The Bureau of Foreign Trade has published a draft amendment to the Foreign Trade Act (貿易法) that aims to address the issue of manufacturing origin certification amid an ongoing US-China trade dispute, the Ministry of Economic Affairs said on Thursday.
To evade US tariffs on Chinese goods, a number of products from China destined for the US have been found making stopovers in Taiwan to gain the “Made In Taiwan” (MIT) label to conceal the source of their products, the ministry said.
The practice has enabled companies to avoid heavy tariffs imposed by Washington on Chinese goods, but it damages the global trade order and taints the reputation of Taiwanese goods abroad, the ministry said.
It would also hurt the interests of local industries and could potentially drag Taiwan into the US-China trade dispute, the ministry added.
Under the amendment, local companies that supply Chinese-made goods with Taiwanese certificates of origin would face fines of NT$60,000 to NT$3 million (US$1,947 to US$97,349), up from NT$30,000 to NT$300,000, or be banned from importing and exporting for one month to a year.
If a breach is serious, the bureau could invalidate a company’s import-export business registration altogether, the ministry said.
The ministry is to a offer reward to whistle-blowers who inform authorities of illegal activities concerning the falsification of certificates of origin, it said, adding that anonymity would be guaranteed.
To prevent such falsification, the bureau in September last year imposed stricter regulations on certain products that are required to apply for the manufacturing origin certification, such as bicycles, aluminum wheels, screws and nuts, as well as products used in the solar industry.
Bicycles, solar products and aluminum wheels destined for Europe and the US from Taiwan’s free-trade harbor zones must also obtain the government’s export permission in advance, the ministry said.
Even so, the EU has started to investigate some Taiwanese firms that have provided false certificates of origin for Chinese products to avoid anti-dumping duties, the bureau said, without revealing which firms.
To curb the illegal practice and safeguard the nation’s interests, the bureau revised the law to introduce heavier penalties, the ministry said.
Due to the urgency of the matter, the draft amendment is to be open for public review for seven days until Wednesday. The ministry did not say when the amendment would take effect.
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