The Executive Yuan held a press conference Jan. 20 in Taipei City to elaborate on tariff negotiations held with the U.S. following the return of Vice Premier Cheng Li-chiun and the trade negotiations team.
Premier Cho Jung-tai first noted that the government proposed a NT$93 billion (US$2.9 billion) initiative to support domestic industry. In addition, a model proposed by Cheng was that Taiwan companies would invest US$250 billion into the US, and the government would guarantee an additional US$250 billion in credit to facilitate further investment. He added that the negotiations enabled an advantageous strategic gain for Taiwan and committed to fully support upcoming negotiations on a Taiwan-U.S. reciprocal trade agreement.
Cheng detailed consensus reached during the negotiations, including lowering U.S. import duty on Taiwan-made goods to 15 percent without stacking them on existing most-favored-nation rates, which is the same status as that of Japan, South Korea, Switzerland and the EU. In addition, semiconductors and related products from Taiwan were granted the most favored nation treatment under Section 232; an investment memorandum of understanding was signed; and signing of a reciprocal trade agreement is imminent. The vice premier also again urged the U.S. to finalize an avoidance of double taxation agreement.
As for credit guarantees, Cheng said the government plans to guarantee up to 50 to 60 percent of loans, with a leverage multiple of 15 to 20 times, putting estimated funding required for the mechanism at between US$6.25 billion and US$10 billion. The mechanism will progress in stages, she said, adding that the MOU does not specify a time limit and that companies will apply for financing only when needed.
The vice premier emphasized that Taiwan is strengthening its semiconductor prowess in the U.S. instead of shifting its supply chain to the U.S. The country’s semiconductor production value reached NT$6.5 trillion last year, she said, adding that Taiwan Semiconductor Manufacturing Co.’s investment in Taiwan is more than its investment in other countries. She concluded by pledging “Taiwan-U.S. can lead” and envisages creation of strategic artificial intelligence partnerships and a mutually beneficial trade relationship with the U.S.
Economic Affairs Minister Kung Ming-hsin said the new tariffs would enhance competitiveness in Taiwan’s automotive components, machinery and machine tool sectors in the U.S. It will also help bicycle, hand tools, medical equipment, plastics, textiles and water hardware industries in market competition, he noted, adding that the results further strengthen Taiwan’s key role in the global high-tech community. (YCH-E)
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