Taiwanese-invested businesses in China will be required to label their products as “Made in China,” a Mainland Affairs Council (MAC) official said on Saturday.
Because of the complexity of supply chains and production processes, defining a product’s country of origin is an issue Taiwan often faces after signing free-trade agreements, MAC Deputy Minister Liu Te-shun (劉德勳) said.
Discussions on the issue between China and Taiwan are expected to begin soon.
If Taiwanese companies manufacture products in China, they will have to list China as the country of origin, although the origin of materials and components and the nationality of the owners of the business will also be taken into consideration, Liu said.
Some Taiwanese businesses with manufacturing interests in China hope that, under certain conditions, they will be allowed to list their products as “Made in Taiwan.”
The issue has become a pressing one because of an economic cooperation framework agreement (ECFA) the government intends to sign with China in which products covered under the deal’s “early harvest” list would qualify for tariff reductions or exemptions — as long as they are made in the two countries.
At the second round of ECFA negotiations, which concluded on Thursday, negotiators from Taiwan and China agreed to start talks on setting guidelines to establish products’ origin.
At present, Taiwanese law defines a product’s origin as the final country in which it underwent a substantive transformation, with the value-added rate exceeding 35 percent.
However, officials said that items included in the ECFA’s “early harvest” list were expected to face stricter point-of-origin guidelines.
“If I give you duty-free treatment, I might ask for a higher value-added rate,” Deputy Minister of Economic Affairs Francis Liang Kuo-hsin (梁國新) said.
Huang Chih-peng (黃志鵬), director-general of the Bureau of Foreign Trade and Taiwan’s lead ECFA negotiator, said verification of a product’s origin was likely to be stricter than the current 35 percent for “early harvest” items, adding that guidelines would vary by product category.
“[The guidelines] will be stricter, but whether the value-added threshold will be higher than 35 percent remains uncertain,” Huang said.
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