TAIPEI - Legging and silk stocking producers in Taiwan have reason to rejoice as their products will have 16-percent price advantage over competitors from Japan and the Republic of Korea (ROK) in the Chinese mainland market.
"We are really surprised, as from January 1, 2011 our products will be sold in the giant mainland market without duty," said Charles Wei, general manager of Fu Chu Knitting Co., Ltd, a silk stocking producer in Taiwan which exports its stockings mainly to the United States and Europe.
Previously, due to the 14-16 percent tariff imposed by the mainland, his products were sold only in small amounts in the mainland market, Wei said.
But now, he, also chairman of Taiwan Hosiery Manufacturers' Association, is working on a plan to turn Taiwan into "a kingdom of stockings" as "the mainland's huge consumption will bring great opportunities."
Not only the knit hosiery industry, the island's farming, design, hospital, maintenance of civil aviation planes, banking, securities and insurance, among other sectors, will also join the celebration to enjoy tax exemptions or other preferential policies next year.
According to the cross-Strait Economic Cooperation Framework Agreement (ECFA), signed in June, tariffs on 539 Taiwan goods will be reduced from Saturday as scheduled, by nearly 29.5 billion New Taiwan dollars (about $1 billion), according to Taiwan authorities.
It is estimated that about 260,000 new jobs will be created in the island by the ECFA's early harvest program, which will benefit about 23,000 small and medium-sized enterprises in the island.
Among the products under the program, the tariff on 18 Taiwan farm products will be cut from 10 percent to 5 percent, which will "greatly benefit Taiwan farmers," said a mainland spokesman for cross-Strait affairs earlier this week.
Under the ECFA's "early harvest program," some goods and services benefit from reduced duties first. The two sides have agreed to cut duties on products in the "early harvest program" to zero over two years.
Taiwan has also agreed to reduce duties on 267 items of products imported from the mainland, but the mainland's farm products are forbidden to enter the island in order to "protect Taiwan's agricultural sector" given the different sizes of the two market, Taiwan's economic authorities said.
According to statistics released by both sides, the mainland has been Taiwan's largest trading partner and export market since 2007.
The statistics show that Taiwan's exports to the mainland are worth more than $100 billion annually, but the annual amount of imports from the mainland was only $30 billion.
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.