RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/165 
16 May 2006  
 
(06-2313) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
SEPARATE CUSTOMS TERRITORY 
OF TAIWAN, PENGHU, KINMEN  
AND MATSU 
 
 
 
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by The Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review  Body on The Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu. Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page iii 
 
 
 CONTENTS 
 
  Page 
I. THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND 
MATSU IN THE MULTILATERAL TRADING SYSTEM 1 
II. ECONOMIC DEVELOPMENTS: 2002-2005 2 III. ECONOMIC AND TRADE POLICY REGIME 4 
 (1) A
DJUSTMENT FOR ECONOMIC TRANSFORMATION  4 
 (2) I MPLEMENTATION OF ACCESSION COMNMITMENTS  5 
 (i) Tariffs 5 
 (ii) Non-Tariff Measures 5  (iii) Services 6 
 (iv) Intellectual Property Rights 7 
 (3) O
NGOING REFORMS  8 
 (i) The financial sector 8 
 (ii) Corporate governance 9 
 (iii) The Telecommunications Sector 9  (iv) Free trade zones 10 
 (v) Privatization of state-owned enterprises 10 
 (vi) Foreign investment liberalization 10  (vii) Trade facilitation 11 
IV. TRADE POLICY DEVELOPMENTS: 2002-2005 11 
 (1) M
ULTILATERAL ACTIVITIES  11 
 (i) WTO/DDA 11 
 (ii) OECD 15 
 (2) B ILATERAL TRADE RELATIONS  15 
 (i) FTAs 15 
 (ii) Bilateral Trade Relations - in addition to FTAs 16 
 (3) R EGIONAL ENGAGEMENT  16 
 (4) T RADE PROMOTION ACTIVITIES  17 
V. FUTURE POLICY  DIRECTIONS 18 
 (1) R AISING COMPETITIVENESS AND MOVING TOWARD SUSTAINABLE DEVELOPMENT  18 
 (2) P ROMOTING FURTHER LIBERALIZATION  18 
 (3) E NHANCING TRADE AND DEVELOPMENT PROSPECTS  18 
ANNEX     20 
 
 Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 1 
 
 
 I. THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND 
MATSU IN THE MULTILATERAL TRADING SYSTEM 
1. As a trade-oriented economy and a major benefi ciary of international trade, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu strongly believes in an open and liberal 
trading system leading to global economic growth.  Moreover, it firmly endorses the view that a rules-
based multilateral trading system can eliminate barri ers to trade and investment, thus producing real 
and significant economic and welfare benefits for the world as a whole. 
2. During the 1980s, when the industrial base wa s going through an accelerated process of 
upgrading and modernization, there were already forcef ul indications that the way forward in terms of 
its economic development was in th e direction of liberalization and internationalization, mainly as a 
result of changes in the global trading environment.   There was early recognition that it would be 
essential for it to actively participate in the develo pment of the multilateral trading system, and in 
1990 the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu sought to join the 
GATT.  It witnessed even more vigorous growth during the 1990s, especially in the information 
technology industry. The outstanding economic gr owth achievements it has realized over recent 
decades can be attributed perhaps as much to the enlight ened policies already being pursued by the 
government and the great efforts made by its private sector, as to the continuing liberalization of the 
global trading regime.  
3. Since its accession to the WTO in 2002, the eviden ce clearly shows that the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Mats u has continued to benefit from the multilateral 
trading system.  Its trade value has increased by an impressive 41.62%1, with more jobs being created 
and unemployment diminishing.  These significant achievements further underscore that additional 
liberalization, by further reducing trade-distorti ng measures and bringing about greater protection of 
intellectual property rights will in  general facilitate more trade in goods and services, from which all 
WTO Members will benefit.  Therefore, it strongly supports the multilateral trading system and the 
on-going Doha Round of negotiations. At the same time, however, the rapid liberalization of its 
market does carry with it certain difficulties and risks that have to be dealt with effectively during the 
transition period.  Accordingly, it needs to exercise gr eat care to ensure that the short-term impact on 
some of its sectors is mitigated, and that benefits  from economic reforms are eventually spread to all 
parts of its economy. 
4. Shortly after its accession to the WTO in  2002, the Doha Round of negotiations was 
launched, aimed at improving global standards of liv ing, and building a more liberal trading system.  
One of the most important goals of this round is th e advancement of developing  countries, particularly 
least-developed countries.  The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu 
indeed shares the same vision as incorporated in the Doha Development Age nda (DDA), particularly 
in terms of the promotion of economic developmen t and the alleviation of poverty.  On its own 
initiative and despite being a newly-acceded WTO Me mber, even prior to its accession, it has been 
providing technical assistance to some of th e developing and least-developed countries. 
5. In its first four-and-a-quarter years of WTO Membership, the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu has contributed to the on-going negotiations through maintaining 
a high level of active participation at Member meetings, and with the submission of numerous 
position documents and suggestions on key negotiati on issues.  Following the latest mandates from 
Ministers at the Sixth Ministerial Conference in Hong Kong 2005, it continues to participate actively, 
                                                      
  1 According to WTO statistics, our trade value am ounted to US$ 247.7 billion in 2002 and US$ 350.8 
billion in 2004. WT/TPR/G/165 Trade Policy Review 
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to sustain the momentum and contribute to the eventu al achievement of the ambitious goals set for the 
DDA.  
6. In addition to its active participation in the multilateral trading system, the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu has been engaged in Free Trade Agreement (FTA)-
related activities with the aim of promoting a more  liberal trading environment and facilitating trade 
with its trading partners.  In the WTO Rules ne gotiations, it advocates open regionalism.  It sees the 
trade liberalization achieved by Regional Trade Ag reements (RTAs) as being complementary to the 
WTO’s liberalization developments on a global basi s and ultimately ensuring that all WTO Members 
share in the benefits of a freer trading system.  
7. It is also engaged in regional activities,  mainly through the Asia-Pacific Economic 
Cooperation forum (APEC).  Since becoming a Me mber economy of APEC in 1991, it has been 
actively advancing with fellow Members, both i ndividually and collectively, various initiatives 
designed to promote trade and investment liberali zation, trade facilitation, and deeper economic and 
technical cooperation in the region.  In addition, it has contributed to capacity-building for developing 
economies, and it is on track to fulfilling the B ogor Goals set by APEC Leaders in 1994.  These 
efforts to promote regional deve lopment and cooperation continue to complement and support the 
work being done within the WTO.  
II. ECONOMIC DEVELOPMENTS: 2002-2005 
8. Despite the economic downturn encountered in 2001, its economy has shown a healthy 
pattern of growth over the 2002-2005 period (see Tabl e 1).  As an open economy, it is by no means 
immune from global economic fluctuations and ca n no longer expect to count on the continuing 
extremely high rates of growth achieved in earlier years.  Nonetheless, its recent performance is 
marked by steady growth, thanks in large part to  ongoing domestic reforms across a wide range of 
areas, as well as a relatively favourable inte rnational economic environment externally.  
Table 1:   Key Economic Indicators  
Indicator 1999 2000 2001 2002 2003 2004 2005 
Gross Domestic Product:        
At Current Prices(US$ million) 298,757 321, 230 291,694 294,803 29 9,785 322,179 345,862 
Annual Change (%) 8.2 7.5 -9.2 1.1 1.7 7.5 7.4 
 At 2001constant Prices (NT$ million) 9,531,425 10,081, 059 9,862,183 10,2 80,971 10,633,860 11,279,191 11,740,073 
Annual Change (%) 5.7 5.8 -2.2 4.2 3.4 6.1 4.1 
Per Capita GNP in US$  13,737 14,721 13,348 13,476 13,752 14,770 15,676 
Gross Fixed Capital Formation:        
 At Current Prices (NT$ million)  2,229,266 2,394, 001 1,910,022 1,87 8,683 1,874,885 2, 279,551 2,269,727 
Inflation Rate (CPI Change, %) 0.2 1.3 -0.0 -0.2 -0.3 1.6 2.3 
Unemployment Rate (%) 2.9 3.0 4.6 5.2 5.0 4.4 4.1 
Average exchange rates:   1999: US$1=NT$ 32.27; 2000: US$1=NT$31.23; 2001: US$1=NT$33.81; 
 2002: US$1=NT$34.58; 2003: US$1=NT$34. 42; 2004: US$1=NT$33.43; 2005:US$1=NT$32.18 
Source :  Directorate-General of Budget, Accounting and Statistics (based on UN 93SNA) 
9. The vitality and strength of the economy is re flected in the wider context by the results 
derived from various surveys carried out recently  by a number of reputable and prestigious 
international organizations.  In these surveys, th e Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu receives a high ranking intern ationally for several ke y economic performance Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 3 
 
 
 areas.  For example, in a Business Environmen t Risk Intelligence (BERI) survey, its investment 
environment was ranked 5th out of 50 economies in  2005.  And, according to the World Economic 
Forum’s Global Competitiveness Report for 2005, its growth competitiveness ranking was 5th out of 
the total of 118 economies surveyed. 
10. Fluctuations in the domestic economy are inevitabl y linked to developments in external trade.  
In 2001, when the economy registered a negative grow th rate of -2.2%, its exports and imports both 
contracted, by -16.9% and -23.3% respectively.  Conversely, when the economy re-gained its growth 
momentum in 2004 and achieved a growth rate of 6.1%, this was due mainly to a strong rebound in 
exports, with the annual growth rate  reaching as high as +21.1%.  Of even more importance, there are 
signs that its accession to the WTO has begun to pr oduce benefits for other WTO Members as well.  
Its imports have recently been growing at a much  higher rate (+31.8%) than exports, leading to a 
contraction of the trade surplus from US$ 22.1 billion in 2002 to US$ 13.6 billion in 2004.  In 2005, 
as the world economy slowed, so too did growth in  its exports and imports,  to +8.8% and +8.2% 
respectively. 
Table 2:  Trade Statistics  
Unit: US$ million 
Year Exports Growth Rate (%) Impo rts Growth Rate (%) Trade Balance 
2000  151,949.8 22.8 140,732.0 26.5 11,217.8 
2001  126,314.3 -16.9 107,970.6 -23.3 18,343.7 
2002  135,315.0 7.1 113,244.8 4.9 22,070.2 
2003  150,600.5 11.3 128,010.1 13.0 22,590.3 
2004  182,370.4 21.1 168,757.6 31.8 13,612.0 
2005 198,434.9 8.8 182,616.2 8.2 15,818.6 
Note: The calculation is based on International Merchandise Trade Statistics: Compilers Manual,  UNSD. The amount of re-exports and 
re-imports are included. 
Source :  Ministry of Finance 
11. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu continues to be 
active in the field of international investment ( see Table 3).  Inward investment reached US$ 4.2 
billion in 2005, reflecting an incr ease of +6.96% over the previous year.  This increase can be 
attributed mainly to expansion by the compe titive, well-integrated, cluster-based manufacturing 
industries and the continually growing services se ctor.  The ongoing implementation of the Economic 
Development Plan (Challenge 2008) has also signi ficantly improved the investment environment by 
further liberalizing related administration and legal systems, and making them more transparent, and 
contributing to the creation of more and better investment opportunities.  During 2002-2005, outward 
investment, mainly to Asian countries such as Camb odia, China, Indonesia, Malaysia, the Philippines, 
Thailand and Vietnam, as well to  some countries in the Americas2, amounted to US$ 40.4 billion.  
The magnitude of this figure reflects the fact  that many of its enterprises are looking to 
internationalize their operations and to sharpen their competitive edge by becoming more deeply 
integrated in every link of the global supply chain.  
                                                      
2 British Virgin Islands, Cayman Island, the United States, Panama, Mexico and Canada. WT/TPR/G/165 Trade Policy Review 
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Table 3:  International Investment Statistics  
Unit: US$ million 
Year 2000 2001 2002 2003 2004 2005 
Outward Investment 7,684.2 7,175.8 10,093.1 11,667.4 10,322.7 8,454.4 
Inward Investment 7,607.7 5,128.5 3,271.8 3,575.7 3,952.8 4,228.1 
Source :  Investment Commission, Mi nistry of Economic Affairs 
III. ECONOMIC AND TRADE POLICY REGIME 
(1) ADJUSTMENT FOR ECONOMIC TRANSFORMATION  
12. Over the past five decades, th e Separate Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu has managed to achieve rapid economic grow th and to establish c onditions favoring price 
stability, equitable income distribution and a very  low level of unemployment.  These achievements 
can be attributed to pragmatic and flexible public  policies in pursuit of economic liberalization and 
globalization.  Whenever new problems were enc ountered, timely, market-friendly policy initiatives 
were adopted to deal with them.  In the face of  the new challenges presented by global competition, 
and to upgrade its economy for the new century, th e government began in 2002 to implement a new 
six-year economic development plan, “Challenge 2008”.  The plan sets out three programmes of 
reform in the political, financial and fiscal  spheres - and ten key individual plans. 
13. The political reforms aim to transform its public administration into a system that is small, 
lean, and proactive. The fiscal reforms seek to ba lance government revenues and expenditures within 
a period of five to ten years.  The financial re forms aim to reduce the banking sector’s non-performing 
loan (NPL) ratio (a measure of bad loans as a pr oportion of total bank loan portfolios) to 5%, and 
raise the capital adequacy ratio of  banks to 8% within two years. 
14. The ten key individual plans are focused on accelerating development of the economy, 
improving living standards and quality of life, and upgrad ing the role of culture and the arts in modern 
life - all with a view to speeding up its emergence as a “green silicon island.”  No longer able to rely 
on the type of low value-added, mid-stream proc essing and contract manufacturing that was a key 
source of growth in the past, it must now invest more heavily in human resources, R&D, innovation, 
logistics networks, and improvements in the environment. 
15. Three years into this effort, it has regained  its growth momentum, aided by the above-
mentioned programmes.  In 2004, for example, it gr ew by 6.1%.  Incoming investment has led to 
some 25 foreign enterprises establishing 28 R&D faci lities.  There are many signs and good grounds 
for believing that the “Challenge 2008” program me will have a positive impact on the economy, 
particularly in achieving the goals of upgr ading industries and increasing competitiveness. 
16. Reflecting the rapid growth of its services sect or, the government also decided in 2004 to 
promote the development of certain services sectors,  based on a model of openness and competition.  
The “Guidelines and Action Plans for Service Industr y Development” served as a blueprint to bring 
about the advancement of 12 strategically important service sectors: finance; logistics/distribution; 
information media; medicine and health care; ma npower training, manpower placement and property 
management; tourism and recreation;  cultural and creative services; design; information; research and 
development; environmental prot ection; and engineering consulti ng.  The development of these 
sectors will position it favorably as it seeks new oppor tunities in the global industrial and supply 
chain. Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 5 
 
 
 (2) IMPLEMENTATION OF ACCESSION COMNMITMENTS  
17. As a newly-acceded WTO Member, the primary fo cus is to ensure conformity between the 
domestic regulatory regime and the requirements of the various WTO agreements, in line with 
accession commitments and related multilateral obligations .  At the time of its accession, the Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu amended all non-conf orming legislation in 
its domestic legal system and implemented the new laws.  While it is still in the process of fulfilling 
all of its accession commitments, it is also worthy of note that in some areas measures implemented 
have gone beyond the level or sc ope of liberalization envisaged in its original commitments. 
(i) Tariffs 
18. During the WTO accession process, tariffs were beginning to be reduced and measures for 
liberalization were already being implemented.  It joined the Ministerial Declaration on Trade in 
Information Technology Products (ITA) in 1996, a nd the tariff on ITA products was reduced to zero 
in 2000 and 2002.  In order to fulfill its accession commitments, tariff rates for some 5,000 tariff lines 
were amended in 2002, reducing the average no minal tariff rate from 8.2% in 2001 to 5.67%3 in 2005; 
in particular, the average nominal tariff on agricu ltural products was reduced from 20.02% to 13.46% 
, and on industrial products, from 6.03% to 4.16% during the same period.  Moreover, from 1 January 
2004, tariffs on pharmaceuticals, toys, furniture,  medical equipment, agricultural equipment, 
construction equipment, paper and steel were all eliminated in accordance with its accession 
commitments. 
19. Substantial progress has also been made in liber alizing other aspects of the tariff regime. The 
government adopted a tariff-rate quota (TRQ) measu re on passenger cars and light commercial 
vehicles, as well as 23 agricultural and fishery products4.  In 2003, a TRQ was applied to the imports 
of rice and, on 7 February 2005, the TRQ on sugar w as eliminated.  In addition, on 1 January 2005, in 
line with its accession commitments, TRQs were lift ed completely on chicken meat, pork belly, and 
meat offal of poultry and pork.  Furthermore, by  1 January 2008, TRQ measures on some agricultural 
and fishery products, such as persimmon, mack erel, carangid and sardine, will be phased out 
altogether. 
(ii) Non-Tariff Measures  
20. As of the date of its WTO accession, it el iminated such non WTO-consistent NTMs (non-
tariff measures) as import bans, and quantitative and area restrictions, in accordance with WTO 
principles.  The government will continue to simplif y import procedures, enhance the transparency of 
import/export licensing procedures, and promote single-window trade administration. The feasibility 
of the further liberalization of remaining NTMs w ill also continue to be evaluated and reviewed. 
21. In line with its accession comm itments, the Separate Custom s Territory of Taiwan, Penghu, 
Kinmen and Matsu has opened up its markets for a wide range of goods.  Restrictions have been 
relaxed or liberalized, and TRQ measures instituted on many of the original 252 items (10-digit HS 
Code) previously subject to import bans.  As of February 2006, only 56 items remained subject to 
                                                      
3 The goods of tariff rate quota system are not included. 
  4 pork belly, chicken, offal of poultry and pork, deer  velvet, fresh pears, bananas, red bean, liquid milk, 
peanuts, garlic bulbs, dried shiitake , dried day lily, coconu ts, betel nuts, pineapples, mangoes, shaddocks, 
persimmons, dried longans, sugar, mackerel, carangid, and sardine 
 WT/TPR/G/165 Trade Policy Review 
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import bans, in each case for reasons of either human health, environmen tal protection or public 
morality. 
22. The number of items for which import licen ses are required was also reduced upon accession 
from 130 to 38 (10-digit HS Code), and even further reduced in 2005 to 24.  The items still restricted 
fall within environmental protection or essential secu rity interest categories.  Examples are diamonds, 
lead, cadmium, chromium waste and scrap, methyl bromide, and Montreal Protocol-restricted 
chemicals. 
23. Other restrictions have also been eliminated  in accordance with its accession commitments.  
For example, while imports of automobiles remain s ubject to a TRQ measure, there are no restrictions 
on imports of automobiles and motorcycles; local content requirements on domestically-made automobiles and motorcycles have been abolis hed; the tax credit differential that favoured 
domestically-made automotive machinery and equipmen t has also been eliminated;  the import bans 
on motorcycles over 150cc and passenger cars equipped with diesel engines respectively have also 
been lifted. 
24. Additionally, to comply with provisions c oncerning fees and formalities connected with 
importation and exportation contai ned in Article VIII of the GA TT 1994, Harbour Construction Dues 
were abolished as of 1 January 2002 and replaced inst ead by a system of Harbour Service Fees, which 
are levied in accordance with the principle of reco vering the cost of services provided.  All trade 
requiring the use of a harbour, including domestic trade, is subject to Harbour Service Fees. 
25. The government monopoly on tobacco and alcohol  products was abolis hed on 1 January 2002 
and replaced with a market-based system.  The manufacturing of tobacco, alcohol, liquor and cigarettes is no longer subject to monopoly control a nd has been opened up to foreign investors.  In 
addition, a tobacco and alcohol tax was introduced at  the same time.  Domestic and imported products 
are treated equally.  Taxes differ according to th e production method and/or characteristics of the 
product. 
26. All the SPS/TBT-related technical regulations and standards that have been adopted are 
already in conformity with WTO rules.  In the SPS area, as of the end of 2005, commitments had been 
fulfilled and notified to the WTO in some 88 docum ents.  SPS measures are in compliance with the 
relevant international standards,  recommendations and guidelines devel oped by the International Plant 
Protection Convention (IPPC), the World Organiza tion for Animal Health (OIE) and the Codex 
Alimentarius Commission, based on scientific principles and risk assessment.  
27. For the sake of adherence to WTO/TBT principl es and to facilitate trade liberalization, the 
government amended relevant laws  and regulations in 2002.  The Commodity Inspection Act and its 
related laws now match internati onal practices and the requirements of the TBT Agreement, and have 
expanded the scope for which the authority commissi ons the private sector to perform conformity 
assessment procedures.  Alternative approaches other than commodity inspections have been 
authorized, including the introduction of declarations  of conformity and monitoring inspections, to 
simplify the procedures of conformity and to fa cilitate customs procedures.  Along with these 
changes, market surveillance has been strengthened to encourage self-disciplin e at the manufacturer 
level.  By the end of 2005, 28 notifications had been submitted to  the WTO in accordance with the 
TBT Agreement.  
(iii) Services 
28. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu has given a high 
priority to making the services industry more comp etitive and efficient, and this has been done Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 7 
 
 
 entirely in compliance with its accession commitments .  Regarding the four modes of supply of trade 
in services, a set of horizontal commitments (commitments applicable across sectors), as well as a set of sector-specific commitments, have been establishe d.  The latter sector-specific commitments cover 
11 services sectors, as follows: business services; communication services; construction and related 
engineering services; distribution services; education services; environmental services; financial 
services; health related and social services; touris m and travel-related services; recreational, cultural 
and sporting services; and transport services.  In the Doha Round negotiations, it has submitted its 
initial and revised offers on services, under the strongl y-held belief that further liberalization of the 
services sector is still needed for economic growth, as well as to attract inward investment.  It hopes 
that intensified liberalization measures can result from these negotiations.  
29. As part of the government’s commitment to  promoting the development of its services 
industries, various sectors have been involved in  an intensive liberalization process marked by 
regulatory reform and market opening.  The reform s of the financial and telecommunications sectors 
are particularly noteworthy (for details see para graphs 34-37 and 40-41 below).  A dditionally, in 
2003, the government approved the overall elimination of  restrictions on investment by foreigners in 
real-estate dealing, real-estate leasing and land de velopment, in the hope of boosting the development 
of these sub-sectors.  Such deregulation was also a pplied to rail transport, the trucking business, 
health care services and the education sector.  Over all, some profound changes to the landscape of the 
domestic services industry can be expected in the years ahead. 
(iv) Intellectual Property Rights  
For many years, the government has been making e fforts to improve the protection of intellectual 
property rights.  During its WTO accession negotiations, it made certain commitments in the area of 
trade-related aspects of intellectual property rights (TRIPS), resulting afterwards in the amendment of 
the copyright laws and regulations, and the eff ective implementation of the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRI PS Agreement).  In so doing, the government 
also amended in 2001 a relevant law that extended the time-span for copyright protection of computer 
programmes to life plus 50 years (natural persons) or 50 years from the date of publication (juristic 
persons). 
 
30. In response to the international debate on th e evolution of IPR issues, and to ensure 
compliance with international standards, amendments have been made to the main IP laws, including 
the Patent Act of 6 February, 2003, and the Trad emark Act of 28 May, 2003.  The Patent Act has 
undergone revisions on the conditions for rejecting a patent application, the timing of the granting of 
patent rights, the insertion of exclusive rights to preclude others from making an offer for sale, as well 
as the abolition of criminal liabilities for utility mode l and design patents.  The Trademark Act has 
been changed in the areas of applications coveri ng multiple classes, providing for division during and 
after registration, opposition after registration, abolishing the associated trademark system, and 
gradually abolishing the defensive trademark system.  The new Trademark Act also extends 
trademark-protectable subject matters to three-dime nsional shapes, single colours, and sound marks.  
Furthermore, border control measures are added in accordance with Articles 51 to Article 60 of the 
TRIPS Agreement, whereby trademark owners are give n the right to apply to Customs to suspend the 
release of imported or exported goods that are suspected of infringement.  
31. The revised Copyright Act was promulgated on 1 September, 2004. The main amendments 
were as follows: (1) a protection mechanism established for Technological Protection Measures 
adopted by copyright owners; (2) amendment of the penal provisions to resolve issues encountered by 
the current Copyright Act; (3) a stricter penalty introduced as a deterrent to infringement; (4) WT/TPR/G/165 Trade Policy Review 
Page 8 
 
 
competency granted to the Customs to suspend, on an  ex officio basis, the release of imports/exports 
suspected of infringement.  
32. The protection of IPR is considered an importa nt and extremely worthwhile task, and a vital 
factor in attracting foreign direct investment.  Th e government has therefore la unched a series of plans 
to strengthen IPR enforcement as well.  As a demons tration of its determination to enforce the IPR 
regime, 2002 was named “IPR Acti on Year”.  This was followed by a Three-Year Action Plan, 2003-
2005, to implement regulatory reforms and increase pub lic awareness.  In response to the emergence 
of certain new IPR infringement issues, the Ac tion Plan 2006-2008 was launc hed on 1 January 2006, 
to sustain and develop the work already carri ed out under the previous 2003-2005 Plan.  
(3) ONGOING REFORMS  
(i) The financial sector  
33. Drawing in part on lessons learned from the Asia n financial crisis, financial reform is placed 
firmly at the top of its policy reform agenda.  Th e need to supervise more effectively the increasingly 
complex financial sector is recogni zed.  This has led to the forma tion of the Financial Supervisory 
Commission (FSC), which came into existence in Ju ly 2004 to act as the sole competent regulatory 
authority for the financial sector as a whole.  The FSC is charged with overseeing the development of 
the banking, insurance, and securities and futures se ctors.  Its primary purpose is to build a sound and 
competitive financial environment, and incr ease the competitiveness of the industry.  
34. With regard to the securities and futures sect or, in October 2003, the Qualified Foreign 
Institutional Investors (QFII) system was abolished,  along with the application system pertaining to 
foreign investors wishing to enter the market.  Instead of having to obtain permission from the 
Securities and Futures Bureau of the FSC (previ ously the Securities and Futures Commission), all 
foreign investors can now invest in the securities ma rket after simply registering with the Taiwan 
Stock Exchange Co. (TSEC) and obtaining an inv estment ID.  The regulatory process has thus been 
simplified, and the scope for investment enlarged.  In addition, the Securities and Exchange Act was 
amended and promulgated on 11 January 2006, expanding the potential scope of business for 
securities firms.  Those that have obtained approval from the competent authority are now allowed to 
borrow and lend securities and money, and to accept a commission from a client to act as depository 
or manage the client's funds.  The Act no longer pr ohibits directors, supervisors and managers of a 
securities firm from investing in other securities firms or concurrently serving as a director or supervisor of a public company.  
35. The “Financial Holding Company Act” was passed in 2001 to facilitate the restructuring of 
financial institutions, establish s ound management and healthy devel opment of the financial sector, 
strengthen the supervision and management of cr oss-selling in the sector, and protect the public 
interest.  Other related regulations were amended to improve the transparency of financial institutions.  
As a result, 14 financial holding companies had co me into existence by the end of December 2005 
through the formation of conglomerates, thanks to  deregulation allowing the cross-selling of various 
financial sectors (mainly banking, securities and insura nce).  In a true spirit of liberalization, the 
business scope of foreign financial institutions has b een expanded.  A variety of foreign institutional 
investors are now allowed to participate in  the Securities Borrowing and Lending System. 
36. The next stage in the reform of the fina ncial sector will aim to enhance the overall 
competitiveness of financial institutions and create a fairer, more innovative and lucrative financial 
environment.  To achieve these aims, the govern ment will encourage financial institutions to 
consolidate and actively attract foreign investment into the sector.  One or two “flagship” financial 
institutions are expected to be created as a result of  consolidation.  To facilitate the consolidation Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
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 process and promote foreign investment, market mech anisms will continuously be used to encourage 
further deregulation of the financial sector.  
(ii) Corporate governance  
37. The reinforcement of corporate governance has also been given top priority.  To this end, the 
Policy Agenda and Action Plan to Strengthen Co rporate Governance was completed in 2003, calling 
for the revision of 16 laws and regulations, as well as  for reform and restructuring of the bankruptcy 
mechanism.  The key points of the action plan are: (i) strengthening corporate internal control 
systems; (ii) orderly establishment of independent  directors, and audit committee or supervisors 
systems; (iii) reinforcement of the public disclosur e system; (iv) promotion of governance for specific 
organizations; (v) strengthening of standards govern ing companies’ accounting procedures, and; (vi) 
the protection of investor interests. 
38. In addition, the Amendment of the Secur ities and Exchange Act was promulgated on 11 
January, 2006, as the basis for strengthening corporate governance, and for promoting the 
development of the capital market and the fina ncial system.  The main amendments include: 
promoting the development of the independent di rectors and supervisors system, reinforcing the 
independence of directors, as well as audit committ ee or supervisors, placing more responsibility for 
false financial reporting on a company’s managers , and establishing the responsibilities of experts in 
the business.  
(iii) The Telecommunications Sector  
39. Telecommunications is one of the leading services sectors where the Separate Customs 
Territory of Taiwan, Penghu, Kinmen and Matsu has made substantial progress in terms of regulatory 
reforms.  The start of liberalization of the teleco mmunications sector dates back to 1989, when value-
added telecoms services were first opened up.  Th en, after amendments to three Telecommunications 
Reform Acts and completion of reform of the Di rectorate General of Telecommunications (DGT) in 
1996, full opening up of the telecoms service mark et was actively sought.  The main reforms 
included: the organizational separation of the in cumbent operator from the regulator; asymmetric 
regulations; phased liberalization; and, the establishm ent of a fair and competitive regulatory structure 
by striking a balance between deregulation and re-regulation.  Beginning in September 2004, the 
licensing process for the fixed network has been re gularized, with application periods open in March 
and September of each year, allowing applicants to  better develop their business plans in advance.  
Now, telecommunications services have been liberalized. 
40. Liberalization of the telecommunications sector in the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu has evidently borne fruit.  For example, there has been a proliferation of 
private operators, and a significant increase in business opportunities in related sectors, such as 
telecommunications systems equipment, softwa re systems for telecommunications products, 
distribution services, management systems in the form of both hardware and software, and 
advertisement services.  In terms of market access for foreigners, in 2002 th e government voluntarily 
raised the ceiling for foreign direct shareholdi ng in Type I telecom enterprises from 20% to 49%, 
except in the case of the incumbent, Chunghwa Teleco m, and new regulations allowed for more than 
50% of members of the board to be foreign nationals .  In addition, in response to the convergence of 
telecommunications, broadcasting and informatio n technologies, a newly converged and more 
effective independent regulator, National Comm unications Commission (NCC), was established on 
22 February, 2006, designed to unify the regul atory administration of telecommunications, 
broadcasting and information services in the market. WT/TPR/G/165 Trade Policy Review 
Page 10 
 
 
(iv) Free trade zones  
41. In order to lay the foundations to enable it to  be more closely integrated into the global 
logistics and management grid, promote trade libera lization and internationalization, facilitate the 
smooth flow of personnel, goods, capital and t echnology, upgrade economic competitiveness, and 
bolster economic development, the Separate Cu stoms Territory of Taiwan, Penghu, Kinmen and 
Matsu has been actively promoting the development of  free trade zones.  It adopted the Act for the 
Establishment and Management of Free Trade Zones in July 2003.  
42. The free trade zones that have come into operation so far include Keelung Port, Taipei Port, 
Taichung Port, Kaohsiung Port and Taoyuan Air Car go Park. Goods will be able to move freely 
within and between the free trade zones and be su bject to warehousing, transshipment, and value-
added operations while enjoying exemption from cu stoms tariffs, commodity taxes, business taxes, 
tobacco and alcohol tax, health and welfare surc harges, trade promotion service fees, and harbour 
service dues, as well as simplified customs procedures.  They are set up to provide four major 
advantages to their constituent companies: 1) singl e-window administration; 2) the free flow of goods 
within the free trade zones; 3) autonomous mana gement by companies operating in the free trade 
zones, and; 4) the free exercise of commercial activ ities within the free trade zones by international 
business people. 
(v) Privatization of state-owned enterprises  
43. Privatization of State-owned enterprises has al so been pursued as part of its commitment to 
economic liberalization.  It started by amending re lated laws and regulations, such as the Statute of 
Privatization of Government-Owned Enterprises in 1991, under which formerly State-owned 
enterprises can be freed of the “red tape” normally  associated with State-owned organizations.  To 
date, 34 formerly State-owned enterprises have been privatized.  All remaining State-owned 
enterprises, with the exception of the Taiwan Wa ter Supply Corporation, are scheduled to be 
privatized in the years to come. 
(vi) Foreign investment liberalization  
44. The primary objective of the investment policy is to create a highly liberalized, 
internationalized, transparent and business-friendly investment environment, which operates in a non-
discriminatory manner.  In this regard, important obj ectives have been to improve the transparency of 
investment mechanisms and provide investors with  the full texts of investment-related laws and 
regulations, as well as information on emerging oppor tunities and the latest investment news.  
45. The Industrial Development and Investment Cent re (IDIC) was established under the Ministry 
of Economic Affairs, which acts as an agency promo ting foreign direct investment (FDI) by enabling 
investors to avail themselves of a series of incentiv es.  It also acts to r esolve issues that foreign 
investors may encounter, assists them with their inv estments, and provides them with post-investment 
after-care services.  
46. In compliance with its commitments, investment bans and restrictions have been relaxed or 
lifted in many sectors. For example, agronomy and hor ticulture, the raising of livestock, fisheries, and 
the manufacturing of alcohol, pesticides and herbicid es, were moved from the “Prohibited Industries” 
to the “Restricted Industries” list; privately ope rated small truck cargo transportation and general 
trucking services were removed from the “Prohibite d Industries” list; coking, industries recycling 
mixed waste metals, railway transportation, real estate, and energy mining were removed from the “Restricted Industries” list.  Up to the end of 20 05, with the exception of a few  sectors involving Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 11 
 
 
 essential security interests and public health aspect s, 99% of the manufacturing industry sector and 
95% of the services industry sector had been  opened up to foreign investment.  
(vii) Trade facilitation  
47. To integrate its economic and trade regime as closely as possible with those of the global 
system, trade liberalization and trade facilitati on under the WTO framework are very important 
aspects for its economy.  As part of the effort to meet the goal of paperless trading as set by the APEC 
Action on Electronic Commerce in 1998, it has estab lished a trade facilitation computer network, 
called the “FT Net”, and has formed a working gro up to simplify and streamline rules and licensing 
procedures related to export/import permits, inspect ion and quarantine requirements.  Regarding the 
simplification of trade procedures, of 3,089 (10-di git HS Code level) e xported and imported goods 
previously subject to export/import licensing require ments, 1,285 items have been freed of any need 
for a license, and the export/import rules for 45 othe rs have been amended.  As to inspection 
requirements, nine different inspection application fo rms have been consolidated into three electronic 
application forms, and three differe nt application forms for importing/e xporting animals, plants and/or 
their products, have been consolidated into one. 
48. Since 14 March 2005, companies have been ab le to apply for expor t/import permits, origin 
certificates, inspection and quarantine documents via th e FT Net.  It is expected that more agencies, 
such as the Directorate General of Telecommuni cations, the Bureau of Energy, the Industrial 
Development Bureau and the Department of Health, will join the FT Net in the near future.  Business 
procedures will continue to be simplified and information dissemination standardized. 
IV. TRADE POLICY DEVELOPMENTS: 2002-2005 
(1) MULTILATERAL ACTIVITIES  
(i) WTO/DDA 
49. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu has made progress in 
fulfilling its obligations under WTO rules and conti nues to be actively engaged in the Doha Round 
negotiations on all fronts.  By attendance at all key negotiation meetings and by submitting numerous 
proposals and suggestions (See Annex), it endeavors to ensure that its position on the various 
negotiating issues is fully understood and addressed. Its contribution to the negotiations has also 
included several substantial donations to the Doha  Global Trust Fund, providing a number of least-
developed country Members with technical assistan ce and capacity-building in support of trade and 
development.  
50. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu made extensive 
commitments during its accession, and it is prepared to make further commitments in the Doha 
Round.  As a newly-acceded Member still in th e process of fulfilling many of its accession 
commitments, it should also be noted that some do mestic industries and organizations are still in the 
process of having to make difficult changes and ad justments.  If the overall momentum towards 
further liberalization is to be maintained, for new Members, the further reforms agreed as a result of 
the Doha Round will prove increasingly difficult to implement unless a certain amount of flexibility, 
perhaps in the form of extended im plementation periods, is guaranteed. WT/TPR/G/165 Trade Policy Review 
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(a) Agriculture 
51. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu supports the long-
term objective of the WTO to establish a market-oriented trading system through reforms by 
eliminating trade-distorting measures in the agri cultural sector, while wishing to underscore the 
indispensable and multi-functional role of ag riculture in areas such as food security, rural 
development, environmental protection and culture pr eservation.  In the Doha round of negotiations, it 
is a member of the so-called “G-10” group; net importers of agricultural products who share the 
conviction that in the wake of trade liberalization it is of vital importance to secure the diversity of 
Members’ agriculture in order to safeguard their non-trade concerns. 
52. While committed to a substantial reduction in trade-distorting domestic support, as well as 
substantial improvements in market access, it holds  the belief that a certain amount of flexibility 
should be given to Members when adopting agricultural reform policies, in the interest of maintaining 
the sustainable development of the sector.  In d esigning the full modalities, it wishes to see Members’ 
individual agricultural environments and differi ng tariff structures duly and fairly taken into 
consideration, and the concerns and interests of  both exporters and importers accommodated in an 
equitable and balanced manner.  
(b) NAMA 
53. Statistics show that industrial goods account fo r 97% of its merchandise exports and 94% of 
its imports.  As a trade-driven economy with a total commodities trading value equivalent to that of its 
GDP, it views market access for non-agricultural pr oducts (NAMA) as a central topic on the Doha 
Agenda. 
54. In the process of gaining its accession to WT O Membership, it has already had to make 
significant changes in the areas of trade liberalizati on and the elimination of tariffs.  It now has 100% 
binding coverage of its tariff lines, with an averag e binding rate of 4.8% for non-agricultural products 
and a tariff structure that is on a par with, if not  more liberalized than, ma ny developed countries.  
Despite the fact that some of its domestic industries are going through a painful process of structural 
adjustment to accommodate its s ubstantial accession commitments, it is still determined to make 
contributions to this round of negotiations in the interest of achieving the ultimate goal of a fully 
liberalized multilateral trading environment. 
55. It is commonly recognized that there is still some ‘unfinished business’ left over from the 
Uruguay Round in relation to market access.  High tariff rates, associated with tariff peaks and 
significant tariff escalation, continue to impede ma rket access for exporters and impose restrictions on 
both global trade and the efficient flow of resour ces to and within the coun tries maintaining such 
severe and diverse forms of tariff protection.  Mo reover, there continue to  be unequal levels of 
binding coverage across products and between Me mbers, as well as many areas where Members’ 
bound rates substantially exceed applied rates, th us presenting exporters with a far from certain 
trading environment. 
56. In an attempt to address such  market access issues in the NAMA negotiations, it supports the 
application of an ambitious formula (such as the Swiss formula with reasonably small coefficient 
values), which it sees as having the potential to create new business opportunities, to harmonize 
Members’ tariff regimes and to create a more equitable and predictable trading environment.  Sectoral 
liberalization could be an effective approach to  the creation of real market access for the WTO 
Membership as a whole.  In the NAMA DDA negotiati ons the Separate Customs Territory of Taiwan, 
Penghu, Kinmen and Matsu has taken the initiative to  submit proposals for the liberalization of three 
important NAMA sectors, Bicycles and Related Pa rts, Sports Equipment, and Hand Tools.  Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 13 
 
 
 (c) Trade in Services 
57. As services account for the majority (more th an 65%) of its GDP, it views further services 
liberalization as being one of the three key pillars of market access in this round of negotiations, and a 
major driver of future global economic growth a nd development, fully alongside agriculture and 
NAMA.  Its negotiating stance on the services side is  therefore comparatively offensive, reflecting its 
“real world” situation and le vel of economic development. 
58. Even though the majority of its services providers  are small to medium-sized enterprises, with 
very limited capacity to export, the government s till needs to find ways for them to benefit in the 
future.  For this reason, its list of priority sectors for the current round includes, inter alia, such sectors 
as computer and related services, maritime services, distribution services, telecommunications services, logistics services, energy services, financial services, environmental services and audio-
visual services. 
59. Following the mandate given by Ministers in Annex C of the Hong Kong Ministerial 
Declaration, for the purpose of improving both the qua ntity and quality of Members’ commitments on 
services, the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu is now working 
bilaterally, plurilaterally and multilaterally with the WTO Members with which it shares common 
interests in both the services and industrial market access negotiations. 
60. It believes that progress on rules within the ser vices negotiations will be generally helpful and 
complementary to the market access negotiations.  Its fear is that discriminatory regulatory measures may act as a deterrent to trade in services.  The nego tiation of domestic regulations is thus a priority 
item on its agenda, and it is in the process of work ing closely with fellow-WTO Members to develop 
disciplines to be applied to domestic regula tions by the end of this current round. 
(d) Rules 
61. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu has been actively 
participating in the Rules negotiations, supporting ef forts to clarify and improve WTO rules relating 
to anti-dumping, subsidies, and regional trade agreem ents (RTAs).  The result should be to make the 
rules more transparent, predictable and precise, th ereby protecting the rights and interests of all WTO 
Members.  In view of the importance of encouraging small and medium-sized companies to participate in global trade, the enhanced rules s hould safeguard their trade interests by ensuring 
procedural fairness and avoiding excessively protectionist effects.  
62. As far as Regional Trade Agreements (RTAs) ar e concerned, it supports the new transparency 
mechanism that provides Member s with more in-depth understa nding of RTA activities through 
factual presentations by the WTO Secretariat.  It  also believes that the substantive rules should 
prevent RTAs from having a weakening effect on the multilateral rules as a result of any 
discriminatory treatment by WTO Members.  
(e) Trade Facilitation 
63. In the firm belief that trade facilitation on a global scale will drive down the costs of 
transactions and help companies to further develop overseas markets, the Separate Customs Territory 
of Taiwan, Penghu, Kinmen and Matsu has adopte d a strategy of actively participating in the 
negotiations on Trade Facilitation, with the aim of reaching a high-quality, binding agreement, or a 
comparable similar arrangement. Based on its own experiences, it has provided proposals for 
Members’ consideration in the areas of immediate release of express consignments and possible WT/TPR/G/165 Trade Policy Review 
Page 14 
 
 
methods for calculating fees and charges.  Taking in to account the needs of coordinating with other 
international organizations and technical assistan ce and capacity building for developing countries 
and LDCs, it proposed to establish a long-term  mechanism to deal with such matters. 
(f) Trade and Environment 
64. In pursuit of fulfilling the objective of sustai nable development as set out in the Marrakesh 
Agreement Establishing the WTO, the Separate Cu stoms Territory of Taiwan, Penghu, Kinmen and 
Matsu has taken an active role in the Doha R ound negotiations on trade and environment, having 
contributed several submissions, including an initial lis t of environmental goods for liberalization.  It 
believes that successful negotiations in this area will  be mutually beneficial to the multilateral trading 
system and to Members’ environmental policies, and ultimately result in the widespread liberalization 
of environmental goods and services markets.  
(g) DSU 
65. The dispute settlement mechanism is essential to the effective functioning of the multilateral 
trading system.  All WTO Members want to see this system flourish in order that their rights may be adequately protected. The Separate Customs Terr itory of Taiwan, Penghu, Kinmen and Matsu is 
supporting the efforts to further clarify and, wh ere necessary, strengthen the rules governing the 
dispute settlement process and the transparency of  proceedings.  It actively participates in, and 
provides input to the formal and informal  negotiation meetings on this issue.  
(h) TRIPS 
66. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu believes that the 
establishment of a multilateral system of notifica tion and registration of geographical indications 
(GIs) for wines and spirits should facilitate GI protection, while not upsetting the balance of 
Members’ rights and obligations in the TRIPS Agreement, nor creating unnecessary and burdensome costs for governments, consumers or producers.  An y system to be established needs to be based on 
the following principles: (1) voluntary participation;  (2) no legal effect for Members choosing not to 
participate in the system; and (3) access for all WTO Members and the public to the database 
containing the notified geographical indications.  
67. In terms of the TRIPS and public health issue, it cannot emphasize too strongly the 
importance and urgency of providing access to medi cines for patients who are not able to afford 
patented drugs.  To alleviate the concerns of patent  holders that some capable consumers might turn to 
cheaper sources, it voluntarily announced that it will not import unpatented drugs except in a situation 
of public emergency or pandemic or other circumstan ces of extreme urgency.  Through this means, it 
has made a significant contribution to the formati on of the General Council’s temporary solution in 
August 2003 and to its permanent decision of 6 December 2005 to amend Article 31 of the TRIPS 
Agreement.  
(i) Development 
68. The Hong Kong Ministerial Declaration sets im portant deadlines in 2006, and calls upon all 
Members to participate in the negotiations with more  flexibility.  The Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu has already introduced tariff-free treat ment for certain goods 
imported from least-developed countries as a means to  facilitate the integration of these countries into 
the multilateral trading system. In line with its  commitments in the Hong Kong Ministerial 
Declaration, it will take additional measures to provi de effective market access for exports from least-
developed countries.  It is determined to work  with like-minded Members within the multilateral Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 15 
 
 
 system to ensure that the DDA lives up to its na me as a Development round and delivers a beneficial 
outcome for all.  
(ii) OECD 
69. The OECD is extremely valuable as a source of  information on developm ents and trends in 
the international economy and trade, as a source of analysis for reviewing domestic trade rules and 
regulations at an early stage, and as a point of  interaction with other economies. The Separate 
Customs Territory of Taiwan, Penghu, Kinmen and Matsu has been participating in OECD activities 
in various ways since being invited to do so in 1989.   In particular, since 1999, it has been organizing 
jointly with the OECD the annual “International Cooperation Programme on Competition Policy” for 
Asian developing countries.  Partly due to its close involvement in this activity, and also in 
recognition of its performance in implementing its own competition policy procedures, it was invited 
in 2002 to serve as an observer at the Competiti on Committee of the OECD, and has since been a 
regular participant in the Committee’s meetings.  
70. In February 2006, the Separate Customs Terr itory of Taiwan, Penghu, Kinmen and Matsu 
received a peer review of its competition policy and law in the OECD’s Global Forum on 
Competition.  The review found that its competiti on law “has been an important element of the 
programme of economic reforms that moved the economy away from direct emphasis on 
manufacturing and exports to a market-driven empha sis on services and high technology.”  It shows 
that its implementation and enforcement of co mpetition law has been recognized by all OECD 
members and participants. 
71. Additionally, as a result of its position as a major world player in the production of steel and 
in shipbuilding, it has been actively participating in  negotiations on two Agre ements designed to help 
establish regulations for determining the conditions  needed for a fair market regime.  This 
participation not only helps it to follow developments in current trade issues, but also provides it with 
the opportunity to contribute opinions and suggestions to the process. As a result, it is invited as an 
observer by the OECD in 2005 to participate in it s Steel Committee meetings.  It therefore remains 
committed to close cooperation with the OECD, es pecially on critical issues such as competition 
policy, steel and others, and often as a facilitato r of dialogue and interaction within the OECD. 
(2) BILATERAL TRADE RELATIONS  
(i) FTAs  
72. Regional trade liberalization helps to bring down barriers to intra-regional trade and 
investment and is therefore a useful supplemen tary process helping to push forward global trade 
liberalization and investment facilitation.  At the sa me time, regional trade liberalization should not be 
undertaken at the expense of the multilateral tradi ng system. WTO Members participating in regional 
trade liberalization have an obligation to pursue a proper balance between their regional trade policy 
objectives and their defence of the basic principles of the multilateral trading system. 
73. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu hopes to strengthen 
its economic ties with other countri es and economies, and steadily devel op its participation in regional 
trade liberalization in accordance with  the above-mentioned principles.  It also considers the free trade 
agreement (FTA) process as being complementary to the multilateral trading system.  Without 
compromising its commitments to the rules-based global trading system, it also engages in FTAs. WT/TPR/G/165 Trade Policy Review 
Page 16 
 
 
74. On 21 August 2003, a comprehensive free trade agreement was signed with Panama for the 
first time, and came into effect on 1 January, 20 04.  The agreement not only strengthens bilateral 
economic ties between both two sides in trade and inv estment, but also covers other issues such as 
competition policy and intellectual property rights. 
75.  On 1 March 2005, FTA negotiati ons were begun with Guatemala.  These have now been 
concluded, and the Agreement is expected to co me into effect during 2006.  In addition, FTA 
negotiations with Nicaragua were started in September 2004, and the negotiations are expected to be 
completed in 2006. 
(ii) Bilateral Trade Relations - in addition to FTAs  
76. In addition to signing FTAs, it has taken steps to strengthen bilateral trade relations with other 
trading partners.  The process of constructive c ooperation and ongoing dialog ue with all its major 
trading partners is a particularly important aspect of its trade policy. 
77. The Southeast Asian region in particular includes many of its major trading partners, which 
together account for approximately 12.8% of its tota l foreign trade.  Consequently, there are specific 
plans in place to strengthen trade a nd investment with individual count ries.  In addition, with respect 
to South Asia, the government has listed India fo r more focused trade development efforts in the 
future.  Through numerous exchanges of trade and investment delegatio ns, bilateral economic 
relations with India have been significantly improve d.  With regard to Northeast Asia, Japan and 
Korea are the focal markets, and it has been making efforts to strengthen economic and trade ties with 
both countries by arranging exchange visits a nd organizing business groups to participate in 
international events.  It is currently promoting sp ecific products in Japan a nd Korea in the hope that 
this will lead to increased sales that will help to re duce the trade deficits with those two countries.  
Meanwhile, bilateral conferences are regularly co nducted with its trading partners throughout the 
Asia-Pacific region, facilitating trade and inv estment, and encouraging technology exchange. 
78. Regular economic and trade conferences are also held with major trading partners such as the 
United States, the EU, Australia and New Zeala nd.  To promote better understanding and improve 
trade relations, it engages in a number of activities,  including examining the trade systems of other 
WTO Members, participating in bilateral negotiations  with key trading partners as part of their 
processes of accession to the WTO, and organizing exch ange visits for high-level economic officials 
and business people.  Various types of symposia, meetings and exhibitions are used to promote 
mutual understanding and trade cooperation. 
79. In addition, it has signed ATA Carnet agreemen ts or related administrative protocols with 
trading partners on the subjects of commerce, trad e shows and expanded trade opportunities.  To help 
protect the interests of its investors and reduce ope rating costs, the signing of Investment Protection 
Agreements and Agreements on the Avoidance of Double Taxation with trading partners has been 
actively promoted.  It continues to encourage more of its trading partners to  sign similar agreements, 
in order to stimulate further be neficial economic interactions. 
(3) REGIONAL ENGAGEMENT  
80. While the priority is to participate in the ru les-based multilateral trading system, it considers 
regional cooperation to be an effec tive way of promoting the concept of further liberalization of trade 
and investment.  Since joining the Asia-Pacifi c Economic Cooperation foru m (APEC) in 1991, it has 
been committed to contributing to regional growth  and development.  It fully endorses the Bogor 
Goals set by APEC and has been vigorously advanc ing the three pillars of APEC’s work, namely 
trade and investment liberalization, trade f acilitation, and economic and technical cooperation Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 17 
 
 
 (ECOTECH). In its Individual Action Plan Peer Re view held in 2004, it presented the progress made 
in the liberalization of its economy, trade facilita tion and investment.  The next such review is 
scheduled for early 2007. 
81. It is an active participant in APEC’s initia tives.  In 2005, it hosted 16 APEC activities and 
meetings covering such topics as trade, the enviro nment, health and security, industrial dialogue and 
SMEs.  Most achieved good results and were welc omed by APEC member economies.  In 2006, 
approximately 18 similar APEC ac tivities will be conducted in Taipei , covering areas such as energy, 
avian influenza, biotechnology, agricultur e, ICT and SME development, among others. 
82. In the ECOTECH area, it has organized various  training programmes, seminars and research 
projects for the purpose of sharing experience and exploring the possibility of cooperation in areas of greatest interest to member economi es.  In the future, it will continue  to engage in such activities to 
promote regional development and coope ration.  As part of its contribution to APEC efforts aimed at 
bridging the digital divide in the Asia-Pacific re gion, it established in late 2004 the self-funded APEC 
Digital Opportunity Centre (ADOC).  Helping developing economies to build their digital 
capabilities, ADOC organizes training courses on a regular basis and assists in setting up ICT training 
facilities in rural and disadvantaged communities.  The annual symposium, “ADOC Week 2006,” will 
be held in June to permit further experience-sh aring and cooperation on IC T applications among the 
region’s economies. 
(4) T
RADE PROMOTION ACTIVITIES  
83. The government adheres to the principle of  placing equal emphasis on import and export 
activities in developing its foreign trade promoti on activities.  In addition to promoting trade 
liberalization and organizing events to promote im ported products, it also or ganizes various activities 
designed to raise the profile of its businesses in th e international trade network and emerging markets. 
84. The “Global Export Promotion Programme” has b een running since 2001 to help enterprises 
expand in overseas markets.  In 2005, it designate d nine countries - Vietnam, Thailand, India, 
Bangladesh, Japan, Korea, Brazil, Argentina and Russia - as focal markets for strengthening export 
promotion efforts.  It has also been assisting its businesses in making better use of the Internet to develop opportunities, and it has organized a number of trade missions to expand its companies’ export sales around the world.  
85. It has helped to integrate the private sector’s product marketing efforts and exploration of new 
markets through visits to foreign countries, trade s hows, visits by foreign trade missions, seminars on 
import/export business opportunities, etc.  With the increasing intensity of competition in foreign trade, there is a growing realization among its companies of the importance of product image, in addition to product quality.  Since July 1990, its e xperts have been engaged in implementing various 
stages of the “Image Enhancement Plan”. The third stage (2001-2005) has centred on efforts to 
promote “excellence and innovalue”, emphasizing envi ronmental protection and cultural concerns to 
give its companies’ products a fri endly, high-tech image.  To continually upgrade the quality and 
brand image of its products in the world market, it decided to integrate resources and expertise in the 
different agencies and industries participating in trade promotion and market development activities, 
and to launch a new master plan in 2006.  WT/TPR/G/165 Trade Policy Review 
Page 18 
 
 
V. FUTURE POLICY DIRECTIONS  
(1) RAISING COMPETITIVENESS AND MOVING TOWARD SUSTAINABLE DEVELOPMENT  
86. Given the need for both economic devel opment and environmental protection, the 
government is taking the measures necessary to prot ect the environment while at the same time 
promoting industrial and economic de velopment, in line with WTO rules.  It will continue to pursue 
policies which take account of social and environm ental concerns, deliver economic growth, broaden 
public interest and promote economic and social pr ogress, both domestically and internationally.  In 
addition, it will continue also to push forward w ith domestic reforms in li ne with the changing 
demands of international trade, striving always to remain in compliance with WTO Agreements. 
87. As for industrial development, it continues to e ngage in reforms that are designed to enhance 
competitiveness and achieve substantial development.  In the area of agriculture , the policy is to 
continue to encourage the adoption of modern  business management practices and concepts, 
innovation in terms of agricultural technology, and the modernization of the marketing and 
transportation of agricultural products.  It is also fostering the introduction of agricultural specialists 
in order to gradually transform the sector into a cap ital- and technology-intensive industry, in contrast 
to the land- and labour-intensive industry of the past. In terms of manufacturing , it will continue to 
strengthen competitiveness through industrial upgradi ng, by improving the image of its products and 
encouraging innovation and more R&D.   There will also be an important focus on IPR protection as a 
further way to attract and harness industrial innovation, and to sustain economic and trade 
development.  In the services sector, the policy wi ll be to continue to follow the “Guidelines and 
Action Plans for Services Industry Development”, increasing added-value, creating job opportunities 
and developing the sector in line with its key role of supporting the growing manufacturing and 
agriculture sectors.  These efforts will contribute to improved competitiveness levels and more greatly 
diversified social benefits.  
(2) PROMOTING FURTHER LIBERALIZATION  
88. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu will maintain an 
open trade policy and regards its continued active pa rticipation in the multilateral trading system as 
the highest priority.  Its negotiators will explor e every opportunity to cooperate with fellow WTO 
Members across all the key issues with the aim of achieving an overall successful outcome to the 
current Doha Round of negotiations.  
89. A major objective of the Doha Round of negotiatio ns is to aid the economic growth of the 
developing and least-developed countries.  The gover nment will continue to work with Members to 
achieve this goal through further liberalization.  In addition, within the limits of its capabilities, where 
possible it will provide developing and least-developed countries with appropriate technical assistance 
and capacity-building activities to help them to  implement WTO-related rules and obligations. 
(3) ENHANCING TRADE AND DEVELOPMENT PROSPECTS  
90. The Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu will continue efforts 
to strengthen cooperation and constr uctive dialogue with its trading partners in order to assist its 
businesses in vying for the best conditions conducive to market development, and with the aim of 
creating mutual benefits for all involved.  In add ition, it also considers that cooperation with trading 
partners with which it has close geographical ties to be an effective way of furthering the spread of 
trade liberalization across international markets.  Hence, it will continue to actively participate in 
trading arrangements and agreements  at the regional level as well. Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
 Page 19 
 
 
 91. The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu has committed itself 
to accelerating its society’s advancement th rough the strengthening of its competitiveness and 
increasing the capabilities of its knowledge-drive n economy.  By continuing to build upon its 
economic and industrial strengths  and achievements, it will thereby enhance its capacity for 
innovation and develop a society noted not only for its  material prosperity but also for its cultural 
diversity and excellent quality of life.  WT/TPR/G/165 Trade Policy Review 
Page 20 
 
 
ANNEX 
LIST OF PROPOSALS SUBMITTED FOR THE DOHA ROUND OF NEGOTIATIONS 
Issue Document 
JOB(02)/126 - Concerns of Small-scale Farming Memb ers:  Modification of the Criteria of Green Box 
JOB(02)/163 - Tariff Rate Quota Volume (J oint proposal with Israel and Japan) 
JOB(03)/167 - Position of Bulgaria, the Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu, Iceland, 
Korea, Liechtenstein and Switzer land on the Framework Package 
JOB(05)/34 - Taking Non-trade Concerns into account 
in the Market Access Pillar (Contribution by the G10) 
JOB(05)/233 – G 10 Proposal on Market Access Agriculture 
JOB(06)/12 - G-10 Positions on Domestic Support 
TN/MA/W/19 - Market Access for Non-Agricultural products 
TN/MA/W/19/Add.1 - Market Acces s for Non-Agricultural products 
TN/MA/W/19/Add.2 - Market Acces s for Non-Agricultural products 
TN/MA/W/19/Add.3 - Market Acces s for Non-Agricultural products 
TN/MA/W/46/Add.6+Corr.1 - Non-Tariff Barri er Notifications using the new form at contained in TN/MA/S/5/Rev.1. 
TN/MA/W/58 - Tariff Liberalization in the Chemicals Sector (Joint proposal with Canada, Japan, Norway, Switzerland and 
the United States) 
TN/MA/W/61 - Negotiating Group on Market Access - Market A ccess for Non-agricultural Products - Tariff Elimination in 
the Gems and Jewellery Sector (Joint proposal with Hong Kong, China; Japan; Singapore; Thailand and the United States) 
TN/MA/W/61/Add.1 - Negotiati ng Group on Market Access - Market Access for Non-agricultural Products - Tariff 
Elimination in the Gems and Jewellery Sector (Joint proposal with Hong Kong,  China; Japan; Singapore; Thailand; 
Switzerland and the United States) 
JOB(05)/201 - Negotiating Group on Market Access - Tariff Elimin ation in the Sports Equipment Sector (Joint proposal 
with Japan, Singapore and Thailand) NAMA 
JOB(05)/202 - Negotiating Group on Market Access - Tariff Elimination in the Bicycle and Related Parts Sector(Joint 
proposal with Japan, Singapore and Thailand) 
Trade in 
Services TN/S/W/10; S/CSC/W/37 - Com puter and Related Services 
 S/WPDR/W/21 - Disciplines on Domestic Regulation for Profe ssional Services. Results of C onsultations with Professional 
Sectors 
 JOB(03)/8 – Proposal for Holding a Workshop on Domestic Regulation 
 TN/S/W/11 - Joint Statement on the Nego tiations on Maritime Transport Services 
 TN/S/O/TPKM - Initial Offer 
 TN/S/W/18 - Assessment of Trade in Services 
 JOB(04)/78 - Definition of Subsidies in Services 
 JOB(04)/82 - Replies to the Sample Questions Submitted by Hong Kong, China, during the meeting of the Committee on 
Specific Commitments on 22 March 2004 Concerning Scheduling Issues 
 TN/S/W/20 - Logistics Services 
 JOB(04)/131 - The second Re view of MFN Exemptions 
 JOB(04)/172 - Replies to Sample Questions Concerning Scheduling Contained in docum ent JOB(04)/133 Submitted by 
Hong Kong, China, 21 September 2004 
 S/C/W/250 - Review of Artic le II (MFN) Exemptions 
 JOB(04)/176 - Joint Statement on Market Access in Services 
 TN/S/W/28 - Joint Report on Informal Discussion on Environmental Services in  the Context of the DDA 
 TN/S/W/34 - Joint Statement on Libe ralization of Logistics Services 
 TN/S/W/37 - Joint Statement on Legal Services 
 JOB(05)/22 - Joint Statement on the Importance of Commitments on Maritime Transport Services 
 TN/S/W/38 - Joint Statement on the Negotia tions on Computer and Related Services 
 JOB(05)/90 - Joint Statement on the Cross-Border Symposium held by WTO in April, 2005 
 TN/S/O/TPKM/Rev.1 - Revised Conditional Offer on Services 
 TN/S/W/43 - Liberalizati on of Financial Services 
 S/C/W/258 - Joint Statement on the Second Re view of Article II (MFN) Exemptions 
 TN/S/W/49 - Joint Statement on the Negotiations on Audiovisual Services 
 JOB(05)/125 - Joint Statement on th e Negotiations of MFN Exemptions 
 JOB(05)/130 - Joint Statement on Liberalization of  Construction and Related Engineering Services 
 TN/S/W/50 - Liberalization of Telecommunications Services 
 S/WPDR/W/36 – Transparency Disciplines on Domest ic Regulation in the Telecommunications Sector 
 JOB(05)/215 - Systemic Elements on Quality of Offers 
 JOB(05)/217 - Strengthening th e Request and Offer Approach  in Services Negotiations 
 List of Proposals (cont'd) Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu WT/TPR/G/165 
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 Issue Document 
TN/S/W/53 - The importance of Mode 3 commitments 
S/WPDR/W/37 - Definitions of Qualifica tion Requirements, Qualification Proce dures, Licensing Requirements, Licensing 
Procedures and Technical Standards 
JOB(05)/252; JOB(05)/ 252/Corr.1 - Statement on the Quality of Telecommun ications Offers at the Special Session of the 
Council for Trade in Services on 1 July 2005 
JOB(05)/253; JOB(05)/253/Corr.1 - Statemen t on Telecommunications Services at the Special Session of the Council for 
Trade in Services on 30 September 2005 
JOB(05)/264 - Objectives for Libera lization of Logistics Services 
JOB(05)/276 - Legal Services-Objectives for Furthe r Liberalisation and Limitations to be Removed 
JOB(05)/315 - Common Views on Negotiation Obj ectives on Maritime Transport Services  
JOB(06)/17 - Statement on Services of Common Interest in the Energy Sector 
TN/RL/W/199 - Negligible Imports 
TN/RL/GEN/68 - Negligible Imports 
TN/RL/GEN/23 - Initiation and Co mpletion of Investigations 
TN/RL/GEN/82 - Affiliated Parties 
TN/RL/GEN/62 - Definition of Domestic Industry 
TN/RL/W/204 - Sunset Review 
TN/RL/GEN/96 - Countervailing Measures 
TN/RL/W/202 - Fishery Subsidies fo r Social Security and Welfare Rules 
TN/RL/W/182 - Submission on Regional Trade Agreement 
TN/TF/W/10 
TN/TF/W/25 
TN/TF/W/44 
TN/TF/W/62 
TN/TF/W/8 (Joint proposal with  Japan, Mongolia and Peru) Trade 
Facilitation 
TN/TF/W/17 (Joint proposal with Japan, Mongolia and Peru) 
TN/TE/W11 - Relationship betw een WTO rules and MEAs/STOs 
TN/TE/W36 - Relationship betw een WTO rules and MEAs/STOs 
TN/TE/W/41 - Relationship betw een WTO rules and MEAs/STOs Trade and 
Environment 
TN/TE/W/44 - Environmental Goods list 
TRIPS TN/IP/W/5 and TN/IP/W/10 - The establishment of a multila teral system for notification an d registration of geographical 
indications for wines and spirits based on Article 23.4 of the TRIPS Agreement (Joint proposal with Argentina, Australia, 
Canada, Chile, Colombia, Costa Rica, Do minican Republic, Ecuador, El Salvador, Guatemala, Honduras, Japan, Namibia, 
New Zealand, Philippines, and the United States) 
  
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