Taiwanese steelmakers are facing more headwinds as the Chinese government last week announced plans to impose import duties on raw materials, along with the anticipated free-trade agreement between China and South Korea by the end of the year, the Industrial Development Bureau said yesterday.
If Beijing’s new tax policy takes effect on July 31, China-based Taiwanese steelmakers are likely to purchase raw materials from local firms, rather than sourcing from their Taiwan-based peers, the bureau said.
That will cause Taiwan’s steel exports to shrink substantially, as up to 70 percent of the country’s steel exports to China are raw materials for production of steel products that are shipped back home for exports at zero tariffs, the bureau said.
“Taiwanese steelmakers will face more hurdles in international trading if the Chinese government implements its new sourcing policy,” the bureau said in a statement.
Expectations that China and South Korea will sign a free-trade agreement earlier than the cross-strait trade-in-goods agreement may be another hurdle, it said.
Taiwan competes with South Korea for steel markets in China, the US and many European countries.
China currently levies 3 to 10 percent of duties on imports of steel products from Taiwan.
The bureau said the government would raise its request for zero tariffs for steel exports to China in future trade talks, which should help reduce potential trade barriers for Taiwanese steelmakers should Beijing and Seoul sign a free-trade pact.
Last year, Taiwanese steelmakers exported US$1.02 billion in steel products to China, compared with US$2.1 billion from South Korean makers.
Assuming the free-trade pact removes all tariffs on steel exports from South Korea to China, Taiwan is estimated to lose US$150 million to US$310 million in steel exports a year, the bureau said.
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