The government will invite Japanese and German manufacturers of sophisticated machine tools and components to invest in Taiwan and ensure that the machine tools’ controllers are made locally, a Ministry of Economic Affairs official said on Tuesday.
The origin of the controllers, which link a computer system and the mechanical components of a computer numerical control (CNC) machine, will decide whether exports of computer--controlled machine tools from Taiwan remain eligible for duty-free entry into China in three to five years.
Seven categories of sophisticated machine tools with CNC functions are to receive duty-free treatment from China under the early harvest program of the Economic Cooperation Framework Agreement (ECFA), set to be launched on Jan. 1.
However, that status will change in a few years unless the machine tools’ controllers, 60 percent of which are currently imported from Germany or Japan, are made in Taiwan, according to Woody Duh (杜紫軍), the director-general of the ministry’s Industrial Development Bureau.
Under the agreement, makers of CNC cutting, stamping and grinding machines will have a three-year grace period, after which all of the controllers used in products exported to China will have to be made in Taiwan to retain the products’ zero-tariff status, Duh said.
For CNC lathes, the adaptation period will be five years, he added.
At the same time, at least 50 percent of the machine tools’ added value will also have to originate in Taiwan to retain duty-free eligibility, but that threshold is already being met and should not pose any problems to local machine tool manufacturers, the ministry said.