Dec. 21 (UPI) — China revoked tax breaks on key Taiwanese chemical imports Thursday, accusing Taipei of breaking a cross-strait trade agreement by implementing policies blocking imports of around 2,500 categories of mainland products.
Preferential tax rates agreed under a 2010 economic co-operation agreement would be suspended on imports of vinyl chloride, propylene, paraxylene and nine other chemical compounds manufactured in Taiwan effective Jan. 1, the Ministry of Finance said in a news release.
The ministry said a nine-month trade barrier investigation had concluded that Taiwan had “unilaterally adopted discriminatory bans, restrictions and other measures on the export of mainland products, violating the Cross-Strait Economic Cooperation Framework Agreement” which applies tariff cuts to more than 800 Taiwanese goods imports.
“It is hoped that Taiwan will take effective measures to lift trade restrictions on the mainland,” the ministry said.
Differences over trade should be resolved through WTO-mediated talks, Taiwan’s Mainland Affairs Council said in a statement which condemned the steps taken by Beijing as “economic coercion.”
However, analysts said the economic impact of the measures would be minimal because the 12 affected products accounted for only 1.1% of China’s imports from Taiwan in the January to November period.
Lin Tze-luen a spokesperson for Taiwan’s legislative Executive Yuan, alleged during a press conference that the Chinese probe was politically motivated and deliberately timed ahead of a parliamentary and presidential election due to be held Jan. 13, on the island that China considers a renegade province.
Taiwan’s Democratic Progressive Party government routinely accuses China of using its economic and military muscle to influence the country’s politics. China’s overwhelming military superiority and a $156.5 billion trade surplus with the island give it the upper hand on both counts.
Thursday’s action was in retaliation for what the commerce ministry probe alleges are blocks by Taipei on imports of 2,509 mainland Chinese mineral, agricultural and textile goods items, a list which it claimed had lengthened in the 13 years since the agreement was signed.
The Kuomintang party — which favors maintaining the status quo over any steps toward independence — could benefit from the spat in the upcoming elections next month because a KMT administration offers the prospect of reduced tensions across the Taiwan strait and smoother trade relations.
