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Understanding ECFA and the Significance of Early Harvest Lists Published 2023-10-30
       When it comes to ECFA (Economic Cooperation Framework Agreement), one often hears about the Early Harvest List,consists of a list of goods that have their tariffs reduced ahead of schedule. This list can be categorized into "Service Trade Items" and "Goods Trade Items." Typically, items that are more urgent or beneficial to both parties (or one party) are included in the Early Harvest List. Any item listed in this list can enjoy the benefits of reduced tariffs.
        It took Taiwan and mainland China three years, from 2011 when they started implementing tariff reductions, to 2013 when the Early Harvest List's tariffs were completely reduced to zero. According to the ECFA website, the Early Harvest Lists of both sides included services such as banking and non-financial services, while the goods trade items included 521 products for which mainland China reduced tariffs towards Taiwan, including textiles, machinery, petrochemicals, and transportation, and 267 products for which Taiwan reduced tariffs towards mainland China, including machinery, petrochemicals, textiles, and transportation.
         Additionally, there is a certificate known as the "Certificate of Origin," which can be divided into "originating in my country" and "originating in a foreign country." If mainland China wants to export goods to Taiwan, it must apply for preferential tariffs in Taiwan and attach the original certificate of origin issued by mainland China's visa agency (one of the 35 exit and entry inspection and quarantine bureaus or one of the 48 Trade Promotion Committees). Similarly, if Taiwan's goods are to be exported to mainland China, the Economic Ministry's Trade Bureau's authorized issuing unit must be applied to for an ECFA certificate. Other related information can be found in the "Regulations for the Management of Certificates of Origin and Processing Certificates."
         Regarding the termination date of ECFA, there is currently no exact date, as it primarily depends on the will of both Taiwan and mainland China. According to the terms of ECFA, if one side wishes to terminate the agreement, they should notify the other side in writing, and both sides should enter into negotiations within 30 days of the notification. If a consensus cannot be reached, ECFA will terminate 180 days after the notification is issued. Within 30 days after the termination of ECFA, both sides should also negotiate the issues arising from the termination.
         Some analysts suggest that the impact of ECFA termination on Taiwan's GDP would be limited. However, the tariff rates on Early Harvest List products, including petrochemicals, machinery, textiles, and transportation, could potentially revert to pre-ECFA levels, affecting related industries. On the other hand, it is believed that the psychological impact of ECFA's termination might be more significant, as ECFA holds significant symbolic importance for cross-strait peaceful exchanges. Some experts are also concerned that if ECFA is terminated, Taiwan's chances of joining the Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) may become more distant, potentially leading to a decline in Taiwan's exports and economic growth.
         The Ministry of Economic Affairs notes that Taiwan's export dependency on mainland China has already decreased, mainly due to policy adjustments, changes in the international landscape, and reduced demand in mainland China. Similarly, the share of Early Harvest List products in Taiwan's exports has also decreased, indicating a gradual diversification of Taiwan's export markets. If ECFA is terminated, the Ministry of Economic Affairs states that they will continue to support Taiwanese industries and assist them in adjusting to potential changes.