China's tariff reductions could hurt South Korea

China's duty-free treatment for 15 types of Taiwanese fruit is likely to have a flow-on impact on South Korea, which is now concerned that its apple exports to Taiwan may be affected, according to a South Korean farm trade source.

According to an official with a South Korean government-affiliated agro-trade organization in Taipei who requested anonymity, South Korea believes Taiwan might import apples from China following China's offer of duty-free privileges.

If true, it would deal a very heavy blow to South Korean apple growers, because almost all their produce is sold to Taiwan, the source said, pointing out that only between 3 percent and 5 percent of South Korean fruit, mainly apples, pears, oranges and persimmons, is exported each year.

Although the Taiwanese government contends that fruit exports to China are not necessarily profitable and that Japan is a better market, farmers in southern Tainan County, which is Taiwan's leading mango growing area, do not agree with this viewpoint.

Huang Cheng-ching (黃澄清), chief delegate of the Yuching Township Farmers Association (玉井鄉農會), claimed that China is the best market for Taiwan farm exports, mainly due to its proximity and the variety of different fruit qualities it is prepared to accept.

Huang said only 20 percent of locally produced mangoes are qualified for export to the stringent Japanese market, while the Chinese market is much more open to a variety of qualities of fruit.

Tu Chao-yen (涂照彥), an economics professor at Japan's Kokugakin University, said that it is not contradictory to approach the Japanese and Chinese markets at the same time.

While Japanese consumers are highly quality conscious, the Chinese market is larger and is rife with opportunity, Tu said, suggesting that Taiwan should sell products of various qualities to satisfy different market demands.

In addition, Taiwanese tea is also a good foreign exchange earner as long as the domestic industry devotes itself to innovation in quality and flavor over the long term, Tu said.

China's duty-free treatment for 15 kinds of Taiwanese fruit took effect Aug. 1, a move that has gained positive response among farmers in southern Taiwan who are traditionally strong backers of the ruling Democratic Progressive Party.

Chen Hsi-huang (陳希煌), a former chairman of the Cabinet-level Council of Agriculture (COA), said that China's zero-tariff offer is aimed at converting "market merchandise" into "political advantages" and claimed that Taiwanese farmers' desire to further explore the Chinese market underscores the low-income problem in the domestic agricultural sector.

Citing COA statistics, he said that non-agricultural annual household incomes averaged NT$1.13 million (US$35,320) in 2003, well above the NT$873,901 average registered by agricultural families -- only 15.7 percent of which, or NT$178,111, was earned by farming.

Low income and product price fluctuations have long been a major headache for Taiwanese farmers, Chen said, urging the government to resolve the issue.

COA statistics show that Taiwanese farm production totaled US$3.55 billion in value last year, with exports worth US$33 million -- some 42 percent to Japan, 22 percent to the US and just 1 percent to China.