Democratic Progressive Party (DPP) legislators yesterday warned that a Chinese Nationalist Party (KMT) proposal to create a “free-trade zone” on outlying islands could undermine Taiwan’s efforts to create a “non-red supply chain” by opening a “back door” for Chinese companies evading US tariffs.
DPP legislators Michelle Lin (林楚茵) and Puma Shen (沈伯洋) voiced their concerns during a meeting of the legislature’s Foreign Affairs and National Defense Committee.
The Foreign Trade Act (貿易法) was amended in 2019 to prevent China from “laundering” the origins of its products, Lin said.
Photo: CNA
That same concern is once again prevalent, as the KMT is proposing amendments to Article 18-1 of the Offshore Islands Development Act (離島建設條例) to create an “Offshore Free Trade Demonstration Zone,” Lin said.
People, companies, goods and services from China could enter the zone under regulations that are yet to be determined.
Lin said that China also makes items that the nation exports to the US, such as electronics, and it would be easy to say those Chinese-made items were from Taiwan instead.
The proposed amendments even state that “relevant regulations will be appropriately relaxed” to facilitate such endeavors, Lin said.
Such a proposal runs the risk of allowing Chinese companies, labor and freight to “launder” the origins of their products by going through the zone, she said.
Shen said that proposing amendments to allow Chinese companies and people to freely enter demonstration zones in Taiwan at a time when the nation is about to begin talks with the US on tariffs is questionable.
Mainland Affairs Council Deputy Minister Shen You-chung (沈有忠) said the act must observe the Act Governing Relations Between the People of the Taiwan Area and the Mainland Area (臺灣地區與大陸地區人民關係條例).
The council believes that the amendment should be reconsidered, especially given the national security concerns and lack of social consensus, he said.
Deputy Minister of Economic Affairs Cynthia Kiang (江文若) said the government was concerned over possible national security implications of the amendment and urged that such concerns be considered when it is discussed at the legislature.
Lin said that it would be favorable for Taipei during bilateral tariff talks if Washington sees that Taiwan is a democratic country observing the rule of law and that it has enacted legislation to prevent China from changing its products’ country of origin.
Deputy Minister of Foreign Affairs Chen Ming-chi (陳明祺) said that Taiwan is committed to working with the US to prevent “origin laundering.”
Additional reporting by CNA
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