Taiwan's small business owners rejoice as ECFA tariff reductions start
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A brochure released by Taiwan authorities said the signing of the ECFA "brings more benefits to Taiwan than the mainland," given the latter's huge economic size.
Staff members at the newly-established ECFA service center under Taiwan authorities' economic department have been busy receiving consulting phone calls over the past week, with the countdown to the start of "early harvest program" approaching.
Guilds of many industries in Taiwan held several policy briefings on the tax reductions, and invited customs officers to explain application procedures for tax reduction and specific "rules of origin," in case foreign producers took advantage of the ECFA by transferring the last manufacturing chain to the island in order to enjoy duty exemption in cross-Strait trade.
After a briefing held by Taiwan Electronic and Electrical Manufacturers' Association on Thursday, a representative of a petrochemical company said his company wanted to get familiar with the tax reduction application procedures as soon as possible, though only two items in the "early harvest program" were related to his company's business.
"But we are waiting for further opening of the mainland, and the next batch of tax reduction is not far as the cross-Strait negotiations move on," he told Xinhua.
According to the ECFA, the mainland will open 11 service sectors to Taiwan. Five service sectors -- accounting, computer services, conference-providing services, research and development, film -- were opened in October.
The mainland has removed quota restrictions for Taiwan films, and allowed the island's filmmaking resources to compete freely in the mainland film market, the value of which hit 6.2 billion yuan (911 million U.S. dollars) in 2009. Previously, Taiwan films had to compete with blockbusters from Hollywood and other overseas films to enter the mainland's market, which has a quota limiting the number of imported-films screened.
Under the agreement, the island also allows 10 mainland films or mainland-Taiwan co-production to screen in Taiwan each year.
The mainland has also approved six Taiwan-based banks to open branches on the mainland, and four other Taiwan banks to establish representative offices, since the two sides signed a memo on the supervision on financial businesses in 2009.
And the opening of the island's banking sector to the mainland, also included in the "early harvest program," is expected to happen soon.
Mainland statistics also show that a total of 15 Taiwan securities firms have set up 29 offices on the mainland so far and Taiwan investors have founded five insurance companies on the mainland.
"The implementation of the 'early harvest program' is only the first step in implementing the ECFA. As negotiations continue, cross-Strait trade will increase and even more people will benefit," said the mainland spokesman for cross-Strait affairs. Under the agreement, the two sides will continue to discuss agreements for commodities trade, services trade and investment.
Chiang Pin-kung, chairman of the Taiwan's Straits Exchange foundation said the island's economy would be greatly boosted by the ECFA. The island's 2010 economic growth was forecast at 9.98 percent and that of 2011 was estimated above 5 percent.
According to a report of the International Monetary Fund in October, Taiwan's economic growth during 2012-2015 was forecast to top the "Four Asian Tigers" - Taiwan, Hong Kong, Singapore and the ROK, four developed regions that maintained high growth rate between 1960s-1990s.
Liu Zhentao, director of the Institute of Taiwan Studies under Beijing's Tsinghua University, said the start of the "early harvest program" coincided with the unveiling of the mainland's 12th Five-Year Program (2011-2015).
"It put Taiwan in a favorable position when competing with other players in the mainland market," Liu told a forum in Taipei.
