MOEA suggests increasing towel duties

The Ministry of Economic Affairs (MOEA) yesterday proposed increasing duties on Chinese towel imports from two to six-fold for three years as a safeguard measure to counter the market disruption caused by a big jump in Chinese towel products.

Replacing the current 10.5 percent tariffs imposed on Chinese imports based on import value, or CIF (cost, insurance and freight) price, the International Trade Commission decided to adopt a higher rate based on quantity.

The commission suggested imposing a NT$42 (US$1.3) per kilogram tariff on made-in-China towels for the first year, NT$32 per kilogram for the second year and NT$20 per kilogram in the third year.

Based on the average CIF price of imported Chinese towels of NT$63.9, the duty rates would work out to be 66 percent for the first year, 50 percent for the second year and 33 percent for the third year, the commission said.

The commission will submit the proposal to the ministry, which will inform the WTO and China's representative to the WTO for consultations. The two parties should conclude the consultations within 60 days.

After the 60-day period, whether a consensus has been reached or not, the ministry is required to report to the Cabinet, which has the final say on implementing the import-relief mechanism.

The tariff rates suggested by the commission are much lower those proposed by the Yunlin Towel Industrial Technology and Development Association (雲林縣毛巾產業科技發展協會), which applied for the safeguard mechanism.

The association had asked the government to increase the duties to 189 percent for the first year, 179 percent in the second year and 169 percent in the third year. The association's suggestions were based on the Ministry of Finance's preliminary anti-dumping investigation in the case.

"We are very disappointed. The commission's proposal will not ease the flood of Chinese towel imports into Taiwan," said Thumas Huang (黃維幸), a visiting professor of law at Shih Hsin University, who represents the association.

Since the Chinese authorities are certain to try to lower the duties in the consultation talks, the final rates could be even lower, Huang said.

If the proposal is accepted by the Cabinet, Taiwan Solidarity Union Legislator Lai Shin-yuan (賴幸媛) said that she would help the association to file an administrative appeal to increase the tariffs.

Commission Deputy Executive Secretary Juan Chuan-ho (阮全和) said the 189 percent duty suggestion was based on a anti-dumping scenario, which is used to address unfair competition, and therefore was not applicable.

According to the WTO rules, safeguard measures are used to "make up for" industries that have been hurt by imports, or "prevent"firms from being hurt by imports, Juan said. They are not designed to totally cut off imports, he said.

Since local manufacturers are largely hurt by by low-priced Chinese products, imposing tariffs by volume instead of price will help reduce imports, he said.