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To: Lane Hall-Witt who wrote (485)	7/29/1998 1:36:00 PM
From: allen v.w.	Read Replies (1) \| Respond to of 40688

TO ALL: A little info on TAIWAN inport and export news. July 23, 1998 No. 71/98 EUROPEAN UNION AND TAIWAN CONCLUDE BILATERAL MARKET ACCESS NEGOTIATIONS The European Union (EU) and Taiwan today completed their bilateral market access negotiations in the context of Taiwan's bid to join the World Trade Organisation (WTO). These are important steps forward towards Taiwan's eventual WTO membership, although this is still some way from being agreed by the WTO as a whole. Sir Leon Brittan, Vice-President of the Commission, reacted to the conclusion of the negotiation with the following comment: "I am greatly encouraged by the conclusion of the market access negotiations with Taiwan. Taiwan's market access offer now compares well with concessions offered by the most industrialised countries. I am particularly pleased to see that Taiwan has improved its market access offer to take account of specific EU requests, notably by agreeing to reduce tariffs on cars from 30% to 17.5%, a move which will make for a more competitive car industry in Taiwan in the future. The substantial removal of market barriers to the sale of cognac, whisky and other spirits in Taiwan is also a welcome step forward. I would now encourage Taiwan to build on its commitments as substantial work still remains to be done before WTO accession can become a reality." The EU has obtained additional commitments going beyond those offered by Taiwan in its market access negotiations with other major WTO partners, notably the US and Japan. These include the 17.5% car tariff and the concessions on spirits; the reduction of tariffs on trucks and buses from 42% to 25%; an agreement to lift the ban on the sale of diesel cars two years after WTO accession; the granting of national treatment to foreign banks regarding lending activities and the opening of branches; and the authorisation of shipping companies to set up as wholly-owned subsidiaries and to run their sea container terminals. The details of the agreement agreed by Sir Leon Brittan and Mr. Wang Chih-kang, Taiwanese Minister of Economic Affairs Industrial tariffs: Taiwan will bind tariffs on 6814 products, reduce its tariff protection, and eliminate tariffs on products covered by the Uruguay Round zero-for-zero agreements as well as the Information Technology Agreement. Most cuts will take place upon WTO accession, but 2217 of the tariff lines will happen over specific time periods ('staging'), as follows: of this figure, most will be reduced by the year 2002, except for newsprint (year 2000), 29 chemicals products (year 2001), 405 products mainly in the chemicals, iron and steel, auto parts, and plywood sectors (year 2004), and 46 tariff lines in the motor vehicles sector (2008). Spirits: Whisky and cognac currently suffer massive discrimination in Taiwan, severely affecting their sales to one of the most lucrative markets in the global drinks business. Taiwan has agreed to remove this discrimination by January 1, 1999 if new legislation equalising spirits taxes has not come into force by then. This would mean dropping cognac tax from 1000 New Taiwanese dollars (NT$) or ECU 26.4 a litre and Scotch and Irish whisk(e)y from NT$ 440 (ECU 11.6) a litre down to NT$ 198 (ECU 5.2) a litre. Furthermore, Taiwan will drop as of August 1 tax rates to NT$ 490 (ECU 12.9) for cognac, to NT$ 350 (ECU 9.2) for Scotch and Irish whisk(e)y of a CIF value higher than 7 US$ and to 198 NT$ (ECU 5.2) for other Scotch and Irish Whisk(e)y . The EU has therefore secured a cast-iron guarantee that its whisk(e)y, cognac and other producers can compete on a level playing field in Taiwan by January next year. In addition, Taiwan will eliminate tariffs on EU spirits completely by the year 2000, and will introduce tougher protection to prevent abuse of the labelling, origin and quality of European wines and spirits. Motor vehicles: Tariffs will be gradually lowered to 17.5% by the year 2008. Taiwan's tariff quota on EU car imports will be set at 159,220 units a year upon accession (this is well over twice the EU's current export level to Taiwan), increasing this by 20% a year until full liberalisation. Taiwan will also remove its ban on diesel passenger cars and motorcycles above 150 cc no more than two years after accession, and will remove discriminatory tax incentives which encourage manufacturers to use domestically produced engines and bodywork. Services: Taiwan will remove foreign equity restrictions in all services sectors except in specific sectors such as telecoms, where the EU and other foreign companies will nonetheless be able to hold a controlling interest. In financial services, Taiwan will substantially improve market access and treatment guaranteed to EU operators. On maritime services, Taiwan will allow foreign shipping companies to set up wholly-owned subsidiaries which can arrange entering/leaving harbours for their own ships, solicit goods and/or passengers and operate their own sea-container terminals as of January next year. Wholly foreign-owned companies will also be able to provide maritime agency, freight forwarding, container station and depot services. Civil aircraft: Taiwan will join the WTO Agreement on trade in civil aircraft upon WTO accession. Agriculture: On accession Taiwan has agreed to market openings in sectors of interest to EU producers such as pork and poultry. In addition, Taiwan will immediately open tariff quotas for EU exports of apples (3000 tons a year) and citrus fruit (1500 tons a year).

To: Lane Hall-Witt who wrote (485)	7/29/1998 1:39:00 PM
From: allen v.w.	Read Replies (1) \| Respond to of 40688

MORE INFO ON EXPORT: July 1, 1998 EU REQUESTS WTO PANEL ON US EXPORT SUBSIDIES The European Commission today announced its formal request for a World Trade Organisation (WTO) Panel investigation into US export subsidies. Tax exemptions worth an annual USD 2 billion are currently extended to American companies exporting through Foreign Sales Corporations (FSCs). The Commission's decision follows several rounds of failed consultations with the US. The proliferation of FSCs over the past decade is one of the EU's major trade concerns. Commission Vice President Sir Leon Brittan said today: "The FSC scheme is a clear subsidy from the US taxpayer to industry. The sums involved lead to a significant distortion of international trade by granting an unfair advantage to US products in highly competitive markets. This is a violation of fundamental WTO rules." FSCs are usually subsidiaries of US corporations, and are located in tax havens such as the Virgin Islands, Barbados or Guam. American firms exporting through such FSCs currently qualify for income tax relief on condition that a large proportion of their product is manufactured in the US. In addition, payments by FSCs to their US parent companies are not subject to US taxation. The Commission consider the FSC scheme to be a clear violation of the WTO Agreement on Subsidies and Countervailing Measures, which prohibits tax regimes which favour exports in comparison with like products sold for domestic consumption. FSCs account for an estimated annual turnover of USD 152 billion and gross profits of around USD 10 billion, which are exempt from normal US taxation. The scheme was extended to the US software industry last September, which will bring estimated savings to US firms of USD 700 million over the next five years. The EU launched formal consultations on FSCs last November after bilateral discussions failed to reach a settlement. Three rounds of consultations have failed to produce any US commitment either to abolish the FSC scheme or to make it WTO-compatible.