GENERAL AGREEMENT ON RESTRICTED L/7189 26 March 1993 TARIFFS AND TRADE Limited Distribution ACCESSION OF THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU Questions and Replies to the Memorandum on the Foreign Trade Régime (L/7097 and Addenda) At its meeting on 6 November 1992, the Council set up a Working Party to examine the application for accession of Chinese Taipei. The Terms of reference of the Working Party are reproduced in document L/7095/Rev.1. Having regard to the timetable agreed at the first meeting of the Working Party, in document L/7097 contracting parties were invited to submit questions in writing concerning the foreign trade régime of Chinese Taipei. Questions submitted by contracting parties in connection with the foreign trade regime of Chinese Taipei and the replies thereto provided by the authorities of Chinese Taipei are reproduced hereunder. Further questions and replies will be circulated in due course. Delegations wishing to raise additional questions concerning the foreign trade regime of Chinese Taipei might inform the representation of Chinese Taipei (with a copy to the Secretariat) of such questions in advance of the meeting of the Working Party, so that considered replies can be made available by Chinese Taipei to members at the time of the Working Party meeting. 93-0414 L/7189 Page 2 Introduction 1. Page 4, paragraph 6: It is stated that "In general, Chinese Taipei has extended bilateral trade concessions to its trading partners on a reciprocal basis, and by applying the m.f.n. principle". Has Chinese Taipei applied any discriminatory trade measures against any of its trading partners on any product? If so, please list these measures and the reasons and the criteria, if any, for taking such measures. Does Chinese Taipei intend to abolish these discriminatory trade measures when it accedes to the GATT? Reply 1 Upon accession to the GATT, Chinese Taipei will extend unconditional m.f.n. treatment to its GATT trading partners with limited exceptions for trade in certain agricultural and industrial products. Discriminatory trade measures, if any, will be gradually phased out through bilateral consultations with the contracting parties concerned. 2. Page 5, paragraph 3: It is stated that "Chinese Taipei intends to assume all obligations and rights under the GATT as a contracting party". Does this mean that Chinese Taipei accedes to the GATT as a developed country; namely, Chinese Taipei shall not enjoy the favourable treatment generally accorded to developing countries under the GATT? Reply 2 Chinese Taipei will, in principle, adhere to the GATT with the rights and obligations of a developed party upon its accession. However, as is well known to the existing contracting parties, being a newly industrialized economy, certain sectors of Chinese Taipei have not been fully developed, and still require protection of some degree. Therefore, Chinese Taipei wishes to be granted a transitional period for making appropriate adjustments or for those sectors to be more developed under limited protection. The length of the transitional period for each type of trade problem or each sector that still requires protection is to be jointly determined by Chinese Taipei and the contracting parties. 3. Chinese Taipei has earlier declared that its intention is to adhere to GATT with the rights and obligations of an industrialized party to the Agreement. However, this is not evident from the Memorandum describing Chinese Taipei's foreign trade régimes. A clear statement to this effect from Chinese Taipei would be welcomed. Reply 3 Please refer to Reply 2. 4. Page 5, paragraph 3: It is stated that "Chinese Taipei would consider adhering to the agreements and arrangements resulting from the Tokyo Round". Specifically which GATT codes are under consideration? Can L/7189 Page 3 Chinese Taipei provide a firm commitment to adhere to the Tokyo Round Codes? Reply 4 Chinese Taipei, at the time of its accession, will adhere to the General Agreement, the Codes on Technical Barriers to Trade, Anti-dumping, Subsidies/Countervailing Duties, Customs Valuation and Import Licensing Procedures, but wishes to have a transitional period for those areas that are to be identified by Chinese Taipei. In the transitional period, Chinese Taipei will endeavour to bring its practices in line with the requirements of the Codes. In respect of the Code on Government Procurement and the Code on Trade in Civil Aircraft, Chinese Taipei after careful consideration, is at present not prepared to adhere to these Codes at the time of accession, but will endeavour to bring its practices more in line with the requirements of the Codes. 5. Chinese Taipei's intentions as regards its adherence to the GATT MTN Agreements is not quite clear in the Memorandum. It is expected that Chinese Taipei will adhere to the Codes on Technical Barriers to Trade, Government Procurement, Anti-dumping, Subsidies, Customs Valuation, Import Licensing Procedures, and Civil Aircraft. Reply 5 Please refer to Reply 4. 6. Page 5, paragraph 1: Please provide specific contents of the assistance to developing countries under an "International Economic Co-operation Development Fund". Reply 6 The IECDF has offered the following assistance to friendly developing countries: (1) Loans The IECDF has approved ten loan applications for developing countries with a total amount of US$144,400,000. Details are as follows: L/7189 Page 4 List of Loans Provided by IECDF (as of 20 November 1992) Commitment Country Project description amount (US$ million) Costa Rica Export Processing Zone 9.0 Panama Export Processing Zone 7.8 Ireland Industry Zone 20.0 Dominican Republic Free Zone 2.5 Papua New Guinea. Housing Development Project 15.0 St. Vincent Development of Infrastructure 8.0 Malawi Development of Airline Industry 27.0 Honduras Road Maintenance Project 20.0 Philippines Manila South Water Distribution 20.1 Project Costa Rica Small and Medium Enterprises 15.0 Development (2) Special technical assistance The IECDF has also provided the following fourteen technical assistance grants for project feasibility studies in various developing countries: (a) Assistance to De La Salle University of the Philippines to establish a vocational training center (Grant of US$300,000). (b) Shared financing with USAID for "Technical Assistance in Finfish Aquaculture Production". (Grant of US$1,530,000) (c) Assistance to Inland Department of Thailand to establish a value-added-tax system (Grant of US$250,000). (d) Assistance to the Commerce Department of the Republic of Venezuela for a feasibility study on the establishment of an Export Processing Zone (Grant of US$350,000). (e) Assistance to the Republic of Guatemala to carry out a vocational training project (Grant of US$94,000). L/7189 Page 5 (f) Assistance to the Republic of Paraguay for a feasibility study on the development of ferro-alloys (Grant of US$170,000). (g) Assistance to Papua New Guinea for a feasibility study on the development of an export processing zone (Grant of US$500,000). (h) Assistance to the Republic of Costa Rica to develop export-oriented small and medium enterprises (Grant of US$1,500,000). (i) Assistance to Mexico for a feasibility study on the development of an export processing zone in Texas-Tamaulipas (Grant of US$100,000). (j) Assistance to the Commonwealth of the Bahamas to develop its conch-shell industry through a two-year training program (Grant of US$500,000). (k) Assistance to Vietnam for a feasibility study on the Highway No.5 Expansion Project (Grant of US$31,200). (1) Assistance to the Philippines for a feasibility study on the Industrial Zone Development Project (Grant of US$15,840). (m) Assistance to the Ministry of Finance cf the Philippines to improve its taxation information system through computerization (Grant of US$400,000). (n) Assistance to the Government of Dominica to develop geothermal resources for power generation by Chinese Taipei's experts (Grant of US$700,000). (3) Other general technical assistance In the area of other related technical assistance, forty-six training courses have been arranged for the 1991-92 fiscal year. The IECDF received 508 foreign officials to Taiwan for various training. In addition, during the 1991-92 fiscal year the IECDE sponsored the visits of about seventy high-ranking officials from developing countries to Taiwan. 7. Page 7: Please provide an outline of the rules of the Statute for the Encouragement of Investment, and indicate whether these rules are different for foreign capital. Reply 7 The Statute for the "Encouragement of Investment" has been abolished since 31 December 1990 and substituted by the "Statute for Upgrading Industries" on 1 January 1991. L/7189 Page 6 The Statute for Upgrading Industries consists of four major enforcement rules, including tax benefits, establishment and utilization of development fund, technical assistance, and establishment of industrial areas. There is no difference in regulating domestic and foreign investors on the enforcement of the Statute for Upgrading Industries. All foreign and domestic investors receive equal treatments except tax benefits that domestic investors do not receive. These tax benefits are described in the Articles 11 and 12 of the Statute for Upgrading Industries as follows: Article 11 Where a non-resident individual or a non-resident profit-seeking enterprise, having been approved to make investment in the Republic of China under the Statute for Investment by Overseas Chinese or the Statute for Investment by Foreign Nationals, receives dividends distributed by a company located in the Republic of China or profits distributed by a partnership in the Republic of China, the income tax payable thereon by such individual or enterprise shall be withheld at the time of payment thereof by the tax withholder as specified in the Income Tax Law at the rate of 20 per cent of such distribution, and the provisions provided in the Income Tax Law for filing final income-tax returns shall not apply.