Industry Focus

The ECFA Impact on
Taiwan Fastener IndustryT

he Ministry of Commerce of the People's Republic of China (MoCChina) initiated a trade barrier investigation against Taiwan on
April 12, 2023, and the number of products involved has increased
to 2,509 so far. According to the announcement, "the investigation
should be completed by October 12, 2023, but under special
circumstances, it can be extended to January 12, 2024". MoC
China 's official website published a press release on October 9,
which stated that the investigation will be extended for threemonths and the deadline is changed to January 12, 2024. On
October 11, the spokesman for Taiwan Affairs Office under
the State Council of China claimed, "ECFA (Cross-Straits
Economic Cooperation Framework Agreement) has brought
benefits to the relevant industries and people on both sidesof the Taiwan Straits, especially those in Taiwan, since it
came into effect. The hope to ensure the continuation ofECFA is the mainstream public opinion on the island, which
also proves ECFA is a good agreement for the benefit of thepeople in Taiwan."China did not release the results of the investigation on
October 12 as expected, probably because it intends to observe
the situation that will come after Taiwan Presidential Election
which will be held in 2024. China’s trade barrier investigation
against Taiwan is clearly targeting ECFA which China may take somekind of actions upon. If that is the case, the preferential duty rate in theECFA Early Harvest List may be canceled, which will significantly change
the import and export tariffs of some products from Taiwan to China.
In 2009, Mr. Ma Ying-Jeou, former President of Taiwan, proposed the signing ofIn 2008, Mr. Ma Ying-Jeoubecame the President of Taiwan
and devoted himself to cross-strait
economic and trade exchange.

1980

2008

2010

Regional economic
integration emerged inlate 1980s.

June 29, 2010,
Signing of ECFA

January 1, 2011,
ECFA Early Harvest List
Tax Reduction came in force.

2011

2016

April 12, 2023,
China launched a tradebarrier investigation
against Taiwan

2023

Cross-strait economic and tradetalks were temporarily suspended as
Taiwan’s ruling party changed again
in 2016.

2024
January 12, 2024,
trade barrier survey results
announcement.

Fig. 1. ECFA Progression
Cross-Strait Economic Cooperation Framework Agreement (ECFA) with China, which is a bilateral economic and trade agreement between
the two sides of the Taiwan Strait to strengthen the economic and trade development of both Taiwan and China. ECFA explicitly emphasizes
that cross-strait tariffs will be "phased in gradually," so that both sides will reduce merchandise trade tariffs to zero within a certain periodof time. The first cross-strait agreement was signed on June 29, 2010 in Chongqing, China, to discuss the follow-up of trade in goods, trade
in services, investment protection, and dispute resolution. The Early Harvest Program came into effect on September 12, 2010. Theproduct content of the early-stage agreement is known as the "Early Harvest List. The tariff-free range covers Taiwan's
exports to China in the petrochemical, machinery, textile, and automotive parts and accessories industries, etc. Starting fromJanuary 1, 2013, all products under the Early Harvest Program have been reduced to zero tariff. In terms of the contents of early
harvest goods, there are three major categories: trade in goods, trade in services, and agricultural products. Both sides of the Taiwan Strait
liberalized different items according to the political and economic considerations at the time. Figure 1 shows the progression of ECFAdevelopment.

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Fastener World no.203/2023 惠達雜誌Industry Focus
Table 1. Taiwan's Export to China and Tariff Reduction
ItemYear
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Sum

All Merchandize

Items in the Early Harvest List

Export Value

Change (%)

Export Value

Change (%)

851.22825.92841.22847.11732.71737.34887.47964.99917.901,024.47
1,259.04
1,211.14
11,100.53

9.29%-2.97%
1.85%
0.70%-13.50%0.63%
20.36%
8.74%-4.88%
11.61%
22.90%-3.80%
2022 growthover 2011179.76
185.66205.78212.26
191.79193.63227.51
236.37198.48193.22
252.27204.952481.68

18.07%
3.28%
10.84%
3.15%-9.64%
0.96%
17.50%
3.90%-16.03%-2.65%
30.56%-18.76%+42.28%2022 growthover 2011

Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
SumAll Merchandize
Import Value

Change (%)

Import ValueChange (%)

440.95414.31433.45492.56452.67439.93500.41537.93573.96635.90824.87839.96
6,586.9

21.62%-6.04%
4.62%
13.64%-8.10%-2.82%
13.75%
7.50%
6.70%
10.79%
29.72%
1.83%
2022 growthover 2011+47.50%

49.66
48.03
49.43
55.38
54.13
50.22
53.90
59.12
60.23
63.16
88.03
87.21
718.5

25.37%-3.27%
2.92%
12.04%-2.27%-7.23%
7.34%
9.69%
1.86%
4.87%
39.38%-0.93%
2022 growthover 2011+75.61%

T h is a r ticle uses t he dat a f rom t he a r ticle"Implementation of the ECFA" dated August 15, 2023,
and organize the bilateral trade and export values
between China and Taiwan under the ECFA frameworkfrom 2011 to 2022 as follows in Table 1 and Table 2.

Fastener World no.203/2023 惠達雜誌Unit: USD 100 Million

Items in the Early Harvest List

According to the results of cross-strait negotiations
back then, Taiwan agreed to lower taxes on 267
Chinese items in the early harvest list, while China
agreed to lower taxes on Taiwanese 539 items in theearly harvest list. China's early harvest list for Taiwan
mainly includes small and medium-sized conventional
industries, agricultural products, and service trade
items, including machinery, automobile parts andcomponents, bicycle parts and components, small
household appliances, orchids, bananas, tea, as well as
the financial industry.

342

Tariff Reduction
By Taiwan Customs’
By China Customs’Calculation
Calculation
1.26
1.21
5.43
5.37
6.76
6.78
7.56
7.58
7.72
7.35
8.68
7.56
9.75
8.85
10.05
9.36
8.99
7.78
8.81
7.32
10.65
9.15
8.22
7.19
93.88
85.5+14.012%

Table 2. Taiwan's Import from China and Tariff Reduction
Item

Unit: USD 100 Million

Approved Amount ofPreferential Tariff
10.36
14.28
15.90
19.74
23.00
18.15
20.20
23.40
21.83
21.75
32.13
31.34
252.08Tariff Reduction
0.23
0.54
0.64
0.82
0.84
0.76
0.81
0.91
0.88
0.90
1.27
1.25
9.85

Compared to Table 1 and Table 2, the import and export
values between Taiwan and China grew significantly from2011 to 2022. Under the framework of ECFA, the total value ofTaiwan's exports to China during the 12-year period was US$1.11trillion, much higher than China's exports to Taiwan which
totaled US$658.69 billion. The value of Taiwan's export to China increased
42.28%, while the value of China's exports to Taiwan increased 47.50%. In
terms of products in the early harvest list, the value of Taiwan's export to China
increased 14.12%, while the value of China's exports to Taiwan increased
75.61%. In terms of the growth rate of export value, China far exceeded
Taiwan, which illustrates that ECFA is a winner for both manufacturers andconsumers across the Taiwan Strait.
Steel fasteners are not included in the early harvest list. China’s
iron ore are not included in the early harvest list of imports intoTaiwan. Therefore, if ECFA gets cancelled, it doesn’t make much of adirect impact on Taiwan’s fastener export. Instead, a larger impact
will land on the domestic sales of 3 industries, namely machinery,automotive parts, and bicycle parts, which will affect Taiwan fastenerIndustry Focus
Table 3. Statistics of Steel Fasteners Export from Taiwan, 2011-2022
Year20112012
2013
2014
2015
2016
20172018
2019
2020
2021
2022
Sum

Value of sales to the Value of sales toWorld (USD 1,000) China (USD 1,000)
3,808,060
110,405
3,586,644
102,1073,679,771
112,551
4,048,973
122,982
3,880,625
110,659
3,610,630
117,885
4,090,044
144,904
4,638,379
143,922
4,316,160
114,095
3,968,861
128,927
5,319,169
191,196
6,140,351
171,933
51,087,667
1,571,565

Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Sum

Value of sales to the Value of sales toWorld (USD 1,000) China (USD 1,000)
3,415,073
467,0673,666,247
471,092
3,779,599
470,177
3,905,724
486,261
3,906,921
481,6933,855,885
470,747
4,119,950
481,218
4,117,713
464,437
3,906,966
442,660
3,669,141
404,876
4,634,435
466,546
5,632,410
436,084
48,610,064
5,542,860

Value Proportion
2.90%
2.85%
3.06%
3.04%
2.85%
3.26%
3.54%
3.10%
2.64%
3.25%
3.59%
2.80%
3.07%

Global Sales
Volume (Ton)1,347,747
1,278,585
1,371,099
1,501,697
1,470,992
1,435,750
1,498,070
1,595,705
1,479,292
1,363,250
1,610,698
1,607,481
17,560,367

Export Weight toChina (Ton)20,25918,722
20,943
21,54919,41622,01325,732
24,332
20,27724,08033,36726,809277,499

Weight Proportion
1.50%
1.46%
1.53%
1.43%
1.32%
1.53%
1.72%
1.52%
1.37%
1.77%
2.07%
1.67%
1.58%

Table 4. Statistics of Motor Vehicle Parts Export from Taiwan, 2011-2022
Value Proportion
13.68%
12.85%
12.44%
12.45%
12.33%
12.21%
11.68%
11.28%
11.33%
11.03%
10.07%
7.74%
11.59%

industry. Tables 3, 4, 5, and 6 respectively display the statistics ofsteel fasteners, automotive parts, bicycle parts, machines in termsof Taiwan’s export to the world and China during 2011 and 2022.
Taiwan's steel fastener export to China accounted for 3.07% of
the total value and only 1.58% of the total weight of export tothe world. For parts and accessories used in motor vehicles,
Taiwan's value of export to China accountedfor 11.59% of theexport to the world. Taiwan's export of non-powered twowheeled bicycles and other bicycles to China accounted for
2.57% of the total sales to the world. Machines accounted for
22.85%. China has limited influence on Taiwan’s export of steel
fasteners and bicycle parts which are listed in the harvest list.
The bigger influence is on machines parts and accessories
used on motor vehicles.
In terms of Taiwan's domestic fastener markets, parts used onmachines and motor vehicles are to be assembled with fasteners. If
ECFA gets cancelled, it will affect the preferential tariffs for products
sold from Taiwan to China, and will indirectly affect the domestic
demand for Taiwan's fastener products. Taiwan’s machine andmotorized vehicle parts exports to China and to the world respectively
take up 22.85% and 11.59% of Taiwan’s total export to the world.
Taiwan’s fastener domestic sales ratio is about 20%. Therefore, it isconjectured that if ECFA gets cancelled, the impact on the domestic
sales of Taiwan's fasteners is within an affordable range.

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Fastener World no.203/2023 惠達雜誌

Global Sales
Volume (Ton)257,671
276,277
253,447
244,221260,763
262,050
264,165
232,261
159,678
179,238
245,523
198,029
2,833,323

Export Weight toChina (Ton)31,64730,94026,86827,69029,44629,32527,66924,31916,20321,752
28,61522,497
316,971

Weight Proportion
12.28%
11.20%
10.60%
11.34%
11.29%
11.19%
10.47%
10.47%
10.15%
12.14%
11.65%
11.36%
11.18%

Before the Ministry of Commerce ofChina gives the final result on January 12,2024, we can summarize into three strategies
that the Taiwanese public think China will
take.
•The first is that China will impose "mandatory"
sanctions on Taiwan, meaning that China will not ruleout the possibility of imposing sanctions on Taiwan'scompetitive petrochemicals, machinery, textiles, andplastics products, and will suspend ECFA in whole or inpart, resulting in a high impact on Taiwan's exports toChina. This is the last thing we want to see.

•The second scenario is that Taiwan may make moderateconcessions and decide to open up import of all orsome of the previously banned Chinese goods. In thiscase, textile and machinery industries that are in theearly harvest list will not be affected, but Taiwan'sagricultural industry may suffer a greater impact.

•The third is that China adopts a reciprocal strategy,
where China only prohibits Taiwan from exporting
corresponding goods to China, which means that China
only allows importing the same goods that Taiwan has
agreed to import from China. This impact on Taiwan's
industry is relatively limited.

Industry Focus
Table 5. Statistics of Non-Powered Two-Wheel Bikes and Other Bikes Export from Taiwan, 2011-2022
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Sum

Value of Sales to the Value of Sales toWorld (USD 1,000) China (USD 1,000)
1,734,406
63,996
1,885,384
61,6551,750,868
52,991
1,749,168
50,3201,913,826
52,3091,501,204
39,467
1,347,695
33,521
1,495,478
31,343
1,363,761
29,5791,121,201
23,9991,336,645
27,641
1,637,035
27,335
18,836,672
494,156

Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Sum

Value of Sales to the Value of Sales toWorld (USD 1,000) China (USD 1,000)
31,762,398
7,885,970
29,839,216
7,087,528
29,517,934
6,789,008
31,462,985
7,153,329
29,016,514
6,207,988
29,090,967
6,167,515
34,875,316
8,991,619
38,822,980
10,013,421
42,707,225
9,260,534
44,539,219
9,669,503
57,453,514
13,741,744
63,136,764
11,591,658
462,225,032
104,559,817

Value Proportion
3.69%
3.27%
3.03%
2.88%
2.73%
2.63%
2.49%
2.10%
2.17%
2.14%
2.07%
1.67%
2.57%

Global Sales
Volume (Ton)20,61547,09885,84678,496
60,736
46,11431,07530,206
20,767
26,676
31,61354,370533,612

Export Weight toChina (Ton)
511
1,296
3,621
1,686
1,141
869
416
394
232
266
314
655
11,403Weight Proportion2.48%
2.75%
4.22%
2.15%
1.88%
1.89%
1.34%
1.31%
1.12%
1.00%
0.99%
1.21%
1.86%

Table 6. Statistics of Machine Export from Taiwan, 2011-2022
Value Proportion
24.83%
23.75%
23.00%
22.74%
21.39%
21.20%
25.78%
25.79%
21.68%
21.71%
23.92%
18.36%
22.85%

Global Sales
Volume (Ton)1,977,815
1,847,431
1,783,830
1,910,399
1,787,104
1,728,499
1,898,879
1,916,983
1,751,798
1,591,739
1,869,892
1,754,018
21,818,387

Export Weight toChina (Ton)487,076
397,156
390,487395,922
336,390
342,469
440,195
446,715
361,536
356,472
428,465
359,552
4,742,435

Weight Proportion
24.63%
21.50%
21.89%
20.72%
18.82%
19.81%
23.18%
23.30%
20.64%
22.40%
22.91%
20.50%
21.69%

Table 7. Taiwan's Top Six Export Destinations in 2022
Destination

China

U.S.A

Hong Kong

EuropeJapanSouth Korea

Export Value (USD 1,000)

121,092,996

75,052,059

64,782,182

40,232,875

33,608,899

22,178,146

25%

16%

14%

8%

7%

5%

Export Proportion

Accordi ng to st atistics, Ta iwa n's tot a l expor t va lue i n 2022
was US$479,415,230,000. The top export destination was China at
US$121,092,996,000, followed by the United States at 75,052,059,000,Hong Kong at US$64,782,182,000, Europe at US$40,232,875,000, Japan at
US$33,608,875,000, and South Korea at US$22,178,146,000. Table 7 lists
Taiwan's top six export destinations in 2022.
In terms of Taiwan’s total export value, China shared 25% and it goesup to 39% if we add Hong Kong’s share which was 14%. The importanceof China to Taiwan's exports is self-evident. Among the greements Taiwan
has signed with the top 6 export destinations, ECFA between Taiwan andChina is the only zero-tariff economic and trade agreement. August 24,
2023, the spokesman of Mainland Affairs Council located in Taiwan said,"China's pressing on Taiwan is no win-win for anyone. We wouldn’t expect
to see China rashly suspend ECFA. ECFA is in line with the spirit of WTO.
Taiwan and China both have joined WTO, hoping to steadily break tariff andnon-tariff barriers between both sides. Now with ECFA in effect, different
opinions should be put on the table and resolved by the book instead of
terminating the agreement abruptly.” Taiwan government has also expressed
its hope that ECFA will continue.

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Fastener World no.203/2023 惠達雜誌

If ECFA is stopped, the impact on Taiwan's
fastener industry is limited, but there is a pitfall.
RCEP has come in force since Januar y 1, 2022,
and it aims to bring tariff down to zero for 90% oftraded products. Plus, Taiwan’s value of export toRCEP member countries continues to increase. It
is concerning that Taiwan has not had any FTA with
RCEP member countries. Taiwan is not a part ofCPTPP. If the benefits with the ECFA early harvest
list discontinue, Taiwan's conventional industries
will immediately suffer an impact on its trade withChina. In an international trade structure with escalating
difficulties, it is hoped that Taiwanese and Chinese
governments can keep good economic and trade relations
and that the ECFA early harvest list will continue ineffect.
Copyright owned by Fastener World / Article by Dr. Wayne Sung