Taiwan's small business owners rejoice as ECFA tariff reductions start
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Legging and silk stocking producers in Taiwan have reason to rejoice as their products will have 16-percent price advantage over competitors from Japan and the Republic of Korea (ROK) in the Chinese mainland market.
"We are really surprised, as from Jan. 1, 2011 our products will be sold in the giant mainland market without duty," said Charles Wei, general manager of Fu Chu Knitting Co., Ltd, a silk stocking producer in Taiwan which exports its stockings mainly to the United States and Europe.
Previously, due to the 14-16 percent tariff imposed by the mainland, his products were sold only in small amounts in the mainland market, Wei said.
But now, he, also chairman of Taiwan Hosiery Manufacturers' Association, is working on a plan to turn Taiwan into "a kingdom of stockings" as "the mainland's huge consumption will bring great opportunities."
Not only the knit hosiery industry, the island's farming, design, hospital, maintenance of civil aviation planes, banking, securities and insurance, among other sectors, will also join the celebration to enjoy tax exemptions or other preferential policies next year.
According to the cross-Strait Economic Cooperation Framework Agreement (ECFA), signed in June, tariffs on 539 Taiwan goods will be reduced from Saturday as scheduled, by nearly 29.5 billion New Taiwan dollars (about 1 billion U.S. dollars), according to Taiwan authorities.
It is estimated that about 260,000 new jobs will be created in the island by the ECFA's early harvest program, which will benefit about 23,000 small and medium-sized enterprises in the island.
Among the products under the program, the tariff on 18 Taiwan farm products will be cut from 10 percent to 5 percent, which will "greatly benefit Taiwan farmers," said a mainland spokesman for cross-Strait affairs earlier this week.
Under the ECFA's "early harvest program," some goods and services benefit from reduced duties first. The two sides have agreed to cut duties on products in the "early harvest program" to zero over two years.
Taiwan has also agreed to reduce duties on 267 items of products imported from the mainland, but the mainland's farm products are forbidden to enter the island in order to "protect Taiwan's agricultural sector" given the different sizes of the two market, Taiwan's economic authorities said.
According to statistics released by both sides, the mainland has been Taiwan's largest trading partner and export market since 2007.
The statistics show that Taiwan's exports to the mainland are worth more than 100 billion U.S. dollars annually, but the annual amount of imports from the mainland was only 30 billion U.S. dollars.
