WORLD TRADE  
ORGANIZATION  WT/TPR/M/165/Rev.1 
10 October 2006 
 (06-4843) 
Trade Policy Review Body 
20 and 22 June 2006  
 
 
 
TRADE POLICY REVIEW 
 
SEPARATE CUSTOMS TERRITORY OF TAIWAN,  
PENGHU, KINMEN AND MATSU 
(CHINESE TAIPEI) 
 
Minutes of Meeting  
 
Revision  
 
Chairperson:  H.E.  Mrs. Claudia Uribe (Colombia)  
 
  Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF CHINESE TAIPEI 4 III. STATEMENT BY THE DISCUSSANT 8 IV. STATEMENTS BY MEMBERS 11 V. REPLIES BY THE REPRESENTATIVE OF CHINESE TAIPEI AND 
ADDITIONAL COMMENTS 19 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 29 
 
   
 
    
 
    
 
  
Note:   Advance written questions by WTO Members and the replies provided by Chinese Taipei are 
reproduced in document WT/TPR/M/165/Ad d.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm. 
 WT/TPR/M/165/Rev.1  Page 3 
 
 
  I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The first Trade Policy Review of the Separate  Customs Territory of Chinese Taipei, Penghu, 
Kinmen and Matsu (Chinese Taipei) was held on 20 and 22 June 2006.  The Chairperson 
(H.E. Mrs. Claudia Uribe (Colombia) welcomed th e delegation of Chinese Taipei, headed by Deputy 
Minister Ruey-Long Chen, and the discussant Ambassador  Bruce Gosper (Australia).  As usual, the 
discussant would speak in his personal capacity a nd not as a representative of his country.  In 
accordance with the established proce dures, the discussant had made available, in advance, outlines of 
the main issues he intended to raise (document WT/TPR/D/141). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures for the meeting.  The report by Chinese Taipei was contained in document 
WT/TPR/G/165 and that of the WTO Secretariat in WT/TPR/S/165.  As indicated in WT/TPR/6/Rev.1, the Member under review should pr ovide written answers, by the beginning of the 
review meeting, to questions submitted at least two weeks before the meeting.  Questions posed 
subsequently should be answered, to the extent possi ble, before the start of the second session of the 
meeting.  Questions left unanswered at the end of the second session should be answered in writing no 
later than one month after the meeting.  Questions by the following delegati ons had been submitted in 
writing at least two weeks in advance of the mee ting and had been transmitted to the delegation of 
Chinese Taipei:  Singapore;  Switzerland;  New Zeala nd;  Japan;  China;  the European Communities;  
Australia;  the United States;  and Hong Kong, China.   Copies of these questions and of the answers 
provided by the delegation of Chinese Taipei were av ailable in the meeting room.  Canada;  Turkey;  
Colombia;  Costa Rica;  Korea;  and Brazil ha d submitted written questions after the two-week 
deadline.  These questions had also been transmitted to the delegation of Chinese Taipei;  copies of  
these questions and of the answers provided by the de legation of Chinese Taipei were available in the 
meeting room.  Copies of all advance questions, as well as the responses received from the delegation 
of Chinese Taipei, are reproduced in WT/TPR/M/165/Add.1. 
3. The Chairperson noted, from the two reports, th at having extricated itself from an economic 
downturn in 2001, Chinese Taipei's economy had since grown steadily.  This was due in part to the 
government's macroeconomic policy measures and struct ural reforms, including trade liberalization.  
WTO Members had also played an important role in making the economic recovery possible, in particular through access to their markets for Chinese Taipei's exports.  Trade was an important part 
of Chinese Taipei's economy.  It was the world's te nth largest exporter and ninth largest importer of 
goods in 2004;  its imports and exports each account for around 60% of GDP.  The reports also gave 
details about structural reforms including the priv atization of state-owned enterprises and sectoral 
reforms, notably in the financial sector.  
4. Nevertheless, a number of challenges that had emerged, and these were being tackled.  In 
particular, Chinese Taipei's efforts to implemen t structural and other economic reforms to boost 
competition were important for its longer-term grow th prospects.  As noted in the report by the 
Secretariat, these reforms included continued tax and financial reform, strengthening corporate 
governance, and trade liberalization, particularly in  agriculture.  The report by Chinese Taipei also 
noted the importance of enhancing competitiveness , including in agriculture, manufacturing, and 
services, and the need for promoting trade facilitation and strengthening the enforcement of intellectual property rights protection.  Furthe r improvement of Chinese Taipei's investment 
environment would help to attract inbound direct investment, which remained substantially lower than 
outbound investment, and improve the efficiency of its economy, as noted in the Secretariat Report.   
  
WT/TPR/M/165/Rev.1 Page 4 
 
 
  II. OPENING STATEMENT BY THE REPRES ENTATIVE OF CHINESE TAIPEI 
5. The representative of Chinese Taipei stated that the first Trade Policy Review of 
Chinese Taipei offered WTO Members an important opportunity to review its trade situation and 
trade policies, and to provide constructive feedback on new directions Chinese Taipei might consider.   
6. Chinese Taipei had benefited from an open and liberal international trading system;  its 
history showed how international trade drove economic growth and development.  Through its 
participation in the global trading system, Chines e Taipei had helped to change private sector 
production patterns, particularly in information t echnology.  Chinese Taipei had become the world’s 
principal supplier of flat panel display technologi es and was helping to bring to market the next 
generation of electronics and IT equipment.  Chinese Taipei had also become a key centre in Asia for 
multinational research and development efforts, a nd expected to continue to pave the way for 
emerging technologies.  Chinese Taipei was putting in to place the plans, policies, and infrastructure 
that would enable it to become a fully "knowledge-based economy". 
7. Chinese Taipei had acceded to the WTO, as the 144
th Member, on 1 January 2002.  From 
2002 to 2004, its trade value grew by 41.6%, a ccording to WTO statistics.  As Chinese Taipei 
continued to phase-in its commitments through the e nd of 2008, its trading partners would continue to 
gain from improved access to its market.  It w ould have to carefully manage and undertake the 
necessary adjustments in areas of its economy that were affected by its rapid liberalization.  Chinese 
Taipei aimed to spread the benefits of trade equitabl y to all sectors and all segments of its population.   
8. In addition to participating in the multilatera l trading system, Chinese Taipei joined in 
regional efforts to promote trade and investment liberalization, especially in the Asia Pacific 
Economic Cooperation (APEC) forum.  Chinese Taipei had hosted many APEC activities and 
meetings;  it had established the APEC Digital Oppor tunity Centre in 2004, to bridge the digital 
divide in the Asia-Pacific region.   
9. Following an economic contraction in 2001, Ch inese Taipei had enjoyed important expansion 
in its trade and investment relations.  As do mestic reforms continued and external economic 
conditions remained favourable, Chinese Taipei had been experiencing steady growth.  Its per capita 
GNP was US$15,676;  inflation had remained w ithin reasonable limits (2.3% in 2005), and 
unemployment was 4.1%.  Reflecting the favourable economic environment, a Business Environment 
Risk Intelligence survey ranked Ch inese Taipei fifth out of 50 economies in 2005 for its investment 
environment;  the World Economic Forum's 2005 Global Competitiveness Report ranked it the 
fifth out of the 118 economies reviewed.   
10. Since 2002, Chinese Taipei's imports had grown fast er than its exports.  Its trade surplus had 
narrowed from US$22.1 billion in 2002 to US$13.6 bi llion in 2004, a decline of 38.5%.  With a 
slowdown of international trade in 2005, Chinese Taip ei's export and import growth rates declined by 
8.8% and 8.2%, respectively.   
11. Inward investment had grown to US$4.2 billio n in 2005, an increase of 7% over 2004.  New 
investment inflows were in manufacturing and services.  Chinese Taipei continued to make more transparent the legal and administrative systems rela ting to foreign direct investment.  In terms of 
outward investment, companies of Chinese Taipei  invested US$40.4 billion between 2002 and 2005, 
mainly in Asia and the Americas.  Its firms continued to internationalize their operations. 
12. The rapidly changing global economy presente d WTO Members with many challenges.  
Chinese Taipei's experience showed that conti nuous reform allowed the economy to respond to 
changes in the external environment, improving competitiveness and contributing to economic  
 WT/TPR/M/165/Rev.1  Page 5 
 
 
  transformation.  A six-year economic developm ent plan, "Challenge 2008", was launched in 2002.  
Under the plan, Chinese Taipei had been implem enting reforms in three core areas – political, 
financial and fiscal – and carried out ten key individual plans.   
13. Political reform was aimed at transforming Chin ese Taipei's bureaucracies into a small, lean, 
anticipatory and responsive system.  Fiscal reform was aimed at bringing public sector spending into 
line with revenues within five to ten years.  Fi nancial reforms were aime d at reducing the banking 
system's non-performing loan (NPL) ratio to 5%, while raising the capital adequacy ratio for the 
banking sector to 8% within two years.  Chinese Taipei's ten key individual plans were focused on 
accelerating economic development and improving living standards.  Chinese Taipei aimed to 
enhance the role of culture and arts.  Chinese Taip ei believed that its future depended on investment 
in human resources, R&D, innovation, logistics ne tworks, and improvements in the environment.  
Through these efforts, Chinese Taipei would be tr ansformed into a "green silicon island".  These 
policies had made progress;  inward investment by 25 foreign companies had resulted in the 
establishment of 28 R&D centres.   
14. Chinese Taipei had focused on developing the services sector, which was considered as a 
critical part of its economic transformation.  It  was concentrating on 12 services sectors that were 
strategically important to the future competitiveness of  the economy:  finance;  logistics/distribution;  
information media;  medicine and health car e;  manpower training and manpower placement;  
property management;  tourism and recreation;  cultu ral and creative services;  design;  information, 
research and development;  environmental protection;   and engineering consu lting.  Upgrading these 
sectors would enable Chinese Taipei to perform ke y functions in the globa l industrial and supply 
chain. 
15. Chinese Taipei's accession to the WTO in 2002 coin cided with its plans to carry out domestic 
reforms.  Non-conforming legisla tion was amended and new laws were  implemented in line with its 
accession commitments.  While Chinese Taipei continued to implement its commitments, it had 
undertaken reforms that went beyond the exp ected level or scope of liberalization.  
16. Before its accession, Chinese Taipei had lowered ta riffs in key areas.  In  1996, it joined the 
Ministerial Declaration on Trade in Information Technology Products (ITA), reducing tariffs on the 
products involved to zero in 2000 and 2002.  Chinese Taipei reduced tariffs on some 5,000 tariff lines 
in 2002, in accordance with the commitments;  the no minal average tariff rate fell from 8.2% in 2001 
to 5.7% in 2005.  Over the same period, tariffs  on agricultural products were lowered from 20% to 
13.5% (not including tariff lines subject to tari ff-rate quotas) and on industrial goods from 6% to 
4.2%.  Tariffs on pharmaceuticals, toys, furniture , medical equipment, agricultural equipment, 
construction equipment, paper, and steel were eliminated in line with accession commitments on 
1 January 2004. 
17. Chinese Taipei imposed tariff rate quotas (TRQs) in certain areas, such as passenger cars and 
light commercial vehicles as negotiated during its accession process.  It applied TRQs on 
23 agricultural and fishery products.  TRQs on rice ha d been applied since 2003;  TRQs on sugar were 
eliminated in February 2005;  and TRQs on sever al products, including some chicken and pork goods 
had been lifted.  Chinese Taipei expected to phase out TRQs on some agricultural and fishery 
products, including persimmon, mackerel  and sardines, on 1 January 2008.   
18. 
Chinese Taipei had eliminated non-tariff measures that did not conform to WTO 
requirements.  As of February 2006, 56 items remain ed subject to import bans  for reasons related to 
human health, environmental protection or public mo rality.  The number of tariff lines (at the 10-digit 
HS Code level) subject to import licences was reduced from 130 to 24 in 2005.  Remaining 
restrictions were for reasons of environmental pr otection or essential security interests, and included  
WT/TPR/M/165/Rev.1 Page 6 
 
 
  diamonds, lead, cadmium, chromium waste and scra p, methyl bromide, and Montreal Protocol 
restricted chemicals.  
19. In services, Chinese Taipei had negotiated a set of horizontal commitments as well as sector-
specific commitments as part of its WTO accessi on.  In 2003, it removed restrictions on foreign 
investment in real-estate and land development;  rail transport, the trucking business, health care 
services, and the education subsector were deregulated.   
20. The protection and enforcement of IPRs had been a major element in Chinese Taipei's 
economic transformation.  Chinese Taipei had implemented its obliga tions under the TRIPS 
Agreement, in line with its acces sion commitments.  Copyright laws and regulations we re amended;  
for example, in 2001, copyright protection of computer programs was extended to life plus 50 years 
(natural persons) or 50 years from the date of publi cation (juridical persons).  Patent and trademark 
laws were amended to ensure comp liance with international standards.   The Patent Act was revised in 
relation to the conditions for rejecting a patent appl ication, the timing of granting patent rights, the 
insertion of exclusive rights to preclude others from making an offer for sale;  criminal liabilities for 
utility model and design patents were abolished.  The Trademark Act was changed to extend the scope 
of trademark-protectable subject matter to three-dimensional shapes, single colours, and sound marks.  Chinese Taipei had introduced border control meas ures in accordance with Articles 51 to 60 of the 
TRIPS Agreement, extending trade mark owners the ri ght to apply to Customs to suspend the release 
of imported or exported goods. 
21. Financial reform had been at the top of the refo rm agenda since the Asian financial crisis.  A 
lesson learned from the crisis was that government s needed to supervise more effectively the 
increasingly complex financial sector.  In July 2004, Chinese Taipei had established the Financial 
Supervisory Commission, the regulatory authority for the financial sector, to build a competitive 
financial environment and increase the competitiveness of industries.   
22. Chinese Taipei's reforms in the telecommunica tions sector included:  the organizational 
separation of the incumbent operator from the regulator;  asymmetric regulations;  phased 
liberalization;  and the establishment of a fair and competitive regulatory structure that balanced 
deregulation and re-regulation.  In response to th e convergence of telecommunications, broadcasting, 
and information technologies, Chinese Taipei had established an independent agency in 
February 2006 to manage the emerging dynamic. 
23. Chinese Taipei had worked to improve corporat e governance.  It had introduced the Policy 
Agenda and Action Plan to Strengthen Corpor ate Governance in 2003 to revise 16 laws and 
regulations and restructure the bankruptcy mechanis m.  Chinese Taipei amended the Securities and 
Exchange Act in January 2006, including measures to strengthen corporate governance procedures 
and protect the development of capital markets and the financial system.   
24. The establishment of free-trade zones was importa nt in enabling more efficient operation of 
Chinese Taipei's private sector and its integration in to the global logistics and management grid.  The 
Act for the Establishment and Management of Free Trade Zones was adopted in July 2003, and there 
were free trade zone operations in Keelung Po rt, Taipei Port, Taichung Port, Kaohsiung Port, and 
Taoyuan Air Cargo Park.  Goods moved freely w ithin and between these zones and underwent 
warehousing, trans-shipment and value-added ope rations while enjoying exemption from customs 
tariffs, internal taxes, and charges, as well as si mplified customs procedures.  Within the zones, 
companies benefited from a single-window administration, free flow of goods, and autonomous management;  international business representatives could exercise their business activities freely.   
 WT/TPR/M/165/Rev.1  Page 7 
 
 
  25. Chinese Taipei was continuing to improve its investment climate by privatizing state-owned 
enterprises and liberalizing restrictions on foreign i nvestment.  It had privatized 34 such enterprises 
and planned to privatize all remaining state-ow ned enterprises, except the Taiwan Water Supply 
Corporation.  As of end 2005, 99% of Chinese Ta ipei's manufacturing and 95% of the services sector 
had been opened to foreign investment. 
26. Chinese Taipei was gratified, as a new Member  of the WTO, to assume its role in 
negotiations on the Doha Development Agenda.  Ch inese Taipei believed in the principle of trade 
liberalization.  This belief was built upon the bene fits it had enjoyed from the multilateral trading 
system over the past few decades, and the economic growth that had been accelerated by its accession 
to the WTO.  However, fast liberalization of the market required transition precautions, to mitigate the 
short-term impact on certain sectors of the economy.  As the newly acceded Members had made substantial commitments during their accessions, some  flexibility would need to be provided to 
maintain the momentum of liberaliza tion and facilitate further reform.  
27. In the on-going round of negotiations, Chinese Taipei supported the long-term objective of 
the WTO to establish a market-oriented trading syst em by eliminating trade-distorting measures in the 
agriculture sector.  However, it underscored the indi spensable role of agricu lture in areas such as food 
security, rural development, environmental prot ection, and cultural preservation.  In the NAMA 
negotiations, Chinese Taipei supported the applicati on of the Swiss formula with reasonably small 
coefficient values, which had potential to cr eate new business opportunities, harmonize Members’ 
tariff regimes and create a more e quitable and predictable trading envi ronment.  Sectoral liberalization 
could be an effective approach to the creation of improved market access for WTO Members.  
Services accounted for more than 73% of Chinese Taipei's GDP:  further services liberalization was 
one of the three key pillars of market access in th e round of negotiations and a major driver of global 
economic growth and development, alongside agriculture and NAMA.   
28. Chinese Taipei had used its accession to th e WTO to establish a foundation for domestic 
reforms.  Chinese Taipei's liberalization effo rts had opened up new opportunities for trade and 
investment;  it looked forward to continuing to e xplore areas for increased cooperation with its trading 
partners.  Chinese Taipei was committed to a str ong international rules-based system, and it had 
worked in support of an ambitious outco me from the ongoing Doha negotiations.    
WT/TPR/M/165/Rev.1 Page 8 
 
 
  III. STATEMENT BY THE DISCUSSANT 
29. The discussant (H.E. Mr. Bruce Gosper) co mmented on the overall economic and trade 
situation of Chinese Taipei, quoting a number of statis tics, and highlighting some of the challenges for 
Chinese Taipei's economic and trade policy. 
30. In five decades, Chinese Taipei had become a dynamic, middle-income economy that was 
close to the leading edge in a number of high-t echnology sectors.  Chinese Taipei's 2005 GDP was an 
estimated US$346 billion, giving its 23 million peopl e a per capita GDP of US$15,120.  Trade had 
played an important role in the economy with im ports and exports each around 60% of GDP.  Exports 
in 2005 had reached a ne w high, up 8.8% on 2004. 
31. Since its accession to the WTO, Chinese Taip ei had enjoyed steady economic growth, 
notwithstanding a severe recession in 2001.  In 2005, GDP grew by 4%.  Continuing growth in world 
trade leading to an increased demand for Chin ese Taipei exports, recent strong performances in 
industrial production, growth in domestic inve stment and private consumption, and lower 
unemployment figures all boded well for steady economic growth in 2006.  This had been officially 
forecast to reach 4.25%. 
32. Services, manufacturing, and agriculture account ed for some 74%, 21% and less than 2% of 
GDP, respectively.  However, the latter two sectors continued to provide higher shares of employment 
than the contribution to GDP would indicate.  Chinese Taipei's employment remained under pressure as a result of major structural change, includi ng the move offshore of many Chinese Taipei and 
foreign-invested manufacturing operations. 
33. The opportunities and challenges posed by the phe nomenal growth of production and trade in 
China were important for all economies, and partic ularly for Chinese Taipei.  In 2002, cross-strait 
trade overtook trade with the United States to become  Chinese Taipei's most important trade.  In 
2004, cross-strait exports constituted more than one -third of Chinese Taipei's total exports.  
Cross-strait exports in 2005, excluding Hong Kong,  China, increased by 15.2% to US$51.8 billion, 
accounting for 27.3% of Chinese Taipei's total e xports.  Two-way cross-strait trade, excluding 
Hong Kong, China, grew to US$71.7 billion in 20 05, comprising 19.3% of Chinese Taipei's total 
trade. 
34. Outbound cross-strait investment was considerable , reaching a peak of US$6 billion in 2004.  
Official figures put the stock of cross-strait i nvestment by Chinese Taipei business at US$40 billion 
by end 2004, over 50% of total foreign inv estment:  more than 20,000 enterprises from 
Chinese Taipei were said to have set up operations across the strait.  However, impediments to trade 
and investment remained.  Chinese Taipei prohibi ted inbound cross-strait trade involving some 
2,200 tariff lines;  little inbound in vestment had been allowed, an d outbound investment required the 
approval of the relevant Chinese Taipei authorities.  Recently it had been reported that restrictions on 
such investment had been tightened. 
35. The movement of people also remained subject to impediments.  The difficulty of obtaining 
visas for cross-strait business visitors had been highlighted by some foreign business as an 
impediment to using Chinese Taipei as a regi onal business hub, thus depressing other foreign 
investment into Chinese Taipei.  On the positive side, air links had been improved with direct 
passenger flights, and charter cargo flight s were being allowed on a one-off basis. 
36. A further challenge for Chinese Taipei would be maintaining its commitment to economic 
reform in the face of the continuing evolution of its economy, and strong competitive pressures on 
more traditional manufacturing.  Chinese Taipei had substantially liberalized  its trade and related  
 WT/TPR/M/165/Rev.1  Page 9 
 
 
  regimes including as a consequence of its WTO accession.  Continued growth would hinge on 
continued trade liberalization and structural reforms, as the authorities recognized.  This would improve the efficiency of the economy and its attractiveness to inbound direct investments. 
37. Chinese Taipei had indicated its intention to continue to improve its investment climate by 
liberalizing restrictions on foreign investments.  Inbound direct investment was prohibited in several 
major sectors, including television and broadcas ting, and in certain other sectors approval by 
authorities other than the Ministry of Economic Affa irs was required.  On the other hand, some 99% 
of manufacturing sectors, and 95% of services sectors were open to foreign investment.  Regulatory 
reforms had been occurring in the financial and te lecommunications sectors.  He was interested in 
knowing more about plans to encourage greater inbound direct investment. 
38. The discussant noted that Chinese Taipei attach ed high importance to the multilateral trading 
system.  Besides participation in the WTO, as its  main trade policy, Chinese Taipei was an active 
member of the APEC.  Although Chinese Taipei was building bilateral a nd regional economic and 
trade relationships, such as the free-trade agreem ent with Panama, its trade was and would likely 
continue to take place overwhelmingly under MFN tr ade conditions.  Some 98% of its imports were 
subject to applied MFN tariffs.  Recent years ha d seen the proliferation of regional preferential 
arrangements. In order to retain its competitiv e edge, Chinese Taipei had no alternative but to 
embrace continued MFN trade liberalization. 
39. In its accession, Chinese Taipei had assumed ob ligations comparable to those undertaken by 
WTO Members with a comparable level of economi c development.  He enquired whether Chinese 
Taipei could confirm that this continued to be its  position and would also guide its approach to taking 
on new obligations in this Round.  Chinese Taipei ha d also stated that it would not claim any right 
granted under WTO Agreements to developing countr y Members.  He asked whether Chinese Taipei 
could confirm that it would not claim any rights gran ted to developing country Members in respect of 
any new rights and obligations under the WTO Agre ements arising out of this Round, for example 
any special and differential treatment provisions under outcomes on rules and trade facilitation. 
40. Chinese Taipei had continued to liberalize its tr ade regime since its accession.  About 31% of 
all tariff lines were duty free and the simple aver age applied MFN tariff rate was 7.8% in 2005.  
Nevertheless, there were areas of significant tariff pr otection, including tariff peaks, tariff quotas, and 
non-ad valorem  tariffs, often concealing high effective ra tes.  These occurred in some agriculture 
subsectors, fisheries products, and cars and car parts.  Textiles and clothing imports were also subject 
to higher tariffs on average.   
41. Concerning Chinese Taipei's efforts to modern ize and transform its agricultural sector to 
make it capital and technology-intensive, he asked  whether agriculture was foreseen as moving away 
from a need for tariff and other trade-distorting support measures. 
42. Chinese Taipei continued to maintain tariff quotas on 22 agricultural and fisheries products,  
as well as on passenger cars and chassis in 2005.  He enquired about the economic benefits to 
Chinese Taipei of applying tariff quotas to cars, pa rticularly when actual imports fell well below the 
quota levels;  and how Chinese Taipei would ensure that its car industry restructured as the import regime moved to a flat tariff of 17.5% in 2011 under its WTO commitments. 
43. Chinese Taipei provided tax incentives and subsidies for R&D and "newly emerging, 
important and strategic" industries, which mainly  included machinery and electronics.  He wondered 
about the criteria for selecting such industries, a nd whether there was any independent review of the 
effectiveness and of overall impact on the econom y of these support programmes.  He also asked 
whether Chinese Taipei had plans to eliminate subsidies that might be distorting trade.  
WT/TPR/M/165/Rev.1 Page 10 
 
 
  44. In the services sector, Chinese Taipei had con tinued to pursue trade liberalization and 
structural reform.  Questions from Members had focussed particularly on the telecommunications and financial sectors.  As Members had shown considerable interest in the independent 
telecommunications regulator established in February  2006, he sought further details.  Chinese Taipei 
had signalled its intention to proceed with the priv atization of banks.  The postal savings system had 
the largest share of deposits among all financial ins titutions in Chinese Taipei in 2004.  He asked for 
further information on Chinese Taipei's current priv atization plans, as well as the main obstacles to 
privatization. 
45. Chinese Taipei had not been the subject of any requests for dispute settlement consultation.  
This was a testament to the excelle nce of its efforts to live up to its accession commitments.  On the 
converse side, Chinese Taipei had sought consultatio ns twice, although it was yet to seek a panel in 
any case.  In the Doha negotiations, Chinese Taipei ha d shown considerable activity, in particular, in 
NAMA, rules, trade facilitation and services;  it had ta ken a generally ambitious stance in these areas.  
Chinese Taipei had been less ambitious in its approach to agriculture.    
 WT/TPR/M/165/Rev.1  Page 11 
 
 
  IV. STATEMENTS BY MEMBERS 
46. Members commended Chinese Taipei's economic perfo rmance over the last few years.   They 
were encouraged by Chinese Taipei's structural refo rm, which together with its participation in the 
multilateral trading system had contributed to its steady economic growth.  They urged Chinese 
Taipei to continue with these reforms.  Members appreciated Chinese Taipei's participation in the 
WTO and encouraged it to continue its contribu tion to the DDA negotiations.  Some Members noted 
the increasing importance of their bilateral trade an d investment relations with Chinese Taipei.  They 
looked forward to receiving any outstanding replies to their advance written questions. 
47. The representative of Switzerland
 noted that Chinese Taipei's WTO-related reforms would 
further improve its competitiveness.  Chinese Taipei w as an attractive location for direct investment.  
He was interested in the economic significance of the cross-strait trade prohibition involving 
2,200 tariff lines, and Chinese Taipei's further pl ans to reduce the number of prohibitions.  On 
industrial policies, he sought clarification on the consistency of tax incentives for "newly emerging 
and strategic" industries with the Agreement on Subsidies and Countervailing Measures (ASCM).   
48. Switzerland attached importance to adequate and effective protection of IPRs as an important 
prerequisite for investment and R&D activities.  He commended the progress made in IPR protection, 
especially in the pharmaceutical sector, and the Ac tion Plan 2006-2008, launc hed in January 2006.  
However, Switzerland was concerned about the considerable smuggling of counterfeit products, 
especially watches.  More active measures were needed, especially strengt hening border control 
enforcement.  He asked for information about th e planned revision of the Patent Act.     
49. The representative of New Zealand  congratulated Chinese Taipei on the achievements in 
improving transparency, protecting IPRs, and enactin g anti-corruption laws.  He encouraged Chinese 
Taipei to continue opening its economy to trade and foreign investment, in particular its agriculture 
sector to increase consumers benefits.     
50. Non- ad valorem  rates tend to conceal high rates;  1.8% of Chinese Taipei's tariff schedule 
involved such rates.  New Zealand encouraged  Chinese Taipei to move to an exclusively ad valorem  
tariff structure, to reduce high tariff peaks, and to address tariff escalation in textiles, petroleum, coal 
and non-metallic mineral products, which impeded the development of less-industrialized Members 
seeking market access in Chinese Taipei for their higher value products. 
51. The services sector, as well as its liberalization, was important in Chinese Taipei's integration 
into the international economy and becoming a regional services hub.  New Zealand welcomed 
Chinese Taipei's commitment to promote liberalizati on in this sector, including the elimination of 
investment restrictions in real estate and land development;  however, it encouraged the removal of restrictions on foreign ownership in other sectors a nd the remaining restrictions in environmental and 
tourism services. 
52. Chinese Taipei continued to regard itself as a developing Member for certain trade purposes;  
this would receive greater scrutiny as its inco me and technology levels rose.  New Zealand 
encouraged Chinese Taipei to consider th e ways it might assume greater responsibilities 
commensurate with its status in the global economy.   
53. The representative of Japan
 stated that Chinese Taipei provided an excellent model as a newly 
acceded WTO Member.  However, further trade libera lization and continuous structural reform were 
needed to achieve sustainable development, as we re strengthened cross-strait economic relations.  
Japan appreciated Chinese Taipei's efforts to implement its accession commitments and domestic 
policies in coherence with the WTO Agreements, including government procurement, as well as its  
WT/TPR/M/165/Rev.1 Page 12 
 
 
  coordination work in audio-visual services in th e DDA negotiations.  He commended Chinese Taipei's 
support of developing countries through the Globa l Trust Fund and the Integrated Framework.  
54. Japan was concerned about the foreign capita l limitations and asymmetric regulation in 
telecommunications, and the operation of cabot age in maritime transport services.  While 
Chinese Taipei promoted the TBT and SPS agreemen ts, its new standard for import inspection of 
Japanese alcoholic drinks needed to be reviewed  and brought into conformity with the SPS 
Agreement. 
55. He hoped that Chinese Taipei would continue its  efforts to enhance the quality of patent 
examination, effective enforcement measures to de ter criminal activities, and to improve protection 
measures along with the progress of digitalization. 
56. The representative of China
 was interested in the first TPR of Chinese Taipei.  The trade and 
economic ties and exchange of people across the strait  were severed after 1949 for over 30 years.  To 
facilitate communications and visits  between relatives and friends of  the two sides, and to promote 
tourism, trade and economic coope ration as well as cultural exchanges, China proposed in 1979 to 
resume direct postal and shipping links across the strait and to develop trad e and economic relations.  
To this end, China had taken measures, based on th e principle that the economic and trade exchanges 
across the strait should be direct and two-way.   These exchanges should also be based on the 
comparative advantages of the two sides. 
57. Thanks to the concerted efforts of the peopl e on both sides, trade and economic activities 
across the strait had expanded.  However, China had a huge trade deficit with Chinese Taipei;  
Chinese Taipei’s economy had benefited a great deal .  According to a stud y by Taipei-based Chung 
Hua Institution for Economic Research, a one U.S. do llar increase in Chine se Taipei's exports to 
China would result in a two U.S. dollar value added in the related industry in Chinese Taipei.  A well-
known politician in Chinese Taipei pointed out that  the trade surplus Chin ese Taipei enjoyed across 
the strait had generated greater economic growth in the past two years than its domestic demand.  The 
surplus had become a vital force bolst ering Chinese Taipei’s economic growth. 
58. China believed that the development and furt her expansion of the cross-strait trade and 
economic cooperation was a common aspiration and woul d be in the long-term interests of people on 
both sides.  China had concerns over the trade regime and policies Chinese Taipei had adopted, 
although efforts had been made to fulfil its ac cession commitments over the past few years.  
Agricultural products, particularly rice products, we re still subject to tariff peaks.  TRQs covered 
130 products including some agricultural goods, passenger coaches, and auto chassis.  All this undermined the goal of a free and open trade and i nvestment regime, as ofte n declared by Chinese 
Taipei, and inhibited its furt her trade and economic growth. 
59. China was concerned over problems relating to the WTO non-discrimination principle.  
Chinese Taipei practiced trade-restrictive policies ag ainst China in many areas, which had limited the 
potential for cross-strait trade and economic coope ration.  Chinese Taipei had maintained import 
prohibitions on 2,237 tariff lines of products from Ch ina without WTO-consistent justification.  
Access for China's services providers was virtually  blocked in many ways, and Chinese companies 
found it impossible to invest in Chinese Taipei.  This was not conducive to the development of 
cross-strait trade and economic relations;  it w as not only against the interests of businesses and 
consumers in Chinese Taipei, but also had a negative impact on business investment in China.  As a 
result, the economic growth of Chinese Taipei  had been greatly impaired.  China urged 
Chinese Taipei to be more sensitive to the voices of the relevant stakeholders, including its own, such 
as businesses, consumers, and investors, and take steps to correct these trade policies and practices,  
 WT/TPR/M/165/Rev.1  Page 13 
 
 
  which were inconsistent with WTO rules, so as to  promote trade liberalization (and facilitation) across 
the strait.  
60. China hoped that Chinese Taipei would faithfu lly honour the basic WTO principles, fully 
implement its accession commitments, take concrete measures to lift discriminatory prohibitions and 
restrictions on Chinese products and services, demonstrate sincerity in resolving outstanding issues in 
the cross-strait trade and economic relations, and make efforts for sustained and healthy economic 
development to the benefit of the people on both sides of the strait. 
61. The representative of Singapore
 welcomed Chinese Taipei's initial and revised services offers 
in the on-going nego tiations, as well as over 70 proposals on various aspects of the DDA negotiations.  
He noted Chinese Taipei's support for the application of the Swiss formula and sectoral liberalization 
to facilitate the creation of new business opport unities, including for developing countries. 
62. Chinese Taipei had a generally liberal trade po licy regime;  it had 100% binding coverage of 
its tariff lines, with an average binding rate of 4.8% for non-agricultural goods.  Chinese Taipei had 
not made use of contingency measures, except fo r three anti-dumping measures.  Its weaknesses and 
distortions included tariff peaks and tariff escalation:  tariffs higher than 50% were applied to some 
53 lines, including passenger cars and chassis and fish ;  tariff escalation was present in a number of 
subsectors, which resulted in a bias against imports of more processed goods and, therefore, gave an 
effective rate of protection to the processed goods th at was higher than the nominal rate.  The simple 
average ad valorem  equivalent of non- ad valorem  duties was 130%.  
63. Singapore encouraged Chinese Taipei to adopt a lib eral regime in the agriculture sector.  In 
services, Chinese Taipei had made commitments across various sectors during its accession to the WTO.  However, Singapore believed that there was room for improvement in areas like financial services, telecommunications, and maritime transport. 
64. The representative of the European Communities
 (EC) noted that many Members were 
concerned about the protection of IPRs, in particul ar proper enforcement, and would welcome further 
improvements.  
65. The EC was concerned about the restrictions on cross-strait traffic and sought clarification on 
further liberalization plans.  This issue would have to be seen in the context of the need to increase 
inbound direct investment, which fell largely behind Chinese Taipei's outbound direct investment.  The low level of inbound direct investment did not reflect Chinese Taipei's stated interest in 
increasing its attractiveness for FDI.  Increased inbound direct investment was important for 
Chinese Taipei's sustained growth, and further libera lization in the services sector had a key role in 
this. 
66. The EC welcomed Chinese Taipei's ambitions to become a services-oriented economy.  
However, formal market access commitments on services were a necessary but not sufficient 
condition for boosting investment and trade in ser vices.  As services production was typically more 
regulated than the production of goods, a modern e nvironment, characterized by least-trade-restrictive 
regulation and good regulatory practices, including adhe rence to international norms and standards, 
was essential for the competitiveness of an economy.  Such practices would raise the profile of 
Chinese Taipei as a regional centre for financ ial services and telecommunications trade and 
investment.  
67. The EC believed that  it would be in Chinese Taipei's deve lopment interests to provide for 
stronger participation of foreign companies in its government procurement.  Chinese Taipei had  
WT/TPR/M/165/Rev.1 Page 14 
 
 
  committed to achieving this, including through pa rticipation in the Agreement on Government 
Procurement, and the EC encouraged it to  proceed with the necessary preparations. 
68. The EC sought more detailed views from Ch inese Taipei on the importance of the link 
between trade and environmentally sustainable devel opment, and on how some of the social effects of 
trade liberalization could be best addressed.   
69. The representative of Australia
 encouraged Chinese Taipei to continue to seek an ambitious 
outcome across all areas in the DDA negotiations, and to submit an improved services offer by the 31 July deadline.  Other areas of Chinese Taipei's participation in the Doha Round were NAMA, trade 
facilitation and rules.  He noted Chinese Taipei's co mplementary engagement in  bilateral and regional 
trade liberalization, particularly in the APEC.  Au stralia encouraged Chinese Taipei to maintain its 
vigilance in strengthening IPR protection.  Austra lia was concerned about quotas on agricultural and 
fish imports, indirect tax on motor vehicles, SPS measures, and services. 
70. The representative of the United States
 noted that Chinese Taipei was focused on retaining 
competitiveness within the rapidly changing regional a nd global economy.  Its policies were aimed at 
strengthening and diversifying its economy, build ing value-added industry, human capital and 
knowledge-based industry and services.  The Unite d States applauded the establishment of an 
independent telecommunications and broadcasting regulator and looked forward to effective oversight 
of the market.  Chinese Taipei had undertaken e fforts to improve enforcement of IPRs, which was 
critical for its increasingly knowledge-based economy.  He was interested in discussions on a number 
of IPR-related issues, such as compulsory licensing,  internet piracy, unauthorized use of copyright 
material on college and university campuses, and protecting patented pharmaceuticals.  
71. Chinese Taipei had taken steps to liberalize its trade and investment policies to enhance its 
competitiveness and put the economy on a path of su stainable economic growth.  He looked forward 
to working closely with Chinese Taipei to ensu re an ambitious outcome for all areas of the 
negotiations-NAMA, services, trade facilitation, agricultu re, and rules, including fisheries subsidies.   
72. There were a number of areas where further improvement could boost efficiency, 
competitiveness, and economic growth and developm ent, including:  further work on tariff and 
non-tariff barriers;  certification requirements for rul es of origin applicable to agricultural products;  
policies on customs classification of specific high-tech  products;  and the development of standards or 
other technical requirements that might affect trade.   
73. Further progress was needed in agriculture wh ere tariffs remained high on selected products, 
and public sector support continued to be a fiscal burden.  The United States was concerned about 
Chinese Taipei's SPS measures, and sought clarification whether there might be less trade restrictive alternatives.  Chinese Taipei had completed the technical aspects of the GPA accession process and 
the United States looked forward to the resolution of the remaining items to allow the accession to be 
completed in near future.   
74. Bilateral trade and investment relations between the United States and Chinese Taipei were 
good, and they were working to enhance the relatio nship under the Trade and Investment Framework 
Agreement signed in 1994.  
75. The representative of Hong Kong, China
 stated that Hong Kong, China and Chinese Taipei 
shared the objective of improving the WTO rules to safeguard the trade interests of among others, 
small and medium-sized companies.    
 WT/TPR/M/165/Rev.1  Page 15 
 
 
  76. Chinese Taipei maintained high applied rates fo r certain tariff lines on agricultural products as 
well as non-agricultural products.  Hong Kong, China en couraged it to improve its tariff regime in the 
on-going market access negotiations.  About 25% of  domestic standards in Chinese Taipei were 
equivalent to international guidelines as of end Oc tober 2005:  She encouraged Chinese Taipei to 
harmonize the remaining domestic standards.  H ong Kong, China urged Chinese Taipei to further 
liberalize the services sector by removing market access limitations, in particular in financial services and telecommunications.   
77. The representative of Canada
 stated that Chinese Taipei had developed from an exporter of  
agricultural commodities into one of the world’s larg est exporters of semiconductors and flat panel 
displays in a little more than 50 years;  companie s based in Chinese Taipei manufactured over 80% of 
the world’s laptop computers.  It had become a key player in global electronics supply chains through its manufacturing and entrepreneurial skills, the pr ogressive opening of foreign markets, and the 
establishment of a rules-based multilateral trading regime. 
78. She noted the efforts Chinese Taipei had made since its accession:  the lowering of tariffs, the 
reduction of non-tariff barriers, an increase in transpar ency, a reduction in trade facilitation costs, first 
steps in the opening government procurement to forei gn bidders, a start to the liberalization of trade in 
services, and initial steps towards structural reform a nd privatization.  Canada urged Chinese Taipei to 
build on the progress in services and other sectors in which domestic producers had been shielded 
from international competition.  
79. Productivity in Chinese Taipei's services sector was higher than average.  Nevertheless, a 
number of additional reforms that took account of sp ecific concerns of the private sector, such as 
greater liberalization, better enforcement of IPRs , and improved trade facilitation to effectively 
optimize cross-strait economic integration, would enhance this record.   
80. Chinese Taipei needed to pursue more vigor ous adjustment policies within its less 
competitive sectors.  Agricultural tariffs remained higher than aver age, and seasonal tariff peaks and 
TRQs were potential barriers to price signals from external markets.  To encourage resources in the 
agriculture to move into more competitive subsecto rs, into alternative rural activities, or out of 
agriculture altogether, it would be important to phase out remaining protective barriers.   
81. SPS arrangements needed to be firmly science-ba sed, and the efficiency and transparency of 
these arrangements needed to be enhanced.  Canada  noted with regret Chinese Taipei's failure to 
follow the OIE's Terrestrial Animal Health Code on the eligibility for trade in beef from BSE-affected 
economies.  She urged the Chinese Taipei authoriti es to adopt science-based guidelines/standards, 
adhere to international standards, and ensure transparency  in such  areas as SPS measures for 
agricultural products, the registration of new pha rmaceutical products or medical devices, the 
enforcement of IPRs, and the consideration of impor t prohibitions for products that were the subject 
of health concerns among local advocacy groups. 
82. The representative of Turkey
 encouraged Chinese Taipei to  continue its liberal policies 
without resort to protective measures.  Almost all of Chinese Taipei’s trade was on an MFN basis, all 
tariff lines were bound, and about 31% of those tariff lines were duty free.  There were high non-ad valorem  duties with high ad valorem  equivalents in the agriculture sector, and a number of 
tariff lines were subject to import licensing:  she sought clarification on these issues.  
83. Chinese Taipei considered bilateral and regiona l trade liberalization as complementary to the 
multilateral trade liberalization.  In this respec t, she sought information on future prospects for 
free-trade agreements.  Turkey hoped that bilatera l economic and trade relations with Chinese Taipei 
could be increased through the existing Business Council.  
WT/TPR/M/165/Rev.1 Page 16 
 
 
  84. The representative of Colombia
 stated that Chinese Taipei's accession to the WTO had been 
an opportunity to continue to liberalize its trading system.  She welcomed the reduction of trade barriers, including tariffs and non-tariff barriers.  However, certain areas required more work, and she 
urged Chinese Taipei to continue to participate in  the negotiations, in particular in agricultural 
negotiations. 
85. Colombia urged Chinese Taipei to bring its import measures into conformity with its 
international obligations and those resulting from it s accession to the WTO;  and to eliminate export 
incentives.  She sought additional clarification about  the simplification of customs clearance, IPR 
reforms, and the objectives of the agricultural technology parks.   
86. The representative of the Republic of Korea
 noted that Chinese Taipei recognized continued 
progress would continue to attract inbound direct investment.  Korea hoped to continue to work 
closely with Chinese Taipei to re inforce the shared commitment to  a rules-based multilateral trading 
system.  
87. The total value of Chinese Taipei's government procurement was about 8% of its GDP;  it had 
taken transparency-enhancing initiatives, including  extension of time-limits for tendering, and 
procurement contracts for not less than NT$1 m illion were awarded through open, selective, or 
limited tendering procedures.  He was concerned about the exclusion of Korean companies and 
products from Chinese Taipei's government procur ement procedures, specifically regarding the 
Taiwan Railways Administration.  He considered that such exclusion was a violation of the MFN 
principle and against the spirit of the GPA.  He asked Chinese Taipei to explain how this exclusion 
went along with Chinese Taipei's WTO obligation, an d whether such an exclusion was being pursued 
as a trade policy. 
88. The representative of Brazil  noted that tariffs on agricultural products were relatively high.  In 
addition,  some specific rates for products such as rice and sugar, were high.  and a range of domestic 
and adjustment programmes had been put in place.  Within the framework of achieving modalities at 
the end of July, he encouraged Chinese Taipei to enga ge in bringing trade in agriculture into line with 
the degree of openness in multilateral rules for trade in industrial goods.  The combination of domestic support and tariff protection imposed costs on taxpayers and consumers and impeded 
increase in trade flows, for instan ce, Brazil's agricultural exports. 
89. Chinese Taipei's SPS measures on imports of b eef were stricter th an necessary, thus 
damaging Brazil's exports of that product.  The current practice in Chinese Taipei was to admit 
imports from countries of which the entire territo ry was proven to be free from disease;  WTO 
practice required that only the area within the country from which the product originated be disease-free.   
90. The representative of Honduras
 welcomed Chinese Taipei's in itiatives in the negotiations on 
trade facilitation.  Honduras and Chinese Taipei ha d begun negotiations for the establishment of a 
free-trade agreement.  He thanked Chinese Taip ei for the technical and financial assistance it 
provided.  
91. The representative of Pakistan  indicated that Chinese Taipei's consistent policies had 
generated a quantum jump:  trade volume ha d increased from US$247.7 billion in 2002 to 
US$350.8 billion in 2004, and foreign exchange reserves reached US$253.3 billion by the end of 
2005.  This was mainly due to openness in trade, market-friendly policy initiatives, and investment-
friendly climate, emphasis on R&D, and a lean public administration.  
 WT/TPR/M/165/Rev.1  Page 17 
 
 
  92. Pakistan was concerned about Chinese Taipei's qua ntitative restrictions;  and there was a need 
for further liberalizing cross-strait traffic for regiona l economic integration.  With its large, growing, 
services sector, Chinese Taipei had the potential to  boost the global trade expansion in services.  
While commending Chinese Taipei for its role in the DDA, including in NAMA, trade facilitation, 
rules, and services, he noted that its ambitions re mained low in opening the agricultural market and 
reducing fisheries subsidies. 
93. The representative of El Salvador
 noted that the World Economic Forum ranked Chinese 
Taipei fifth in terms of its economic competitiven ess in 2005.  Chinese Taipei was a large source of 
foreign investment in Central America and El Salv ador and potentially a very important market for 
exports.  El Salvador had bilateral relations w ith Chinese Taipei, including through an Economic 
Complementary Agreement, a Central American Tr ade Office, which was opened in Chinese Taipei 
to promote investment;  the incorporation of Ch inese Taipei into the Central American Bank for 
Economic Integration;  the Joint Cooperation Co mmission of the Economic Development Fund, and 
Chinese Taipei's becoming a partner of the Alliance fo r Sustainable Development in Central America.  
Negotiations for a bilateral trade agreement were exp ected to be completed by end 2006.  He thanked 
Chinese Taipei for its support in the DDA negotiatio ns, such as initiatives related to small economies. 
94. The representative of China , who requested the floor to make a point of order, stated that 
there was an understanding in the WTO with regard  to the nomenclature and titles of officials of 
Chinese Taipei.  Although he had heard incorrect nomen clature used several times in statements prior 
to El Salvador's intervention, for the sake of smoot h running of the meeting he had not asked for the 
floor.  However, he stated that the delegate that had just completed its statement had repeatedly used 
incorrect nomenclature, despite the fact that the Member under Review had entered the WTO as a 
separate customs territory, not as a State.  Thus, he requested delegations that this understanding 
should be observed by all Members regardless of th e relationship they might have with the Member 
under Review.  He hoped that some speakers had ha d a "slip of tongue" in using such incorrect 
nomenclature, and that similar mistakes would not be repeated.  He hoped that the Review would 
continue to proceed smoothly.  
95. The Secretariat  (Mr. Clemens Boonekamp, Director of  the Trade Policies Review Division) 
stated that in order to ensure a smooth Review, the Secretariat, on its ow n initiative, would change 
some of the terminologies in relevant documen ts, including advance written questions and the 
minutes, to reflect the name of the Member under Re view.  He appealed to Members to give Chinese 
Taipei its full due as a Member of the WTO, and to  abide by the agreed nomenclature.  He hoped that 
the Review could proceed under the understanding that the Member under Review and the system 
deserved a clean and ordinary Review. 
96. The Chairperson  supported the Secretariat's initiative to make necessary amendments to 
relevant documents.  She did not wish to open a po litical debate on this issue, as the meeting was a 
Trade Policy Review.   
97. The representative of El Salvador  stated that the necessary arrangements would be made 
through the Secretariat.  El Salvador attended the Trade Policy Review meeting with the view that it 
was a trade forum and hoped the remainder of th e discussion would be focused on trade issues and 
other discussions would be held elsewhere.  He e xpressed his support for the rules of the WTO.  
98. The representative of Guatemala  shared Chinese Taipei's view of the present Doha Round 
negotiations, in which the most important objective was to achieve progress for developing Members, 
particularly with regard to promoting ec onomic development and poverty alleviation.  
WT/TPR/M/165/Rev.1 Page 18 
 
 
  99. While thanking Chinese Taipei for supporting the initiatives for small economies, he 
encouraged it to liberalize agricultural trade by  eliminating subsidies and increasing market access 
within the Doha Round of negotiations.  He co mmended Chinese Taipei for its role in the trade 
facilitation negotiations and for the technical assistance it provided for capacity building of 
developing and the least developed countries, including Guatemala.  
100. He noted that negotiations for a free-trade ag reement between Chinese Taipei and Guatemala 
were concluded in August 2005;  and an invest ment promotion and protection agreement was in 
place. 
101. The representative of India
 observed that Chinese Taipei had developed over the past three 
decades on the 'export driven' economy model of growth.  Chinese Taipei had emerged as an 
important economic player in the Asia Pacific re gion and had enjoyed a favourable trade balance for 
several years.  It was the world's 16th largest economy and had the third largest foreign exchange 
reserves. 
102. The representative of Nigeria  stated that Chinese Taipei's export policy was commendable, 
but contrary to the practical aspects of exports to Afri ca, in particular Nigeria.  In her view, most of 
Chinese Taipei's export products to Nigeria were causing injury to domestic industries due to 
problems relating to standards or dumping.  She ur ged Chinese Taipei to reconcile the differences 
between its export policies in theory and in practice. 
103. The representative of Chinese Taipei  noted that he was pleased with the proceeding of the 
Review.  He stated that Chinese Taipei had app lied for Membership to the GATT/WTO as a separate 
customs territory, without prejudice to its legal status.    
 WT/TPR/M/165/Rev.1  Page 19 
 
 
  V. REPLIES BY THE REPRESENTATIVE OF CHINESE TAIPEI AND ADDITIONAL 
COMMENTS 
104. The representative of Chinese Taipei divided hi s responses into three themes:  (i) economic 
environment;  (ii) trade policy regime;  and (iii) sectoral issues.   
(i) Economic environment  
105. Chinese Taipei's target for economic growth in 20 06 was 4.5%;  in the first half of the year, it 
was estimated at 4.9%.  In the first five months , Chinese Taipei's exports had grown by 12.3% and 
imports by 10.5%.  Trade was considered as the engine for Chinese Taipei's economic growth:  if 
trade continued to grow, the outlook for Chinese Ta ipei was good.  Employment had been the concern 
over recent years;  the unemployment rate had r eached 5.17% in 2002 and had been brought down to 
3.78% in 2006 through private sector and government  efforts.  The goal was to bring down the 
unemployment rate to 2%.  Chinese Taipei wa s pleased with current economic development, 
however, it would make efforts to improve it.  This would depend on the results of the current round 
of negotiations.  
106. On the subject of sustainable development, rai sed by the EC, this was an important issue for 
Chinese Taipei and it was holding important conferences aimed at seeking a balance among the economy, environment, and energy to ensure sustainable development.  
107. Regarding industrial policy,  Chinese Taipei would continue to encourage the private sector to 
invest in automation, R&D, and the development of human resources that could solve pollution and 
energy conservation.  Special attention would be gi ven to the promotion of key industries for future 
development, in accordance with the economic deve lopment plan.  For example, the production value 
of semiconductors would exceed NT$ 1 trillion in  2006;  and Chinese Taipei's production of TFT 
LCDs would be number one in the world.  In a ddition, development of biotechnology and digital-
content industries was being planned.  Traditional industries, such as petr ochemicals, textiles and 
heavy industry, would also be upgraded as pa rt of Chinese Taipei's industrial policy.  
108. Addressing the question by the Japanese delegati on on investment, Chinese Taipei stated that 
up to 2005, 99% of manufacturing and 95% of services had been open to investment.  In the current 
round of negotiations, it continued to make comm itments to open up the services sector to foreign 
investment, especially in mode 3.  There were  some limitations on the acquisition of land for 
agriculture. 
109. The majority of Members commended Chinese Taip ei for its participation in the on-going 
negotiations.  On non-agricultural market access (NAMA), Chinese Taipei strongly supported the 
simple Swiss formula with two coefficients, as this could bring about a substan tial reduction in tariffs.  
As a recently acceded Member, Chinese Taipei s ought some flexibility to address some of its 
sensitive items in NAMA.   
110. Agriculture was very important for Chinese Ta ipei though it accounted for less than 2% of 
GDP.  Chinese Taipei had a deficit in agricultura l trade amounting to US$3.9 billion in 2005, about 
50% of its total agricultural production.  Chinese Taip ei maintained no agricultural export subsidies.  
Although Chinese Taipei was committed to make a co ntribution to the Doha Round, it hoped for some 
flexibility, particularly in the area of tariffs a nd market access.  Its accession commitments had been 
extensive. 
111. In services, following the mandate in Annex C of the Hong Kong Ministerial Declaration, for 
the purpose of improving the quantity and the quality  of Members' commitment on services, Chinese  
WT/TPR/M/165/Rev.1 Page 20 
 
 
  Taipei was working bilaterally, plurilaterally , and multilaterally with other like-minded WTO 
Members to come up with a good package.  This w as a priority sector for Chinese Taipei, and it had 
identified twelve sectors for future development.  
112. The discussant
 welcomed Chinese Taipei's forecast of  economic growth (4.5%), high export 
growth (over 12%), and the improvement of the em ployment situation.  He welcomed the way in 
which Chinese Taipei linked economic development to  the prospects for the Doha Round;  this 
suggested that Chinese Taipei saw a clear interest in the open trading system for its future economic 
progress.    The comments on the Doha Round confirmed the importance Chinese Taipei attached to the round and its activity in certain areas, in pa rticular in NAMA and services.  Services was 
identified as an important sector for the future of Chinese Taipei and many other Members.   
(ii) Trade policy regime  
113. The representative of Chinese Taipei
 stated that Chinese Taipei strongly supported the 
multilateral trading system.  However, given the prol iferation of free-trade agreements, it would also 
seek opportunities to enter into FTAs with trad ing partners.  Currently, Chinese Taipei had 
three FTAs:  through its FTA with Panama, two- way trade had increased by more than 100%;  the 
FTA with Guatemala would enter into force by 1 July;  and the FTA with Nicaragua was signed in 
2006.  Chinese Taipei believed that these FTAs woul d assist its goods and services to enter the market 
of the Americas.  Negotiations for FTAs with El Salvador and Honduras were in place, and 
Chinese Taipei was interested in negotiating with other WTO Members.   
114. With regard to import measures, the tari ff quota on passenger cars was implemented in 
accordance with the resu lts of Chinese Taipei's WTO accession negotiations.  The quota was probably 
under-filled because the quota amounts were large a nd beyond the export capacities of Chinese 
Taipei's trading partners.  The tariff quota was a transitional measure, which would be phased out in 
2011, and the tariff would then be reduced to 17.5%. 
115. Upon its accession to the WTO, Chinese Taipei  committed to accede to the Agreement on 
Government Procurement;  it had concluded the technical negotiations and was ready to join the 
Agreement.  In 1999, Chinese Taipei had already enacted the Government Procurement Act, which 
was in full compliance with the Agreement.  As a result, the foreign orig in of Chinese Taipei's 
government procurement had been raised from 14% to 17%.  Thus, Chinese Taipei considered its 
market open to foreign suppliers;  and it was making  the procurement system transparent and fair.  
Chinese Taipei was committed to acceding to the GP A as soon as possible.  Regarding the specific 
question from Korea, negotiations between the Taiwan Railways Administration and a Korean 
company were still ongoing.  Once an agreement was reached, the necessary adjustments would be 
made to the current measure.  The only remaini ng problem was to ensure that the quality of the 
procurement was up to Chinese Taipei's standard. 
116. Regarding taxation, the commodity tax rate on sedans with an engine capacity above 2,000 cc 
would be reduced to 30% from January 2007. 
117. Chinese Taipei reviewed the coverage of "newly  emerging, important and strategic" industries 
every two years:  those with mature technology we re being phased out, and those with potential to 
generate substantial benefits fo r economic development were being added.  Chinese Taipei had to 
ensure that granting of such subsidy was not  contingent upon export performance, and it was 
automatic as long as the application was in complia nce with the criteria and requirements set out in 
relevant laws and regulations.  Thus, Chinese Taipei  believed that the measure was consistent with 
WTO rules and principles.    
 WT/TPR/M/165/Rev.1  Page 21 
 
 
  118. Where relevant international standards existed,  about 71% of Chinese Taipei's standards were 
harmonized with international ones.  Chinese Taip ei was making efforts to acquire the necessary 
information and technical assistance to increase the harmonization rate. 
119. Regarding the SPS measure on the inspection of  alcoholic beverages, Japan had been 
accepted as one of the countries where alcoholic pr ofessional associations could issue test reports or 
guarantees to verify that alcoholic products confor med to Chinese Taipei's hygienic standards.  Thus, 
the product concerned would not be subject to furt her inspection requirement and there would be no 
additional burden on Japanese suppliers. 
120. Chinese Taipei had made efforts to maintain  its BSE-free and disease-free status on many 
important animal diseases in order to protect human and animal health.  Its measures were in 
accordance with the OIE Code and the SPS Ag reement;  the safety assessment and technical 
evaluations undertaken by a panel of experts were entirely based on scientific evidence.  He invited 
Canada to continue to provide detailed informa tion regarding the early 2006 re-occurrence of BSE, 
for further evaluation.   
121. Chinese Taipei's regulations allowed the recogniti on of disease-free status for either an entire 
country or part of a country.  Concerning Braz il’s application for the recognition of its foot-and-
mouth disease-free zone with vaccination, the result of risk assessment indicated that the risk was still 
non-negligible.  However, Chinese Taipei welcomed  further discussions with experts from Brazil to 
find a mutually satisfactory solution.  
122. Chinese Taipei had a sound legal framework to provide adequate protection to IPRs.  The 
Copyright Act had been amended several times to incorporate some of the provisions of WIPO 
treaties (WCT and WPPT), although Chinese Taipei was not a Member of the WIPO.  Chinese Taipei believed that its Copyright Act was not only WTO-c onsistent but "WTO plus".  The Patent Act had 
been amended to extend the term of protection fro m 15 to 20 years, in accordance with the TRIPS 
Agreement;  and Chinese Taipei continued to amend the Act to ensure more transparency and better 
accessibility by patent applicants.  Chinese Taipei ha d also deleted criminal liability from the Patent 
Act, to avoid abuse.  Amendments to the law on trade marks had been made to allow monochrome, 
sound and three-dimensional shapes to be markable ;  and provisions had been inserted regarding 
marks of geographic origin. 
123. Future amendments would address Internet piracy in the Copyright Act.  For the Patent Act, 
Chinese Taipei had agreed to implement paragraph 6 of the Doha Declaration on the TRIPS 
Agreement and Public Health;  it had also agreed  to grant data exclusivity protection for new 
chemical entities for five years.  An Action Plan w as in place to strengthen efforts in enforcement, and 
there was a special police force, with about 220 officers, who were specialized in cracking down on 
counterfeiting activities.  Future work would include  setting up a special IP court to deal with IPR 
legal cases and seminars to educate legal professionals.   
124. Chinese Taipei was an important importer of Swiss watches;  these imports had reached 
US$244 million in 2005, which was about 82% of tota l watch imports.  The market had no room for 
counterfeit watches. 
125. With regard to a compulsory licensing case raised by the EC, Chinese Taipei had closely 
followed the TRIPS Agreement;  Article 76 of the Pate nt Act was consistent with Article 31(b) of the 
TRIPS Agreement.  The appeal of the case to the Mi nistry of Economic Affairs had been rejected;  
however, Chinese Taipei assured Members that the a ppeal procedure was transparent and independent 
from any intervention of the government.  The appellant could further appeal to the High 
Administrative Court within two months after receiving the decision.  Chinese Taipei assured  
WT/TPR/M/165/Rev.1 Page 22 
 
 
  Members that it remained fully co mmitted to the TRIPS Agreement a nd the WTO in dealing with this 
case. 
126. The representative pointed out that Chinese Taipei ' trade policy regime was fully consistent 
with the rules and the principles of the WTO;  and any outcomes of the current Round would be duly 
reflected in Chinese Taipei's trade regime.   
127. The discussant
 wondered whether there were any form al processes under way to review the 
Challenge-2008 programme and put in place new arrange ments that might help govern further reform.  
In respect to Chinese Taipei's FTA programme, he welcomed the observation that Chinese Taipei was 
looking for a comprehensive approach.  This was particularly important to the multilateral trading 
system and he believed that few would have a clea rer view than Chinese Taipei about the importance 
of high standard, comprehensive agreements that fully met the rules and obligations of the WTO. 
128. On TRQs on passenger cars, he hoped for furthe r liberalization initiatives in this sector as 
well as in other sectors.  He appreciated the conf irmation that arrangements were in-hand for further 
tariff reduction by 2011. 
129. A number of Members had raised their concer n about Chinese Taipei's current government 
procurement practices, such as the margin of prefer ences applied, and obligations or requirements of 
reciprocity.  There was a general interest in steps being taken by Chinese Taipei to improve and promote transparency in procurement activities and a greater openness to foreign suppliers.  He asked 
whether Chinese Taipei might make further comments on these issues.  
130. The alignment of Chinese Taipei's TBT measures to international standards had also been 
raised by a number of Members;  Members were expected, where possible, to seek to align their 
standards to international ones, and he encouraged Ch inese Taipei to continue efforts in that regard.   
131. The representative of Japan
 commended Chinese Taipei as one of the best models for the TPR 
meetings.  He appreciated the answer concer ning the reduction of tariffs on Japanese alcoholic 
beverages, sake and shochu .  However, he noted that the tariff was high, compared to those of similar 
alcoholic beverages.  These constituted substan tial barriers for market access for these products.  
Japan hoped for a positive response towards an early tariff-reduction, and asked for further prospects 
by Chinese Taipei in this regard.  On SPS measur es, Japan believed that the hygiene standard for 
methanol in Chinese Taipei was rela tively strict compared with the st andards of other Members.  The 
standard, along with the requirement to obtain an in spection certificate for each item, was an obstacle 
to market access for foreign alcoholic beverages.  He hoped that the standard for methanol would be 
relaxed to the levels of other Members and the va lidity period for inspection certificates would be 
extended or eliminated.  Japan sought Chinese Taip ei's further specific views in this regard. 
132. The representative of Canada  hoped that Chinese Taipei would review its SPS measures to 
bring them more into compliance and conf ormity with international standards. 
133. The representative of the United States  welcomed the clarification that the certificate of origin 
requirements were contained in the regulations gove rning the determination of country of origin on 
imported goods of 29 March 2004;  he  asked how a copy of the regulation could be obtained.  On 
other charges affecting imports, he asked whether all importers were qualified for the services of the 
Trade Promotion Fund (TPF) and whether all entities eligible for the services of the TPF might obtain assistance in case of unfair trade practices and assist ance for the extension of business market.  He 
sought detailed information on how an ad valorem  trade promotion fee conformed to the value of the 
services rendered. In the area of SPS, the United States sought details on Chinese Taipei's plans 
regarding the amendment of the Plant Protection a nd Quarantine Act, and asked  when Chinese Taipei  
 WT/TPR/M/165/Rev.1  Page 23 
 
 
  expected it to become law.  Chinese Taipei had stat ed in the written replies that a resolution was not 
reached during the negotiations conducted by the pa tent owner and the Chinese Taipei firm between 
June 2001 and April 2002.  Quoting the provision of Article 31 (b) of the TRIPS Agreement, which 
included "reasonable commercial terms and conditions" and "reasonable pe riod of time", he noted that 
the written response discussed the reasonable period of time criteria, but did not discuss reasonable 
commercial terms and conditions.  He was also interest ed in the Intellectual Property Office's decision 
and its analysis in granting compulsory licensing in light of Article 31 (a to l) criteria of the TRIPS 
Agreement.  The United States was in terested in reading the decision and the analysis by the Petitions 
and Appeals Committee.   
134. The representative of the European Communities
 asked for clarification on the preference 
margins and transparency in government procurement,  and updates on the IPRs compulsory licensing.   
135. The representative of China  stated that key questions raised by China were about the 
discriminatory economic and trade policies and meas ures adopted by Chinese Taipei's in relation to 
China, their WTO consistency, and the relationshi p between this and Chinese Taipei's large trade 
surplus with China.  China cons idered that the answers were disappointing and far from convincing, 
while responses to other questions were clearer.   
136. Chinese Taipei had stated in its answers that the restrictive trade policies and measures it had 
adopted against goods and services from China were ju stifiable because the two sides had not engaged 
in accession negotiations with each other under the WTO framework.  The fundamental rule of the 
WTO was that all outcomes resulting from bilateral negotiations were applie d multilaterally to all 
Members on an MFN basis;  exceptions could be allowed only under a few si tuations such as the 
RTAs under Article XXIV of the GATT and Article  V of the GATS, preferential arrangements under 
the Enabling Clause, and waivers approved by th e relevant WTO bodies.  Other exceptions might 
involve country-based TRQs.  The absence of su ch bilateral negotiations between China and 
Chinese Taipei could never be used as an excuse by the latter to exempt it from its obligation to apply 
its basic commitments to all other Members on equa l and non-discriminatory basis.  As a Member of 
the WTO, Chinese Taipei had to be well aware of this rule.  
137. During the accession process of Chinese Taipei, one third of the then 140 Members had 
conducted bilateral negotiations w ith Chinese Taipei.  China believ ed that the MFN treatment had 
been provided to almost all Members of the WTO.  Thus, the problem was apparently not a matter of 
whether they had conducted bilate ral negotiations, but whether Chinese Taipei had the political will 
with regard to faithful implementation of the b asic rules and principles of the multilateral trading 
system. 
138. Noting Chinese Taipei's responses to China's qu estions in addressing cross-strait relations, 
such as "the cross strait relations are special and complex", "unique and complicated", "not a simple 
trade issue", and "it had not immediately been ab le to carry out a comprehensive overhaul of the 
cross-strait trade and economic regulations" (after f our years of its accession), China considered that 
this could not be taken as an excuse for Chinese Taip ei to run counter to the fundamental principle of 
non-discrimination of the WTO. 
139. The bilateral relations of all 150 Members of the WTO were unique, sp ecial and complicated, 
perhaps to different degrees.  However, all Member s, with the exception of a very few cases of non-
application of the WTO Agreement, had been applying the same or at least similar treatment to other 
Members in terms of trade on the MFN basis.  This  general rule had to be applied to the trade 
relationship between the two sides of the strait si nce they were both Members of the WTO and the 
WTO Agreement was mutually applied between them .  Since its accession, China had never come  
WT/TPR/M/165/Rev.1 Page 24 
 
 
  across, and never created, difficulties in applying  its commitments to Chinese Taipei based upon the 
WTO rules and principles.  China urge d Chinese Taipei to follow suit soon. 
140. China noted that during China's recent TPR, th e WTO Secretariat and Members believed that 
the large volume of inbound FDI was a major factor behind the trade surplus China had vis-à-vis other Members, such as the United States:  China believed that much of this was a surplus transferred from 
the investment source Members, including Chinese Taipei , to China.  With regard to trade imbalance 
across the strait, Chinese Taipei had said that a majority of Chinese Taipei's overseas investment was 
concentrated in China, which had generated a subs tantial trade flow, and had contributed to Chinese 
Taipei's trade surplus vis-à-vis China.  China cont ended that it was difficult to understand the logic of 
this answer.  Every Member knew that the real reas on behind the serious imbalance was the restrictive 
trade policies and measures taken by Chinese Taipei against China.  To normalize trade relations 
these policies and measures should be eliminated immediately. 
141. Among the 160 subsectors of trade in services, real estate was the only subsector in which 
Chinese Taipei allowed inbound investment from Chin a.  This was cited by Chinese Taipei as an 
example in its answer to China's question to illustrate that it had eliminated restrictions against China.  
China argued that there was no detailed procedure to  implement this lifting of restriction.  China 
considered that there was no point in Chinese pe ople attempting to buy a house, when they faced 
obstacles in travelling to Chinese Taipei and were allowed only a short-term stay.  With regard to 
whether Chinese enterprises could hold exhibitions in  Chinese Taipei, China noted that the answer did 
not address its concern.  China's interest was in whether exhibitions exclusively for Chinese 
enterprises or those jointly with local en terprises could be held in Chinese Taipei. 
142. China expressed its disappointment that more th an four years after the accession of Chinese 
Taipei, China as well as investors in China from a ll other Members had not yet been able to benefit 
much from the WTO membership of Chinese Taipei.  It was time for Chinese Taipei to eliminate 
current policies and practices inconsistent with the WTO rules and principles in order to change the 
abnormal situation of the cross-st rait economic and trade relations. 
143. The representative of New Zealand
 commended Chinese Taipei on the work it had undertaken 
to abide by its accession commitments.  She encour aged Chinese Taipei to resist maintaining high 
tariffs on agricultural products.  On the issue of tariff quota under-fill, New Zealand hoped to be 
provided with the right conditions to supply eno ugh milk for the increasing demand for fresh milk by 
Chinese Taipei consumers. 
144. The representative of Chinese Taipei  stated that Chinese Taipei would continue its efforts to 
improve market access, to ensure transparency of  its government procurement system;  to encourage 
more participation of foreign suppliers;  and join the GPA. 
145. On tariffs on sake and sochu, he confirmed that the tariff was about 40%:  Chinese Taipei 
would further consider the tariff reduction in co mbination with the outcomes of the Doha Round 
negotiations. 
146. Sanitary standards on methanol depended on the kind of product.  Chinese Taipei was 
reviewing the standards, for example, standards for SO 2 had been lowered, and it would further 
improve the standards on methanol.  It would ma ke the relevant announcement in due course. 
147. Regarding the question from the United States, Chinese Taipei did not have a regulation on 
certification of origin (CO).  Customs officers would ask for further clarification or proof of origin 
only if they had reasonable doubt as to the authentic ity of the CO.  Chinese Taipei would provide 
further details on this issue.   
 WT/TPR/M/165/Rev.1  Page 25 
 
 
  148. On trade promotion fees, Chinese Taipei confirme d that all companies in Chinese Taipei that 
paid the fees had access to the services of the trad e promotion agency, including when a company 
suffered from unfair trade practices.  
149. The regulation on SPS measures requested by the United States was being elaborated;  when 
the draft was ready, Chinese Taipei would ask for Members' comments according to the WTO 
procedures. 
150. Chinese Taipei recognized that a company auth orized to implement compulsory licensing 
would have to negotiate with the patent right ho lder for reasonable remuneration.  Chinese Taipei 
would ensure that the rules of the TRIPS Agreemen t were followed in this respect.  Chinese Taipei 
hoped that before that stage there would be an opportunity for the two parties to find amicable 
solution through negotiations and cons ultation.  In case of need, the government of Chinese Taipei 
would provide the necessary assistance.  
151. Tariffs on agricultural products was one of the issues that had to be addressed in this Round 
of negotiations.  The current average tariff for agricu lture was 12%;  some of the high tariffs were the 
result of tariffication, which reflected the difference between the import and domestic prices.  
Chinese Taipei noted that the level of tariff did not i ndicate the level of protection;  therefore, in the 
current agricultural negotiations, Chinese Taipei su pported the linear approach in tariff reduction, 
with flexibility.  More than 98% of tariff lines were subject to ad valorem  duties;  non- ad valorem  
duties were the result of accession commitments.  Chinese Taipei would transfer these duties to 
ad valorem  in the current DDA negotiations.   
152. Trade imbalance between Chinese Taipei and Ch ina reflected an imbalance of investment 
between the two sides, which was more serious than trade.  The current trade surplus was the result of 
large investment from Chinese Taipei to China.  Chinese Taipei's investors in China imported 
machinery, equipment, raw materials, and cap ital goods from Chinese Taip ei because of their 
familiarity.  However, the situation was changing;   as a result of Chinese Taipei's assistance in 
upgrading the production capacity in China, China w as in a position to supply raw materials, spare 
parts, components and capital goods.  There had been a decline in Chinese Taipei 's trade surplus with 
China.   
153. Regarding the 2,220 banned prod ucts, an inter-agency coordi nating meeting took place every 
two months to review the products.  At the meeti ng of 16 June 2006, the import ban on eight further 
items was lifted.  A more comprehensive review t ook place every six months, and any interested party 
might submit a request to lift an import restricti on on any item.  If China believed that this process 
was too slow, it could ask for a consultation,  to which Chinese Taipei assured sympathetic 
consideration.  Chinese Taipei noted that during its accession to the WTO, it did not invoke non-application, which was an indication of the sin cerity of its wish to develop trade and economic 
cooperation with China.  A regular consultation mechanism needed to be set up, or a regular dialogue 
channel between the two sides, which would facilitate  the exchange of views about any issue in the 
context of the WTO.  It was not necessary to wait for a TPR, as this took place every four years.   
154. According to Chinese Taipei's statistics more than 70% of its outward investment was in 
China.  This concentration was risky, especially in the age of globalization.  Thus, measures were 
sometimes needed to diversify risks.  Chinese Taipei noted that there were restrictions by the Chinese 
Government on investment overseas, including foreign exchange restrictions, the most important 
ingredient for investment overseas.  Chinese Taip ei looked forward to more relaxation of the 
restrictions on Chinese investment alongside a re laxation of restrictions on China's products.  
Chinese Taipei noted that its investment made a co ntribution to China's economic growth.  It also 
contributed to the creation of job opportunities in China and upgrading of production.  China was  
WT/TPR/M/165/Rev.1 Page 26 
 
 
  entering high tech stage of its development, a nd Chinese Taipei's production companies had shifted 
more to China.  Although Chinese Taipei's comp anies theoretically controlled 80% of the world 
production of notebook computers, it did not have ma nufacturers locally, but in China.  China was the 
bigger beneficiary of the bilateral cross- strait trade and economic relationship.   
155. The representative of China
 recognized that it had substantial investments from Chinese 
Taipei, and these, like investments from other Memb ers of the WTO, were positive elements to the 
Chinese economy.  However, he was concerned about  the reason for the trade surplus:  whether 
Chinese Taipei's large investment in China created  Chinese Taipei's surplus over China.  He thought 
that an exchange of views on this issue might take  place with Chinese Taipei after the meeting.  China 
wished to invest in Chinese Taipei , but the restrictions were too tough.  Except for one sector (real 
estate), every other sector was closed to investment from China. 
156. China did not consider it appropriate to resolv e the issue of the import ban on 2,200 products 
through bilateral consultations.  It considered this to be a basic policy, a restriction by Chinese Taipei.  
It doubted that bilateral consultati ons would result in the immediate elimination of restrictions.  China 
believed that, as Chinese Taipei had not invoked non-a pplication of the WTO the restrictions should 
be removed;  if there were restrictions, they had to comprise only few exceptions.   
157. The representative of the United States  followed-up on the question regarding the Trade 
Promotion Fund:  the U.S. concern was not relate d to companies in Chinese Taipei, but to foreign 
exporters that were clearing goods through the cust oms authorities (so-called "importers of record"), 
whether or not they were Chinese Taipei comp anies.  The United States asked whether these 
importers of record enjoyed the benefits of the Fund or were excluded from having to pay the fee.  He 
reiterated his request for clarifica tion on how the open-ended nature of ad valorem  fee could relate to 
the value of services rendered. 
158. The representative of Chinese Taipei  confirmed that its trade promoting agency (TAITRA) 
provided services to all companies, including foreign exporters operating locally.  The fee collected 
was assessed on both exporters and importers withou t discrimination and Chinese Taipei would try to 
ensure that the fee would be commensurate with th e service rendered.  There was a review process to 
adjust the fee, and it had had been reduced several times;  current fee was 0.0415%.   
159. The discussant  noted that a lot of cross-strait trade and investment was related to 
opportunities in third-country markets, and was impo rtant for all.  The issue was important from the 
viewpoint of obligations, the trading system, and the interests of all Members, including 
Chinese Taipei itself;  access to low cost imports was important to Chinese Taipei's competitiveness 
and trade performance.    
(iii) Sectoral issues 
160. The representative of Chinese Taipei  noted that that most sectoral issues, including 
agriculture, had been covered.  Additional in formation had been sought (by Colombia) on the 
development of an agricultural technology park.  This park was located in the south, and 
eight industries had been identified as the base for its development, including plant seeds, functional 
foods, animal/fowl breeds, water plant seeds, biologi cal pesticide and fertilizer, animal vaccines, and 
animal/plant/insect pest testing reagents.  Construc tion of the infrastructure was under way.  Chinese 
Taipei would provide further information if required.  
161. Concerning the trade regime on rice (Colombia), Chinese Taipei informed Members that there 
was a TRQ with an annual quantity equivalent  to 144,720 tonnes of brown rice, of which 65% 
(94,068 tonnes) was imported by the government an d the rest (50,652 tonnes) by the private sector.   
 WT/TPR/M/165/Rev.1  Page 27 
 
 
  The government had been allocating the quota thr ee times each year since 2003.  Imports of 
government rice was governed by the Agricultu re and Food Agency and the procedure was 
transparent. 
162. There had been much concern about further liber alization of the services sector.  This sector 
was very important for Chinese Taipei:  it created jobs, increased income, and supported other 
industries;  and it accounted for 73% of GDP.  Chin ese Taipei intended to further develop the sector, 
by focusing on mode 3 to encourage the commercia l presence of foreign service suppliers.  Two areas 
were of particular interest:  fina ncial services and telecommunications.  
163. In 2001, Chinese Taipei had launched a programme of financial reform in order to liberalize 
its financial market;  the Financial Supervisory Commission (FSC) was also established, to regulate 
and supervise banking, insurance, securities, and futures industries.  The FSC operated on 
autonomous basis.  There were also plans for a privatization programme:  the Taiwan Cooperative 
Bank had been privatized at the end of January 2006;  the Bank of Taiwan was expected to be 
privatized in June 2008;  and the Central Trust of  China would merge with the Bank of Taiwan in 
June 2007. 
164. In telecommunications services, Chinese Taipei  had set up a new agency, called NCC, which 
merged some governmental agencies, would be supervising telecommunications, media, and 
information.  The NCC was composed of 13 commi ssioners with three-year terms of office.  The 
commissioners had to exercise their authority indepe ndently of the influence by political parties and 
the government.  This separated the regulatory body from  the service provider. 
165. Under the efforts of this Commission, Chinese Taip ei had continued to liberalize services.  In 
July 2002, it had abolished the requi rement that foreign citizens coul d not exceed 50% of the board of 
a telecommunication company, and there was no resi dency requirement for the members of the board 
for a Type I telecommunication service provider.  In June 2005, Chinese Taipei relaxed the foreign 
equity requirement and allowed up to 40% of fo reign share holders for Chunghwa Telecom, which 
was originally a monopoly-supplier of the telecommunications service.  Applications for integrated 
network service licences had been accepted in March and September of each year since September 2004.  The minimum paid-in capital require ment for integrated fixed-line network services 
had been reduced from NT$40 billion to NT$16 billi on, and the system capacity requirement had 
been lowered from one million subscriber lines/ports to 400,000.  
166. Chinese Taipei was taking liberalization measures in other sectors.  In education, which was 
of interest to Australia and New Zealand, Chinese Ta ipei would continue its review:  for example, it 
had a plan to abolish the restriction on foreigners becoming the chairperson of the board of directors 
of secondary schools, universities, and junior colleges;   and the number of foreigners on the board of 
directors was to be adjusted to two out of five of the board members.  For tourism, the original 
requirement to obtain a residence certificate was a bolished on 17 February 2004;  Chinese Taipei was 
in the process of further liberalization of this sector, in particular in tour-guide services.  
Liberalization of environmental services would con tinue, in particular in sewage services, refuse 
disposal, sanitation-related services.  Chinese Taipei would remain open-minded in  its participation in 
the services negotiations.  
167. The Chairperson 
stated that the text for the second-da y interventions by the representative of 
Chinese Taipei would be made available to Members in the afternoon of 22 June 2006. 
168. The representative of Chinese Taipei  stated appreciation for the Secretariat's preparation for 
and facilitation of the conduct of this Review.  He noted that the Secretariat report was balanced and 
informative in terms of the economic environment a nd the details of Chinese Taipei's trade policy.    
WT/TPR/M/165/Rev.1 Page 28 
 
 
  However, Chinese Taipei regretted the lack of  a section on the general constitutional and legal 
framework, which usually appeared in Secretariat's reports for other Reviews.  The section was  to 
ensure an understanding of trade policy formulati on and implementation, and included a description 
of government structure, legal framework, relations hip between different parts of the government, 
rights of citizens, and the system under which violation of these rights were redressed.  The omission 
in the Secretariat's report made it incomplete a nd undermined the goal of the Trade Policy Review 
Mechanism in furthering transparency.  As this  was Chinese Taipei's first Trade Policy Review, 
accurate representation of its government and the lega l system should have been indispensable to an 
assessment of overall trading environment.  Chinese Taip ei considered this oversight to be serious and 
was strongly dissatisfied in this regard.  He invite d Members to contact the mission of Chinese Taipei 
in Geneva for further information on its governmental  institutions and legal framework related to its 
trade policy formulation and implementation.    
 WT/TPR/M/165/Rev.1  Page 29 
 
 
  VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
169. This first Trade Policy Review of the Separate  Customs Territory of Taiwan, Penghu, Kinmen 
and Matsu (Chinese Taipei) has been highly informat ive and thought-provoking, thus contributing to 
a much better understanding of Chinese Taipei's trad e and related policies and the challenges it faces.  
I very much appreciate the valuable contribution of Deputy Minister Ruey-Long Chen and his 
delegation;  also, our discussion has greatly bene fited from insightful comments by our discussant, 
Ambassador Bruce Gosper of Australia, and ma ny thoughtful interventions by Members.  
170. Members commended the recent steady growth in Chinese Taipei's economy.  In 2005, real 
GDP grew by 4.1% and per capita GDP was over US $15,000.  Members expressed their appreciation 
of Chinese Taipei's continued reform, particularly tr ade liberalization;  this is at the heart of its 
economic success.  Members also recognized that th e multilateral trading system, by keeping markets 
open, contributes to the steady growth of Chinese Taipei's economy.  With a view to promoting 
sustained growth, Members called on Chinese Taipei to continue to improve the environment for 
inbound direct investment.  
171. Members welcomed Chinese Taipei's active par ticipation in the multilateral trading system, 
including its strong support for the Doha Developmen t Agenda.  Members also noted the engagement 
of Chinese Taipei in regional and bilateral trade arrangements, which are seen by Chinese Taipei as 
complementary to the multilateral trading system.   
172. Almost all of Chinese Taipei's trade is on an MFN basis, with a simple average applied MFN 
tariff of 7.8% in 2005.  All tariff lines are bound and most applied rates coincide with bound rates, 
thereby making the tariff predictable.  About 31% of all tariff lines are duty-free.  However, Chinese 
Taipei's tariff has some tariff peaks (often concealed by non- ad valorem  rates), tariff escalation, and 
tariff quotas.  Members expressed particular concer n over relatively high tariffs in agriculture.  
Members also noted that a number of tariff lines are subject to import and export licensing requirements.  Members welcomed the fact that Ch inese Taipei has seldom resorted to contingency 
measures.  
173. Members were concerned that inbound cross-st rait trade was prohibited on some 2,200 tariff 
lines and that little inbound cross-strait direct investment had been allowed.   
174. Members noted Chinese Taipei's commitment to achieving a more transparent and open 
government procurement regime:  they urged Chinese Taipei to permit greater external participation 
in its government procurement activities.  Memb ers called for further harmonization of Chinese 
Taipei's standard and SPS arrangements with international ones.  While Members commended 
Chinese Taipei's significant improvement in the en forcement of intellectua l property rights, some 
Members called for greater efforts in this regard. 
175. Members encouraged Chinese Taipei to consider  further reforms in ag riculture.  Chinese 
Taipei stated that efforts are being made to mode rnize and transform the agriculture sector to make it 
more capital and technology-intensive.  Some Memb ers questioned the effectiv eness of tax incentives, 
subsidies and tariff quotas applicable to certain manufacturing industries.         
176. Members noted the importance of the services sector to the Chinese Taipei economy, and 
encouraged it to further liberalize this sector, esp ecially financial services and telecommunications.  
Members were interested in regulatory developments  in services, such as Chinese Taipei's plan for 
privatization of state-owned financial instituti ons, including postal savings, the new independent 
telecommunications regulator, and developments c oncerning the regulation of cross-strait transport 
and movement of natural persons.        
WT/TPR/M/165/Rev.1 Page 30 
 
 
  177. Members expressed their appreciation for the or al and written responses to their questions 
provided by the Chinese Taipei delegation.  They  look forward to receiving any outstanding answers 
to questions within a month. 
178. This successfully concludes the first Trade Polic y Review of the Separate Customs Territory 
of Taiwan, Penghu, Kinmen and Mats u.  The review has been very useful in giving us a far better 
understanding of Chinese Taipei's trade policies and practices.  As some Members noted, Chinese 
Taipei provides an excellent model as a newly acce ded WTO Member.  I hope that Chinese Taipei 
will continue to play an active role in the WTO a nd in the ongoing negotiations , and take to heart the 
concerns expressed by Members, particularly with regard to its policies on agriculture, sanitary and 
phytosanitary measures, government procurement, a nd cross-strait trade and investment.  I would 
once again like to thank the delegation of Chinese Taip ei for its active engagement in this review, the 
discussant for his insightful comments, and Member s for contributing to what has been a very 
enlightening two days of discussions.   
__________