Position Paper on Taiwan's Fruit Exports to China

Mainland Affairs

Position Paper on Taiwan's Fruit Exports to China

In order to temper Taiwan's negative reaction to the passage of the "anti-separation law"(the so-called "anti-secession law") by Beijing authorities, China launched an all-out united front campaign to manipulate Taiwan's farmers. On March 30, 2005, the Chinese Communist Party (CCP) and Taiwan's Kuomintang (KMT) reached an inter-party agreement. Following the visits to China by the chairmen of the KMT and People's First Party (PFP) in late April and mid-May, respectively, Beijing has been rolling out a series of incentives for Taiwan. On May 23, Beijing announced that 18 kinds of fruit from Taiwan could be marketed in China instead of the original 12. On June 1, the Taiwan Affairs Office under China's State Council announced at a press conference that zero-tariff treatment would be granted for 15 kinds of fruit from Taiwan (pineapples, lychees, papayas, star fruit, mangoes, guavas, wax apples, betel nuts, pomelos, dates, coconuts, loquats, plums, peaches, and persimmons). Regarding these developments, the Mainland Affairs Council of the Executive Yuan provides clarifications as below.

The government of Taiwan in fact imposes no restrictions whatsoever on the exportation of Taiwanese agricultural products to China. Despite this, the volume and value of Taiwanese fruit exports to China are miniscule as a consequence of the China market's peculiar characteristics and trade barriers. According to customs statistics, last year's fruit exports to China amounted to only 629 metric tons. With a value of US$340,000, it accounted for only 0.01% of Taiwan's total agricultural exports and 0.02% of the total value of Taiwan's fruit production. This means that, at present, China is not an important export market for Taiwanese fruits.

Given the relatively small scale and high cost of Taiwan's fruit production, farmers have no choice but to focus on the growth and export of high-quality, high-value fruits. On the other hand, China's per capita income is low, greatly limiting its consumption of high-priced fruits. Even if Taiwan's high-quality fruits eventually do sell well in China, increasing numbers of Taiwanese businesspeople and farmers may be tempted by China's cheap production costs to transfer there Taiwan's agricultural technologies and crop strains for local production. Cheaper fruits produced in China could greatly reduce the demand for Taiwanese fruits there, replace Taiwanese fruits sold on other overseas markets, and also be sold to Taiwan in turn.

Taking into consideration both free-market economic principles and the aspirations of Taiwanese farmers, Taiwan's government has regarded China as only part of a much larger global market for fruit exports and has striven to help local farmers develop overseas markets and brand names. At the same time, however, due to the uncertainties and risks of the China market, the government must remind them not to place all their hopes on China's market, but to pragmatically and actively develop the global market. We must understand China's political intentions toward Taiwan, as below.

First, it is important to note that Beijing's arbitrary extension of preferential treatment to imports of Taiwanese fruits comes at a time when China's agricultural sector itself is plagued by enormous problems. In this light, one can see that it is nothing more than a calculated ploy to cozy up to Taiwan's agricultural counties of central and southern Taiwan, as well as farmers as a whole. As this and the other related incentives are being offered via deals made with Taiwan's opposition political parties, they clearly serve as attempts to divide Taiwan's society, governing and opposition parties, and the sentiments between Taiwan's farmers and the government.

Second, the Chinese communist authorities have demanded consultations on technical problems in the importation of Taiwanese agricultural products and designated Taiwanese negotiating authorities. In so doing, they deliberately shun the negotiation body designated by our government. Were the government to acquiesce in such behavior, its authority would be severely undermined, and the Taiwanese people would be faced with the disastrous consequences of a "de-governmentalization."

Third, the Chinese communist authorities have spared no effort to attract investment, technology, and strains from Taiwan's agricultural sector. Such tactics have had a considerable negative impact on Taiwan's agricultural development and overseas markets. The ulterior motive for granting zero-tariff treatment to 15 kinds of fruit from Taiwan and opening up China's market to expand cross-strait exchanges with Taiwan's farmers is to accelerate China's absorption of Taiwan's core agricultural technologies and superior crop strains.

At this stage, the Taiwan government imposes no restrictions on agricultural exports to China. In recent years, Taipei has made budget allocations to help the private sector develop overseas markets, including the China market. In cross-strait agricultural exchanges between private organizations or individuals, the government maintains a laissez-faire approach as long as its authority is not involved. In facing China's united front maneuvers to manipulate Taiwan's agricultural sector, the government has raised its "one principle, three arrangements"basic stance.

Under the "one principle,"we shall make our greatest endeavors to promote Taiwanese agricultural exports globally, treating exports to China merely as one aspect thereof.

In the first of the "three arrangements," the Taiwan External Trade Development Council (TAITRA) is designated as the window for integrating and overseeing export-related matters. While local farmers' associations coordinate the supply of produce, TAITRA is responsible for promoting thereof to global markets, including the China market. Second, negotiations for export of produce to China that involve governmental authority, such as tariffs, quarantine, inspection and customs clearance, are handled by a negotiation team consisting of experts from the Council of Agriculture, the Mainland Affairs Council, and other relevant agencies. When the need arises, TAITRA will assist in arranging related consultations upon request. Third, in order to ensure the quality of high-value fruits and its prompt delivery, it is essential to expedite the implementation of comprehensive "measures for facilitating cross-strait cargo transportation"that cover all types of goods, including farm produce. This requires the earliest possible negotiation of concrete arrangements for two-way flights operated by airlines from both sides without stopovers in a third area.