 
time, the Government will continue  to improve its own public procurement system to make it more 
open, transparent and non-discriminatory. 
Dispute settlement 
51. Over the last three years, while continuing to  enhance its own legal capacity, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu has remained an active participant in WTO 
dispute settlement proceedings. Since its accession to the WTO in 2002, in consideration of its 
substantial trade and systemic interests, the Sepa rate Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu has launched three disputes as a compla inant and participated in 63 disputes as a 
third party. Of the three disputes as a complainan t, two of them (WT/DS274 and WT/DS318) reached 
only the consultation stage. In the third dispute, the Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu, along with two co-complainant s (the United States and Japan), requested the 
establishment of a panel by the DSB in their disput e with the European Communities and its Member 
States with regard to the tariff treatment of certa in information technology products (WT/DS375, 376, 
377). The panel was established on 23 September 2008, and two substa ntive meetings of the panel 
were held (and opened to the public) in May and July of 2009. 
Trade remedy measures 
52. The Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu has applied only very 
limited trade remedy measures during the period un der review. There have been four anti-dumping 
investigations, in which two measures were applie d. No safeguard or countervailing measures have 
been taken since its accession to the WTO. 
Aid for trade and technical assistance 
53. The Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu believes that 
development factors should be taken into account  in all DDA negotiations and argues this point 
consistently. In addition to holding regional thematic seminars for developing Members in 
cooperation with the WTO, the Government has conducted several Aid-for-Trade programmes under 
the International Cooperation and Development Fund (TaiwanICDF) a nd participated in the activities 
of relevant interna tional organizations. 
V. OTHER MULTILATERAL (REGIONAL) AND BILATERAL TRADE 
RELATIONSHIPS 
54. The multilateral trading system remains the first pr iority of the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu, as it pursues the objective of gaining greater integration in the 
world economy. In this regard, since the last review , while continuing to participate actively in the 
WTO, it has endeavored to deepen its regiona l and bilateral trade relationships as well. Separate Customs Territory of Taiwan, WT/TPR/G/232 
Penghu, Kinmen and Matsu Page 17 
 
 
 Asia-Pacific Economic Cooperation (APEC) 
55. Since becoming a member economy of APEC in 1991, the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Mats u has engaged in various APEC-re lated activities in support of the 
regional cooperation and integrati on process. In particular, it shares its experience and knowledge in 
different fields with other APEC economies on i ssues ranging from green energy and nanotechnology 
to agricultural technical cooperation, SME develo pment and disaster recovery. In 2009 alone, it 
organized 23 programmes to help  economies build capacity, including the APEC Symposium on SME 
Strategies to Manage the Impact of the Globa l Financial Crisis and the SME Working Group 
(SMEWG), the Symposium on Assessment and Best Practices on Paperless Trading, the Workshop on 
the Development of LED Optical Lighting Standard s and the Meeting of the Expert Group on New 
and Renewable Energy. 
56. In line with APEC's commitment to economic inte gration as a key to furthering development, 
the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu has joined other economies in 
actively advancing relevant work, such as enhanc ing supply chain connections, improving the ease of 
doing business, and pursuing clean and green growth , with a view to reducing trading costs for 
businesses and effectively addressing public needs. Am ong others, the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu participates in  APEC's second Trade Facilitation Action Plan 
(TFAP II), formulated in 2007. TFAP II focuses on four distinct areas for action:  customs procedures, standards and conformance, business mobility and electronic commerce, with an aim to reducing 
trading costs by a further 5% by 2010. In addition,  as part of its contributions to regional economic 
and technical cooperation, the Se parate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu 
launched, in August 2004, the APEC Digital O pportunity Center (ADOC) Initiative, a self-funded 
multi-year capacity-building program, in order to help developing APEC member economies enhance 
digital capabilities. As of 2009, more than 100,00 0 people received ICT skills training through 
53 training centers established in eight economies. 
Organization for Economic Cooperation and Development (OECD) 
57. The OECD is a major forum for the multilateral exchange of information and experience, as 
well as cross-border cooperation a nd harmonization. The Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu remains an observer in the OECD Competition, Steel and Fishery 
Committees, working closely with the OECD on issues such as trade, investment, taxation, 
competition policies, SMEs, financial markets, employment strategies, public governance and the 
environment. 
Free trade agreements and ot her bilateral initiatives 
58. The Separate Customs Territory of Taiw an, Penghu, Kinmen and Matsu has actively 
embarked on an agenda of greater commercial inte raction with its trading partners, which includes 
signing free trade agreements (FTAs). It has entered into FTAs with Panama, Guatemala, Nicaragua, 
El Salvador, and Honduras, while negotiations with  other trading partners such as the Dominican 
Republic are still in progress. In addition, the Sepa rate Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu is negotiating a cross-strait economic cooperation framework agreement with China. 
59. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu also takes a positive 
approach to establishing bilateral trade and invest ment relationships with  key trading partners. 
Currently, it has concluded 28 bilateral investme nt agreements and taken effective measures to 
maintain stable bilateral trade and investment rela tionships with key trading partners. Frameworks for WT/TPR/G/232 Trade Policy Review 
Page 18 
 
 
 regular bilateral economic and trade dialogues have been established with major trading partners, 
including Australia, Canada, the EU, India, Japan, New Zealand, and the United States. 
VI. FUTURE OUTLOOK 
60. In the wake of the global economic crisis, the Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu strongly endorses the proactiv e measures taken by the WTO in countering the 
likelihood of trade protectionism, and believes that  a multilateral trade system is the foundation for 
the sustainable development of a stable global economy. As a firm supporter of the multilateral 
trading system, the Government will cooperate constructively with WTO Members to secure the 
earliest conclusion of the DDA negotiations, with a meaningful and balanced outcome to strengthen 
its function. 
61. In addition to its focus on multilateral trade liber alization, the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu also actively participates in regiona l economic integration 
through bilateral and multilateral trade and ec onomic cooperation framework with a view to 
facilitating economic globalization. The Government  believes that bilate ral and regional trade 
agreements can complement and reinforce the multi lateral trading system, in turn facilitating the 
improvement of the domestic industrial structure and promoting competitiveness. 
62. The current primary objective of the Separate Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu's trade policy is to strengthen the "G lobal Linkage" with major trading partners. To 
accomplish this objective, the Government will con tinue its efforts to move towards regional and 
global integration. At the same time, the Government will endeavor to increase the competitiveness of 
its industries and build on its position in the gl obal marketplace through continuous reforms for 
improvements of a business and investment-friendly e nvironment. The Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu will remain comm itted to assume a greater role in international 
economic cooperation and to  contribute actively to the global economy. 
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