The WTO approved Taiwan's entry accord yesterday, one day af-ter the trade group endorsed China's membership.
The news means that Taiwan's 11-year odyssey to gain membership in the trade body is nearing an end.
Minister of Economic Affairs Lin Hsin-yi (
The 142-member WTO must still approve the deal at the organization's ministerial conference scheduled for Nov. 9 to 13 in Doha, Qatar.
Both Taiwan and China must then ratify their accords and wait 30 days before their memberships become official.
Barring unexpected developments, both should formally become WTO members at the beginning of next year.
Taiwan has completed legislation to tailor its trading system to meet WTO requirements, but must still complete legislation or revisions on 14 other bills before its WTO accession.
As Taiwan is expected to join the WTO sometime at the beginning of next year, the country must not only open up the local market to foreign imports but also face competition from across the Taiwan Strait, according to government officials.
The entry of some 20 agricultural items from China -- including rice, peanuts, garlic, betel nuts, chicken meat, red beans and bananas -- are expected to hit the sector hard, according to the Council of Agriculture.
Lee Cheng-mau (
Lee suggested farmers respond by focusing on producing Wu-loong tea, wax apples and mangos for export to China.
The council has estimated that the government will need a budget of more than NT$100 billion in financial aid packages to help local industry in the first four years following Taiwan's admission to the trade organization.
Automobiles
Another sector expecting harder times is the auto industry.
Anticipating stiff competition from Chinese car makers, Taiwan's four major automakers -- Ford Lio Ho Motor (
Huang Wen-fan (黃文芳), a section chief at Taiwan Transportation Vehicle Manufacturers Association, said the cancellation of a measure requiring a minimum ratio of locally-made car parts is expected to deliver the biggest impact on domestic makers, with around 30 percent of locally-made auto parts being replaced by imports.
At previous WTO entrance negotiations with the US and EU, Taiwan promised to end the required minimum 40 percent locally-made ratio for car parts immediately after its entry into the WTO, Huang said.
Taiwan will also gradually lower import duties on small automobiles to 17.5 percent in 2009 from the current 30 percent, Huang said.
Duties on car parts will be lowered to 8.93 percent by 2004 from the current 14.58 percent, Huang added, citing statistics by the Directorate General of Customs under the Ministry of Finance.
Indeed, Ford Lio Ho, the Taiwan partner of the US automaker Ford Motor, announced in June that the company will stop the production of sedans with engines under 1,500cc, saying manufacturing small cars in Taiwan would no longer be profitable after WTO entry as import tariffs and taxes gradually decline.
Alcohol and tobacco
Taiwan's tobacco and alcoholic beverages are also expected to be dealt a blow, with the price of the local cooking staple "red-label" rice wine (紅標米酒) increasing from NT$24 per bottle to more than NT$100, and that of Long life cigarettes (長壽菸) increasing from NT$25 to NT$33.
Under the new Wine and Tobacco Tax Law passed by the Legislative Yuan last year, prices for foreign brands of brandy and whisky will be cut, as the average tariff rate for all imported tobacco and alcoholic drinks will be lowered to 18.01 percent from 26.32 percent.
The opening up of the domestic alcohol market also means that the private sector is allowed to produce wine, liquor and beer, according to officials at the Ministry of Finance.
In line with the ministry's planning, the liberalization of alcoholic beverage production will be carried out in four stages: the fruit wine market will be opened during the first year of entry; rice liquor and liquors made from other grains in the second year; distilled liquors and spirits in the third year; and beer in the fourth year.
In preparation for the impending end of its monopoly on the market, the Taiwan Tobacco and Wine Monopoly Bureau (
Over the last three years the bureau has cut its workforce from 14,000 to 8,600 and is planning to further reduce numbers to 7,600 in 2002, according to Chu.
In addition, the bureau also plans to cooperate with brewers and distillers in China for the production of beer and liquor including Taiwan Beer, the bureau's best selling alcoholic beverage in Taiwan.
Service sector
Chang Po-hsin (張伯欣), chairman of Chang Hwa Bank, said that local banks will have to team up with foreign financial institutions to lift the quality of financial products and management, lest they be run out of business by foreign competition.
While there are foreign concerns about the limits on foreign participation in Taiwan's financial markets and on the types of investment permitted, finance officials said they have revised laws to improve complicated regulations that have discouraged large international financial institutions in the past.
But Lee Yung-shan (李庸三), chairman of the ROC Banks' Association, is worried about the new order in future financial market after WTO entry, saying the current Taiwan market is overcrowded with 53 banks and may have to undergo a period of market reshuffle through mergers or acquisitions.
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