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Appendix 1: Questions from Experts Chapter 0: General Macroeconomic, Trade and Investment Policy Questions 0.1: General Macroeconomic Questions Q0.1. Is there a website where people can access Chinese Taipei’s basic macroeconomic variables? The IAP mentions the website http://www.stat.gov.tw/main.htm. Are there other sites which provide latest information, or more extensive range of information than this website? If so, please provide the web address. A: The website http://www.stat.gov.tw is the most complete and updated website providing data and materials regarding Chinese Taipei’s macroeconomic performance. However, experts are welcome to check the Council for Economic Planning and Development website at http://www.cepd.gov.tw/encontent/index.jsp for a wider range of information. Q0.2. Is there a website where one can obtain Chinese Taipei trade data on industry and economy level, and foreign investment on industry and economy level? (I could not find investment data in the website above, and are more detailed trade data available?). If such data is not available through the internet, please provide the latest annual foreign investment (especially inward foreign direct investment) data between 1990~2005, broken down by major economies and industries if possible. A: Please see the website of Bureau of Foreign Trade (BOFT) (http://eweb.trade.gov.tw/ ) to find Chinese Taipei’s trade, finance, economic statistics, monthly reports and forecasts. The latest annual foreign investment data is available in the website of Investment Commission, MOEA at http://www.moeaic.gov.tw/. Q0.3 What is Chinese Taipei’s general appraisal of its recent macroeconomic conditions and macroeconomic policy? Is Chinese Taipei generally satisfied with Chinese Taipei’s economic performance? If not, which areas does the Chinese Taipei government consider to be problem areas, and what type of policies has the government implemented, or have under consideration? A: Chinese Taipei’s economy is growing at a stable pace, thanks in large part to ongoing domestic reforms across a wide range of areas, as well as a relatively favorable international economic environment externally. Economic growth reached 4.09% in 2005 and 4.93% in the first quarter of 2006. The unemployment rate is declining steadily, falling to an average of 4.13% for all of 2005. The decline continued in the first half of 2006, dropping to 3.87%, 0.27% lower than the same period of 2005. The vitality and strength of the economy is reflected in the wider context by the results derived from various surveys carried out recently by a number of reputable and prestigious international organizations. In these surveys, Chinese Taipei receives a high ranking internationally for several key economic performance areas. For example, in a Business Risk Intelligence (BERI) survey, our investment environment was ranked the 5th out of 50 economies in 2005. According to the World Economic Forum’s Global

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Competitiveness Report for 2005, our growth competitiveness ranking was the 5th out of the total 118 economies surveyed. As an open economy, Chinese Taipei recognizes that it is by no means immune from global economic competition. In the face of the new challenges presented by global competition and to upgrade our economy for the new century, Chinese Taipei will continue to implement the “Challenge 2008: Six-year Development Plan,” as well as the New Ten Projects and the service industry development plan. Furthermore, Chinese Taipei will re-engineer over the long term its economic structure with focuses on creating innovalue, persisting with reform, promoting investment, positioning globally, and embracing humanistic concerns. These focuses may be discussed in greater detail as follows: In the creation of innovalue, the goal is to help Chinese Taipei perform even more brilliantly on the stage of international trade by upgrading industrial value-added through a three-pronged approach: R&D, branding, and core advantage. The aim is to have two Chinese Taipei’s brands rank among the world´s top 100 and five brands with a value of over US$1 billion, by 2012. As for persisting with reform, taxation and financial reforms will be continued with the objective of building up a financial environment that links with the international community. To promote investment, the government will create a good investment environment in the areas of land, capital, human resources, transparency of investment information, and internationalization of the legal system. In regard to global positioning, the government will continue to reinforce the operational functions of Chinese Taipei’s five free trade zones, and will aggressively encourage enterprises to set up operations headquarters on the island. To embrace humanism, the government will integrate the different existing pension systems and carry out planning and implementation of an annuity system to take care of the interests of the elderly. Meanwhile, in response to future changes in the population structure the executive team is engaged in formulating “Population Policy Guidelines” and a “Population Policy White Paper” designed to set up “comprehensive population policies aimed at achieving a healthy pluralistic society, to ensure that our economy and society can maintain continuous, sound development.” Q0.4 The previous IAP Peer Review for Chinese Taipei describes “the Challenge 2008 Six Year Development Plan.” (p.18) Are the same goals still in place? Have there been any modifications? Has the implementation of the plan gone according to schedule? What has been the initial successes and disappointments (if any) of the Plan? A: In order to realize the overall goals of “Green Silicon Island” and the “New Economy Strategy,” Chinese Taipei launched the “Challenge 2008: Six-Year Development Plan” in 2002. The Plan, involving reform programs in the political, financial and fiscal

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spheres along with ten individual plans, aims to secure the economy’s competitive edge through a package of reforms and investments. The Plan has been implemented according to its planned schedule. The key emphases of the Plan are investments in human resources, investments in R&D and innovation, and investments in global logistics channels. Some of the recent achievements are as follows: 1. Chinese Taipei is among the world’s leaders in sci-tech innovation capabilities:

According to the latest report by the World Economic Forum (WEF) issued in 2005, Chinese Taipei ranks number five in the world in growth competitiveness, and ranks the 4th in the technology and innovation indexes. This amply testifies to the great vitality of R&D and innovation activities in Chinese Taipei.

2. Development of the “two-trillion, twin-star” industries: The Ministry of Economic

Affairs has designated the so-called “two-trillion” (semiconductors and image display) and “twin-star” (digital content and biotechnology) industries as the new profit bases of Chinese Taipei’s industrial development. In 2005, the “two-trillion” and “twin-star” industries’ output reached more than NT$2.5 trillion, 13.4% higher than the year before. The semiconductor industry achieved output of NT$1.113 trillion, image display NT$995 billion, digital content NT$290 billion, and biotechnology NT$158.5 billion. It is expected that in 2006, Chinese Taipei will become the world’s most important location for 12-inch wafer fabrication, the world’s largest supplier of TFT panels, the pivot of the Asia-Pacific region’s digital content design and value-added applications, and an important pioneer in the biotechnology industry.

3. Turning Chinese Taipei into a stronghold of R&D: Chinese Taipei possesses high-

quality manpower and enjoys a significant advantage in innovative R&D. The government is now actively encouraging domestic and non-Chinese Taipei companies to use Chinese Taipei as an R&D base, bringing in offshore manpower, technology, resources and systems to create a bigger profit base on the foundations of Chinese Taipei’s high-tech core advantages. As of year-end 2005, Chinese Taipei had successfully induced multinational companies to set up 30 R&D centers in Chinese Taipei, generating R&D investment amounting to more than NT$24 billion, while domestic firms had set up another 89 R&D centers. It is projected that, by 2007, Chinese Taipei will be home to 40 regional R&D centers set up by multinational enterprises and another 100 set up by local enterprises.

4. Cultivating high-quality manpower to support industrial development: Chinese

Taipei is continuing to enhance manpower for the IC design, digital content and other important industries by establishing industrial institutes and expanding the recruitment of overseas sci-tech talent, in an effort to make speedily available sufficient high-skilled manpower to meet the needs of businesses at every stage -- a key aspect of giving full support to these industries’ development. As of year-end 2005, the Semiconductor Institute had provided short-term, mid-term and long-term training courses for 3,388 trainees, and the Digital Content Institute had trained

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1,757. In addition, e-education had been provided for a total of 86,594 workers. 5. Investing in global logistics channels: As of the end of January 2006, Chinese

Taipei’s broadband usership had reached 4.638 million households, and it is forecast to hit the 6 million mark in 2007. Furthermore, by the end of February 2006, 282 firms had applied to take advantage of the incentives for operations headquarters.

Q 0.5 The previous IAP Peer Review put some emphasis on Chinese Taipei’s efforts to recover from the financial crisis, and reform the financial sector. Can Chinese Taipei give some indication on further developments in its efforts to reform the financial sector and other sectors of the economy from the aftermaths of the financial crisis? Does Chinese Taipei believe that it has fully recovered from the financial crisis? A: 1. Since the mid-1980s, the government has been adopting measures to relax controls on

foreign exchange, eliminate interest rate ceilings, open the establishment of new bank branches, expand the scale of operation of financial institutions, and so on, in order to respond to the liberalization and globalization trends in finance. However, during this process of financial liberalization and globalization, the number of financial institutions in Chinese Taipei grew dramatically. For instance, in only ten years beginning in 1991, when restrictions on the establishment of new domestic banks were lifted, the number of banks more than doubled to more than 50. Exasperating the situation was that the financial institutions did not have enough innovative ability, they lacked the concept of self-regulation, and they entered into a cycle of vicious competition with one another. As a result, they were generally running up high bad-debt ratios, and capital adequacy ratios were declining. When the Asian financial crisis struck in 1997, the latent problems in Chinese Taipei’s financial sector emerged one by one, and it highlighted the importance of financial reform.

2. To eliminate such problems once and for all, in 2002, Chinese Taipei set up a

“Financial Reform Task Force”, which, during the first phase of financial reform, focused mainly on eliminating fraudulent practices and reducing non-performing loans (NPLs) through improvements in the management structure of financial institutions. Data provided by the authorities indicate that the share of non-performing loans among the total loans outstanding decreased from 11.27% in 2001 to 2.24% in 2005.

3. The second phase of financial reform (from 2004 to 2008) has been focusing on

regulatory reform to make Chinese Taipei into a “regional financial services center.” The Government intends to facilitate mergers and acquisitions (M&As) of banks to reduce the number of banks in Chinese Taipei and to raise the shareholdings of offshore investors from 18.8% to 25% of overall market capitalization. According to the data provided by the authorities, the number of domestic banks (head offices) decreased from 53 in 2001 to 45 in 2005. In addition, from January 2005 to June 2006 there have been 15 banking M&A deals among banks, and from June 2002 to December 2005, fourteen financial holding companies formed and consolidated 94 financial subsidiaries, including 16 banks, 7 insurance companies, 13 securities firms and 7 bill finance companies. Non-Chinese Taipei investors such as General Electric

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Capital Corp., Nomura Holdings, Newbridge Asia, Temasek Asia Financial Holdings, and Shinsei Bank have invested in local banks of Chinese Taipei, bringing with them new technologies, management teams and capital that will build up the international competitive profile of Chinese Taipei’s financial institutions.

4. The following is a brief statistical overview of the results of our efforts to reform the

financial sectors of the economy from the aftermath of the financial crisis:

1997 2001 2002 2004 2005 NPL Ratio 3.71﹪ 11.27﹪ 6.12﹪ 2.78﹪ 2.24﹪

Loans (NTD, Billion) 10,595 12,715 12,505 14,599 15,777

5. Chinese Taipei implemented many measures for the reform of its financial industry

after the financial crisis of 1997, and Chinese Taipei has never experienced a serious financial crisis. In the meantime, the non-performing loan ratio and asset quality of Chinese Taipei’s banks have significantly improved. Our banking industry is more stable and healthy than ever.

0.2 Cross-strait relations Q0.6 Please provide us with data on cross-strait investments and trade vis-à-vis the rest of Asian region (at least ASEAN+3)? A: The statistics data on cross-strait investment and foreign investment of Asian region is available in the website of Investment Commission, MOEA at http://www.moeaic.gov.tw/. Please find Attachment A for the 2005 Trade Statistics with PRC; Japan; ASEAN 10; Hong Kong, China; and Korea. 0.3 General Trade Policy Questions Q0.7 What is Chinese Taipei’s position for the Doha Development Agenda? In which issues does Chinese Taipei have the most interest? A: We continue to be actively engaged in the Doha Round negotiations on all fronts. Our contribution to the negotiations has also included several substantial donations to the Doha Global Trust Fund, in support of trade and development. We made extensive commitments during our accession, and are prepared to make further commitments in the Doha Round. As a newly-acceded Member still in the process of fulfilling many of our accession commitments, we should also be noted that some domestic industries and organizations are still in the process of having to make difficult changes and adjustments. We would like to elaborate further on the issues of our interests as follows:

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(a) Agriculture

We support the long-term objective of the WTO to establish a market-oriented trading system through reforms by eliminating trade-distorting measures in the agricultural sector, while wishing to underscore the indispensable and multi-functional role of agriculture in areas such as food security, rural development, environmental protection and culture preservation. In the Doha round of negotiations, we are a member of the so-called “G-10” group; net importers of agricultural products who share the conviction that in the wake of trade liberalization it is of vital importance to secure the diversity of Members’ agriculture in order to safeguard their non-trade concerns. While committed to a substantial reduction in trade-distorting domestic support, as well as substantial improvements in market access, we hold the belief that a certain amount of flexibility should be given to Members when adopting agricultural reform policies, in the interest of maintaining the sustainable development of the sector. In designing the full modalities, we wish to see Members’ individual agricultural environments and differing tariff structures duly and fairly taken into consideration, and the concerns and interests of both exporters and importers accommodated in an equitable and balanced manner.

(b) NAMA In the process of gaining accession to WTO Membership, we have had to make significant changes in the areas of trade liberalization and the elimination of tariffs. We now have 100% binding coverage of tariff lines, with an average binding rate of 4.8% for non-agricultural products and a tariff structure that is on a par with, if not more liberalized than, many developed countries. Despite the fact that some of our domestic industries are going through a painful process of structural adjustment to accommodate our substantial accession commitments, we still determine to make contributions to this round of negotiations in the interest of achieving the ultimate goal of a fully liberalized multilateral trading environment. It is commonly recognized that there is still some ‘unfinished business’ left over from the Uruguay Round in relation to market access. High tariff rates, associated with tariff peaks and significant tariff escalation, continue to impede market access for exporters and impose restrictions on both global trade and the efficient flow of resources to and within the economies maintaining such severe and diverse forms of tariff protection. Moreover, there continues to be unequal levels of binding coverage across products and between Members, as well as many areas where Members’ bound rates substantially exceed applied rates, thus presenting exporters with a far from certain trading environment. In an attempt to address such market access issues in the NAMA negotiations, we support the application of an ambitious formula (such as the simple Swiss formula with reasonably small coefficient values), which we see as having the potential to create new business opportunities, to harmonize Members’ tariff regimes and to create a more equitable and predictable trading environment. Sectoral liberalization

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could be an effective approach to the creation of real market access for the WTO Membership as a whole. In the NAMA DDA negotiations we have taken the initiative to submit proposals for the liberalization of three important NAMA sectors, Bicycles and Related Parts, Sports Equipment, and Hand Tools.

(c) Trade in Services As services account for the majority (more than 65%) of our GDP, we view further services liberalization as being one of the three key pillars of market access in this round of negotiations, and a major driver of future global economic growth and development, fully alongside agriculture and NAMA. Our negotiating stance on the services side is therefore comparatively offensive, reflecting our “real world” situation and level of economic development. Even though the majority of our services providers are small to medium-sized enterprises, with very limited capacity to export, the authority still needs to find ways for them to benefit in the future. For this reason, our list of priority sectors for the current round includes, inter alia, such sectors as computer and related services, maritime services, distribution services, telecommunications services, logistics services, energy services, financial services, environmental services and audio-visual services. Following the mandate given by Ministers in Annex C of the Hong Kong Ministerial Declaration, for the purpose of improving both the quantity and quality of Members’ commitments on services, we are now working bilaterally, plurilaterally and multilaterally with the WTO Members with which we share common interests in both the services and industrial market access negotiations. We believe that progress on rules within the services negotiations will be generally helpful and complementary to the market access negotiations. Our fear is that discriminatory regulatory measures may act as a deterrent to trade in services. The negotiation of domestic regulations is thus a priority item on the agenda, and we are in the process of working closely with fellow-WTO Members to develop disciplines to be applied to domestic regulations by the end of this current round.

(d) Rules We have been actively participating in the Rules negotiations, supporting efforts to clarify and improve WTO rules relating to anti-dumping, subsidies, and regional trade agreements (RTAs). The result should be to make the rules more transparent, predictable and precise, thereby protecting the rights and interests of all WTO Members. In view of the importance of encouraging small and medium-sized companies to participate in global trade, the enhanced rules should safeguard their trade interests by ensuring procedural fairness and avoiding excessively protectionist effects. As far as Regional Trade Agreements (RTAs) are concerned, we support the new transparency mechanism that provides Members with more in-depth understanding of RTA activities through factual presentations by the WTO Secretariat. We also

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believe that the substantive rules should prevent RTAs from having a weakening effect on the multilateral rules as a result of any discriminatory treatment by WTO Members.

(e) Trade Facilitation In the firm belief that trade facilitation on a global scale will drive down the costs of transactions and help companies to further develop overseas markets, we have adopted a strategy of actively participating in the negotiations on Trade Facilitation, with the aim of reaching a high-quality, binding agreement, or a comparable similar arrangement. Based on our own experiences, we have provided proposals for Members’ consideration in the areas of immediate release of express consignments and possible methods for calculating fees and charges. Taking into account the needs of coordinating with other international organizations and technical assistance and capacity building for developing countries and LDCs, we proposed to establish a long-term mechanism to deal with such matters. In conclusion, we would like to reiterate our strong commitment to the Doha Round Negotiations. We are looking forward to meaningful and substantial outcome. We also expect the global trading regime to be benefited by the result of the DDA negotiations.

Q 0.8 How does Chinese Taipei evaluate the effects of its accession to WTO at this time? Has the effects been positive or negative overall? Can Chinese Taipei give some examples of positive and negative effects from accession? Does the general public still maintain mostly positive opinions on Chinese Taipei’s accession to WTO? A: Since we entered the WTO in 2002, people from both the private and public sectors have been concerned about the impact of WTO accession on our economy. In 2005, we assigned the Chung-Hua Institution for Economic Research to conduct an economic study on the three-year impact of our accession. According to the study, accession to the WTO has had an overall positive impact on economic and trade development. Our economic and trade development has been in an upward trend since our accession to the WTO. Here are some statistics for your reference: Total trade increased by 6.1% in 2002, 12% in 2003 and 26% in 2004. Even in 2005 – the year of unstable oil prices – we managed to keep our trade growing at 8.5%. Of course, all this trade growth has been kicking up our GDP, which hit 6.1% in 2004. In addition, since our accession to the WTO, both the total production value and exports of manufactured goods have been increasing steadily. The negative impact caused by our accession has been limited. The industries that have faced more competitive pressure from foreign imports are those which sell most of their products on the domestic market, such as the heavy electrical machinery, home electronics and textile industries. On the other hand, our automakers have seen production increase by 60% over the past three years and their market share rose to 87% in 2004, even in spite of our commitment to reduce tariffs and expand the quota of

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foreign auto imports. In the services sector, we have witnessed growth in production, employment and trade. Production in this sector has increased by an annual rate of 3.56% since 2001, and its contribution to our GDP has risen to 68.7% from 66.9% in 2001. The opening of our services market has helped attract foreign investment, improve operating skills, enhance quality, reduce costs and increase the competitiveness of our services. The liberalization in telecommunication, financial and transportation services has brought more momentum to our economic growth. Our accession has indeed brought negative impacts on some sensitive products, such as rice and fruit. However, those negative influences are not as serious as what we had expected prior to accession. Employment in the agricultural sector has been decreasing, while total production value and per capita production have been rising. Though we have not conducted any surveys of the general public, we believe most people still have a positive opinion of our accession to the WTO because they have been enjoying the benefits of cheaper imported commodities caused by tariff reduction and a greater variety of choices when they go shopping. Q 0.9 In the previous IAP Peer Review (p.14, Paragraph 3), the Review stated that there were concerns that there would be accelerated outward exodus of Chinese Taipei’s industries which may lead to outflow of capital and human resources. Thus, Chinese Taipei had established unilateral restriction on trade to provide a transitional period of time for adjustments. Can Chinese Taipei give more details on what types of restrictions were put in place, and whether these restrictions are still in place? If so, then how long does Chinese Taipei expect the restrictions to remain in place? A:

1. Statements regarding restrictions on imports from PRC In light of the present circumstances of cross-strait relations, as well as geographic, cultural and economic factors, PRC is uniquely positioned to export a tremendous volume of goods and products to Chinese Taipei. Both parties have not conducted consultations with regard to PRC’s imports to Chinese Taipei. Chinese Taipei has implemented policies to open up cross-strait trade, which includes gradually opening its market to goods and products from PRC.

2. Review process of opening markets:

In order to further liberalize imports from PRC, the Bureau of Foreign Trade not only holds regular meetings once every two months to review applications from individuals but also conducts regular comprehensive reviews of all the remaining items subject to restrictions for import from PRC once every six months.

3. Liberalization efforts to date: As of July 24, 2006, a total of 8,660 items, accounting for 79.61% of all the 10,878 items under HS ten-digit code, could be imported from PRC freely. Of those items, 7,255 were industrial products and 1,405 were agricultural goods.

4. If individual businesses are interested in importing into Chinese Taipei certain

commodities from PRC that are currently banned for import, they can recommend

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those commodities to the BOFT for liberalization review. BOFT then deals with those requests with full discretion.

Q0.10 The WTO TPR Government Report shows that Chinese Taipei has been establishing free trade zones. How successful have they been? Does Chinese Taipei have plans to increase the number of free trade zones? A: Currently there are five FTZs in operation in Chinese Taipei, and they are the Taipei Free Trade Zone, Keelung Free Trade Zone, Taichung Free Trade Zone, Kaohsiung Free Trade Zone, and Taoyuan Air Cargo Park Free Trade Zone. Goods will be able to flow freely into a FTZ, or between FTZs, for warehousing, transshipment, and value-added processing. Such goods will also be exempt from customs duties as well as commodity and business taxes, and will enjoy simplified customs administration and customs clearance procedures. Statistics show that by the mid-July of 2006, a total of 73 enterprises had moved into the five FTZs, and the number is expected to grow to 105 by the end of that year. Total investment in the FTZs is projected to soar to NT$13.8 billion in 2008, and the total value of their import and export trade is projected to skyrocket to NT$193.8 billion in 2008. Although government agencies in charge of the target industries or civic organizations and local governments are, according to the Act for Establishment and Management of Free Trade Zones, entitled to apply to set up FTZs within or adjacent to the international seaports or airports, the number of FTZ in Chinese Taipei is unlikely to increase in the short term. Nevertheless, several jurisdictions have expressed an intention to apply for the establishment of FTZs, including the Tainan Country Government (for the Southern Free Trade Zone), Tainan City Government (Anping Free Trade Zone), Kaohsiung City Government (Southern Star Free Trade Zone), and the Industrial Development Bureau (Changhua Coastal Industrial Zone), all striving to bring better profits to operators and find a new positioning for Chinese Taipei in global production and logistics chains. Q0.11 The WTO TPR reports that Chinese Taipei has not used countervailing or safeguard measures since the accession to WTO, but Chinese Taipei has used anti-dumping measures in two products, and special agricultural safeguards have been used. The WTO TPR (p.42 Table III.7) shows that anti-dumping measures are in place for art paper and cement; and special safeguards were triggered for 11 items (p.68 para 11). Is this a complete up-to-date list of anti-dumping and safeguard measures in place? A: Yes, the list of anti-dumping and special safeguard measures, indicated in our WTO TPR is a complete and up-to-date at the moment. Q0.12 WTO TPR p.68 para 12 describes Chinese Taipei’s protective measures for rice. Chinese Taipei is not unusual from other Asian economies in placing strong protective measures for rice. Can Chinese Taipei explain why, from Chinese Taipei’s perspective, protecting the rice market is so important? A:

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Rice is the staple food and the most important crop in Chinese Taipei. In 2004, Chinese Taipei’s rice farming households numbered around 245,000, accounting for 34% of the total number of farming households. The number of people who engage in the work of rice cultivation is estimated to be 1,100,000. Chinese Taipei’s rice market is free, and the various policies and measures that we have for rice are all in conformance with WTO rules. In general, the main reasons Chinese Taipei protects its domestic rice industry are based on concerns of food security and the development of the rural economy. 0.4 Free Trade Agreements Q0.13 Does Chinese Taipei have studies on the likely impact of the ASEAN + 1 (or ASEAN+3) economic integration on its own trade and investment in the Asian region? What efforts is Chinese Taipei making to counteract any potential negative impact of regional integration? A: Promoting the signing of FTAs or regional integration is one of the main strategies that economies around the world are using to increase their global competitiveness and attract foreign investment. Since 2002, the pace of regional integration in Asia has been accelerating due to the proposed ASEAN + 1 (with PRC), ASEAN + 3 (with PRC, Japan, and Korea), ASEAN + 6 (with PRC, Japan, Korea, New Zealand, Australia, and India), and so on. However, none of these include Chinese Taipei. While other economies sign FTAs, Chinese Taipei has also been seeking opportunities to form FTAs with other economies in order to strengthen economic and trade cooperation, improve the benefits of trading, and reduce the trade diversion effects created by other FTAs. To prevent being marginalized, we have adopted the following response strategies: 1. Actively participate in the WTO to promote globalization and trade liberalization:

We are pushing for trade liberalization under a globalized framework together with other WTO members and seek to work with economies whose interests are similar to ours in order to compete for our economic interests, lower tariff rates, minimize the difference between the tariff rates enjoyed by RTA members versus those enjoyed by WTO MFNs, and generally lighten the impact of FTAs/RTAs on our businesses.

2. Actively participate in APEC’s regional integration activities and promote the idea of open regional integration: As RTAs/FTAs have become more widespread and the scope of liberalization expands, in the 2004 Ministerial Meeting APEC approved the “FTA Best Practices,” based on the APEC Business Affairs Council’s (ABAC) recommendation that RTAs/FTAs become more transparent. The “FTA Best Practices” forms a model of reference for member economies as they prepare to sign RTAs/FTAs. The document also emphasizes that RTAs/FTAs should conform to WTO norms, be transparent, and be open to participation by other economies.

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3. Promote the signing of FTAs: To date, Chinese Taipei has signed and implemented FTAs with Panama and Guatemala, and we have signed an FTA with Nicaragua. Negotiations are also under way for another FTA with Honduras and El Salvador. Meanwhile, Chinese Taipei continues to promote plans to sign FTAs with leading trade partners, and we hope to play a more active role in the world’s regional integration.

4. Improve Chinese Taipei’s advantage in industrial technology: Industrial competitiveness is an important factor for successfully wedging into the global market, and if we are not competitive and sign FTAs with other economies, then not only can we not enter other’s markets but we also leave our own market wide open. Therefore, Chinese Taipei has always been working hard to improve our investment environment as well as our industrial competitiveness.

Q0.14 In current FTA negotiations with some Central American economies, how are rules of origin being treated? Can you give us an idea of the status of negotiations? Do these economies have FTAs with the United States and with other economies? A: ‧ In our FTAs with Panama, Guatemala and Nicaragua, rules of origin are generally

based on the concept of change of classifications and percentage of local content. ‧ We have signed FTAs with Panama, Guatemala and Nicaragua. We are currently

negotiating an FTA with El Salvador and Honduras. ‧ We understand that the Central American economies of Costa Rica, El Salvador,

Guatemala, Honduras, and Nicaragua together with the Dominican Republic concluded an FTA with the United States (CAFTA-DR) in August 2004.

Q0.15 The IAP states that Chinese Taipei has concluded an FTA with Panama, and it is in effect. The WTO TPR states that FTA negotiations with Guatemala has been completed, and is expected to enter into force in 2006; and Chinese Taipei is currently negotiating with Nicaragua. The TPR also states that Chinese Taipei expects to start negotiations with Honduras and El Salvador in the near future. When does Chinese Taipei expect the negotiations to start? Are there any other economies with which Chinese Taipei is currently negotiating an FTA? Are there economies with which Chinese Taipei is contemplating FTA negotiations? A: ‧ Our FTA with Panama and Guatemala went into force on January 1, 2004 and July 1,

2006 respectively. We concluded the FTA negotiations with Nicaragua and signed the agreement on June 16, 2006. Both sides hope to implement the FTA as soon as it passes respective legislative procedures in each. In addition, FTA negotiations with El Salvador and Honduras have been going smoothly since May, 2006. The three Parties expect to conclude FTA talks this year.

‧ As for our FTA with Dominican Republic, we expect to start negotiations soon. ‧ We hope that the process of trade facilitation and liberalization can be accelerated

through FTAs. Therefore, we are willing to consider entering into FTAs with any trading partner with the same philosophy.

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Q0.16 Which issues have proven to be most difficult for FTA negotiations? A: Negotiating FTAs is a very challenging job. The issues covered are under jurisdiction of quite a few government agencies. Their positions are not always consistent. For example, the trade department may advocate market opening based on the ideal of free trade, while the agriculture and industry departments may suggest excluding some sectors or sensitive goods depending on the different levels of development for those sectors. Accordingly, negotiators have to painstakingly coordinate various positions. Likewise, it takes time to negotiate the market access issues with trading partners due to their different levels of economic development and competitiveness of individual products. Q0.17 According to the IAP Reporting on FTAs and RTAs, the Chinese Taipei-Panama FTA includes no provisions on government procurement, labor and environmental standards. Can Chinese Taipei give some indication why these areas were not included? Also, it does not seem to include a full list on which service sectors are included, and which are not. Can Chinese Taipei briefly explain which service sectors and which sensitive goods were not included in the FTA, and the reason? A: ‧ While negotiating FTAs with trading partners, we take an open attitude on any

trade-related matter, including government procurement, labor and environmental standards. Nevertheless, all FTA parties first have to reach consensus on the issues to be included in the FTAs before proceeding.

‧ As for opening market of service sectors, we generally adopt the approach of “negative list.” With the negative list, FTA Parties offer National Treatment and Most-Favored-Nation treatment to other Parties, unless specific reservations are indicated in relevant annexes, including reservations for existing measures and liberalization commitments, reservations for future measures, activities reserved to the state enterprises, quantitative restrictions. The details are publicized on our relevant websites.

Chapter 1 : Tariffs Q1.1 Chinese Taipei has low average applied tariffs and many non-duty tariff lines. In lowering the tariffs, how did Chinese Taipei go about deciding which items would have lower tariffs, which items would have higher tariffs, and which items would be duty free? Were there some criteria for deciding which group of goods would be duty free, and which group of goods would have lower tariffs? A: There are no statutory or regulatory criteria for Chinese Taipei to decide which groups of goods are to be duty free or have lower tariffs. At such times as the tariff schedule is reviewed, we invite all related government agencies to participate in the review, and take into account the principles of the liberalization and facilitation of international trade and the needs of domestic industries, importers, and consumer interests.

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Q1.2 Does Chinese Taipei have an institutional consultation mechanism with the private sector when it negotiates in trade abroad? If yes, please describe the system. Is the consultation mechanism different for goods and services? A: In accordance with the “Administrative Procedures Act,” effective on 1 January 2001, regulatory authorities must use open and transparent administrative procedures, consult with interested parties before issuing regulations, provide advance notice, public hearing, and comment periods for proposed rules, and publish all regulations. Therefore, interaction between both private and public sectors has been adequate and smooth. To solicit business associations’ view on trade negotiations and policy formulation, we have 17 trade-related working groups convened by different agencies of Ministries, and industries will be invited to attend working group meetings. Agencies also will hold workshops, seminars and training courses to assist the industrial community to obtain a comprehensive grasp of international trade developments. To collect industries’ view on industrial development and trade policy directions and to fulfill the need to adjust industrial structure, the Ministry of Economic Affairs (MOEA) has established an industrial policy review system and organized the “Industry Development Advisory Council (IDAC),” which has functioned since 2002. Its members are composed of business people, experts, scholars, and officials from other ministries. Under the IDAC, there are six reviewing bodies, including a trade and investment reviewing body convened by the Director-General of the Bureau of Foreign Trade, MOEA. The trade body has twenty members, with ten of them from the business community. In addition, the MOEA has entrusted Chung-Hwa Institution for Economic Research (CIER) to do research work and provide government with advice on all major international trade policies or positions. The coverage of CIER’s research covers many areas, including the impact of trade liberalization on the economy, the development of simulation models, tracking the progress of trade negotiations, setting up a WTO website, etc. CIER also holds a variety of tailor-made training courses not only for officials but also for business people. The above-mentioned consultation mechanism is applicable to both goods and services. Q1.3 Chinese Taipei’s tariff structure has many admirable qualities. Its average bound and applied rates are fairly low for a developing economy; and the differences between the bound and applied rate seems to be very small. However, it should be noted that tariff rates for agricultural goods, while not high relative to many other developing economies, are very high compared to other types of imports. A: Due to the sensitive nature of agriculture, the average applied rate for such products is higher than that for industrial products, but in comparison to the rates applied in certain other economies, we believe that the rates are fairly low. Chinese Taipei considers that tariffs just reflect the differences between import and

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domestic prices, so that the level of a tariff does not really represent a high level of protection. Besides, our present tariff structure is the result of our WTO accession negotiations. We have been actively engaged in the DDA negotiations to achieve substantial improvement on the three pillars and ensure the ongoing process of trade liberalization. Q1.4 Chinese Taipei’s tariff structure seems to include many “specific tariffs.” What types of tariffs are considered “specific tariffs”, and can Chinese Taipei indicate why it utilizes such specific tariffs so extensively? A: The term “specific tariff” in our tariff schedule means a tax of the goods imported based on weight, such as “NT$88/KGM”. In fact, specific duties are applied to only 1% of the tariff lines. In most cases, the duties are levied on an ad valorem basis. The specific tariff system has some merits. The duty amount imposed can be easily calculated without needing to spend a lot of money in administrative costs to check the declared price given by importers. The issue of the transfer of the items under non-ad valorem to ad valorem duty is being discussed in the DDA agricultural negotiations, and we will make any revisions in accordance with the result of the negotiations. Q1.5 WTO TPR (p.35) concludes that Chinese Taipei’s tariff structure has elements of tariff escalation, and in the absence of GSP or other preferences, such tariff escalation can impede the industrialization of developing economies and LDCs. Does Chinese Taipei have plans to lower the degree of tariff escalation? Does Chinese Taipei have a GSP program for LDCs? If so, please give a short description. Do any APEC economies qualify for Chinese Taipei’s GSP program? A: We consider that it is necessary to allow an appropriate degree of tariff escalation in specific sub-sectors for the protection of domestic processed goods. We are aware that an appropriate elimination of tariff escalation is included as a topic for discussion in the WTO Doha Round of negotiations and changes will be made in accordance with the result of the negotiations. Although we have no GSP program, we, starting from 9 December 2005, grant duty-free access to LDCs in regard to 125 products of their export interests, upon completing the domestic legal procedures. And we will continue to study the possibility of expanding the product list. Q1.6 WTO TPR (p.35 para 32) states that the Ministry of Finance has authority to adjust customs duties in order to deal with ‘extraordinary’ situations. Does this authority extend to all goods, or only to a limited types and number of goods? Can the Ministry of Finance raise tariffs above the WTO bound rates, even only temporarily? Are there transparency measures in place so that traders can quickly be informed of any changes in rates, and are there mechanisms in place so that traders can have some predictability for when and how much the tariff rates may change? A: According to Article 71 of the Customs Act, the authority exercised in the adjustment of tariff rates by the Ministry of Finance (MOF) can be applied to all goods listed in our Customs Import Tariff; however, to comply with WTO tariff reduction commitments,

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we would not seek to increase tariffs above the WTO bound rates. If an adjustment in a tariff rate is approved, the MOF will publish such adjustment in the official journal and at the same time send a copy to the related import/export associations so as to ensure predictability and transparency for importers/exporters. Chapter 2: Non-Tariff Barriers Q2.1 The recent TPR of Chinese Taipei in the WTO states that it is not a member of Codex or International Plant Protection Convention. Does it have any intention of joining? A: As a Member to the WTO, we fulfill the obligations under the WTO/SPS Agreement and harmonize our SPS measures with the international standards, guidelines and recommendations set by OIE, IPPC and Codex, although we are not a member of Codex or the IPCC. Q2.2 The previous IAP Peer Review stated that the number of items requiring import licenses was down to 18 in 2003, and it has engaged in a negative list system covering 58 items. Has the situation changed since 2003? A: 1.After its accession to the WTO on January 1, 2002, Chinese Taipei, in line with its

accession commitments, has opened markets for an extensive range of goods. Among the original 252 categories (10-digit HS Code) subject to import ban, restrictions were relaxed or liberalized; Tariff Rate Quota (TRQ) was also offered. Imports of rice and rice products, which were originally conducted pursuant to special treatment in the WTO Agricultural Agreement, were switched to the TRQ system on January 6, 2003. As of July 2006, there were only 56 categories still subject to import ban, 24 items subject to import licensing, and 142 categories governed by the TRQ system.

2. Chinese Taipei reduced the number of items for which import licenses are required

from 130 to 38 (10-digit HS Code) after its accession to the WTO on January 1, 2002 and further reduced the number to 18 in 2003. (The items that are still restricted are those for which WTO rules permit restrictions, such as diamonds, lead, cadmium, chromium waste and scrap, methyl bromide, and Montreal Protocol restricted chemicals.)

Due to the need for trade surveillance/statistics on imports of steel/iron products, Chinese Taipei added 6 steel and iron products to the list of commodities subject to import licensing, with the effect that the number of items for which import licenses are required increased from 18 to 24 (10-digit HS Code) in July 2006.

3. Please refer to our annual IAP submissions from 2003 to 2006. Q2.3 Import quota allocation for motor vehicles is also tied with export performance. Is this correct? How do you determine the quota allocations? Why does Chinese Taipei exclude the US, EU and Canada from the quota allocation? In actual data, how is the

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utilization rate of the quota by different economies? A: 1. The current TRQ system on motor vehicles is in accordance with the negotiation

results of Chinese Taipei’s accession to the WTO and is not tied with export performance (please see attachment for more information). The actual utilization of tariff quota depends on free market mechanisms, and all WTO members are included in the TRQ allocation system.

2. For more information on quota allocation for motor vehicles, please refer to the

information provided by the Dept. of Customs Administration, Ministry of Finance. The quota allocation and utilization rate for motor vehicle can be found on the Customs website, www.customs.gov.tw.

Q2.4 Attachment A to Chapter 2 of Chinese Taipei’s IAP lists those sectors subject to import prohibition, subject to import licensing, and tariff rate quotas. Can Chinese Taipei explain the reasons and justifications for such measures? A: Chinese Taipei set up those measures stated in the Attachment A to Chapter 2 of its IAP in order to protect public morals, to protect human life or health, to fulfill its accession commitment, and to fulfill its obligations under international agreements in accordance with GATT Article XX. Q2.5 In Attachment A to Chapter 2 of Chinese Taipei’s IAP, Chinese Taipei states that steel/iron products are subject to import licensing because of a need for trade surveillance/statistics. Given that few other economies use licensing as tool for surveillance/statistics on steel and iron products, does Chinese Taipei have particular reason why licensing is required for surveillance and statistics? Also, if licensing is solely for reasons of surveillance/statistics, it should be fairly easy for importers to obtain licenses. Is this so? What conditions are required to receive licenses for steel/iron products? A: 1.The licensing of steel/iron products for the purpose of surveillance/statistics was

introduced in April 15, 2002 in response to the Import Relief on steel/iron product by the United States, to prevent sudden increase of steel/iron import by means of dumping.

2.The licensing system introduced in 2002 was originally limited to 471 items of

steel/iron products, then was liberalized in 2004 to only 6 items (reinforced steel, H section steel and others) based on the consideration of public construction projects’ safety and quality requirements.

3.The import-licensing requirement on steel/iron products is based on self-declaration

and is an automatic licensing system with no restriction. Chapter 3: Services

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Q3.1 How does Chinese Taipei go about deciding which services sector to open up and commit in GATS? Are all GATS sector commitments bound at actual regulatory regime? If not, which sectors have different bound commitments from actual? Is there plan to close this gap in the DDA Round? A: The decision on which services sector to open up and commit by Chinese Taipei is made by a special task force, which is made up of senior officials from all related competent authorities. Most of Chinese Taipei’s GATS commitments are bound at actual status. However, Chinese Taipei submitted a Revised Offer on Services in June, 2005 to make further commitments to close the gap based on current services market status, for example, in Telecommunication, Computer and Related, Financial and other services sectors. Furthermore, a second round revised offer is under preparation and will be submitted if DDA negotiations are re-activated. Chinese Taipei will continue work in this area. Q3.2 In many service industries, private domestic industry or professional associations seem to serve as regulators for that particular service industry. Having private industry or professional organizations serve as regulators can improve the regulatory system by making the system more responsive and flexible, reflecting the needs of the industry. However, if the regulatory capacity is misused, these private regulators can restrict the entrance of new service providers and offshore firms into the market. In other words, the incumbents, who are members of the industry or professional associations, can set regulations in such a way that it restricts competition from outsiders. Which specific sectors in Chinese Taipei rely on private regulators? Are there any policy mechanisms in place to stop such misuse of regulatory powers by these associations? Does government monitor and regulate these private regulators? Can non-Chinese Taipei people join most of these associations? What is the actual participation rate by non-Chinese Taipei people in these organizations? Do non-Chinese Taipei people play an active part in these associations? A: Government authority is the only regulator for the services industry in Chinese Taipei, i.e. Chinese Taipei does not rely on professional associations to regulate services industries. However, according to our Commercial Group Act, all licensed publicly owned or non-governmental corporations or firms established in accordance with the Corporation Act or Commercial Registration Act should join in the local commercial trade councils and become members within one month after their establishment. Acceptance on the part of the councils is mandatory. Regarding professionals, according to regulations on professionals (ex. attorneys, architects, public accountants, medical doctors, engineers, etc.), a professional who is not a member of a professional association after acquiring the necessary business practice license will not be authorized to run a practice. On the other hand, professional associations are not entitled to refuse or deny the membership application of a duly licensed professional. All civil associations (including commercial groups and professional associations) are governed by social administration authority and supervised by different regulatory authorities according to their business (professional) characters. Offshore services suppliers (both natural and juridical persons) with Chinese Taipei business license have the same rights as Chinese Taipei persons to apply for membership in a commercial group (professional

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association) if they meet the requirements for membership of the association. The actual participation rate by non-Chinese Taipei persons in these associations is low. It is not because these associations refuse non-Chinese Taipei persons ’ participation, but the numbers of offshore services suppliers are not as many as local services suppliers. Nevertheless, many offshore services suppliers in Chinese Taipei have joined various services associations without difficulty, and have played an active part in public activities. Q3.3 Please give us an update on the privatization of SOEs, A: Please find Attachment B for the privatization of SOEs under the Ministry of Economic Affairs. Q3.4 Please provide us with breakdown of service exports/imports of Chinese Taipei and main trading partners. Does it track down service trade activity by mode of supply? A: Please find Attachment C for a list of Chinese Taipei’s statistics on services in trade from 1999-2005. The data does not track down services trade activities by mode of supply. The methodology of keeping statistics for services in trade is still under development in Chinese Taipei. Q3.5 What are the reasons for having restrictions in land transportation, postal, courier, savings and remittance services, passenger car rental and leasing, radio and TV broadcasting, and special recreational services? Please give examples of restrictions in these sectors? What are recreational services? A: Chinese Taipei has already opened rail transport service, road freight transport service and passenger car rental to foreign investment. However, Chinese Taipei’s laws still do not allow foreign investment in road passenger transport service. 1. Reasons for restrictions in land transportation: In accordance with our Highway Law,

cargo transportation services on Chinese Taipei highways are already open to foreign investment and operation. As for passenger transport services on our highways (in addition to being for-profit enterprises), they must also fulfill social responsibilities and obligations in line with the government’s policies on developing mass transportation. Therefore, the Highway Law still does not permit foreign investment and operation of these passenger transport enterprises.

2. As for the restrictions on passenger car rental and leasing, these have already been

lifted in accordance with our WTO commitments. The Postal Act (the first paragraph of Article 6) of Chinese Taipei stipulates that “apart from Chunghwa Post and others so entrusted, no others may engage in the business of delivering letters, postcards or other correspondence.” The restriction is to ensure that all people in Chinese Taipei enjoy the right to a universal postal service, ie the permanent provision of quality basic postal services in all areas of Chinese Taipei at affordable prices

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Banks in Chinese Taipei may, after obtaining approval by the competent authority, engage in financial activities with the mainland China branches of foreign banks, the mainland China financial institutions ("China Banks") and the overseas branches thereof, the mainland China legal entities, groups, institutions and the overseas branches thereof, and natural persons. Such financial activities include taking deposits and remittances. The allowable purposes for outward remittances to the mainland China are limited to 15 categories, such as personal use or grants to friends and relatives, importing goods from the mainland China, office expenses, etc. Chinese Taipei does not have other restrictions besides these on remittance and saving services. Chinese Taipei recognizes that the radio and television sector is a sensitive sector, which plays a vital role in maintaining the culture for our society. Therefore, we draw up laws to regulate offshore investment in radio and television services, for example: Non-Chinese Taipei persons may not be promoters, shareholders, directors, or

supervisors of a radio/television business (Sec. 3, Article 5, Radio and Television Act).

Total direct and indirect offshore investment in a company operating a cable radio and/or television system shall be less than 60 percent of the total shares issued by the company. Direct offshore shareholding is limited to legal entities, and the total shares directly held by offshore shareholders shall not exceed 20 percent of the total shares issued (Sec. 2, Article 19, Cable Radio and Television Act).

At least two-thirds of the directors and two-thirds of the supervisors of a company operating a cable radio and/or television system shall be Chinese Taipei persons. The chairman of the board of directors shall be Chinese Taipei person (Sec. 1, 2, Article 20, Cable Radio and Television Act).

The total shares of a satellite broadcasting business directly held by offshore shareholders shall be less than 50 percent of the total shares issued by the said business (Article 10, Satellite Broadcasting Act).（NCC）

According to the Culture and Arts Reward Act, Article 2, the “cultural and arts-

related enterprises” referred to in this Act shall mean entities that operate or are engaged in the following undertakings:

1. preservation, maintenance, passing on or promotion of cultural heritage or traditional culture;

2. creation, research and exhibition or performance of music, dance, the fine arts, drama, literature, folk arts, crafts, environmental-design arts, photography, broadcasting, movies or television programs;

3. dissemination of publications or other information regarding culture and the arts;

4. management or establishment of cultural institutions or places for cultural or artistic activities;

5. research, planning, promotion or execution of traditional life arts, or other cultural or artistic activities;

6. investigations into or research on cultural construction, cultivation of

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professional talents or international cultural exchanges; or 7. other cultural and artistic enterprises as designated by competent authorities.

We do not have the sub-sector of “special recreational services.” Q3.6 Chinese Taipei’s insurance law does not allow insurance firms to engage in other types of financial services such as banking. Why? Is there any planned amendment of this law? A: Chinese Taipei’s insurance industry is regulated under prudential supervision. In order to create an internationally competitive market for insurance business, Chinese Taipei issued the “Directions for the Conduct of Wealth Management Business by Life Insurance Companies” on January 13, 2006. Life insurance companies that meet certain qualifications may conduct wealth management business after obtaining approval from the competent authority. In addition, Chinese Taipei also issued the “Directions for the Operation of Bank Assurance Business by Banks, Insurance Companies, Insurance Agents, and Insurance Brokers” on July 29, 2005. According to this regulation, insurance companies may solicit insurance products through banking channels by utilizing the business space, office facilities, and manpower provided by banks. Q3.7 Why are Type I telecommunication enterprises subject to price cap regulations? How does the Directorate General of Telecommunications (DGT) determine the price ceiling? A: On 22 February 2006, Chinese Taipei established the Communications Commission (NCC, an independent regulator, by merging the Directorate General of Telecommunication and the Department of Broadcasting Affairs of the Government Information Office. It is a converged regulatory body responsible for the regulation of telecommunications, information and broadcasting service sectors. In Chinese Taipei, light-handed telecom regulation is applied to Type II telecom enterprises, while in order to foster competition, a different approach is applied to Type I telecom enterprises, which are subject to price cap regulations. The formula of price cap regulations is listed below:

( )[ ] [ ]XCPIPPP ttt −∆≤−−− 11

, where "Pt" refers to the rates or amounts of tariffs (hereinafter, the "Tariff Rates") following adjustment by Type I Telecommunications Enterprises during each implementing year. "Pt-1" refers to the Tariff Rates implemented by Type I Telecommunications Enterprises for the year immediately proceding each implementing year. "ΔCPI" refers to the most current annual rate of increase in the consumer price index in Chinese Taipei, as announced by the Directorate General of Budget, Accounting and Statistics prior to each implementing year. "X" refers to the adjustment coefficient. Q3.8 The previous IAP Peer Review states that the third stage of de-regulation on power plants is being implemented. Has there been further progress since 2003? A: In order to meet power demand between 2011 and 2013, the Ministry of Economic

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Affairs (MOEA) promulgated the “Directions of the Fourth Stage on the Establishment of Independent Power Producers (IPPs)” on June 6, 2006. It deregulates the establishment of coal-fired, oil-fired or LNG combined-cycle power plants. Under this regulation, applicants should submit their proposals and relevant documents to MOEA for review through the local government by December 5, 2007. Q3.9 According to Temporary Entry and Stay of Service Providers and Intra-Corporate Transferees Section, Professional and technical non-Chinese Taipei employee work permits are valid for up to three years, and extendable up to three additional years. Does this mean non-Chinese Taipei employees can only work up to six years? Also, in Chapter 13, we note that permit is granted only one year at a time. Isn’t this difference in period of validity inefficient and inconvenient? A: When a non-Chinese Taipei worker is employed to engage in work as referred to in subparagraph 1 to 7 and 11 of Paragraph 1 of Article 46 of Employment Service Act, the duration of the work permit shall not exceed three years. And upon the expiration of the work permit, the employer may apply for extension pursuant to the business needs. The aggregate working years are not limited to 6 years for the aforementioned non-Chinese Taipei professionals. When a non-Chinese Taipei worker is employed to engage in work as referred to in subparagraph 8 to 10 of Paragraph 1 of Article 46 of Employment Service Act, the duration of the work permit shall not exceed six years. According to our existing permit regulations, if a non-Chinese Taipei professional intends to apply for a resident permit, the applicant’s employer should apply for a work permit first through Council of Labor Affairs. Once approved, the applicant can then submit a resident permit application to our overseas offices or Bureau of Consular Affairs. In short, the issuance of a resident permit by reason of employment is mainly based on approved work permit. Moreover, if the applicant has obtained extension of work permit from the Council of Labor Affairs, he or she then can apply for extension of the Alien Resident Permit (ARC) at the local police authority. It is not necessary for the applicant to apply for an extension of resident permit. As for the statement that such a permit is granted only one year validity at a time, this refers to the length of time from the time it is issued to the time that the alien arrives in Chinese Taipei. There is no such problem after the alien enters into Chinese Taipei. Q3.10 APEC Leaders’ Transparency Standards on Services Section states that Chinese Taipei will use the internet as much as possible to publish laws, regulations, etc. Is there a centralized website where all such legal and regulatory information is available in one place? A: Chinese Taipei has built a centralized website to publish laws, regulations, etc. The website offers both Chinese and English versions. Please refer to the Laws and Regulations Database website http://law.moj.gov.tw/ (for English: http://law.moj.gov.tw/eng/) for details. Chapter 3a: Business Services

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3a:1: Business Services: Legal [None at this time] 3a:2: Business Services: Accounting Q3.11 According to Operational Requirements section, a offshore CPA may not perform professional services without being admitted to membership of a CPA association. Are there any discriminatory requirements for admittance to a CPA association? A: Under the CPA Law, both Chinese Taipei persons and non-Chinese Taipei persons passing the professional examination and having practical experience can apply to be admitted to the CPA Association. The CPA Association cannot reject any CPA’s application for admittance. There are no discriminatory requirements between Chinese Taipei persons and non-Chinese Taipei persons for admittance to the CPA Association. Q3.12 According to Entry section, a non-Chinese Taipei person who has passed the CPA examination and acquired a certificate is also required to obtain permission from Financial Supervisory Commission. Is this last permission required for all professionals seeking to become a CPA in Chinese Taipei, or is it required only for non-Chinese Taipei persons (i.e. is it discriminatory)? If it is required only for non-Chinese Taipei persons , what is the justification behind requiring the permission? A: The requirement for a non-Chinese Taipei person to obtain permission from the Financial Supervisory Commission is based on prudential consideration. Any non-Chinese Taipei person meeting the CPA qualification, which is also applicable to our domestic CPAs, and having no criminal record in his home economy, will be granted permission to practice as a CPA in Chinese Taipei basically on the principle of National Treatment. 3a:3: Business Services: Architectural [None at this time] 3a:4: Business Services: Engineering Q3.13 Entry section states various conditions on how non-Chinese Taipei persons can establish a consulting firm. Some of the conditions state that the firm must hire at least one licensed professional engineer. Does this person have to be a Chinese Taipei person? Must this person have a PE license as stated in the Operational Requirements Section? A: According to Article 7 of the “Act Governing the Administration of Professional Engineering Consulting Firms,” the managerial officer in charge of engineering technological services or the responsible person in charge of the engineering technology

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department shall be served by Chinese Taipei’s licensed professional engineers. A non-Chinese Taipei person can acquire a PE certificate after passing the PE examination in accordance with the “Professionals and Technologists Examination Act.” Any person who has a PE certificate and over 2 years related working experience can apply for a PE license. 3a:5: Business Services: Other Professional Services 3b: Communications Services 3b:1: Communications Services: Postal Q3.14 According to Operational Requirements Section, Postal Law prohibits persons from operating forwarding of letters, cards or papers. However, private courier services are allowed provided that they follow relevant laws and regulations. How does Chinese Taipei define and differentiate these two types of services? Also, the IAP lists no discriminatory treatments or restrictions on offshore entry. Does this imply that Postal Law, Civil Aviation Law, Airfreight Forwarded Regulations and Road Regulations contain no discriminatory measures or restrictions? A: The Postal Acts prohibits persons from operating forwarding of letters, postcards or other correspondence, but newspapers, magazines, printed matters and parcels are open to private courier services for free competition. The relevant Postal Law, Civil Aviation Law, Airfreight Forwarded Regulations and Road Regulations contain no discriminatory measures or restrictions on offshore entry. 3b:2: Communications Services: Express Delivery See question for Postal Services 3b:3: Communications Services: Telecommunications Q3.15 Entry Section of the IAP describes investment ceilings. Is the following description correct? For Type I telecom enterprise, the shares directly held by all (not single) non-Chinese Taipei persons may not exceed 49%, and the shares held directly and indirectly by all (not single) non-Chinese Taipei persons may not exceed 60% (40% for Chunghwa Telecom). Are there ceilings for single domestic investors as well? A: According to paragraph 3 of Article 12 of the Telecommunications Act, the percentage of shares directly held by all non-Chinese Taipei persons may not exceed 49%, and the shares directly and indirectly held by all non-Chinese Taipei persons may not exceed 60%. The ceiling on direct and indirect shares of Chunghwa Telecom held by all non-Chinese Taipei persons is 40%. As far as single domestic investors are concerned, there are no ceilings for single domestic investors.

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Q3.16 Chinese Taipei is not unusual in that it places investment ceilings for non-Chinese Taipei persons on communications services. However, the justification for them is not always clear. What is Chinese Taipei’s justification (legal, ethical, moral, national defense, etc.) for placing such investment ceilings? A: One major reason for placing investment ceilings on Type I telecom enterprises is their use of scarce resources, e.g. radio spectra, telephone numbers or right of way. Furthermore, the network deployment involves universal services and the security of the whole island’s telecom infrastructure, and telecom services strongly affect domestic consumers’ rights and public interests. Therefore, Chinese Taipei places appropriate ceilings for investments on Type I telecom enterprises. As for Type II telecom services, there are no investment ceilings. 3b:4: Communications Services: Audio-Visual Q3.17 Requirements of Service Providers Section describes investment ceilings for non-Chinese Taipei persons . Is the following statement correct? For cable radio and television services, the total amount of shares that all (not single) non-Chinese Taipei persons can own is limited to 60% and shares that a single non-Chinese Taipei person can own is limited to 20%. Also, are there similar investment ceilings for domestic investors? A: In areas of cable radio and television services, total direct and indirect offshore investment in a company operating a cable radio and/or television system shall be less than 60 percent of the total shares issued by the company. Direct offshore shareholding is limited to legal entities with a ceiling for each entity at 20 percent of the total shares issued. As far as domestic investors are concerned, there are no ceilings for domestic investors. For further information on matters pertaining to cable television regulations, please contact the NCC. Q3.18 Chinese Taipei is not unusual in that it places investment ceilings on communications services. However, the justification for them are not always clear. What is Chinese Taipei’s justification for placing such investment ceilings? A: Based on the considerations of security,culture, politics and society, offshore investment in radio and television services should conform to Article 19.2 of the Cable Radio and Television Act. For further information on investment ceilings in communication services, please contact the NCC. Q3.19 The IAP does not list details of over-the-air radio and television services. Are there similar restrictions for over-the-air broadcasting and communications services? A:

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The restrictions concerning over-the-air broadcasting and communications services are as follows: Non-Chinese Taipei personsmay not be promoters, shareholders, directors, or

supervisors of a radio/television business (Sec. 3, Article 5, Radio and Television Act).

The total shares of a satellite broadcasting business directly held by offshore shareholders shall be less than 50 percent of the total shares issued by the said business (Article 10, Satellite Broadcasting Act).（NCC）

For further information on restrictions on investment in over-the-air broadcasting and television services, please contact the NCC. Chapter 3c: Construction and Related Engineering Services Q3.20 Under the Operational Requirements Section, the IAP states that a construction company must employ one or more full time engineers. Do they need to be Chinese Taipei persons, or may they be non-Chinese Taipei engineers? Some cases also require relevant work experience. Must these experiences be from Chinese Taipei projects, or can these requirements be satisfied with experience outside Chinese Taipei, for example experience with a construction company outside Chinese Taipei? A: A General Construction Company in Chinese Taipei must employ one or more full time engineers. These engineers can be non-Chinese Taipei persons , but they all need to obtain a Chinese Taipei engineer’s certificate. According to Article 7, Paragraph 1, Item 1 of the Construction Industry Act states: “1. At least 1 full-time engineer who holds a civil, hydraulic, survey, environmental, structural, earth or water and soil conservation engineer certificate or architect certificate, has studied courses related to civil engineering and construction for some credit hours before getting the engineer certificate through exam, and has worked in civil engineering and construction for over 2 years.” The qualification for the aforementioned engineers consists of obtaining a Chinese Taipei engineer’s certificate. A non-Chinese Taipei person can acquire a PE certificate after passing the PE examination in accordance with the “Professionals and Technologists Examination Act”. Any person who has a PE certificate and over 2 years related working experience can apply for a PE license. Thus there are no restrictions for non-Chinese Taipei persons to obtain certificates through due process. Further explanations on what constitutes an engineer are available at the website of the Public Construction Commission. In addition, the required experience in civil engineering is by no means limited to experience obtained within the island. Chapter 3d: Distribution Services

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Q.3.21 In December 2005, Chinese Taipei eased the investment criteria for distribution centers. Please explain the changes in the investment criteria. A: ‘The Regulations Governing Customs Clearance for the Goods in Logistics Centers’ was amended by the MOF on 1 November 2005. The amount of paid-in capital which must be invested by a company limited by shares and primarily engaging in logistics business is now NT$200 million, reduced from NT$300 million. Q3.22 The Operational Requirements section lists various types of businesses where government’s permission is required. Under the Discriminatory Treatment and MFN section, the IAP lists that there are no restrictions inconsistent with MFN treatment. However, the section does not state whether there are discriminatory treatments in the sense that the government requires different or more strict conditions when a non-Chinese Taipei personcompared to Chinese Taipei person wants to receive a permit. Are there such discriminatory conditions, and if so what are they? A: For the effective administration of these types of businesses to maintain public welfare, all companies, domestic or not, that engage in the types of business listed in the column of Operational Requirements must apply for permission. No discriminatory condition exists. Chapter 3e: Education Services Q3.23 The Operational Requirements section states that principal/president and chairman of the board must be Chinese Taipei persons, and that the number of non-Chinese Taipei persons on the board of directors may not exceed 1/3 of the board or five members. What is the reason and justification for such limits? A:

The restraints in our relevant law are to try to strike an appropriate cultural balance, while paying due respect to our domestic policy objective. However, the Ministry of Education is currently working to amend the Private School Law. For secondary schools, universities and junior colleges, there are plans to abolish the restriction that a non-Chinese Taipei person may not become the Principal/President and Chairperson of the Board of Directors.

With regard to adult education services（CPC924） and other education and training

services（CPC929）, the rule that a non-Chinese Taipei person may not become the Principal/President and Chairperson of the Board of Directors remains the same.

Revision of the said law is still in the legislative process.

Q3.24 In the previous IAP Peer Review (p.111), Chinese Taipei stated that there are no foreign private schools registered in Taipei at that time. Is this still correct? Can Chinese Taipei give some indications on why such is the case (lack of demand? High regulatory burden? Other reasons?) A:

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Because of the abundance of providers within the domestic education market and the lack of demand for other providers, there are still no foreign private schools registered in Chinese Taipei. Chapter 3f: Environment Services Q3.25 The Operational Requirements section states that pest controllers shall employ professional technicians. Are there any identity requirements or discriminatory treatment in defining who is (or can be) professional technicians? A: There are no identity requirements or discriminatory treatment in defining who is (or can be) professional technicians. However, according to the regulation of “Environmental Agents Professional Technical Personnel Management Regulation,” there are some academic background requirements, work experience requirements and training qualifications for professional technicians. Since the professional technicians are supposed to work in Chinese Taipei, they are required to have an Alien Resident Certificate. Chapter 3g: Financial Services Q3.26 In the Licensing and Qualification section and the Entry section, the IAP states various paid-in capital requirements and minimum working capital requirements. For offshore banks and their branches, do these numbers refer to amount of capital that must be located in Chinese Taipei, or can banks fulfill these requirements through capital in their home economies? A: According to Article 3 of the regulations governing offshore bank branches and representative offices, a bank which has been approved to establish branch offices in Chinese Taipei shall allocate a minimum operating capital of NT$150 million for the first branch and NT$120 million for each additional branch office. To ensure that these local branches of offshore banks operate safely and soundly in the market, these monetary amounts stated above must be remitted to Chinese Taipei. Chapter 3h: Health and Related Services Q3.27 In the Operational Requirements Section and Licensing and Qualifications Section, the IAP describes various requirements for establishing welfare institutions, institutions for the disabled, and institutions for senior citizens. In the Entry and Discriminatory Treatment sections, the IAP states that there are no restrictions on entry and there are no restrictions inconsistent with MFN treatment. Does this imply that non-Chinese Taipei persons also receive National Treatment for establishment of these institutions? (i.e. there are no restrictions or additional requirements for non-Chinese Taipei persons when establishing these types of institutions?) A: There is no special restriction for non-Chinese Taipei persons to establish social welfare institutions in Chinese Taipei except as indicated in horizontal section and MFN exemption of Chinese Taipei's Services Schedule.

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Chapter 3i: Tourism and Travel Related Services [No questions at this time] Chapter 3j: Recreational Cultural and Sporting Services [No questions at this time] Chapter 3k: Transportation Services Chapter 3k:1: Transport Services: Maritime Q3.28 It states that offshore operators (branch) must keep an operating fund of no less than NT$12 million in Chinese Taipei administrative area. Do Chinese Taipei domestic operators have similar requirements? A: According to the Article 4 of the Regulations for Administrating Vessel Carriers and Vessel Chartering Operators, certain minimum capital requirements shall be provided by the newly established shipping company as follows: the capital shall be sufficient to pay for 10% of total construction cost for building the new vessels, or it shall be sufficient to pay for 20% of total purchase cost for buying the existing vessels. For example, the current price for a wholly new 1000TEU container ship is over US$12 million, and 10% of that is equivalent to at least NT$40 million, which is much more than NT$12 million. Therefore, the stipulation in Article 31 of the same Regulations, that offshore operators (branch) must keep an operating fund of no less than NT$12 million in Chinese Taipei administrative area, is not at all more severe than the requirement for Chinese Taipei operators. Chapter 3k:2: Transport Services: Air Q3.29 It states that currently,offshore investment in Chinese Taipei airlines is limited to 1/3; but Chinese Taipei is planning to increase the ceiling to 49%. What is the reason Chinese Taipei wants to limit offshore investment in the air transport services? Are there ceilings on single domestic investors as well? A: According to Article 49 of Civil Aviation Act, a civil air transport enterprise shall be

formed as a company organization. For a limited share company, at least two-thirds of its capital should come from Chinese Taipei persons, and its board chairman and two-thirds of board directors should be Chinese Taipei persons. There is no any ceiling on single domestic investors. The reason that Chinese Taipei limits offshore ownership is to insure that the flag

carrier is a tool for promotion of domestic trade and tourism, provides public service (domestic transportation), creates employment, and promotes hi tech development. With the understanding that liberalizing the limitation on offshore investment could

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benefit our airlines by inviting experienced offshore management teams and forging domestic alliances with others, Chinese Taipei has finished a draft of revisions to the Civil Aviation Act that will raise the ceiling on offshore investment to 49% of total equity. This policy will go into effect once the regulation process is completed. Chapter 3k:3: Transport Services: Rail Q3.30 How does Chinese Taipei’s Rail Transport Services operate? Is the rail service run by a government agency? Or is it a private (or public) monopoly, or is there competition among different companies? A: At present, rail transport services in Chinese Taipei take two forms: a government-owned enterprise and private carriers. Moreover, in line with our WTO commitments, this sector has already been opened for offshore investment and operation. If the rail transport is privately invested in and built, then the private corporation has a guaranteed period in which it has the right to operate the rail transport service. If it is built by the government and operated by a private corporation, then the government uses an open bidding process to determine which corporation will be entrusted to operate it. Chapter 3k:4: Transport Services: Road Q3.31 It states that those companies which are approved by the central highway authority can invest in various road transportation services. May we assume that approval is given to non-Chinese Taipei persons on a non-discriminatory (MFN and NT) basis? A: Chinese Taipei’s laws concerning non-Chinese Taipei investment in road transportation services is entirely non-discriminatory. Chapter 3l: Energy Services [None at this time] Chapter 4: Investment Q4.1 The General Policy Framework section state that a non-Chinese Taipei investor may establish businesses after receiving approval from the Ministry of Economic Affairs. Is this a discriminatory requirement? How easy is it to receive the approval? A: 1.According to the provisions of the current statute for investment by non-Chinese

Taipei persons, non-Chinese Taipei investor shall fill in an investment application form together with relevant documents to the Investment Commission of MOEA for receiving prior approval.

2.In case the non-Chinese Taipei investment is under certain amount and not engaged in

the prohibited or restricted industries, the Investment Commission, MOEA will fast

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review the application by its ex officio. 3.The current approval procedure for non-Chinese Taipei investment is under constant

review by the Investment Commission, MOEA for further simplification. Q4.2 The Non-Discrimination section of the IAP state that pursuant to the Guidelines for Banks Engaging in Financial Derivatives Business, Chinese Taipei maintains a negative list system. What is this negative list system? Does the list state what types of derivative businesses a bank cannot engage in? Also, does the list apply equally to all banks, domestic or not? A: 1.Pursuant to the “Guidelines For Banks Engaging in Financial Derivatives Business,”

other than for the products listed below (which require prior approval), a bank that has obtained approval to engage in a financial derivatives business (and, in the case of a futures trading business, has obtained approval thereof in accordance with Futures Trading Act), may engage in any financial derivatives transaction including combinations thereof, and shall submit a description of each product's characteristics, a letter of undertaking to comply with laws and regulations, and a statement of risk disclosure to the Financial Supervisory Commission ("FSC") within 15 days after commencement of business for record:

(1) Products involving, and subject to, the Act Governing Relations between People of

Chinese Taipei and the People of the Mainland and the related laws and regulations promulgated under this Act;

(2) Products derived from the price of domestic shares or relevant to exchange traded commodities and index contracts traded at the futures exchange, approval for which products requires consultation with the Securities and Futures Bureau; and

(3) Products subject to approval of the CBC.

If the FSC has approved any bank to engage in a type of product falling under Subparagraph (1) or (2) of the proceeding paragraph, another bank may directly engage in the same type of product commencing 15 days after the date following the date when such other bank submits application documents, a letter of undertaking to comply with laws and regulations, and a statement of risk disclosure to the FSC so long as the FSC does not object thereto during such 15 day period. However, such banks shall not engage in such business until such fifteen-day period expires. Banks shall apply to the CBC for approval to engage in products as referred to in Paragraph 1, Subparagraph (3). 2.This list does not state what types of derivative businesses a bank cannot engage in. This list applies equally to all banks. Q4.3 The Non-Discrimination section of the IAP state that under the FINI registration system, offshore institutional investors are no longer subject to any investment quota or validity period limits. Are there any remaining discriminatory requirements on offshore investors? Are there any remaining performance requirements? A:

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Under current regulations, offshore investors are divided into two categories: institutional investors (FINIs) and individual investors (FIDIs). While FIDIs are subject to a US$5 million investment quota, FINI investments are not subject to any upper limit. However, some specific industries, such as telecommunication, still impose investment ceilings for offshore investors. There is no performance requirements on those investment. Q4.4 The Non-Discrimination section of the IAP state that for real estate, aliens may be permitted to acquire land on the principle of reciprocity. Does this statement imply that non-Chinese Taipei persons can purchase land only if their home economy allows Chinese Taipei persons to purchase land? A: Yes. Only persons from economies that allow Chinese Taipei persons to acquire land may enjoy the same rights to acquire land in Chinese Taipei. Q4.5 In the previous IAP Peer Review (p.53), Chinese Taipei gave a very useful summary on legislation and regulations concerning purchase of land by non-Chinese Taipei persons. Have there been any substantial changes since that time? A: No. The laws and regulations regarding land acquisition for non-Chinese Taipei persons have not changed since then. Q4.6 Can Chinese Taipei give a general idea of the number and types of industries which are covered by the “Negative List for Investment by Overseas Chinese and Non Chinese Taipei Persons – Prohibited Industries and Restricted Industries for Investment,” (i.e. which industries are prohibited from such investment)? In WTO TPR p.21 Table II.1, the WTO secretariat lists industries with restrictions on FDI. Is this list accurate and up to date? What is the reason (or the justification) why Chinese Taipei prohibits offshore investment in these sectors? A:

The latest list of “prohibited and restricted industries” under the negative list is available on the website of Investment Commission, MOEA at http://www.moeaic.gov.tw/.

Such a list is to prevent offshore investment in industries that may negatively affect

public order and safety, and good customs and practices. The removal of industries from the “prohibited and restricted industries” list is under constant review by different competent authorities in accordance with their respective laws or regulations. Q4.7 Is Chinese Taipei’s investment laws and regulations fully compliant with APEC’s Non-Binding Principles on Investment? Has APEC Non-Binding Principles on Investment been useful for Chinese Taipei? If so, how? A: To reach APEC’s Bogor Goal of free and open investment, the APEC Investment Experts Group (IEG) developed a set of Non-Binding Investment Principles (NBIPs) in 1994.

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We have worked with the IEG to develop NBIPs and the subsequent task of compiling a Menu of Options with the aim of identifying policy measures for voluntary adoption to achieve investment liberalization and business facilitation. We have recently also participated in the OECD’s taskforce for development of the Policy Framework for Investment (PFI). We believe that some of PFI’s elements could be adopted for use by APEC. In our participation in APEC’s Non-Binding Investment Principles, Menu of Options, and OECD’s Policy Framework for Investment, we have had the opportunity to review domestic investment-related laws and regulations and to carry out a gradual relaxation of restrictions on offshore investment. The NBIPs remain a very important and relevant reference tool for us in achieving the Bogor goal of a sound and open investment environment. Q4.8 Chinese Taipei requires Japanese affiliated manufacturers to export more than 12% in the ratio obtained by the formula: the amounts of [exports to Japan+(export of finished motor vehicles – CKD imported)]/(CKD parts price for assembly of fiished motor vehicles destined to domestic consumption) x 100. Please explain the rationale of the use of the formula and how has it been implemented. A: The 12% ratio is only a target for the development of motor industry. No penalty is imposed for manufacturers fail to meet the target. The government presents the best performance award to manufacturers every year. Q4.9 Chinese Taipei ties the issuance of resident permit with export performance. Is this true for all offshore investments in manufacturing or only in automotive industry? What is the rationale for this policy? Is Chinese Taipei considering its discontinuation? A: Chinese Taipei does not tie issuance of the resident permit with export performance. Q4.10 What are the rules on local borrowing by companies owned by non-Chinese Taipei persons? Do different rules apply for 100% foreign-owned firms vis-à-vis partially foreign-owned companies? A: Our financial regulations accord National Treatment to companies owned by offshore stakeholders for borrowing activities, and make no distinction between 100% foreign-owned firms and partially foreign-owned companies. Chapter 5: Standards and Conformance Q5.1 The previous IAP Peer Review lists MRAs in place in 2003, and the current IAP updates the list. Most of those MRAs seemed to be APEC related MRAs. Does Chinese Taipei maintain other bilateral or regional MRAs? A:

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Chinese Taipei signed Arrangements with the United States (IT equipment), Canada (IT equipment) and Australia (IT equipment & EE products) on the acceptance of EMC test reports in 1999, 2002, 2004 respectively, and signed Arrangements with New Zealand and Singapore for electrical and electronic products on the acceptance of EMC and safety certification results in 2005. Q5.2 What has been Chinese Taipei’s experience with negotiating and implementing MRAs? Has the experience been generally favorable? In what ways? A: The MRAs that we signed with our trading partners, listed in the response to Q5.1, have generally gone smoothly in practice and have been welcomed by industry. Q5.3 WTO TPR (p.54, Table III.13) lists the number of domestic technical standards and the number of domestic standards equivalent to international standards. The total number of domestic standards seems to vastly outnumber international standards. As unnecessary standards may act as trade barriers, does Chinese Taipei have mechanism in place to review new or existing standards to check whether they are necessary standards, and that they do not act as unnecessary trade barriers? A: The domestic standards are mainly used by the industry as basic guidelines to produce their products. All domestic standards are subject to review every five years after their adoption. The review is conducted in a transparent way and interested parties are invited to provide their comments. Chapter 6: Customs Procedures Q6.1 Please update us on the “Single-Window Concept”. A: We adopt the “Single Window Concept” in improving our trade facilitation environment. Rather than creating a single authority or a single system, our concept is to provide an automated system. Currently, there are two value-added network companies providing electronic services for stakeholders. The stakeholders will only need to visit the single window to complete their applications for import/export permits, certificates of origin, certificates of inspection, and quarantine certificates, etc. In addition, all the information provided for trade administration will link with the customs clearance system with no need for data re-entry. The first stage was the consolidation of the computer systems among the Directorate General of Customs, the Bureau Of Foreign Trade, Bureau of Standards, Metrology and Inspection, and Bureau of Animal and Plant Health Inspection and Quarantine. With the simplification of the licensing procedures and the shortening of the time needed for licensing operations, cargo clearance operations are, therefore, further expedited. We will continue to promote the networking with other relevant agencies in 2006. Q6.2 For transparency, does Chinese Taipei have a mechanism in place to inform traders about new legislation or regulations, or revisions which are being considered? Does Chinese Taipei have a mechanism for consultation with traders about new

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legislation and regulations or revisions under consideration? A: Yes, we have a mechanism prescribed in the Administrative Procedure Act to inform traders about new legislation or regulations, or revisions which are being considered and we also consult with traders about new legislation and regulations or revisions under consideration. Q6.3 Does Chinese Taipei give traders time between public announcement of a new or revised legislation and regulations, and its actual implementation so that traders will have time to prepare for the new (or revised) legislation and regulations? A: Yes, we consult with the private sector and other agencies before new legislation and regulations enter into force. In addition, there must be an interval between the public announcement of a new or revised regulation and its entry into force according to the Central Regulation Standard Act. Q6.4 Does Chinese Taipei operate a centralized database or a single contact window where traders can receive information on all relevant import or export procedures from various agencies and ministries? A: The single contact window, established by the Bureau Of Foreign Trade, Ministry of Economic Affairs, can provide relevant import or export information of various agencies for traders. Q6.5 In the Adoption of Kyoto Convention Section, the IAP states that Chinese Taipei has organized a task force to identify discrepancies between the Revised Kyoto Convention and Chinese Taipei Customs laws. Has the project been completed? Are there any discrepancies? Has Chinese Taipei signed the Revised Kyoto Convention, and if not, what are the problems which keep Chinese Taipei from signing? A: Our Customs has completed the identification of discrepancies between the Revised Kyoto Convention and our Customs laws. Since there are some discrepancies found, we are working on the possibility of amending our Customs Act or relevant laws according to the Revised Kyoto Convention. We have not signed the Revised Kyoto Convention, as we are not the member of WCO. Q6.6 In the Implementation of Clear Appeals Procedures section, the IAP states that appeal procedures are prescribed in various laws. Is there a single independent agency responsible for appeals, or are appeals handled by various agencies themselves? Also, is there an internet address where traders can find out how the appeal procedures work, and if so, what is that address? A: According to Articles 45, 46, and 47 of the Customs Act, and Articles 47 and 48 of the Customs Anti-smuggling Act, the special committees in Customs, the Ministry of Finance, and Ministry Of Justice shall deal with the appeals. Traders are able to get relevant information via the following websites: http://customs.gov.tw

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http://doca.mof.gov.tw http://law.moj.gov.tw Q6.7 In the Implementation of TRIPS Agreement section, the IAP describes various approaches to crack down on illegal goods. Can the Chinese Taipei government give an indication of how effective these measures have been? A: Our Customs has taken some border measures to prevent infringement of intellectual property rights, including the “Operational Directions for Customs Authorities in Implementing Measures for Protecting the Rights and Interests of Patent, Trademark, and Copyright,” “Export Monitoring System of Trademarks,” “Inspection for Exports of Audio-visual Copyrighted Works and OEM Audio CDs,” “Operational Directions for the Enforcement Taskforce against Export of Pirated Optical Disks,” “Inspection System on Optical Disk Manufacturing Implement and Optical Disks” and “Inspection System on Export Chip Products with Mask-ROM.” In 2005, the Customs intercepted 76 cases of imported copyright-infringing goods. Of these, 65 cases were pirated DVDs and CDs (33,290 items), and 11 cases were counterfeit PC boards for game players (3,823 items). With regard to export, 1 case (484 items) of copyright-infringing goods were intercepted. In the area of trademark violations, 174 cases (2,393,323 items) infringing trademark rights were seized; the majority of infringing goods were cigarettes, followed by medicine, leather handbags and wallets, daily necessities, etc. With regard to export, 3 cases (700 items) infringing trademark rights were seized (see the attached Statistics 2005). Customs will continue its efforts to enforce border measures more effectively. Among others, it will help enhance the understanding of right holders of border measures and strengthen cooperation with right holders to crack down on counterfeits and pirated products. Q6.8 In the Adoption of Systematic Risk Management Techniques Section, and the International Standards for Electronic Commerce section, the IAP describes various measures Chinese Taipei has taken to streamline customs procedures. Can the Chinese Taipei government give an indication of how effective these measures have been? Can the Chinese Taipei government give an indication of the decrease in the average time required for customs clearance due to these measures? A: After analyzing clearance's data and information, we input high-risk factors (example: companies, CCC Code, economy of origin,..) into the Cargo Selectivity System so that the rate of high-risk merchandise inspection is increased and that of low-risk merchandise inspection is decreased. This can facilitate normal cargo clearance and increase efficiency of anti-smuggling activities. There is no indication of a decrease in the average time required for customs clearance due to other measures that we have taken to streamline customs procedures. Currently, the average clearance time for import air cargo is about 13 minutes, and that for sea cargo is about 2 hours. Q6.9 In the Base Year/Cumulative Improvements Development of a Compendium of Harmonized Trade Data Elements Section, the IAP states that Chinese Taipei established a project team to study the contents of G7 data sets, and presumably the

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WCO Customs Data Model as well. What were the results of the project team study? Has Chinese Taipei adopted all or elements of the WCO Customs Data Model? If not, what is the difficulty? A: Our Customs completed the mapping and definition of our declaration data elements against Version 1.0 of the WCO common data sets in 2005. The mapping shows that there are some discrepancies on the name of some data sets. Considering that the change of clearance system will increase cost to both traders and Customs, and that the WCO Common Data Model is not finalized yet, we will postpone adopting all of the WCO common Data Model until the final version of Data Model is determined. Q6.10 In the Base Year/Cumulative Improvements Adoption of Systematic Risk Management Techniques section, the IAP states that Customs set up a single window service center at each clearance depot. What duties are covered by the single window, and how much responsibility and authorities are delegated to these single windows so that they do not end up as being “one-more-stop” window service? A: The single window service center at each field Customs Office provides consultation to the enquiries regarding cargo clearance raised by traders. Traders still need to go through the regular customs clearance procedures for their goods. Q6.11 In the Base Year/Cumulative Improvements Other Improvement section, the IAP shows that some elements of authorized trader system (where Customs give preferential treatment to reputable and/or reliable traders) have been adopted. What other elements of authorized trader system are in place? A: In order to create a barrier-free paperless clearance environment, in addition to simplifying cargo clearance procedures and uplifting operational efficiency, our Customs is in the process of promoting a business firm certification system, in which accredited firms may enjoy the privileges of lowering cargo examination rates and paying lump sum duties on a monthly basis. As of the end of 2005, a total of 112 firms have been certified by the Customs. This initiative is of much help to trade facilitation and enhancement of competitive edge of local enterprises in the international market. Q6.12 The IAP states various risk management measures that Chinese Taipei has installed recently. Does Chinese Taipei operate differentiated customs procedures for cargo such as green/yellow/red line procedures depending on risk assessment? If so, what percentage of cargo undergoes the toughest treatment, and what percentage of cargo undergoes the lightest treatment? A; The declarations are classified into three categories—C1, C2, and C3—based on the selectivity criteria, which include risk level of importers, exporters, tariff numbers, manufacturer ID, country of origin and filer. The notation C1 refers to bypassing while C2 refers to document review, and C3 refers to document review plus cargo examination. In 2005, 14% of cargo underwent the toughest treatment C3, 29% of cargo underwent the general treatment of C2, and 57% of cargo underwent the lightest treatment C1.

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Q6.13 In the Highlights on Trade Facilitation Work, Part II, the table shows that Chinese Taipei has selected 40 of the 60 possible items for customs procedures. Can Chinese Taipei give a general description of the customs procedures items that it did not choose, and give the reason why it did not choose them? A: The reason why we did not choose the rest of the items of the customs procedures is because they are not much related to Customs current operations. Q6.14 Have APEC’s Trade Facilitation Principles useful for Chinese Taipei? Can Chinese Taipei give some examples on how APEC’s Trade Facilitation Principles have been useful for Chinese Taipei’s efforts in improving trade facilitation? A: APEC’s Trade Facilitation Principles, such as simplification and transparency, have been quite helpful as Chinese Taipei has worked to improve its level of trade facilitation. Relevant efforts that we have made include establishing the Web-based Customs Application Service and tracking system and the ePayment System. Stakeholders are able to request services via the Internet at home or anywhere and track the progress of their application and declaration. In addition, Chinese Taipei Customs has consolidated the Customs cargo clearance systems and the e-Financial Services System to establish the “Customs Duty and Tax Internet Payment System” so as to provide more alternative channels and mechanisms for traders to pay taxes/duties/fees. Both measures provide more transparent and convenient service to traders. Chapter 7: Intellectual Property Rights Q7.1 What are Chinese Taipei’s rules on parallel importation of audio-visual products? Has the court ever ruled on when rights are exhausted? A: 1. According to Article 87, Subparagraph 4 of the Copyright Act, regarding the

prohibition of parallel importing of goods, any imported copies of a work without the authorization of its economic rights holders, except as otherwise provided under Article 87bis of this Act, shall be deemed an infringement on copyright. In the 2004 amendment, criminal liabilities for violations of Article 87, Subparagraph 4 were deleted from Article 93, Paragraph 1, Subparagraph 2, therefore, the importation of more than one copy of the same reproduced work (including audio-visual works) incurs only civil liabilities. However, should the importation be followed by distribution through transfer of ownership or rental, criminal liability may be imposed by the application, respectively, of Article 91bis, Paragraph 2, or Article 92.

2. Pursuant to Article 59bis of the Copyright Act, “A person who has obtained

ownership of the original of a work or a lawful copy thereof within the [administrative area] under the jurisdiction of [Chinese Taipei] may distribute it by means of transfer of ownership,” the exhaustion of rights principle applies only when a person obtains ownership of an original work or a lawful reproduction thereof within the administrative area under the jurisdiction of Chinese Taipei.

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Aforementioned provisions are not applicable to illegal reproductions; hence, the unauthorized importation of more than one copy of the same audio-visual product and its subsequent sales or rental is deemed an infringement on copyright, and will incur civil compensation and be subject to criminal penalties.

Q7.2 Chinese Taipei has one case of compulsory licensing. What were the reasons for the granting of the compulsory license? What is the current status of appeal? A: According to Article 76, Paragraph 1 of the Patent Act, “in the case of an applicant’s failure to reach a licensing agreement with the patentee concerned under reasonable commercial terms and conditions within a considerable period of time, the Patent Authority may, upon an application, grant a right of compulsory licensing to the applicant to put the patented invention into practice.” In this case, the applicant of compulsory licensing and the patent holder underwent numerous negotiations between March 2001and April 2002, but no agreement was reached, the Patent Authority therefore issued the compulsory license in accordance with Patent Act Article 76, which is in conformity with TRIPS Article 31(b) . The patent holder then appealed to the Ministry of Economic Affairs Committee of Petitions and Appeal (herein referred to as the Committee) on August 26, 2004. The Committee has held several hearings since that time. Because both parties had conveyed willingness for reconciliation during the administrative review procedure, the Committee thus postponed the subsequent hearing several times per the requests of both parties. The final hearing was held on April 10, 2006, and the Committee will soon render a final decision. Should the parties involved be unsatisfied with the final decision, further appeal can be filed with the High Administrative Court and Supreme Administrative Court. Q7.3 What is the role of the Intellectual Property Office (TIPO)? Is TIPO in charge of maintaining, implementing and enforcing IPR laws and regulations, or does it act as a coordinator for various other agencies responsible for maintaining, implementing and enforcing IPR laws and regulations? What actual powers and responsibilities does TIPO have? A:

TIPO is responsible for the implementation and establishment of IPR regulations and policies, as well as the establishment of an inter-agency committee to coordinate the formulation, integration, promotion, and review of IPR policies:

1.Policy coordination: TIPO actively participates in APEC and WTO conferences, organizes

bilateral conferences, and participates in trade talks pertaining to IPR issues to stay abreast of the latest developments in IPR legislation, regulate development trends, and harmonize legal regime with international guidelines.

2.Policy formulation: Laws and regulations for patent, trademark, copyright, trade secrets, and IC

layout are revised in a timely fashion to stay abreast of international development trends and to meet the needs of domestic industrial development. Revisions are drafted with reference to the

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policies of other economies, their status of implementation, and the opinions of domestic patent agents.

3.Policy discussions and integration: Through organizing seminars and workshops, TIPO

strengthens industrial and academic sectors’ communication with patent agents, and rights holders and users. Opinions on current legislation and policies are compiled and reviewed as reference for future amendments and legislation.

4.Policy promotion: TIPO seeks the support of different sectors through organizing public

hearings and seminars. TIPO also fosters communication and consensus among high-level government agencies, congress, and relevant interest groups, so as to promote smooth policy-making and legislative processes.

5.Policy review: TIPO conducts periodic reviews of new or existing policies and

compiles public opinions for future reference. Q7.4 For trademarks, does Chinese Taipei operate under the first-to-file principle or the first-to-use principle? A: In principle, trademark applications are accepted under the first-to-file principle, unless the applications are submitted on the same day and when time precedence cannot be determined, then the time precedence of the application is determined in accordance with provisions in Article 18 of the Trademark Act. According to Article 23, Paragraph 1, Subparagraph 13, “a trademark application shall be rejected if it is identical or similar to a registered trademark or a proposed trademark of a preceding application that is designated for use on identical or similar goods or services thereof, and hence likely to cause confusion to relevant consumers.” A concerned party may request that the Registrar Office invalidate said registration. And according to Article 30, Paragraph 1, Subparagraph 3 of the Trademark Act, “[under the condition] where, prior to the filing date of a registered trademark, a person has been using bona fide an identical or similar trademark designating on the identical or similar goods or services, [that person shall not be bound by the designation of rights to the registered rights holder]. However, the aforementioned only is applicable to those goods or services on which such trademark has already been in use; the trademark right holder of the said registered trademark may request the said person to attach appropriate and distinguishing label(s).” Q7.5 In the Effective Enforcement of IP Rights Section, the IAP states that there are civil remedies for IPR infringements, but no administrative remedy. Does this statement imply that the government does not prosecute IPR infringements unless there is a civil complaint? (i.e. the government does not initiate investigations on IPR infringement?) Does it also imply that there are no criminal penalties for IPR infringement (for example, illegal copying and distribution of movie DVDs and music CDs)? Also, are there criminal penalties for IPR violations? (The WTO TPR states that right-holders can bring actions based on administrative and civil codes, which seems to contradict the statement in the IAP). If criminal penalties do exist, can Chinese Taipei give some examples of criminal penalties?

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A: 1. Our Copyright Act was revised in 2003 and 2004 to strengthen implementation in

the areas of:

(1)Civil liability: Specific chapter on civil remedies is included to stipulate rights holders the rights to demand the removal of infringement of rights or to make demand to prevent such infringement, to demand for restoration and compensation for damages, or to request for the destruction of infringing products and instruments aiding in the creation of said infringing products. (2) Criminal liability: Major revisions include an amendment regarding distribution

rights (Article 28bis); stipulating offences “pirating optical disks for the purpose of selling or leasing” and “sale of pirated optical disks” as public crime, i.e., prosecution without complaint by right holder; granting competency to law enforcement agencies to confiscate infringing products (Article 98bis); and amending the regulations governing terms of criminal penalties for copyright infringements (Articles 91 to 95, and 100 to 102) and increasing related fines amounts. In addition, existing penal provisions on vocational crimes are deleted in accordance with Criminal Code revisions that took effect July 2006, and adopt the principle of “combined punishment for several crimes.” In other words, each copyright infringement should be sentenced separately, and their punishment should be combined and carried out according to regulations in the Criminal Code. Penal provisions in the Trademark Act include civil and criminal measures.

(1) Civil liabilities include:

Article 61: “A trademark right holder may claim for damages from a person infringing whose trademark rights, and may request for excluding infringement thereto; in case of likelihood of infringement, the said right holder may also request for the prevention thereof.

Using trademark under conditions stipulated by Paragraph 2 of Article 29 without consent from a trademark right holder shall constitute infringement of the trademark rights.

A trademark right holder, when requesting in pursuance with provisions of the preceding paragraph 1, may request for destruction or other necessary disposal of the goods infringing trademark rights, or raw materials or equipments utilized for infringement.”

(2) Criminal liabilities include: Article 81: “without prior consent of the trademark or the collective

trademark right holder, any person who uses a mark identical or similar to a registered trademark or collective trademark on the identical or similar goods or services, and hence has caused likelihood of confusion to relevant consumers, shall be charged with imprisonment for no more than three years, detention and, in addition thereto or in lieu thereof, a fine of no more than NT$200,000.”

Article 82: “Any person, who knowingly sells, displays for sale, exports or imports the goods referred to in the preceding article, shall be charged with imprisonment of no more than one year, detention, and, in addition thereto or in lieu thereof, a fine of no more than NT$50,000.”

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Article 83: “The goods manufactured, sold, displayed, exported or imported by, or the articles or documents in connection with provision of services by, a person committing any of the offenses as specified in the preceding two articles, shall be confiscated, regardless of whether such goods, articles or documents belong to the offenders.”

Customs control measures:

According to Trademark Act Article 65 and Copyright Act Article 90bis, a right holder may request the Customs Authority to suspend the release of imported or exported goods that are suspected of infringing the trademark right, copyright, or plate right of said right holder. In 2003, the Customs Authority also promulgated the “Operational Directions for Customs Authorities in Implementing Measures for Protecting the Rights and Interests of Patent, Trademark, and Copyright,” which allows Customs to suspend ex officio the release of goods suspected of infringement on trademark right or copyright.

Q7.6 Some sections of the IAP refer to the Intellectual Property Office as TIPO, and some sections refer to it as IPO. Do these two acronyms stand for same agency, or are they separate and different agencies? A:

TIPO and IPO refer to the same office. Q7.7 The Base Year/Cumulative Improvement Ensuring the Expeditious Granting of IP Rights state that MOI is responsible for registration of copyrights. Does Chinese Taipei maintain a database of copyrights? Is registration of copyright required if a copyright holder wants to protect his IPR? (i.e. does the right holder have to register his copyright if he wants to sue for IPR infringement?) A:

Our Copyright Act adopts the principle of automatic protection to any work upon its completion. No registration is necessary to initiate copyright protection, including protection for the exercise of all other form of copyright. Q7.8 The Base Year/Cumulative Improvement General Policy Position Section state Chinese Taipei’s approach to IPR protection. How does Chinese Taipei actually implement these policies? The Base Year/Cumulative Improvement Effective Enforcement of IP Rights Section states that Chinese Taipei maintains IPR Police. What is the role of the IPR Police, and how effective has it been? A:

In order to implement its IPR protection policy, the government has taken various measures to strengthening its IPR regime. Under the IPR Action Plan 2003-2005, a special IPR Police force was established in 2003 to carry out random raids of night markets and retail shops suspected of piracy. The IPR Police, with 220 police officers, spares no effort for IP protection by adhering to their motto: “cracking down on the illegal, and protecting the legal.” Q7.9 What efforts has Chinese Taipei made to crack down on parallel imports? A:

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Chinese Taipei has provisions for the parallel import of patented goods, adopting the principle of international exhaustion, with the court determining the exhaustion of rights. This also applies to utility model and design patents. Chinese Taipei also has provisions for the parallel import of trademarked goods and layout designs. Parallel import of copyrighted products is prohibited under the Copyright Act, and importation without the authorization of the right holder incurs only civil liabilities and not criminal liabilities. Chapter 8: Competition Policy Q8.1 In previous IAP review, concern was raised about the independence of FTC. It was mentioned that there was a plan to no longer require the FTC and CBC heads to attend government meetings to make them focus solely on their areas of concern. Please update. A:

To improve government efficiency, Chinese Taipei is proceeding with a government reorganization program. The program will make FTC a completely independent agency. Four related legislations for the program have been drafted. Of these, the "Purposes and Principles of the Basic Organizational Code" was passed in June 2005. The government will keep in close touch with relevant parties with a view to passing the bills and carrying out the task of the government reorganization program. Q8.2 Can you give us an example of “collective action” by private firms that had been approved by the FTC? A:

At its 358th Commissioners’ meeting on September 16, 1998, the FTC approved the joint venture by the Kaoshu, Likang, and Yanpu area gravel suppliers to form three new companies for gravel exploitation and distribution in the Kaopin River area.

The broad region of the Kaopin River drainage area makes it difficult to oversee. Long-term unauthorized and indiscriminate gravel extraction had threatened river embankments and bridge pylons, and caused depletion of gravel resources. Illegal extraction had extended to inland areas, triggering strident protests from nearby residents due to growing environmental concerns. To regulate riverside gravel extraction, the local authority had put forth its "Plan for Management of Kaopin River Gravel Extraction."

Out of concerns for public policy, the FTC believed that this concerted action would help deter illegal extraction, prevent threats to flood prevention works, and contribute to the safety of bridges, nearby wells and underground water. This would positively reduce the social costs of illegal extraction and contribute to the entire economy and public interest without restricting competition. The FTC approved the concerted action, which was limited to gravel mining and distribution by the three new companies. Gravel rinsing, crushing, or other processing were not within the scope of this approval. In addition, the three companies were not permitted to engage in fixing price, zoning distribution areas, limiting output, setting trading terms or time of

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processing operations, and other unfair restrictive behaviors. The approval period extended until the end of 1999 to accord with planning by water conservation units. Q8.3 In the General Policy Framework Section, the IAP describes the number of cases handled relating to competition law. The IAP states that a many of cases were due to complaints by members of the public. Does the FTC regularly review public complaints for prosecution? How are the complaints gathered by the FTC? A:

Article 26 of the Fair Trade Act states, “The FTC may investigate and handle, upon complaints or ex officio, any violation of the provisions of this Law that harms the public interest.” The commencement of the FTC disposition is upon complaints or ex officio. The complainant need not meet any eligibility requirements and can be a consumer or an enterprise. The complaint can be in the form of letter or email, but it must provide a detailed and substantive content, present relevant evidence along with her/his true name and address as prerequisites for acceptance by the FTC. Once the complaint is accepted, an investigation is initiated. Q8.4 In order to keep violators from breaking the law, often penalties must be of sufficient amount. In the Base Year and Cumulative Improvements for General Policy Position section, it states that FTC handled 2198 violations of the law and fined a total of NT$1271 million; so an average penalty seems to be about NT$ 500,000. For cases prosecuted by the FTC, how are the amounts of penalties determined? Are there penalties other than fines? How often have these other types of penalties been used? A:

The penalty amount is determined case by case. Fines are determined in Commissioners’ Meeting. Specific factors to be considered in assessing the fine include the violator’s motive, purpose and expected gain from the violation, the harm to market order, the duration of the harm, the violator’s actual benefit from the violation, the size and market position of the violator, any previous enforcement or warnings about the type of violation, the violator’s previous record of compliance with the law, and the violator’s “remorse” and co-operation with the FTC investigation.

Except for fines, the FTC may order any enterprise that violates any of the

provisions of this Law to cease, rectify its conduct or take necessary corrective action within the time prescribed in the order. In 2005, 130 cases were ordered to stop or correct illegal actions.

In addition, criminal prosecution can be made for illegal multi-level sales schemes,

commercial disparagement, and the failure to comply with FTC cease and desist orders on abuse of dominance, concerted actions, illegal counterfeiting and vertical restrains. Ninety-four cases involving criminal liability have been brought to the courts since the FTC’s establishment. Q8.5 How is the FTL enforced? Does FTC bring cases to the court, or does it judge and impose penalties by itself under the mandate of FTL? A:

The FTC judges and imposes administrative fines and orders under the mandate of

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FTL. However, these rulings can be appealed to the Appeal and Petition Committee and, in turn, to the administrative court. With regard to the disposition of cases involving criminal liability, the FTC brings cases to the court. Q8.6 Does FTL allow members of the public to directly sue for damages in competition law cases? (i.e. does FTL allow civil suits?) If so, under what circumstances, and for how much? A:

Article 31 of FTL states, “Any enterprise that violates any of the provisions of this Law and thereby infringes upon the rights and interests of another shall be liable for the damages arising therefrom.” Article 32 of FTL states, “In response to the request of the person being injured as referred to in the preceding article, a court may, taking into consideration the nature of the infringement, award damages more than the actual damages if the violation is intentional; provided that no award shall exceed three times the amount of damages that is proven. Where the infringing person gains from its act of infringement, the injured may request to assess the damages exclusively based on the monetary gain of such infringing person.” This further allows the injured to seek multiple damages ex post facto. Q8.7 In the Reviews of Competition Policies Section, the IAP notes that FTC relaxed restrictions on joint ventures, strategic alliances and methods to increase R&D cooperation, and to increase market competitiveness. What are the new standards for such joint ventures and strategic alliances? A:

Since the FTC is still in the process of preparing the “Draft Amendments to the Fair Trade Law,” the new standards for joint ventures and strategic alliances have not been enacted. The FTC will relax the restrictions once the draft has been implemented. Q8.8 In the Measures to Deal with Horizontal Restraints section, the FTC mentions leniency programs to improve efficiency. How do these leniency programs work, and under what conditions is leniency granted? A:

The content of the leniency program is still being prepared as part of the “Draft Amendments to the Fair Trade Law.” Q8.9 In the Base Year/Cumulative Improvement Reviews of Competition Policy section, the IAP states that the FTC abolished the requirements to announce via public notice the names of monopolistic enterprises hold a market share above 20%. Why? If Chinese Taipei no longer feels that 20% is an appropriate level for monopolistic market share, then what is the new standard? A:

The pre-amendment version of Article 10(2) of FTL stated: "At fixed times the competent authority shall announce (the names of) monopolistic enterprises." In order to carry out the mandate of this provision the FTC expended substantial administrative resources. However, where an instance of abuse of a monopoly position arose at a time other than the time of the announcement, the data and conclusions related to the initial determination could not be directly applied, and a de novo investigation into the

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relevant market and practices of the enterprise was still required. Accordingly, the amendments removed the requirement of announcing enterprises, and the Commission can directly handle illegal monopolistic acts based on market data collected through investigations.

The current presumptive rules for defining a monopolistic position in Chinese

Taipei are found in Article 5-1 of the FTL. An enterprise shall not be deemed a monopolistic enterprise if none of the following circumstances exists:

1. The market share of the enterprise in a relevant market reaches one-half of the market; 2. The combined market share of two enterprises in a relevant market reaches two-thirds

of the market; and 3. The combined market share of three enterprises in a relevant market reaches three-

fourths of the market.

However, under any of the abovementioned circumstances, where the market share of any individual enterprise does not reach one-tenth of the relevant market or where its total sales in the preceding fiscal year are less than NTD one billion, such enterprise shall not be deemed a monopolistic enterprise.

It is important to note that an enterprise that does not fall into any of the

abovementioned categories may still be deemed a monopolistic enterprise by the FTC. This occurs if the establishment of such enterprise or any of the goods or services supplied by such enterprise to a relevant market is subject to legal or technological restraints or if there is any other circumstance under which the supply and demand of the market are affected and the ability of others to compete is impeded. Q8.10 In the Base Year/Cumulative Improvement Reviews of Competition Policy section, the IAP states that for enterprise combination filing requirements, FTC may distinguish between financial institution enterprises and non-financial institutions. How does FTC distinguish between these two types of institutions, and what is the justification for distinguishing between these two types of institutions? A:

According to the public notice of the “thresholds of sales monetary amount” issued by FTC, any merger that falls within any of the following circumstances shall be filed with the FTC in advance:

1. Where an enterprise in a merger is a non-financial enterprise, its sales for the preceding fiscal year exceeds NT$ 10 billion, and the enterprise it merges has a sales amount exceeding NT$ 1 billion in the preceding fiscal year.

2. Where an enterprise in a merger is a financial enterprise, its sales for the preceding fiscal year exceeds NT$ 20 billion, and the enterprise it merges has a sales amount exceeding NT$ 1 billion in the preceding fiscal year.

The term “financial enterprises” refers to financial institutions as defined in Article 4 of the Financial Institution Mergers Act and financial holding companies as defined in Article 4 of the Financial Holding Company Act. It includes financial holding

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companies, banks, credit cooperatives, credit departments of farmers and fishermen associations, bills companies, financial companies, credit card business institutions, the Directorate General of Postal Remittances and Savings, securities and futures enterprises, insurance enterprises, and trust enterprises.

Based on the pre-amendment version of sales volume threshold published by the FTC (NT$5 billion), almost no merger involving financial institutions can be exempt from review, which has given rise to the contention of over-regulation. The amendment therefore allows the FTC to distinguish between financial institutions and non-financial institution enterprises in prescribing and publishing the sales volume trigger thresholds so that regulation for financial institutions can become more definite and reasonable. Q8.11 Have APEC’s Principles to Enhance Competition and Regulatory Reform been useful for Chinese Taipei? Can Chinese Taipei give some examples on how APEC’s Principles to Enhance Competition and Regulatory Reform have been useful for Chinese Taipei’s efforts in improving competition policy? A:

The FTC always builds a competitive environment and enforces competition law in accord with the APEC’s Principles to Enhance Competition and Regulatory Reform. The FTC has also advocated the Principles to Enhance Competition and Regulatory Reform to the concerned authorities for their reference. Chapter 9: Government Procurement Q9.1 The IAP states that Chinese Taipei has been endeavoring to accede to the WTO Government Procurement Agreement (GPA), and has passed relevant domestic legislation. However, it has not yet actually acceded to the GPA. Can Chinese Taipei explain the reasons for the delay? A: Chinese Taipei committed itself to becoming a party of the GPA upon accession to the WTO. However, discussions are still continuing on this issue. Q9.2 If the information can be shared, can Chinese Taipei give some indication of the coverage it has negotiated with other economies under the GPA (which agencies, the threshold amounts, etc.)? A: Annex 1 Government Entities

all administrative units prescribed by the pertinent organization laws of such entities

Thresholds 130,000 SDRs - Goods 130,000 SDRs - Services covered in Annex 4 5,000,000 SDRs - Construction covered in Annex 5

Annex 2 OtherGovernment Entities

Taipei City Government, Kaohsiung City Government

Thresholds 200,000 SDRs - Goods 200,000 SDRs - Services covered in Annex 4

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- Construction covered in Annex 5 15,000,000 SDRs (For the first year from the effective date of the Agreement) 10,000,000 SDRs (For the second year from the effective date of the Agreement) 5,000,000 SDRs (From the third year onwards after the effective date of theAgreement)

Annex 3 All OtherEntities

Public schools and government-owned enterprises contained in Annex 3

Thresholds 400,000 SDRs - Goods 400,000 SDRs - Services covered in Annex 4 - Construction covered in Annex 5 15,000,000 SDRs (For the first year from the effective date of the Agreement) 10,000,000 SDRs (For the second year from the effective date of the Agreement) 5,000,000 SDRs (From the third year onwards after the effective date of theAgreement)

Annex 4 Services Of the Universal List of Services, as contained in document MTN.GNS/W/120,

services contained in Annex 4, such as legal services, architectural services,software implementation services, translation and interpretation services, etc.

Annex 5 Construction Services

All services contained in Division 51 CPC.

General Note Exemption Exclusions regarding electricity, transport, etc.

Q9.3 Does Chinese Taipei maintain a single agency responsible for majority of government procurement for all ministries, agencies and government-owned enterprises, or does it allow each ministry and agency to procure goods and services on their own subject to GP legislation? A: According to Article 3 of the Government Procurement Act, procurement conducted by any government agency, public school or government-owned enterprise shall be governed by the provisions of this Act. There is no agency responsible for majority of government procurement for all ministries, agencies and government-owned enterprises. Q9.4 The Transparency Section state that Government Procurement Gazette (GPG) covers tendering and award notices. Open and Effective Competition section states that GPIS includes tendering information for all government entities. Do these statements imply that tendering and award notices in the GPG are also included in the GPIS? A: All tendering and award notices in the GPG can be acquired in the GPIS. Q9.5 Does the Electronic Procurement Plan include all government agencies? A: After undertaking pilot programs, the Electronic Procurement Plan now includes all

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government agencies. Q9.6 In recent years, what is the percentage of total procurement executed through open competition (for goods, services, and construction services, in terms of numbers and value)? A: The statistics released by the Public Construction Commission shows that approximately 85.35% of the total procurements in number (150,528 out of 176,367 cases) or 83.52% of the total in value (NT$813.3 billion out of NT$973.8 billion) were conducted through open tendering procedures in 2005. Q9.7 The WTO TPR indicates that Chinese Taipei maintains a preference to local suppliers of up to 3% for local suppliers in government procurement, and procuring entities may request tenderers to purchase locally produced goods. Do such restrictions or preferences also apply to goods or services from GPA signatory economies? A: According to paragraph 2 of Article 44 of the GP Act, the margin of preference and the starting and the expiry dates of the preference period for particular tenders should be published in the GPG (Government Procurement Gazette). Since the GP Act came into effect in May 1999, there is no such preference being published since the scope of preference that may be adopted has not been prescribed yet. If there will be any such plan in the future, it will not be applicable to procurements covered by GPA, and will be in conformity with the provision of Article 44 of the Government Procurement Act. Q9.8 Are Chinese Taipei’s government procurement laws and regulations fully compliant with the GPA and APEC Non-Binding Principles on Government Procurement? Has APEC Non-Binding Principles on Government Procurement been useful for Chinese Taipei? If so, how? A: As a result of completion of preparatory work for accession to the WTO/GPA, Chinese Taipei’s government procurement system has conformed to international norms and the APEC Non-Binding Principles (NBPs) on Government Procurement. The result of Chinese Taipei’s voluntary review of consistency of government procurement regimes against the NBPs specifically demonstrates the institutional improvement and concrete reform that Chinese Taipei has undertaken, and such improvement and reform have been very helpful in creating a transparent and fair government procurement market. Additionally, Chinese Taipei has established a non-discriminatory, timely, transparent, and effective bid challenge system for protecting the rights and interests of both offshore and domestic suppliers. The foregoing institutional changes have therefore enhanced the investment regime in Chinese Taipei. Q9.9 In the Accountability and Due Process section, the IAP states that Chinese Taipei has established the Complaint Review Board for Government Procurement. Can Chinese Taipei give an indication on how well the Board has worked, and whether parties are satisfied with the review process? A: The statistics of bid-challenges since 2002 received by the CRBGP of the Public

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Construction Commission are as follows:

Period Results of Complaint Cases Sustainable or Partially

Sustainable 156 cases 57% Substantially Resolved Not Sustainable 116 cases 43%

Procedurally Resolved 299 cases

2002.1.1 ～

2002.12.31 Total 571 cases

Sustainable or Partially Sustainable 148 cases 47% Substantially

Resolved Not Sustainable 164 cases 53% Procedurally

Resolved 297 cases

2003.1.1 ～

2003.12.31 Total 609 cases

Sustainable or Partially Sustainable 150 cases 53% Substantially

Resolved Not Sustainable 133 cases 47% Procedurally

Resolved 207 cases

2004.1.1 ～

2004.12.31 Total 490 cases

Sustainable or Partially Sustainable 141 cases 55% Substantially

Resolved Not Sustainable 114 cases 45% Procedurally

Resolved or In Process

201 cases

2005.1.1 ～

2005.12.31

Total 456 cases The statistics show that the sustainable or partially sustainable complaint cases are approximately 50% of the number of cases that have been substantially resolved, or approximately 28% of the total cases filed by suppliers. Q9.10 The WTO TPR states (p.46 para. 65) that Bid-rigging for government procurement has rarely been investigated, and the authorities consider that relevant provision of GP Act prevent the occurrence of bid-rigging. Can Chinese Taipei give some more details on why it feels GP Act prevents the occurrence of bid-rigging? A: In accordance with Article 108 of the Government Procurement Law, a special Supervision Unit has been established to accept tips supplied by suppliers or persons on auditing and monitoring procurement by government agencies. In accordance with Article 76 of the Government Procurement Law, the Complaint Review Board for Government Procurement has been established to accept complaint cases and mediation cases. E-procurement is also a way to eradicate corruption. Announcements and bid retrievals made via the internet can keep bid retrievals confidential so as to preclude bid riggings.

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Chapter 10: Deregulation and Regulatory Review Q10.1 The IAP states that CEDI coordinates the tasks of regulatory reform. However, the IAP lists various projects as agenda for CEDI. While most of these projects are worthy, there is also a role for general systematic regulatory reform across all areas and agencies. Does Chinese Taipei have plans to carry out such a regulatory reform program? A: Chinese Taipei recognizes that regulatory reform is one of the important elements in the promotion of open and competitive market. On April 18, 2005, the Council for Economic Planning and Development (CEPD) made a cross-ministerial resolution to introduce the Regulatory Impact Analysis (RIA) mechanism, which has been adopted by OECD members as a policy tool for promoting regulatory reform and upgrading the quality of the regulatory regime. This move shows our determination in taking further steps in regulatory reform. The CEPD is now working with the Committee of Laws and Regulations and other agencies in formulating a concrete action plan with regard to policy measures for adopting RIA approaches to guiding principles and operational methods. The action will be implemented following its approval. In addition, Chinese Taipei will continue to promote deregulation as well as the simplification and streamlining of administrative procedures through holding the 2006 Golden Axe Awards competition, which help spur government officials to take initiatives that push forward progress on this front. In order to give the mid- and high-ranking government officials a better understanding of the regulatory reform program being pushed by both APEC and the Organization for Economic Cooperation and Development (OECD), the Golden Axe Awards this year held a special International Forum on APEC-OECD Integrated Checklist on Regulatory Reform on June 27. Two noted experts were invited to Chinese Taipei to present talks during the event: Dr. Rolf Alter, Deputy Director of the OECD’s Public Governance and Territorial Development Directorate; and Dr. Josef Konvitz, Head of the Regulatory Policy Division of the OECD’s Public Governance and Territorial Development Directorate. The forum was successful, and the results will be included in Chinese Taipei’s presentation to the APEC roundtable discussion on regulatory reform this September in Vietnam. Chinese Taipei, together with Hong Kong, China and the United States, has volunteered to do the self-assessment exercise by using the APEC-OECD Integrated Checklist on Regulatory Reform. Q10.2 Does CEDI or Chinese Taipei government have a mechanism for reviewing new regulations or revisions under consideration? Does CEDI or Chinese Taipei government require a regulatory impact analysis (RIA) for new regulations or revisions under consideration? A: Chinese Taipei recognizes that regulatory reform is one of the important elements in the promotion of open and competitive market. On April 18, 2005, the Council for Economic Planning and Development (CEPD) made a cross-ministerial resolution to introduce the Regulatory Impact Analysis (RIA) mechanism, which has been adopted by

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OECD members as a policy tool for promoting regulatory reform and upgrading the quality of the regulatory regime. This move shows our determination in taking further steps in regulatory reform. CEPD is now working with the Committee of Laws and Regulations and other agencies in formulating a concrete action plan with regards to policy measures for adopting RIA approaches to guiding principles and operational methods. The action will be implemented following its approval. Q10.3 Does CEDI or Chinese Taipei government have a mechanism for reviewing existing regulations so that regulatory efficiency and regulatory compliance can be increased? A: Please refer to the answer of Q10.2. Q10.4 Regulatory Reform IAP highlights the regulatory reforms in PRC business visitors, financial sector, investments, M&A, Free Trade Zones, trade facilitation, employment of non-Chinese Taipei workers and transparency. Can Chinese Taipei give a general indication of what other areas that underwent recent regulatory reforms, so that we can get an idea of the breadth of Chinese Taipei’s regulatory reform efforts? A: As a beneficiary of international trade, Chinese Taipei believes that an open and liberal trading system can lead to global economic growth. Therefore, we strongly endorse the view that the rule-based multilateral trading system can eliminate a variety of trade and investment barriers, generating real welfare benefits to the world as a whole. Chinese Taipei will continue to reform areas that are helpful in improving Chinese Taipei’s overall investment environment. These areas cover social security, industrial development, fiscal and financial reforms, international and cross-strait business relationship, and government efficiency. In addition, to reflect the rapid growth of our services sector, Chinese Taipei decided in 2004 to promote the development of certain services sectors based on a model of openness and competition. The “Guidelines and Action Plans for Service Industry Development” served as a blueprint to bring about the advancement of 12 strategically important service sectors: finance, logistics/distribution, information media, medicine and health care, manpower training, manpower placement and property management, tourism and recreation, cultural and creative services, design, information, research and development, environmental protection, and engineering consulting. The development of these sectors will position Chinese Taipei favorably as we seek new opportunities in the global industrial and supply chain. Q10.5 In the Identification and Review of Proposed Regulations Section, the IAP describes Chinese Taipei’s reform efforts in investment, and Chinese Taipei’s SMILE program. May we assume that all measures and projects involved are WTO consistent, including (if any) tax breaks, subsidies, or incentives; and that offshore firms can participate on non-discriminatory basis in these projects (unless as otherwise stated in the other sections of the IAP)? A: The primary objective of Chinese Taipei’s investment policy is to create a highly

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liberalized, internationalized, and transparent investment environment that is non-discriminatory. In this regard, the government has been devoting itself to improve the transparency of the investment regime and provide investors with the full text of investment laws and regulations, emerging investment opportunities, and the latest information. Since the mid-1980s, when it began trying to gain membership in the World Trade Organization (WTO), Chinese Taipei has been carrying out regulatory reforms in various sectors of the economy. For example, several hundred laws and regulations have been revised so as to bring them in line with international norms and standards, in particular to be consistent with the WTO’s agreement on trade-related investment measures so as to provide economic benefits both to Chinese Taipei and other economies, as well as reduce the barriers for offshore investment. As GATT is now the WTO’s principal rule-book for trade in goods and the Uruguay Round also created new rules for dealing with trade in services, via these agreements, Chinese Taipei also operates a non-discriminatory trading system that spells out the rights and obligations of WTO members. Q10.6 In the Identification and Review of Proposed Regulations Section, the IAP describes Chinese Taipei’s reform efforts in M&A. It states that restrictions on acquisition limits have been relaxed. Are these the same investment ceilings which are listed elsewhere in the IAP? If not, what are these acquisition limits, and how were they relaxed? A: On May 2004, Chinese Taipei adopted a partial revision of the Business Mergers & Acquisitions Law to relax restrictions on acquisition limits. Major changes were: 1. The scope of new share issuance for procurement, originally limited to the purchase

of shares in other companies, was expanded to include the purchase of business locations and property of other companies.

2. A provision was added to the effect that when a company issues new shares all of

which are to be used for the purchase of another company’s existing shares, business, or property, the stipulation in Article 267 of the Company Law and Article 28-1 of the Securities Transaction Law that the employees and original shareholders have priority rights to purchase the shares does not apply.

3. A provision was added that when a corporate merges with a subsidiary in which it

owns 90% or more of the capital, the merger may be carried out by a special resolution of the board of directors.

4. The revision also stipulates that a resolution of a shareholders’ meeting for the

takeover of property or the sale of property may be effected if at least 1/2 of the shareholders attend and approve by a vote of 2/3. The original stipulation required attendance of at least 2/3 of the shareholders and approval by at least 1/2 of those attending.

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Statistics compiled by the MOEA show that 533 mergers, takeovers, and split-ups have been taken place since the Business M&A Law was implemented on Feb. 6, 2002, with a total value of NT$215.9 billion being carried out. These business reorganizations have had a positive effect on Chinese Taipei’s economic development, and the newly relaxed provisions will give a further boost to horizontal and vertical business integration. This, in turn, will enhance international competitiveness and operating efficiency. Further liberalization of M&A methods will be considered in the near future with the aim of facilitating more M&As. Q10.7 In the Identification and Review of Proposed Regulations Section, the IAP describes Chinese Taipei’s reform efforts for Free Trade Zones (FTZs). The IAP states that FTZs have a high degree of autonomy. Can Chinese Taipei give more details on what type of authority have been delegated to the FTZs, and what type of regulations have been weakened or eliminated for FTZs in particular? A: In order to lay the foundations to enable our economy to be more closely integrated into the global logistics and management grid, Chinese Taipei adopted the Act for the Establishment and Management of Free Trade Zones in July 2003. Free Trade Zones (FTZs) are set up to provide four major advantages to their constituent enterprises: single-window administration, the free flow of goods within the FTZs, autonomous management by enterprises operating in the FTZs, and free exercise of commercial activities within the FTZs by international business people. As of June 2006, there are five FTZs in operation: Taipei Free Trade Zone, Keelung Free Trade Zone, Taichung Free Trade Zone, Kaohsiung Free Trade Zone, and Taoyuan Air Cargo Park Free Trade Zone. Goods can flow freely into a FTZ, or between FTZs, for warehousing, transshipment, and value-added processing. Such goods are also exempt from customs duties as well as commodity and business taxes, and enjoy simplified customs administration and customs clearance procedures. Q10.8 In the Identification and Review of Proposed Regulations Section, the IAP describes some of Chinese Taipei’s reform efforts in transparency. May we assume that these transparency measures apply to all government agencies? A: In order to make policies and regulations transparent, Chinese Taipei created the Guidelines on Legal Matters in 1977. The Guidelines were revised in 2004 and are still in use. These require that there be a mechanism for transparency in the promulgation and revision of laws. Furthermore, in order to let those who participate at home and abroad understand matters concerning the policies and regulations of Chinese Taipei, guidelines were drawn to establish a database of all of Chinese Taipei’s laws and regulations and have them translated into English. An electronic government website in English has also been set up to let people come to understand the actions and plans of the government of Chinese Taipei. In addition to this website being convenient for people to share and utilize government information, it also ensures the right of the people to know and encourages people to understand, trust, and conduct oversight of public affairs. The

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government has also promoted public participation by enacting regulations like the Freedom of Government Information Act and the Administrative Procedure Act. Q10.9 In the Reform of Industry/Sector Specific Regulation Section, the IAP describes some of Chinese Taipei’s reform efforts in privatization of government-owned enterprises, but gives little context on the role and size of such enterprises in the economy.. Can Chinese Taipei give some indication of the proportion of those enterprises’ output and activities in the economy, and the number of them remaining? (WTO TPR p.63 and Table AIII.8 on p.106 seems to have most of these figures. Are those figures correct and up to date?) A: Privatization of government-owned enterprises has been pursued as part of Chinese Taipei’s commitment to economic liberalization. It started by amending related laws and regulations, such as the Statute of Privatization of Government-Owned Enterprises in 1991, under which formerly government-owned enterprises can be freed of the “red tape” normally associated with government-owned organizations. To date, 35 formerly government-owned enterprises have been privatized. All remaining 14 government-owned enterprises will be privatized in the years to come according to schedule. To give a general picture about the role and size of the government-owned enterprises in Chinese Taipei’s economy, according to statistics released by Research, Development, and Evaluation Commission (RDEC) in 2004, the gross product generated by 28 out of all government-owned enterprises were NT$965.8 billion, 9.12% of GDP of that year, comparatively lower than 9.35% of 2003. The gross capital formation of the 28 government-owned enterprises of 2004 were NT$180.5 billion, accounting for 8.53% of gross domestic capital formation of that year, comparatively lower than 11.29% of 2003 and 12.99% of 2002. The decline was mostly due to the rising number of privatized government-owned enterprises. Q10.10 In the Reform of Industry/Sector Specific Regulation Section, the IAP describes some of Chinese Taipei’s reform efforts in privatization of government-owned enterprises. The IAP lists various privatization efforts since 1999. In reading these efforts, the government seems to consider a government-owned enterprise privatized if the government’s share of the enterprise is below 50%. Is this impression correct? Does the government share include only direct ownership, or does in include indirect ownership (for example, ownership through other government owned enterprises) as well? Does the government consider the a government-owned enterprise privatized if it holds less than 50% of the stock, even though government may be the largest single stockholder? A: According to Paragraphs 2 and 3 of Article 3 of the Statute of Privatization of Government-Owned Enterprises, a government-owned enterprise refers to any enterprise jointly invested in and operated by the government and private individuals where the capital of the government exceeds fifty percent (50%); or any enterprise jointly invested in by the government and government-owned enterprises, or by government-owned enterprises where the aggregate invested capital exceeds fifty percent (50%) of the capital of the investee enterprise.

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A privatized government-owned enterprise is operated as the same as a private enterprise. However, for the protection of shareholders, the government manages representatives of government’s shares in the privatized government-owned enterprise based on the Rules for Management and Sales of Government-Owned Shares. Q10.11 The WTO TPR Government Report and the previous IAP Peer Review highlight Chinese Taipei’s efforts to improve corporate governance. Can Chinese Taipei explain why it is placing such high emphasis on corporate governance, and how successful these reforms have been? A: The government’s determination to act with great vigor in carrying out corporate governance reform reflects its recognition of the importance of stronger corporate governance for the long-term development of Chinese Taipei’s economy. Firstly, it is to respond to international trends and to raise competitiveness. As Chinese Taipei’s enterprises develop their global positions and reach out into international markets, they are using increasingly diversified and internationalized channels for raising capital. Strengthening corporate governance in Chinese Taipei will help our enterprises gain recognition in international financial markets, making it cheaper and more efficient for them to raise capital, boosting the value of their stock, and enhancing their global competitiveness. Secondly, strengthening corporate governance will be beneficial to improving the fundamental soundness of enterprises and achieving an efficient pattern for separating the roles of the management and owners of companies. It will help to imbue managers and directors with a more professional attitude towards taking responsibility, pursuing sustainable development, and striving for the enhancement of shareholder value. These are all important facets of molding a healthy corporate governance culture. In recent years, the MOF, the MOEA, and other competent authorities have implemented a number of reforms in this regard. They have, for example, amended the Company Law to ban cross-holding of shares; introduced the system of independent directors and supervisors; improved the quality of information disclosure by TSE/GTSM listed companies; instituted legal proceedings against improper acts and related corruption, and assisted investors to pursue claims for damages; promulgated the “Corporate Governance Best-Practice Principles for TSE/GTSM Listed Companies”; strengthened internal audit and internal control systems; established the Market Observatory Post System for the capital market; strengthened the provision of information in foreign languages for international investors' reference; set up a reform committee to work on improving the corporate accounting system; established a financial reform taskforce; and secured the passage of the Financial Holding Company Law, the Statute for the Establishment and Management of the Financial Reconstruction Fund, the Merger and Acquisition Law, the Law for Protection of Securities and Futures Investors, and other important new laws. However, considering that economies around the world are vigorously pushing ahead with corporate governance reform and that Chinese Taipei’s firms are rapidly increasing

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their level of internationalization, it is necessary to take even more active measures and step up the pace of our efforts on this front. In November 2003, Chinese Taipei initiated the “Policy Agenda and Action Plan to Strengthen Corporate Governance,” which calls for the revision of related laws and regulations, as well as for reform of the reorganization and bankruptcy mechanism. With regard to the progress of the aforementioned Action Plan, which contains 44 concrete measures and 52 implementation items, the following is a summary of the items completed: (1) draft amendments of the Company Law, and the Securities and Exchange Law have been deliberated by the legislature; the Accountants Law has been approved and submitted to the legislature for deliberation; (2) communication and coordination on the issue of the independent director system; as well as (3) other important measures: (3-1) expanding the pool of talent eligible to act as independent directors and supervisors by reviewing and amending the rules restricting the faculties and staff of public universities and colleges from acting as independent directors or supervisors, to allow optimal utilization of academic resources; (3-2) strengthening the contents and criteria of disclosure of business information regarding re-investment and overseas investments; (3-3) disclosing change of control, and disclosing information on independent directors & shareholding structure; (3-4) continuously reviewing the Criteria Governing Information to be Published in Annual Reports and Public Prospectuses; (3-5) supplementing the contents of the website of the Market Observatory Post System; (3-6) establishing corporate governance principles for financial (including asset management) and insurance institutions; (3-7) implementing the Corporate Governance Best-Practice Principles for TSE /GTSM Listed Companies. (3-8) strengthening the disclosure or reporting of information affecting the independence of CPAs. (3-9) bringing accounting principles into line with international practice. Q10.12 Have APEC’s Principles to Enhance Competition and Regulatory Reform been useful for Chinese Taipei? Can Chinese Taipei give some examples on how APEC’s Principles to Enhance Competition and Regulatory Reform have been useful for Chinese Taipei’s efforts on regulatory reform? A: APEC’s Principles to Enhance Competition and Regulatory Reform have been useful for Chinese Taipei as they advocate the basic tenet that open and competitive markets are the key drivers of economic efficiency and consumer welfare. These principles, endorsing the principles of non-discrimination, comprehensiveness, transparency, and accountability, provide a framework that links all aspects of economic policy that affect the functioning of markets. Through these principles, Chinese Taipei recognizes the strategic importance of developing competition policy measures so as to support the strengthening of markets as well as to ensure and sustain growth in the region. Furthermore, Chinese Taipei also recognizes that an improved competitive environment is beneficial to the small- and medium-sized enterprises. These principles have been applied in the reforms of the financial services and telecommunications industry, liberalization of foreign investment, trade facilitation, protection of intellectual property rights, corporate governance, and privatization of

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government-owned enterprises, etc. For instance, the telecommunication industry is among those economic sectors where we have made significant progress in terms of regulatory reform. Chinese Taipei started telecommunications liberalization back in 1989, when value-added telecommunications services were first opened up. Then, after amendments to three Telecommunications Reform Acts and completion of reform of the Directorate General of Telecommunications (DGT) in 1996, full opening up of the telecommunications service market was actively sought. Major reforms in this regard included: the organizational separation of the incumbent operator from the regulator; asymmetric regulations; phased liberalization; and the establishment of a fair and competitive regulatory structure by striking a balance between deregulation and re-regulation. Also, beginning in September 2004, the licensing process for fixed networks has been regularized, with application periods open in March and September of each year, allowing applicants to better develop their business plans in advance. As a result of these reform measures, there has been a proliferation of private operators and a significant increase in business opportunities in related industries, such as telecommunications systems equipment, software systems for telecommunications products, distribution services, management systems in the form of both hardware and software, and advertisement services. In terms of market access for offshore businesses, in 2002 the government voluntarily raised the ceiling for offshore direct shareholding in Type I telecom enterprises from 20% to 49%, except in the case of Chunghwa Telecom, and new regulations allowed for more than 50% of members of the board to be non-Chinese Taipei persons. In addition, in response to the convergence of telecommunications, broadcasting and information technologies, a newly formed and more effective independent regulator, the NCC, was established on March 1, 2006. It is designed to unify the regulatory administration of telecommunications, broadcasting and information services in the market. Chapter 11: Implementation of WTO Obligations (including Rules of Origin) Q11.1 The IAP does not state what type of Rules of Origin (ROO) Chinese Taipei uses. According to the WTO TPR, the economy of origin is determined by substantial transformation standard (ratio of value added is above 35% of the transaction value of non-originated parts or materials, or transformation involves changes in HS code on the six digit basis). Is this summary correct? A: Yes, Chinese Taipei’s non-preferential Rules of Origin is based on the wholly-obtained goods and substantial transformation criterion. Substantial transformation is determined either by the tariff shift rule (changes in the six-digit HS classification) or by the value-added rule (value added to the goods by a ratio of no less than 35%). Q11.2 Concerning non-preferential and preferential (FTA) rules of origin, how is the preferential ROO for Chinese Taipei-Panama FTA different from non-preferential ROO? For the future FTAs, does Chinese Taipei plan to use ROO substantially different from the non-preferential ROO?

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A: The greatest difference between ROO under the Chinese Taipei-Panama FTA and non-preferential ROO is that the FTA ROO contains a specific ROO regime. In general, origin under the Chinese Taipei-Panama FTA is conferred when goods are wholly obtained or produced entirely in the free trade area or, for goods incorporating non-originating materials, if these materials undergo a change in tariff classification under the Harmonized System (HS) as set out in the specific ROO. Where no change in tariff classification occurs, a good may still be considered as originating if its regional value content is not less than the certain percentage. In future FTAs, Chinese Taipei will continue to use a preferential ROO distinct from the non-preferential ROO. Q11.3 The IAP, as well as the WTO’s TPRM report seems to indicate that Chinese Taipei is successfully and faithfully implementing WTO obligations and its accession commitments. Is this a fair assessment? Has there been any areas of WTO obligation or accession commitments which have proven more difficult than foreseen at the time of accession? A: The WTO Secretariat, based on its own authority, wrote the Secretariat Report of our first trade policy review under the WTO, which was held on 20 and 22 June this year. Our efforts to fulfill our accession commitments and WTO obligations were highly appreciated by all WTO Members, and were reflected in the Secretariat Report. We believe that this report is a fair assessment, and we will continue making contributions to the multilateral trading system by actively participating in the Doha Round of negotiations and complying with WTO rules. As a newly-acceded WTO Member, our primary objective is to ensure that our domestic regulatory regime conforms to the requirements of the WTO and to our accession commitments. It took us twelve long years to complete the accession process, and this allowed us enough time to adopt appropriate measures to reduce any negative impact on our industries. As a result, we have encountered no specific difficulties in implementing WTO obligations or our accession commitments. Q11.4 The previous IAP Peer Review report states that Chinese Taipei originally joined the WTO as an advanced economy, but then exercised its prerogative to consider itself a developing one. Why did Chinese Taipei change its position? (The answer to this question was given in the previous IAP Peer Review as an attachment. However, the attachment was not included in the IAP Peer Review Report available on the APEC IAP website) A: 1.With regard to a WTO Member’s status as “developing” or “developed”, we are all

aware that the practice of self-declaration is always used in this regard. At the same time, according to the standards or categorizations used by various international organizations, such as UNCTAD and OECD, Chinese Taipei is classified as a “developing economy.” Such a classification is fully consistent with our current economic situation.

2.During our accession to the WTO, some Members were of the view, based on our

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economic indicators and predictions at that time, that Chinese Taipei should “assume a level of obligations commensurate to that of the developed economy original Members of the WTO.” Such language merely reflects the negotiation process in our accession to the WTO; it is not related to the development status of Chinese Taipei.

Chapter 12: Dispute Mediation Q12.1 The IAP states that Chinese Taipei is not a signatory to ICSID. What is the reason? A: Chinese Taipei is not a member of the U.N., so it is not qualified to be an ICSID signatory. Q12.2 The IAP states that Chinese Taipei maintains several bilateral agreements for dispute mediation. Which economies do Chinese Taipei maintain bilateral agreements? What happens to disputes with parties whose economy may not have a bilateral agreement with Chinese Taipei? A: Chinese Taipei has signed investment promotion and protection agreements with 26 economies, including the following APEC members: Indonesia, Malaysia, the Philippines, Singapore, Thailand, the United States, and Vietnam. Chinese Taipei has not been involved in an investment dispute to date. Should a dispute occur in the future with one of those economies with which Chinese Taipei maintains a bilateral investment agreement, the mechanism provided for in the agreement can be used to settle it; if the dispute arises with an economy with which no investment agreement has been signed, it will have to be settled through other appropriate channels. We therefore hope that the Free Trade Arrangement of the Asia Pacific (FTAAP), for which ABAC is currently carrying out a feasibility study, will become reality at an early date so as to protect the investment interests of all APEC member economies. Q12.3 The IAP states that in December 2003, Chinese Taipei government has opened a law database. Does this database include all legislation for all government agencies? Does it include implementation rules, executive orders and regulations? If so, perhaps this item should be listed in the regulatory reform section as well, under transparency. A: The law database was first made available for public access in April 2001 at its website (http://law.moj.gov.tw). All legislations and executive orders (including implementation rules) for all government agencies executive regulations are posted on the individual websites of each governing agency. All of those sites may also be accessed through hyperlink at the abovementioned website. Chapter 13: Mobility of Business People Q13.1 The Short Term Business Entry section states that business people who intend to

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engage in business activities or business people who intend to supply services on a contractual basis may be granted at most one year visitor permits; for visits of no more than 90 days or for the duration of the contract whichever is less. Is the permit extendable? Can the business person extend the visit if the situation warrants? A: Business people who intend to engage in business activities for short periods in Chinese Taipei may apply for visitor permits. Bona fide business people who come to Chinese Taipei frequently may be granted at most one-year validity, multiple entry visitor permits with initial duration of stay up to 90 days. Persons from a economy with which Chinese Taipei has a reciprocal agreement will be issued multiple entry visitor permits with validity of five years in principle. Business people who do not get involved in work or employment are not required to get work permit. They usually stay less then 90 days and do not have to extent their visit permits. Business people who intend to supply services on a contractual basis in Chinese Taipei should apply for work permits first and then apply for appropriate visitor permits. The work permit is extendable when it expires as long as the application is qualified by relevant regulations.

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Appendix 2: Experts Follow-Up Questions Chapter 0: General Macroeconomic, Trade and Investment Policy Questions Q0.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? Should the Bogor Goals be applied only among APEC members, or should it be applied to all economies, even non-APEC members? A: The Impact of the Bogor Goals Eleven years later, the Bogor Goals remain a key organising principle for APEC and the driving force behind its trade and investment liberalisation and facilitation work program. Driven by this shared commitment, the APEC region has emerged as the engine of world economic growth over the last decade, outpacing the rest of the world in opening itself to international trade and investment and increasing its share of global output and trade as a result. The results of the Stocktake demonstrate that APEC economies have achieved significant liberalisation and facilitation of trade and investment since 1994. Multilateral, regional, bilateral and unilateral initiatives all have contributed to a more open regional environment. Tariff and non-tariff barriers have been removed in many cases and lowered in many others, though liberalisation has clearly been more successful in some sectors than others. Foreign investment has been liberalised. Outcomes in a range of other areas designated by the Osaka Action Agenda (OAA), such as services, competition policy, intellectual property rights and customs procedures have improved. Economic and technical co-operation (ECOTECH) activities have developed in parallel to the progress made on the liberalisation and facilitation fronts. The rewards from these policy choices have been substantial and have contributed to sustained economic growth and significant welfare improvements in the region. Commitment to the Bogor Goals As the process of globalisation unfolds and regional integration intensifies, new ways of conducting business are emerging and new barriers to trade and investment, both actual and potential, are surfacing. It is important that APEC does not interpret the goals of free and open trade and investment in a finite or static manner. The expanding international trade agenda has since 1994 broadened to include not only border issues directly related to trade

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liberalization, but also facilitation and behind-the-border issues such as standards and conformance, customs procedures, e-commerce and business mobility. Only in recognising this reality and the fact that the environment for trade is constantly evolving, will APEC be able to adapt its focus accordingly and continue to deliver concrete and commercially relevant outcomes in the years ahead to realise the Bogor Goals. While recognizing that the Bogor Goals are dynamic, APEC Leader’s pledge in1994 to achieve free and open trade must be maintained. We view Bogor Goals as WTO-plus. We think that all member economies both developed and developing should work together towards the goal of overall liberalization in APEC region. Q0.3.1: Answers to Q0.3 refer to population policy. Is Chinese Taipei facing demographic problems either currently, or expecting in the future? (e.g. high proportion of retired people to working age people, high ratio of men to women) How are these problems expected to impact on future economy and economic policy? A: Chinese Taipei is facing certain demographic problems, such as the following:

Seriously decreasing birth rate and imbalanced male-female ratio among newborns: The birth rate per family has decreased from 2.5 in 1981 to 1.2 in 2004.

Decreasing enrollment number of primary education school is having a major impact on the entire educational system: After 10 years, the number of primary school students will decline 34%, high school students 20% and college students 4%, and this will result in an oversupply of teachers.

Increasing burden on the working population: On average, 7.2 laborers supported an elderly person in 2006. After 15 years, there will be 3.3 laborers for each elderly person.

Accelerating growth of the elderly population: Persons over 65 years old currently account for 10% of the total population; after 20 years, it will be 10%.

Rising number of foreign spouses: At present, 376,000 marriages in Chinese Taipei involve one overseas spouse. Their children account for one-eighth of all children born in Chinese Taipei.

To address those problems, Chinese Taipei is adopting the following response strategies: Launching a systematic program for taking care of infants: The program covers

better nursery facilities, nanny management, the health care system, person-centered education, etc.

Adjusting educational planning: Chinese Taipei is planning to take advantage of resources more efficiently, strengthening education of new immigrants, promoting life-long learning, and so on.

Amending existing labor laws and regulations: Chinese Taipei will relax restrictions on retirement age, so that the age of retirement is decided by the labor market. This is intended to elevate the quality of labor resources.

Developing a diverese, multi-level caregiver industry: In-house care, community care, and institution care services must be fostered. The government will encourage private sectors to establish houses where in-house care is available, nursing homes, and obstacle-free facilities.

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Adjusting immigration policy: It is necessary to build an adequate control mechanism for inward immigration in order to maintain a stable population growth rate.

Q0.5.1: Chinese Taipei plans to raise the shareholding of offshore investors from 18.8% to 25% of overall market capitalization of banks. Does this mean that offshore investment is only allowed through shares purchase? Are all banks listed in the stock exchange? A: In addition to share purchasing, offshore banks can establish their own branches and conduct banking business in Chinese Taipei pursuant to regulations governing offshore bank branches and representative offices. Most banks in Chinese Taipei are listed on the stock exchange or in the over-the-counter market, and the few exceptions are mostly government-owned-banks. Q0.5.2: The NPL ratio reduction is very impressive. But of how much of the NPLs have been transferred to government asset management corporation? What has happened to it? How much were sold off and to whom? How were the funds raised? Please give us update on the NPL picture e.g. how many of the bad loans have been repaid or written off; percent of restructure loans that turned non-performing again? In general, what were the methods that the government and the private sector used to reduce the NPL? A: In order to accelerate the NPLs cleanup, the AMC mechanism was set up according to Article 15 of The Financial Institutions Merger Act. Financial institutions can transfer NPLs to these AMCs, which are private companies rather than state-owned. For instance, Taiwan Asset Management Corporation (TAMCO) and ORIX acquired NTD 141.8 billion and 83.1 billion of NPLs respectively. Banks in Chinese Taipei have various ways to deal with NPLs. They include, besides selling to AMCs, foreclosure, collection and write-off by the saving of business tax reduction, deposit reserve rate cut and banks’ own earnings. From January 1999 to July 2006, banks wrote off NTD 1.505 trillion at cost of their earnings, and from December 2001 to June 2006, NTD 801.5 billion worth of NPLs were sold to the AMCs. After banks sold the NPLs to AMCs, they no longer exist in bank books and will not revert to NPLs, either. Q0.8.1: Answers to Q0.8 refer to negative effects on sensitive products, mostly agriculture. How has the government dealt with negative effects on these products and industries (both agricultural, and non-agricultural)? How did the government achieve consensus on WTO accession? Were there any measures to ‘compensate’ the ‘losers’, or strengthen the social safety net prior to accession? A: The impact of WTO accession on Chinese Taipei’s non-agricultural industry was relatively small mostly because during the previous ten years we had been active steadily implementing trade liberalization measures such as deregulation, tariff reduction, and so on. Currently the customs tariff on 84% of non-agricultural industrial items is 10% or less. Before accession, the average nominal tariff rate on these products was 6.03%; the final tariff rate will be reduced to 4.15% after completion of the tariff

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reduction plan. During the negotiation process of Chinese Taipei’s accession to the WTO, the government kept communicating with the industries on the tariff. At present, there are no specific measures for compensating the industrial sector on losses derived from the accession. However, we are continuing to implement various general measures to promote investment and increase productivity. These include measures to elevate the global competitiveness of domestic industries, upgrade both high-tech and traditional industries, enhance R&D and the training of professionals to meet the demands of industrial structural adjustment, and continue to create an environment of fair competition and high efficiency. The decision to accede to the WTO was an intra-governmental policy. We built our economy on a bedrock of exportation. We recognized early on what linking up with the global economy—what breaking into global markets—did to our standard of living: it raised it! So, it was on to the next phase for us, which was to plug into that international organization that crystallizes free trade: the WTO. Our negotiation strategies were mostly initiated by relevant government agencies that are responsible for accession issues. In order to keep the public informed of those strategies and of the problems faced in the accession process, our government had intensively communicated with our industries and private sectors prior to accession through meetings, seminars, workshops and hearings. The government agencies collected opinions from private sectors and then worked out adjustment policies and measures, in the hope of reducing negative accession impact to a minimum and helping our industries take advantage of the new business opportunities. Through this approach, we were able to achieve consensus on WTO accession. Q0.9.1: Chinese Taipei has implemented policies to open up cross-strait trade. Has PRC reciprocated those gestures? Do investments and trade from Chinese Taipei allowed liberal access in PRC? A: For those items of investment in which PRC has opened up, investment by Chinese Taipei’s enterprises is basically welcomed. PRC does not place any restriction on imports from Chinese Taipei, and as for the small number of restrictions that Chinese Taipei places on PRC’s agricultural products or sensitive items, these are due to the peculiarities of the cross-strait economic and trade relationship. Q0.12.1: Answers to Q0.12 state that Chinese Taipei rice market is ‘free.’ This brings up an interesting point – to ‘Western’ economies, ‘free’ means no trade barriers; to ‘Eastern’ economies, ‘free’ means imports are allowed, even with high tariffs or other barriers in place. Chinese Taipei also list reasons why rice market is protected – but, there is, or should be, alternative methods to guarantee the welfare of farmers. Why is protection being used? Why is it considered the best tool for the job? A: Besides being an important crop in Chinese Taipei, rice serves important roles with respect to maintaining ecological balance and the transmission of culture. Therefore,

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Chinese Taipei has adopted a series of measures to preserve pro-actively the balance between supply and demand in our rice industry, and border control measures is one subset of these measures. The assured-price rice purchasing system offered by Chinese Taipei is a measure intended to protect the security of the food supply, maintain a balance between supply and demand in the local market, stabilize rice prices, and ensure a living income for farmers. Farmers can freely decide whether or not they will sell rice to the government. However, to meet the demands of the Doha round agreements, Chinese Taipei has already been planning a direct payment program, so that the current fixed price system reverts to free market mechanisms. Q0.18 Would Chinese Taipei discuss its foreign exchange regime and policy? A: Foreign exchange regime and Exchange rate policy: The exchange rate system of Chinese Taipei is a managed float. In principle, the NT dollar exchange rate is determined by market forces. In case the supply and demand for foreign currencies is distorted by seasonal or irregular factors (for example, large and sudden short-term capital movements, or irrational expectations) and as a result the exchange rate becomes unduly volatile and strays from economic fundamentals, we will step in to maintain the dynamic stability of the NT dollar exchange rate. Q0.19 Clarification needed: Is Chung-Hwa Institution a government-funded research institution? Is it considered a part of the government (if so, under which ministry?) or is it independent? A: The Chung-Hua Institution for Economic Research is a government–funded research institution; however, it is independent and not part of the government. Chapter 1: Tariffs Q1.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of tariffs. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: Chinese Taipei appreciates the importance of full liberalization for global and regional economic development and is firmly committed to multilateral and bilateral trade negotiations. But in the progress of liberalization, we also note the different levels of development and special situation of each economy and think that liberalization must proceed gradually and with flexibility.

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In order to implement the Bogor Declaration and to reach the goals of trade liberalization and facilitation as set out in the Osaka Action Agenda, Chinese Taipei has taken the following steps in regard to tariff liberalization since 1996, and the average rate on all products has been reduced from 8.64% in 1996 to 5.60% in 2006. 1.Amendment of the Schedule by reducing the tariff rates of 350 items of agricultural goods and 780 items of industrial goods. The amendment, with a 14.78% tariff rate reduction, was drafted in November 1996 and took effect on June 19, 1998. 2.Commencement of implementation of Chinese Taipei’s commitment to the Ministerial Declaration on Trade in Information Technology Products on July 1, 1997. Of the 289 items of IT products subject to staged reduction to 0%, 274 items, including electronic components, IC process equipment and testing instruments, were subject to four equal tariff cuts by 2000. Another 15 items, including fiber optic cables, communications products, etc., were subject to staged reduction to 0% by 2002. Chinese Taipei has now finished the implementation, and all ITA products enter Chinese Taipei duty-free. 3.In order to implement the concession commitments for accession into the WTO, Chinese Taipei amended the rates of more than 4,000 tariff lines, effective on January 1, 2002. 4.Chinese Taipei has adopted a tariff rate quota system on passenger cars and chassis and 22 agricultural commodities, which were originally subject to import restrictions in 2002. The 22 agricultural commodities include red beans, liquid milk, peanuts, garlic, dried forest mushrooms, dried day lilies, young coconuts, betel nut, pineapples, mangoes, shaddock, persimmons, longans, sugar, mackerel, carangid, sardines, chicken, pork bellies, offal (including red meat offal, poultry offal, and deer velvet), fresh pears, and bananas. In addition, since January 1, 2003 tariff quota was applied for rice products, which were originally subject to special treatment on ANNEX 5 of the Agreement on Agriculture. The TRQ on sugar, chicken, pork bellies, red meat offal, and poultry offal were phased out in 2005, in order to promote further liberalization. 5.Chinese Taipei unilaterally lowered tariff rates on 35 items (under HS 8-digit) from 2003, including melon seeds, parts and accessories of bicycles, preparations and charges for fire-extinguishers, parts and accessories of motor vehicles, saw blades for stone cutting purpose etc, in order to rationalize tariff escalation and promote the development of industry. 6.In order to simplify customs clearance procedures and help reduce the administrative cost of Customs and the operational costs of importers, Chinese Taipei has implemented a de minimis measure since October 1, 1998. The measure was further reviewed to cope with the need for our WTO accession. As of January 1, 2002, we granted exemption on tariff, business tax, commodity tax, tobacco and alcohol tax, and the health and welfare surcharge to imported goods for which the duty-paying value is less than NT$3000. However, the above exemption does not apply to contraband, controlled goods, and agricultural goods that are subject to the tariff rate quota system. In order to further promote the liberalization and facilitation of trade and investment in the new century, Chinese Taipei will conduct a full review of the Schedule, revise the tariff rates with an aim to address the industrial needs and pursuant to conclusions reached in the New Round of Multilateral Trade Negotiation of the WTO. Q1.2.1: We would like to know more about the 17 trade-related working groups that the

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different agencies of Ministries convene to assist its trade negotiations. A: We have 17 trade-related working groups that are divided according to trade issues and convened by various Ministerial agencies. These 17 groups cover the following issues: agriculture, sanitary and phytosanitary measures, technical barriers to trade, investment, trade rules, market access, rules of origin, import licensing procedures, trade in services, intellectual property rights, trade in civil aircraft, government procurement, trade and development, trade and environment, regional trade agreement, trade facilitation, and competition. Q.1.2.2. Does the appointment of ten members of the business community to the IDAC create no conflict of interests? Who chooses them and how are they appointed? Does the government have any criteria on who should represent the business community in the IDAC? A: According to the regulations governing the establishment of the “Industry Development Advisory Council (IDAC),” Council members include business people, experts, scholars, and officials, who are selected by the Minister of Economic Affairs. The term of membership is two years. There are no specific criteria for selecting the members; candidates are chosen based on their industrial background, position, and contribution to industry. Q1.3.1: On ‘specific tariffs’, while there is no a priori reason to believe that specific tariffs imply higher tariffs (than ad valorem tariffs), it is still useful to check the general level of protection due to these specific tariffs. Has Chinese Taipei, or other organizations, calculated the ad valorem tariff-equivalents to these specific tariffs, even if only in a very general way? If so, can Chinese Taipei provide some details? A: To our understanding, the methodology used to calculate ad valorem equivalents (AVEs) was derived from agreement in WTO Agricultural and NAMA negotiations. Chinese Taipei calculates all our ad valorem tariff-equivalents according to the methodology as described in the Annex. Chapter 2: Non-Tariff Barriers Q2.0.0: There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of non-tariff barriers. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: To reach the NTM liberalization goals that are set forth in the Bogor Declaration,

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Chinese Taipei after its accession to WTO on 1 January 2002 has eliminated non WTO-consistent NTMs of import ban, quantitative and area restrictions or administered them according to WTO principles. In addition, relevant government agencies will continue to simplify import procedures, enhance transparency of import/export regulations and procedures, reduce the number of items requiring import/export permit, and promote single window trade administration. Chinese Taipei will also continue to review remaining NTMs and study the feasibility of further liberalization. Chinese Taipei will spare no effort in promoting the further liberalization and facilitation of trade and investment. Q2.1.1 What type of support can APEC economies give to Chinese Taipei to facilitate its participation and membership in IPPC and Codex? Are these two organizations part of the UN system? If yes, does the fact the Chinese Taipei is not a UN member has something to do with its difficulty in participating in IPPC and Codex? A: Chinese Taipei is not a member of the Codex or of the IPPC-associated organizations, which are part of the UN system, of which Chinese Taipei is not a member. Q2.2.1: On Q2.2. it seems that the number of items subject to import licensing has increased from 18 in 2003 to 24 currently. Can Chinese Taipei explain the reason for the increase? A: Due to the need for trade surveillance/statistics on imports of steel/iron products, Chinese Taipei added 6 steel and iron products to the list of commodities subject to import licensing, with the effect that the number of items for which import licenses are required increased from 18 in 2003 to 24 (10-digit HS Code) in 2006. Q2.5.1: Q2.5 state that reason for licensing of steel and iron products was the US safeguard measures for steel and iron products. Since the US safeguard measure has been withdrawn, shouldn’t the licensing be withdrawn as well? A: Although we mentioned in the previous question that our licensing system introduced in 2002 was in response to the safeguard measures on steel/iron product adopted by the United States, to prevent sudden increase of steel/iron import by means of dumping, we would like to point out again that the licensing system was liberalized in 2004 to only 6 items (reinforced steel, H section steel and others) based on the consideration of public construction projects’ safety and quality requirements. Therefore, the basis for consideration of our licensing system on steel/iron product today is no longer in response to the safeguard measures by the United States. Q2.6: On reviewing Chinese Taipei’s answers to questions raised by ABAC, it seems that Chinese Taipei has modified or eliminated many problematic laws and regulations, but companies are not aware of such modifications or eliminations, which implies that information is not flowing smoothly between businesses and government. What mechanisms are currently in place to inform businesses of changes in laws and regulations? A:

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1. In accordance with the “Administrative Procedures Act”, effective on 1 January 2001, regulatory authorities must use open and transparent administrative procedures, consult with interested parties before issuing regulations, provide advance notice, public hearing, and comment periods for proposed rules, and publish all regulations. 2. All import/export regulations are indicated in the “Customs Import Tariff and Classification of Import & Export Commodities”, which is available to the general public and provides a full picture of the non-tariff measures applied in Chinese Taipei. In case of any amendments, the Bureau Of Foreign Trade, Ministry of Economic Affairs will publish such revisions in the official gazette and provide inquiry service. Contact Point: http://fbfh.trade.gov.tw/rich/test/indexfhE.asp 3.Chinese Taipei truthfully adheres to notification procedures with respect to annual questionnaire submission on import licensing procedures, administration of laws and regulations and any changes thereof, instituting licensing procedures or changes in these procedures, under the WTO Agreement on Import Licensing Procedures. Copies of legislations referred to in these notifications are available for consultation in the WTO Secretariat. 4.When the laws and regulations have been amended or repealed, we post the related information simultaneously on the Customs bulletin board and website. In addition, the information is forwarded to government publications office so that it can be published in the government gazette. The latest reports and information are issued to the mass media as well. 5.The English-language “Taiwan Investment Biweekly” and “Taiwan Investment Panorama” semimonthly, the Chinese-English bilingual “Taiwan New Economy Newsletter” monthly, Japanese-language “Monthly Letter on Taiwan Investment,” and Chinese-language “International Investment” are distributed among non-Chinese Taipei business people in Chinese Taipei, and the Chinese-English bilingual “Investment in Taiwan” website (http://investintaiwan.nat.gov.tw) and Japanese-language “Japan Desk” website (http://www.japandesk.com.tw) have been set up to provide the most up-to-date information on investment in Chinese Taipei and on changes in investment-related laws. The government has followed the example of the publishing of unified daily gazettes in Europe, America, and other advanced areas by publishing “Gazette Online” every day except Saturdays, Sundays, and public holidays beginning in January 2005. The Gazette’s website (http://gazette.nat.gov.tw) is updated daily at 4:00 p.m. “Databank of Laws and Regulations” portal site (http://law.moj.gov.tw) is to provide the latest information on laws and regulations, and enquiry services for existing laws and regulations. Chapter 3: Services Q3.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually

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mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of services. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: The Bogor Goals, which were set out at the APEC leaders’ meeting in 1994, aim to realize free trade and investment across APEC member economies by 2010 for developed economies and by 2020 for developing economies. Chinese Taipei recognizes that the more liberalized trade and investment become under the multilateral trading system, the more benefits we will enjoy. We also recognize that the Bogor Goals consider mutual respect among the diverse economies in APEC and in the WTO as the basis for seeking our common interests. When Chinese Taipei entered the WTO, the degree of liberalization of its service industries was already relatively high in comparison with those of most other WTO Members. In order to actively participate in the Doha Round Service Negotiations, we submitted our initial offer in March 2003 and our revised offer in June 2005. We also determined to further open up our computer, telecommunication, audio-visual and maritime transport service industries. PRC and Southeast Asian economies are adjacent to Chinese Taipei and attract many of our investors. Therefore our business people are interested in exporting computer, engineering, maritime transport, logistics, financial, audio-visual, distribution, telecommunication and tourism services to these economies. Q3.1.1 Can Chinese Taipei provide us with a list of GATS sector commitments where the bound commitment diverges from actual and indicate the nature of divergence? A: For your reference we are providing, as attachment A, our revised offer in services, which was submitted by Chinese Taipei in June 2005. Q3.5.1 Is there special reason why offshore investment and operation of land passenger transport enterprises are not allowed, in comparison to air and sea transport services where policies appear more liberal? How does your answer to Q3.5 relate to your answers in Q3.31 (road transport services)? A: No any special reason. According to our laws, the offshore investment and operation of road passenger transport service has not been allowed in the present time. Q.3.5.2: Q3.5 mentions that passenger transport services must fulfill ‘social responsibilities and obligations’. What are these responsibilities and obligations, and does Chinese Taipei feel that offshore investors or owners will not carry out these obligations? If so, why? A:

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There is no special reason. According to our laws, the offshore investment and operation of road passenger transport services has not been allowed in the present time. Q3.5.3: Point of clarification on answer to Q3.5. Does the Chinese Taipei law forbid offshore express delivery services from delivering letters or documents? A: Under Chinese Taipei law, services (including offshore express delivery) exclusively reserved to Chunghwa Post include the picking-up, transport and delivery of letters, postcards or other correspondence. For transparency purposes, a correspondence is defined as a document being sent with the intent of conveying meanings, ideas or facts from the sender to a specific person. Q3.6.1 Considering international consolidation trend in the financial sector where cross-shareholding has been allowed between financial sector industries e.g. insurance, banks and securities, is there a special reason why Chinese Taipei maintains separation, specially between insurance and banks? A: Pursuant to Article 36 of the Financial Holding Company Act, a financial holding company may invest in the following enterprise(s): banking enterprises, bills finance enterprises, credit card businesses, trust enterprises, insurance enterprises, securities enterprises, futures enterprises, venture capital investment enterprises, offshore financial institutions which have been approved for investment by the competent authority, and other enterprises which the competent authority considers to be financially-related businesses. By the end of June 2006, 14 financial holding companies were approved to establish in Chinese Taipei, integrating 15 domestic banks, 1 offshore bank, 14 security brokers, 7 insurance companies and other financial related companies as subsidiaries. Pursuant to Article 74 of the Banking Act of Chinese Taipei, commercial banks may apply to the competent authority for approval to invest in financial related businesses, which include banks, bills houses, securities companies, futures companies, credit card companies, financial leasing companies, insurance companies, trust companies, and other financial-related businesses designated by the competent authority. Furthermore, pursuant to paragraphs 1 and 4 of Article 146 of the Insurance Act, insurance enterprises may invest in insurance-related businesses, including businesses of banking. Thus there is no restricted regulation of cross-shareholding between insurance and banks in Chinese Taipei. Q3.7.1 How is the adjustment coefficient determined and who determines it? A: In the determination of adjustment coefficient (X-factor), the NCC takes the following factors into consideration: the international benchmarks of the X-factor, the status of the telecommunication market, the productivity of the telecommunications enterprises, and consumer interests. Q3.16.1: Q3.16 states that offshore investment ceilings on Type I telecom enterprises are restricted because of their use of national scarce resources, such as the limited radio spectra. Can Chinese Taipei elaborate?

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A: Like the US, Chinese Taipei recognizes that offshore investment in domestic infrastructure and communications networks is likely to be a potential threat to public interests. Such recognition can also apply to Chinese Taipei's case in setting the ceiling of offshore investment in Type I telecom enterprises while the use of scarce resources, such as radio spectrum and rights of way, is essential to public interests. Q3.23.1 For secondary schools, colleges and universities, plans to abolish the restriction on offshore principal/president exist. Why is there no similar plans for adult education services (CPC 924) and other education and training services (CPC929)? A: With regard to the question about adult education services (CPC924) and other education and training services (CPC929), the restrictions which pertain to the relevant regulations in question, are made by municipal educational authorities, and because each of the 25 municipalities are autonomous, the regulations are different among these education municipalities. Therefore, we recognise the need to coordinate these regulations and are actively working with the educational authorities from each of the 25 municipalties. Q3.28.1: Q3.28 lists the conditions that domestic shippers must satisfy, then argue that NT$12 million requirement for offshore shippers are compatible with requirements for domestic shippers. In that case, why not apply the domestic requirement directly to offshore shippers as well? A: According to the Article 4 of the Regulations for Administrating Vessel Carriers and Vessel Chartering Operators, certain minimum capital requirements shall be provided by the newly established shipping company as follows: the capital shall be sufficient to pay for 10% of total construction cost for building the new vessels, or it shall be sufficient to pay for 20% of total purchase cost for buying the existing vessels, while we provide that offshore operators (branch) must keep an operating fund of no less than NT$12 million in our administrative area in the Article 31 of the same regulations. If the offshore operators (branch) follow the foregoing rules governing the domestic operators, the operating fund counting on specific proportion of the costs for building new vessels or purchasing existing vessels will be both higher than NT$12 million. In addition, it is not easy to estimate the costs of such vessels. Therefore, the above-mentioned regulations will make it easier for the offshore operators to steer, and consist with the WTO principles. Q3.30.1 Is there no foreign equity limitation in rail transport services? A: No. Chinese Taipei laws do not impose any such limitation. Chapter 4: Investment Q4.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor

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Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of investments. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: 1.Promoting economic development by attracting FDI is a matter of agreement by all APEC members. Given the vast differences in development among them, however, members hold different views on the best ways to attract FDI that makes positive contributions to local development and, for this reason, there are variances among members in progress toward free and open investment. Chinese Taipei feels that APEC has already made very important contributions in promoting free, open, and transparent investment among members through such means as the Collective Action Plan, Individual Action Plan, and IAP Peer Review, as well as through the publication of the “APEC Investment Guidebook.” These measures should be continued and strengthened. 2.To further realize the Bogor Declaration’s goals of free and open investment, Chinese Taipei has revised the statute for investment by non-Chinese Taipei persons to provide for a simple reporting system for small investments that do not involve industries in which investment is prohibited or restricted. Chinese Taipei also pays great attention to suggestions by offshore chambers of commerce and offshore companies; discussions are held with offshore chambers of commerce annually on issues of concern to them, and item-by-item discussions are carried out with the American Chamber of Commerce in Taipei and the European Chamber of Commerce in Taipei on issues raised in their white papers and position papers with the aim of improving the investment environment. 3.As an important source of FDI for APEC members, Chinese Taipei hopes that APEC will build up a more liberalized investment environment and achieve further improvements, especially in the areas of personnel movement, the hiring of foreign professionals and technicians, equity ownership ratio restrictions, free remittance of funds, facilitation of customs and other administrative procedures, land ownership, mineral exploration and development, and banking and insurance as well as other services. Q4.1.1 The answer to Q4.1 state that offshore investment under a certain amount will undergo a fast review. What is that amount? A: If the amount of offshore investment is under NT$500 million and does not involve prohibited or restricted industries, the Investment Commission, MOEA will fast review the application by its ex officio. Q4.4.1 The answer to Q4.4 state that only aliens from economies that allow Chinese Taipei persons to acquire land may enjoy the same rights acquire land in Chinese Taipei. Isn’t this reciprocity requirement overly restrictive for inducing offshore investment? Which economies have signed the reciprocity agreement? Are there measures in place so that offshore businesses, which cannot purchase land, can still have access to land for their business purposes (e.g. long term leases)

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A: Under the principle of reciprocity, offshore investment still increases year by year in Chinese Taipei, which seems to indicate that reciprocity requirement does not lead to reduction of offshore investment. Actually, those reciprocal countries do not have to sign the reciprocity agreement. Chinese Taipei’s Ministry of Foreign Affairs verifies whether or not a certain economy restricts persons and businesses from Chinese Taipei to purchase land in their territory. If they do not have any such restriction, then the economy will be listed on a list of Reciprocal economies for aliens acquiring land in Chinese Taipei. There are more than forty such economies so far on this list. Please see the attachment B for details. Offshore businesses that are not involved in acquiring rights and interests to land in Chinese Taipei are not subject to reciprocity requirement, so that, for example, leases, in contrast to ownership, superficies or a mortgage etc., do not require reciprocity. Q4.11: The answer to ABAC’s questionnaire (Q4.5, Questions from Member Economies) states that there may be double taxation on investment returns for offshore investors if the home economy of the offshore investor has not signed a DTA (Double Taxation Agreement) with Chinese Taipei. Which economies have signed DTA with Chinese Taipei, and is Chinese Taipei open to signing more DTAs with APEC member economies or others? A: As of 31 December 2005, 16 comprehensive income tax agreements and 14 international transportation income tax agreements had been signed and brought into force. The relevant information has been posted on our website at www.dot.gov.tw. The lists of the tax agreements are as follows: 1. Comprehensive income tax agreements: Australia, Belgium, Denmark, Gambia, Indonesia, Macedonia, Malaysia, the Netherlands, New Zealand, Senegal, Singapore, South Africa, Swaziland, Sweden, UK, and Vietnam; 2. International transportation income tax agreements: Canada, the European Union, Germany, Israel, Japan, Korea, Luxembourg, Macau, the Netherlands, Norway, Sweden, Thailand and the United States. It is a consistent policy of Chinese Taipei to conclude agreements with friendly economies to avoid double taxation and prevent fiscal evasion. Thus, we are open to signing more DTAs with relevant economies. Chapter 5: Standards and Conformance Q5.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of standards and conformance. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do

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Chinese Taipei expect from other member economies both developed and developing? A: In the area of standards and conformance, Chinese Taipei views the Bogor Goals as WTO-plus, as member economies in the Asia Pacific region would be working together to produce regional benefits. Member economies in the region have different levels of technical infrastructure development, which results in different problems faced by individual member economies. This provides member economies with more opportunities to discuss in depth various aspects of issues involved in this particular field. The SCSC serves a forum for both developed and developing member economies to exchange views and experiences on the one hand, and to form regional position in international standardizing organization on the other hand. Chinese Taipei continues aligning its domestic standards to international standards in accordance with the SCSC resolution and to adopt an inspection scheme that is more convenient for firms to place their products on the market without compromising consumer protection. Chinese Taipei will continue to negotiate mutual recognition agreements with its trading partners to facilitate trade. The efforts of Chinese Taipei to achieve Bogor Goals will be listed in our presentation during the interview with experts from APEC on September 26, 2006. Chapter 6: Customs Procedures Q6.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of customs procedures. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: To meet the Bogor goals of free and open trade, Chinese Taipei Customs has been dedicated to building a barrier-free environment to facilitate international trade. There are some specific measures implemented in recent years. The specific measures are as follows: 1.Chinese Taipei Customs started to implement air cargo and sea cargo clearance automation systems gradually since November 1992. With the experience accumulated in the past twelve years, our import and export cargo clearance operations have been greatly facilitated. To improve the cargo clearance environment even more, Chinese Taipei has endeavored to promote paperless trading, streamline clearance operations and help the business sectors reduce transaction costs. To this end, our Customs has put much effort into promoting Internet-based services across the island. The Air Cargo Internet ASP (Application Service Provider) Declaration System, was established and approved in April 2004, and the Sea Cargo Internet ASP (Application Service Provider)

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Declaration System was established in August 2005. 2. Custom Duty and Tax Internet Payment System Based on the electronic payment module of the e-Government Service Platform (GSP), Chinese Taipei Customs has consolidated the Customs cargo clearance systems and the e-Financial Services System to establish the “Customs Duty and Tax Internet Payment System.” In addition to the existing over-the-counter payment method and the electronic payment initiative, this new System provides another convenient alternative to duty payers, so that they are able to enquire or pay duties/taxes via the Internet around-the-clock. The enquiry services of this System have been operational since January 16, 2006, and the Customs ePayment service for imports/exporters and customs brokers was launched in February 2006. 3. Establishment of the “Facile Trade Net” In close cooperation with other relevant government agencies, Customs has been making efforts to promote the “Trade Facilitation Plan” of the Bureau Of Foreign Trade. Under this Plan, licensing documents, including import and export permits, certificates of import and export commodity inspection, as well as import and export approval documents, are to be transmitted through the consolidated computer system. The “Facile Trade Net” was launched on August 31, 2005, and the first stage was the consolidation of the computer systems among the Customs Service, Bureau Of Foreign Trade, Bureau of Standards, Metrology and Inspection, and Bureau of Animal and Plant Health Inspection and Quarantine. With the simplification of the licensing procedures and the shortening of the time needed for licensing operations, cargo clearance operations are, therefore, further expedited. We will continue to promote the networking with other relevant agencies. 4. Establishment of the “WCO Framework of Standards to Secure and Facilitate The Globe Trade” Task Force In line with the Implementation of the APEC Framework based on the “WCO Framework of Standards to Secure and Facilitate Global Trade” Action Plan, Chinese Taipei Customs has established a task force since January 2006 to examine the APEC Framework. The Task Force has compiled a list of questions to the USA that it would like to have discussed in the APEC Workshop, along with any questions from other member economies. Q6.1.1: Can Chinese Taipei give an indication on paperwork burden for traders; how many pieces of paperwork is required from traders, and typically, how many manhours are used to fill out the paperwork? Has there been studies on how the one-stop window or other measures have reduced this burden? A: The required documents for Customs clearance include the application form, invoice, packing list, bill of lading and letter of attorney. Further licensing documents are required in case of involving licensing regulation. Normally, traders key in the application data on their computers and transmit it to Customs electronically. They do not need to submit the documents mentioned above unless the cargos are selected for document review or physical examination. Currently, we do not have survey data about man-hours required to do the paperwork. In close cooperation with other relevant government agencies, Customs has been making efforts to promote the “Facile Trade Net” launched by the BOFT to improve our trade facilitation environment. Under this

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Project, nine different inspection application forms were consolidated into three different electronic forms, and four different application forms relating to the inspection of imported/exported plants, animals, and their by-products were simplified into a single electronic form. Simplifying procedures on import/export permits and licenses reduced processing time by 50%. Q6.2.1: Can Chinese Taipei elaborate further on its answer to this question? Most importantly, where are such information on new or revised legislation and regulation available? How can traders get access to this information? Is it free? Does it include information on fees? A: Traders can have access to the Website of http://gazette.nat.gov.tw/egFront/index.jsp and http://web.customs.gov.tw to get the information of new or revised legislations and regulations freely. Q6.3.1: Can Chinese Taipei give examples of how the proposed legislation or regulation was changed due to consultation? How are the opinions actually gathered and reflected in the legislation or regulation? A: The “Regulations Governing the Implementation of Post-release Duty Payment Procedures for Imported Goods” is a good example of how the prevailing legislation or regulation was changed due to consultation. According to the original regulation, there is only one guarantee measure acceptable to Customs. After discussing with related stakeholders, Customs adopted their opinions to expand the guarantee measures into six different kinds. Therefore, traders can freely choose the guarantee measure. Q6.3.2: What is the interval between announcement of legislation or regulation and its entry into force? A: According to Article 13 of Central Regulation Standard Act, if a regulation stipulates that the regulation shall be enforced from the date of promulgation or publication, the regulation shall become effective from the third day of the promulgation or publication date. On the other hand, according to Article 14 of aforementioned Act, the regulation shall become effective from the date of enforcement when there is a date of enforcement specified in the regulation or when there is a decree to designate the date of enforcement. Q6.15: In answering ABAC’s questionnaire (Q6.3 Questions from Member Economies), Chinese Taipei mentions that, for obtaining ‘prescription certificates’, Department of Health requires various documents, including a list of ingredients. Some economies have expressed concerns (dealing with a APEC member economy – not Chinese Taipei) that these information, which may include trade secrets, are not kept in confidence, but released to domestic industry groups. How does Chinese Taipei maintain the privacy and security of information submitted to receive prescription certificates? What types of legal measures are in place to guarantee security of information? A: 1.Chinese Taipei joined WTO in 2002. According to Article 39 of TRIPS of WTO, members should protect data from unfair commercial use.

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2.In order to provide sufficient information to consumers, it is mandatory that all the ingredients should be labeled on the package of cosmetics in Chinese Taipei. This regulation is harmonized with those in European Union, United States and Japan. Therefore, a list of cosmetics ingredients submitted for registration should not cause any special concern. Chapter 7: Intellectual Property Rights Q7.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of intellectual property rights. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: In order to encourage innovative R&D, promote industry upgrading, enhance competitiveness, and establish a free and open commercial and investment environment, Chinese Taipei recognizes the importance of IPR protection. To realize the constant changes within a knowledge-based economy, Chinese Taipei has taken the Bogor Goals into account in enacting and implementing its IPR protection policy and measures; legislation and administrative management are kept in line with international trends, and promoting transparency, strengthening education and awareness, and elevating the level of cooperation with other APEC member economies. For more details please refer the papers that provided by TIPO on September 27. Q7.2.1 In the answer to Q7.2, Chinese Taipei describes a situation of compulsory licensing without listing the industry, company or the good involved. If the revelation of such facts are not against Chinese Taipei’s secrecy or privacy laws, can we get an idea on which industry and which good were involved? A: In July 2004, TIPO granted the compulsory license of five CD-R patents of the patent holder (Philip Taiwan) to the licensee on the ground that both parties were unable to reach an agreement after negotiations of reasonable commercial terms over a considerable period of time. The patent holder has filed an appeal with the High Administrative Court. Chapter 8: Competition Policy Q8.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view

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that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of competition policy. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: The aims of the competition policy in Chinese Taipei are maintaining trading order, protecting consumers' interests, ensuring fair competition, and promoting economic stability and prosperity. From the aspect of competition, it is necessary to build fair and competitive market, remove all undue regulations and market access barriers for achieving the goal of free and open trade and investment. To achieve the Bogor Goals, the measures that the FTC, the competent authority of competition law/policy, takes include: 1. Establishing a free trade system through removal of unnecessary restrictions, review

and revision of the Fair Trade Law and its subordinate regulations, and formulation of guidelines for the handling of cases and administrative procedures.

2. Investigating violations of the Fair Trade Law and maintained market competition and order.

3. Establishing promotion and communication channels to foster public awareness and strict adherence to the Fair Trade Law.

4. Promoting international exchange and cooperation, and offering technical assistance and personnel training in competition policy/law for developing member economies.

The global competition environment has undergone fundamental changes due to large-scale expansion and global mergers of multinational businesses. The competent authorities on competition policy of the different economies must intensify their cooperation in issues relating to the complex types of transnational mergers, international cartels, and regional monopolies, so as to reconcile the diverse competitive measures in the different economies. Chinese Taipei expects to strengthen the cooperation with law enforcement agencies of APEC member economies to deal with cross border anti-competitive behavior. Q8.2.1: Answer to Q8.2 gives an example of collective action by private firms, which had been approved by FTC. Are there set standards for judging whether such collective action is warranted and desirable; or are the decisions made on case-by-case basis? A: In principle, to have concerted actions is to limit competition, to impede the adjustment of prices and to harm consumer interests. For these very reasons, the Fair Trade Act makes it a point to impose strict scrutiny. However, concerted actions consist of many different types, and their effects on different markets vary. On the other side of the coin, some concerted actions are beneficial to the economy as a whole and in the public interest, too; therefore, they should be permitted. In addition to the catch-all prohibitions, Article 14 of the Fair Trade Act requires the approval of the exceptions listed below: 1. unifying the specifications or models of goods for the purpose of reducing costs, improving quality or increasing efficiency;

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2. joint research and development on goods or markets for the purpose of upgrading technology, improving quality, reducing costs, or increasing efficiency; 3. each developing a separate and specialized area for the purpose of rationalizing operations; 4. entering into agreements solely concerned with the competition in global markets for the purpose of securing or promoting exports; 5. joint acts with regard to the importation of goods for the purpose of strengthening trade; 6. joint acts limiting the quantity of production and sales, equipment, or prices for the purpose of meeting the demand in an orderly fashion, while in economic downturn, the market price of products is lower than the average production costs so that the enterprises in a particular industry have difficulty to maintain their business or encounter a situation of overproduction; or 7. joint acts for the purpose of improving operational efficiency or strengthening the competitiveness of small-medium enterprises. If the benefits to the overall economy and public interest of the concerted action outweigh the disadvantages resulting from the competition restrains, the concerted action can be approved by the Fair Trade Commission. Q8.4.1: While the answer to Q8.4 answered much of the procedural aspect of the question, we would like more elaboration on the penalty part of the question; namely, NT$500,000 does not seem like a heavy fine. Does FTC find the amount of penalties adequate to make its actions felt by the violating companies? Are there penalties other than fines that FTC use in these cases A: Article 41 of Fair Trade Act states, “The Fair Trade Commission may order any enterprise that violates any of the provisions of this Law to cease therefrom, rectify its conduct or take necessary corrective action within the time prescribed in the order; in addition, it may assess upon such enterprise an administrative penalty of not less than fifty thousand nor more than twenty-five million NTD. Shall such enterprise fail to cease therefrom, rectify the conduct or take any necessary corrective action after the lapse of the prescribed period, the Fair Trade Commission may continue to order such enterprise to cease therefrom, rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively assess thereupon an administrative penalty of not less than one hundred thousand nor more than fifty million NTD until its ceasing therefrom, rectifying its conduct or taking the necessary corrective action” Therefore, the penalty is up to NT$25,000,000 for the first violation. There are several cases in which that penalty was levied. The Fair Trade Commission’s dispositions include not only the anti-competition cases, but also unfair competition cases. Although the average penalty seems to be about NT$500,000, it’s still a big amount for a small company which makes a false advertisement. Furthermore, according to Article 18 of Administrative Penalty Act, if the gained benefit from an illegal action exceeds the maximum statutory amount of fine, the fine may be increased to the extent appropriate within the scope of the benefit gained, regardless of the statutory limitation of maximum fine. Q8.7.1: Answers to Q8.7 and Q8.8 refer to the “Draft Amendments to the Fair Trade

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Law. Can Chinese Taipei share some of the preliminary measures in the draft, as it deals with these two questions? A: Since the Fair Trade Commission is still in the process of preparing the “Draft Amendments to the Fair Trade Law”, we are still unsure of the content. Thus far, the leniency policy being drafted consists of elimination or reduction of administrative penalty, and an adequate incentive mechanism is being designed to encourage parties of joint actions to make recourse to the leniency policy. Q8.12: Does Chinese Taipei reserve the right to exercise competition policy prerogatives on offshore firms, similar to US and EU? (e.g. right to review M&A of offshore firms if they maintain US-based affiliates and M&A may affect the local market) A: Yes, the Fair Trade Commission reserves the right to review M&A of offshore firms if they maintain US-based affiliates and if M&A may affect the local market. This is explained in “The Fair Trade Commission Guidelines on Extraterrestrial Mergers,” published by the Fair Trade Commission in 2000. An “extraterritorial merger case” as referred to in these Guidelines means a merger of two or more offshore enterprises outside Chinese Taipei under any of the circumstances enumerated in Article 6(1) of the Fair Trade Act, and where the merger will have a direct, substantial, and reasonably foreseeable effect on the domestic market. Chapter 9: Government Procurement Q9.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of government procurement. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: Chinese Taipei has been giving an impetus to "the Government Procurement Electronic Plan", including “Government Procurement Information System”, “Inter-entity Supply Contract System” and “Electronic ITB/RFP Document and Electronic Bidding System”. The electronic invitation to tender and electronic bidding system can promote efficiency and transparency of GP regime to satisfy the Bogor Goals. Q9.2.1 Are there any reservations or bilateral restrictions on Chinese Taipei’s GPA concessions and coverage? A: According to the General Notes of Appendix I offered by Chinese Taipei, some reservations or bilateral restrictions may apply to the situations stated below:

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1.This Agreement shall not apply to contracts: - for the acquisition or rental of land, existing buildings, other immovable property or concerning rights thereon;

- for the acquisition, development, production or co-production of programme materials by broadcasters and contracts for broadcasting time;

- of employment. 2.This Agreement shall not apply to: - contracts awarded under an international agreement and intended for the joint implementation or exploitation of a project; contracts awarded under the particular procedure of an international organization; - procurement made with a view to resale or to using in the production of supplies or services for sale; - procurement of agricultural products made in furtherance of agricultural support programmes and human feeding programmes; - procurement of the following goods and services (including construction) relating to the electricity and transport projects. Exclusions regarding electricity (goods)

HS 8402 Steam or other vapour generating boilers HS 8404 Auxiliary plant for use with boilers HS 8410 Hydraulic turbines, water wheels, and regulators HS 8501 Electric motors and generators HS 8502 Electric generating sets HS 8504 Electrical transformers and converters HS 8532 Power capacitors HS 8535 Electrical switches, breakers, switch-gears (for a voltage exceeding 1,000 volts) HS 8536 Electrical switches, breakers, switch-gears (for a voltage not exceeding 1,000 volts) HS 8537 switch boards, controller panels HS 8544 Power cables (including optical fibre cables) HS 9028 Electricity supply meter

- Notwithstanding the above, this Agreement shall apply to the procurement of HS codes 8402, 8404, 8410, 8501 (Electric motors with capacity of 22 megawatts or greater, electric generators with capacity of 50 megawatts or greater)*, 850164, 8502, 8504 (electrical transformers and static converters, with capacity of 1 to 600 megawatts)*, and 8544 (cable related to telecommunications applications) for the goods and suppliers of the United States; the European Communities; Japan; Switzerland; Canada; Norway; Iceland; Hong Kong, China; Singapore; and Israel. *Coverage to be effective two years from the date of the Chinese Taipei's accession to the WTO. - Notwithstanding the above, this Agreement shall apply to the procurement of HS codes 8402, 8404, 8410, 850164 and 8502 for the goods and suppliers of Korea.

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Exclusions regarding electricity (services and constructions) CPC 51340 Power transmission line construction work CPC 51360 Power plant and substation construction work CPC 51649 Power transmission and distribution automation system construction work CPC 52262 Power plant construction engineering work CPC 86724 Power transmission, distribution and substation engineering design services CPC 86725 Power plant engineering design services) CPC 86726 Power transmission and distribution automation system engineering design services CPC 86739 Integrated engineering services for power transmission and distribution turnkey projects

- Notwithstanding the above, this Agreement shall apply to the procurement of CPC codes 51340, 51360 and 51649 for the service providers of Korea; the European Communities; Japan; the United States; Switzerland; Canada; Norway; Iceland; Hong Kong, China; Singapore; and Israel. - Notwithstanding the above, this Agreement shall apply to the procurement of CPC code 52262 for the service providers of Korea; the European Communities; the United States; Switzerland; Canada; Norway; Iceland; Hong Kong, China; Singapore; and Israel. - Notwithstanding the above, this Agreement shall apply to the procurement of

CPC codes 86724, 86725, 86726 and 86739 for the services providers of the United States; Canada; Korea; the European Communities; Japan; Switzerland; Norway; Iceland; Hong Kong, China; Singapore; and Israel.

Exclusions regarding transport

HS 8601 Rail locomotives, powered from an external source of electricity or by electric accumulators HS 8603 Self-propelled railway or trainway, coaches, vans and trucks, other than those of heading. HS 8605 Railway or trainway passenger coaches, not self-propelled, luggage van, post office coaches and other special purpose railway or trainway coaches, not self-propelled HS 8607 Parts of railway or trainway locomotives or rolling stock HS 8608 Railway or trainway track fixtures and fittings, mechanical (including electro-mechanical) signalling, safety or traffic control equipment for railways, roads, inland waterways, parking facility, port installations or airfields, parts of the foregoing

- Notwithstanding the above, this Agreement shall apply to the procurement of HS code 8608 for the goods and suppliers of the United States; Canada; the European Communities; Japan; Switzerland; Norway; Iceland; Hong Kong, China; Singapore; and Israel, effective two years from the date of the Chinese Taipei's accession to the WTO. - Notwithstanding the above, this Agreement shall apply to the procurement of HS code 8601, 8603, 8605 and 8607 for the goods and suppliers of Canada; the European Communities; Japan; Norway; Iceland; Hong Kong, China; Singapore; and

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Israel. For a period of 10 years from the date of the Chinese Taipei's accession to the WTO, up to 50 per cent of the procurement amount can be used by the Chinese Taipei for offset purposes. 3.Procurement does not include the acquisition of fiscal agency or depository services, liquidation and management services for regulated financial institutions, and sale and distribution services for government debt. 4. Procurement in terms of the Chinese Taipei's coverage does not include non-contractual agreements or any form of government assistance, including but not limited to, cooperative agreements, grants, loans, guarantees, fiscal incentives, and governmental provision of goods and services to persons or governmental authorities not specifically covered under the Chinese Taipei's Annexes to this Agreement. Q9.11: In its answer to Hong Kong, China’s question (Q9.3 on Questions from Member Economies), Chinese Taipei mentions the GP Electronic Plan. Will the systems listed under GP Electronic Plan provide information on Chinese Taipei’s GP related laws and regulations, as well as information concerning individual bids; and how much of this information will be available in foreign languages (English or other languages)? A: GP related laws and regulations in English are available on the Public Construction Commission website (http://www.pcc.gov.tw/eng/indexE.htm). The GPIS (Government Procurement Information System) database is offered mainly in Chinese. In addition, with a view to making government procurement information more transparent, Chinese Taipei has undertaken a program effective since Jan. 1, 2005 to publish English summary tendering notices for procurements, which may apply to GPA in the future. There have been 1,921 English summary tendering notices published from January 1 to August 31 this year (2006). Chapter 10: Deregulation and Regulatory Review Q10.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of deregulation and regulatory review. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: Chinese Taipei recognizes that government reform is a fundamental step for strengthening economic competitiveness. Regulatory reform is a vital part of this process. There are three core concepts: (1) deregulation, simplification of administrative procedures, active innovation, and the relaxation of controls; (2) establishment of a modern and highly efficient regulatory environment under the principles of maximizing benefits, simplifying government administration, and better serving the people; (3) establishment of active, energetic, and efficient administrative organizations.

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In 2002, the Innovative Service Mechanism Group submitted a document concerning the establishment of Regulatory Impact Analysis (RIA) in the hope of effectively utilizing government resources in accordance with related economic analyses. In 2003, the CEPD, through the method of entrusted research, presented a research report entitled “A Feasibility Study on Administrative Organizations’ Implementation of RIA”. In 2004, the CEPD and the Committee of Laws and Regulations entrusted another research project in order to gain a better understanding of RIA via an empirical study. Following Chinese Taipei’s WTO accession in 2002, further reforms have been carried out in areas such as financial services, transportation, investment, and flow of personnel, while a number of import tariffs have been lowered and non-tariff barriers removed. Moreover, to demonstrate Chinese Taipei’s determination to open up its market and enhance the operating efficiency of government-owned enterprises, the timetable for the privatization of government-owned enterprises has been advanced significantly. Meanwhile, Chinese Taipei has been striving to further the goals of trade liberalization and facilitation and has made significant progress in terms of regulatory reforms. Chinese Taipei recognizes that regulatory reform is one of the important elements in the promotion of open and competitive market. We also fully acknowledge the need to develop the APEC-OECD Integrated Checklist for the self-assessment on regulatory, competition, and market openness policies so that member economies may use it as a guiding tool to evaluate their respective regulatory regimes. By producing a synergy of the three policy areas—regulatory, competition, and market openness policies—the basic elements and principles of the OECD and APEC Principles are fully incorporated in the current draft of the Integrated Checklist, which successfully highlights the importance of regulatory quality, competition, and the avoidance of unnecessary economic distortions. In the future, it will be essential to have a feasible action plan that takes individual member economies’ domestic contexts into account and enhances member economies’ capabilities in carrying out necessary reforms via various capacity building programs as well as international cooperation. Q10.2.1 Can Chinese Taipei discuss CEPD’s plan in more detail? Do CEPD’s plan involve gathering the opinions of the regulated parties, including non-Chinese Taipei persons? If so, how will the opinions be gathered? What will be the mechanism and process for opinion gathering (from both Chinese Taipei persons and non-Chinese Taipei persons?) Point of clarification – the answer seems to imply that currently, RIA is not required. Is this correct? A: The Council for Economic Planning & Development (CEPD) is in the process of commissioning studies on establishing a mechanism for Regulatory Impacts Analysis (RIA) to assess the feasibility of employing the RIA mechanism to review existing or newly-enacted laws and regulations. It is hoped that this may provide a systematic method for conducting regulatory reforms. For the first phase, the study on the operational experiences of the various OECD economies, including the US, UK, Canada, South Korea, and Australia, has already been completed, with a report thereon issued at the end of 2003. At the end of February this year (2006), CEPD completed the second-

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phase task of empirical analysis, within which one best-practice case study with regard to the “Commodity Inspection Act” of the Bureau of Standards, Metrology & Inspection, MOEA was conducted. MOEA has compiled information on the restrictions or prohibitions from various competent government authorities concerning all specific industrial sectors, to check whether they are in place. To ensure that Chinese Taipei’s economic regime is even more in line with the principles of liberalization, trade facilitation, and transparency and, at the same time, to ensure that offshore investors and domestic businesses can compete fairly, the various competent government authorities for the respective industrial sectors continue to review and revise the relevant laws and regulations so as to make the investment environment much more attractive to both offshore and domestic enterprises. MOEA convenes seminars with offshore investors on a regular basis to exchange opinions with them on laws and regulations with which they are concerned, and on the possible improvements in terms of their implementation. DOIS of the Ministry of Economic Affairs also coordinates with other government agencies about making improvements being suggested by offshore investors, in order to remove obstacles to trade and investment and to help offshore investment projects in Chinese Taipei to succeed. The American Chamber of Commerce and the European Chamber of Commerce annually publish the White Paper and the Position Papers respectively. These papers put forward issues and problems being confronted by their members while doing businesses in Chinese Taipei. Over the years, the Center for Economic Deregulation and Innovation (CEDI Services) under the CEPD has acted as the interface between the government and offshore business communities, coordinating the various competent government authorities to make necessary changes to their administrative procedures or revise relevant laws and regulations, so as to facilitate the business activities of those offshore business communities. Q10.2.2 The answers to Q10.2 seem to indicate that RIA will be required only for new legislation and regulation, or those being revised. Answers to other questions seem to indicate that existing regulations are being examined and impact is being analyzed, but in an ad hoc fashion. Is this impression correct, or do Chinese Taipei have a comprehensive plan to examine and analyze all existing regulations? A: Chinese Taipei is in the process of commissioning studies on establishing a mechanism for Regulatory Impacts Analysis (RIA), to assess the feasibility of employing the RIA mechanism to review existing regulations or newly enacted laws. It is hoped that this may provide a systematic method to adopt for regulatory reforms. For the first phase, the study on the operational experiences of the various OECD economies, including the US, UK, Canada, South Korea, and Australia, has already been completed, with a report thereon issued at the end of 2003. At the end of February this year (2006), CEPD completed the second-phase task of empirical analysis, within which one best-practice case study with regards to the “Commodity Inspection Act” of the Bureau of Standards, Metrology & Inspection, MOEA was conducted.

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Not only are the new law proposals examined and analyzed, but existing regulations are also being examined and analyzed. Relevant instances are:

In order to make policies and regulations transparent, Chinese Taipei created guidelines on government agencies’ legal matters in 1977 (which were revised in 2004 and is still in use at present). These demand that there be a mechanism for transparency in the promulgation and revision of laws and regulations. That is to say, “If necessary, the agency should consult with professionals and scholars, or call a seminar or a public hearing. The agency should seek advice from local autonomous bodies, when there is an increase of the number of members of said body or if said body’s spending is affected. The agency should implement a solid evaluation concerning the aspects and scopes of the impacts of the draft regulation.”

The above-mentioned Guidelines stipulate the necessity to seek the opinions of

related agencies and other stakeholders during the process of regulation drafting.

The procedure to amend regulations, as well as bills treated as above, should have a procedure for seeking the public’s opinion prior to being sent for the competent authority’s consideration. When creating regulations according to the Administrative Procedure Act and relevant guidelines, government agencies must ex officio hold a hearing. As well, an announcement should be made in the gazette concerning the regulation, and the period in which the announcement is run must not be less than 7 days. Should members of the public render opinions on the proposed regulation, they must do so to the proper authority for its reference. This will reduce the chance of criticism after the regulation is promulgated. People or groups could also submit regulation drafts to the relevant authority for its consideration.

Q10.4.1 The Guidelines and Action Plans for Service Industry aim to bring about the advancement of 12 strategically important service sectors? How does Chinese Taipei plan to achieve this? Can Chinese Taipei give more details? Are there subsidies involved? A: In order to carry through the above “Guidelines and Action Plans fro Service Industry,” Chinese Taipei has selected 12 emerging services for strengthened development: financial services, distribution services, telecommunication and media services, medical, healthcare and care-giving services, manpower training, dispatching and property management services, tourism, sporting and recreational services, cultural and creative services, design services, information services, research and development services, environmental protection services, and engineering consulting services. Also, we have formulated eight strategies to implement the action plan, including manpower training and recruitment, deregulation with a negative-list approach, internationalization, offering investment incentives, a services mechanism, implementing services flagships, and so on. It is predicted that the overall production

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value of Chinese Taipei’s service industry will account for 73.6% of GDP in 2008, with the ratio of the total employment reaching 60% over the same period. There is no subsidy involved. Q10.7.1 The answer to question Q10.7 points out that FTZs were created to provide four major advantages. Then the answer lists the four advantages. Can Chinese Taipei provide more details on which regulations were eliminated or revised for FTZs? Also, why not reform the entire economy, rather than just limited region within FTZs? A: FTZs are being considered as “within the physical administrative area, but outside Chinese Taipei’s customs area.” Goods will be able to flow freely into a FTZ, or between FTZs, for warehousing, transshipment, and value-added processing. Such goods will also be exempt from customs duties as well as commodity and business taxes, and will enjoy simplified customs administration and customs clearance procedures. For establishing FTZs, Chinese Taipei has enacted “Act for the Establishment and Management of Free Trade Zones” and a set of supporting regulations for FTZs to function. Chinese Taipei has been striving to push forward reforms towards its entire economy for the past two decades in order to meet the requirements of APEC and the WTO international trade regime. To avoid too huge an impact on the economy from the quick deregulation and reform efforts, the government is adopting a gradual approach so as to maintain the stability of the economy as a whole. Q10.13: In “Questions from Member Economies” Q10.3, Chinese Taipei states that export performance should not be regarded as a trade barrier, because the business can use other criteria when requesting resident permit applications for professionals. Why does Chinese Taipei believe that minimum conditions are necessary for the issuance of resident permits? A: According to our existing regulations, if a non Chinese Taipei person intends to apply for a resident permit by reason of employment, the applicant’s employer should apply for a work permit for the applicant first from the Council of Labor Affairs. The issuance of a resident permit by reason of employment is mainly based on having an approved work permit. Those aforementioned criteria in Q10.3, including the export performance, minimum capital and business volume are necessary for applying for the approval of hiring offshore professionals. That is to say, the minimum conditions are set for the work permit instead of the issuance of the resident permit. Chapter 11: Implementation of WTO Obligations (including Rules of Origin) Q11.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some

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view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of rules of origin. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: To achieve the Bogor Goals in the area of rules of origin, we do our best to make rules of origin clear and predictable, and applied in an impartial, transparent, consistent and neutral manner. We think that the Bogor Goals are actually WTO-consistent trade. In this regard, rules of origin should applied in accordance with the provisions of the WTO Agreement on rules of origin. Q11.5 Do Chinese Taipei advocate the use of a common rule of origin among all APEC member economies? If so, what should that rule of origin be? A: The Harmonization work programme of rules of origin is in progress in WTO, and once the work programme is completed, we will have a common set of rules of origin. Consequently, we don’t think that the APEC member economies need their own common rules of origin. Chapter 12: Dispute Mediation Q12.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of dispute mediation. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A:

1. As for intergovernmental dispute cases, Chinese Taipei believes that if APEC members devote themselves to fulfilling the Bogor Goals of free trade and investment in the Asia-Pacific, this would help to reduce the number of dispute cases among APEC economies.

2. Chinese Taipei gives priority to bilateral negotiations to resolve dispute cases. If negotiations fail to settle the disputes and the other parties are WTO members, Chinese Taipei will comply with the rules set forth in the WTO dispute settlement mechanism.

3. Regarding the possibility of a voluntary consultation dispute mediation service proposed in the Bogor Declaration, Chinese Taipei holds an open position at this stage. If such a service could facilitate the resolution of disputes between or among APEC economies, and accordingly avoid the need of going directly into the costly WTO dispute settlement mechanism, it would be our pleasure to work with other APEC economies in this area.

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4.In view of the fact that it is not now a signatory of the ICSID, Chinese Taipei has moved to protect the interests of investors by signing agreements for the promotion and protection of investment with 26 economies and free trade agreements with three economies, all of which contain a mechanism for dispute mediation. Efforts to sign similar agreements with other economies will continue. 5.We hope that the FTAAP concept now under study by ABAC will become reality soon, so as to provide more concrete investment protection for APEC as a whole. Q12.4 The answers to the questions in this section seem to imply that Chinese Taipei would like to accede to these international dispute mediation mechanisms, but it is constrained. Is this impression correct? Would Chinese Taipei like to make some comments on accession to these mechanisms? A: Chinese Taipei would like to accede to international dispute mediation mechanisms. 1.For investors and economies, the mediation of disputes generally requires that domestic administrative relief possibilities be exhausted first. The investment sections of investment protection and free trade agreements signed by Chinese Taipei all contain this requirement. 2.Chinese Taipei implemented a “Law of Administrative Procedure” in 1999 and has established a comprehensive administrative relief system. An offshore investor who encounters an investment dispute can seek to have it resolved through this system. If a satisfactory resolution cannot be found, the investor can make use of the investment dispute resolution mechanism provided in the investment protection agreements that Chinese Taipei has signed with 26 economies and the free trade agreements it has signed with three economies. 3.Chinese Taipei is a major recipient of FDI as well as an important source of FDI for other APEC members. We are confident that Chinese Taipei’s participation in international dispute mediation mechanisms will enable it to provide investors with even more equitable and reasonable investment protections and a better range of dispute resolution choices. Q12.5: There has been argument by the public in some APEC member economies that these dispute mediation organizations and mechanisms reduce freedom of member governments to make policy, and infringe on the sovereignty of member governments. Does Chinese Taipei have any opinions in this regard? A: Arbitration issued in any third country is legally effective, as long as it has been approved by a Chinese Taipei court through required official venue. Thus, arbitration does not involve questions of sovereignty. Chapter 13: Mobility of Business People Q13.0.0 There is a surprisingly diverse range of views on what ‘Bogor Goals’ actually

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mean among the member economies of APEC. For example, some view the Bogor Goals as meaning that every and all trade barriers will be dismantled, and some view that some barriers should remain, as long as it affects only a limited part of trade. Some view it as WTO-consistent trade, and some view it as WTO-plus. We would like to discuss during the interview, how Chinese Taipei interprets the Bogor Goals in the particular area of mobility of business people. What are the specific measures that Chinese Taipei is, or planning to implement to satisfy the Bogor Goals, and what do Chinese Taipei expect from other member economies both developed and developing? A: “Bogor Goals” aims at achieving trade facilitation and trade liberalization, which depends greatly on whether business mobility is convenient or not. APEC Business Travel Card was exactly designed for facilitating the movement of bona fide businessmen. Chinese Taipei joined the ABTC scheme in August 2001, and started issuing the card from May 2002. Up to July 31, 2006, other member economies have forwarded 17,041 ABTC applications to Chinese Taipei for processing, and by the same date, Chinese Taipei received 979 of its own applications. From these, 874 cards were issued. As for the issuance of permit for “intra-company transfers and specialists,” the current processing time is 10-17 working days, which complies with the 30-day standard set by APEC. Chinese Taipei hopes that all member economies can effectively implement the ABTC scheme so as to fulfill the spirit of “Bogor Goals.”

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Attachment A: Q0.6 2005 Trade Statistics with PRC, Japan, ASEAN 10, Hong Kong, China and Korea

Total Trade Export Import Economy Name

Amount Growth Rate%

Share % Amount Growth Rate%

Share % Amount Growth Rate%

Share %

Global-Economy

370,993,323,855 8.51 100.00 189,393,127,473 8.84 100.00 181,600,196,382 8.17 100.00

PRC 60,806,739,930 19.96 16.39 40,879,072,745 20.19 21.58 19,927,667,185 19.49 10.97

Japan 60,421,119,699 6.33 16.29 14,480,683,489 9.71 7.65 45,940,436,210 5.31 25.30

ASEAN 10 47,649,436,821 9.66 12.84 26,568,896,450 14.65 14.03 21,080,540,371 3.97 11.61

Hong Kong, China

32,607,320,243 2.16 8.79 30,720,709,041 3.01 16.22 1,886,611,202 -9.89 1.04

Korea 18,778,408,285 10.63 5.06 5,574,926,422 4.21 2.94 13,203,481,863 13.58 7.27

SOURCE : DIRECTORATE GENERAL OF CUSTOMS, Chinese Taipei

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A 3.3 The privatization of Government-owned Enterprises under the Ministry of Economic Affairs. *1

Company Privatization Timetable

Privatization Plans Progress

Taiwan Power Co.(TPC)

December, 2005 Plans currently under reviewand revision (including public offering,listing DR, strategic investors)

The release of TPC shares will not be implemented until the legislative body passes the “Draft Revision of Electricity Act” and agrees with the privatization plan presented by the MOEA. TPC is currently communicating with the labor union and revising the privatization plan.

Chinese Petroleum Corp. (CPC)

Will be approved by thecompetent authority

By strategic sale of shares The shares of CPC will be released after privatizationplan of CPC approved by the legislative body. CPC is communicating with the labor union now.

China Shipbuilding Corp. (CSBC)

December, 2005 *2

By the sale of 51%~66%shares via auction or strategicinvestors; or asset sale.

CSBC is processing the 2nd public announcement about the search for strategic investors.

Aerospace Industrial Development Corp. (AIDC)

Will be approved by the competent authority

To convert part assets ofdivision to share of a newprivate company and then toprocess an IPO

AIDC is processing an operating improvement plan and communicating with its employees.

Taiwan Sugar Corp. (TSC)

December, 2007 SBU Privatized TSC is processing a contracting out plan.

Taiwan Water Supply Corp. (TWSC)

Temporarily not to be privatized

Contracting out operations (water treatment plant )

TWSC is currently planning to contract out its operations.

*1 Government-owned enterprises under the Ministry of Finance, Ministry of Transportation & Communication, and Veterans Affairs Commission (VAC) are not included. *2 CSBC plans to be privatized by December 2006. *3 Tang Eng Iron Works Co. (TEIW) was privatized on July 5, 2006.

Attachment B

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APPLICATION FORM FOR LAND ACQUISITION BY ALIENS

Date of Application: (day/month/year)

I. Applying with: _____________________________________________________

II. Investment in: _____________________________________________________

III. Basic Information of the Applicant:

A. Name: (in Chinese)_______________________________________________

(in English) _______________________________________________

(Native language of the applicant) _____________________________

B. Nationality: (in Chinese) ________________ (in English) ______________

C. Residence or business address of the foreign corporate body registered (including postal code):

(in Chinese) _______________________________________________________

(in English) ________________________________________________________

D. Business address of subsidiary organizations or offices (including postal code):

_________________________________________________________________

E. Passport number or license number granted by the competent authority:

_________________________________________________________________

F. Power of attorney for litigation and agent of the foreign corporate body:

Name (in Chinese) _______________________________________________

Name (in English)________________________________________________

Nationality: (in Chinese) _____________ (in English) _________________

Passport number: ________________________________________________

Contact address: _________________________________________________

G. Proxy for application: ___________________ Tel: ____________________

Fax: _________________________________ Email: __________________

H. Correspondence Address (including postal code):

Attachment D

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_________________________________________________________________

IV. Basic Information on the Land Ownership Applied for:

A. Land description, area, category of use (or zoning) and scope of ownership

B. Building description, address, area and scope of ownership

V. Documents Required: (tick the box □ as appropriate)

□ A. Identity documents of the applicant;

□ B. Investment proposal (indicating the name of the project, land location and requirements specified by the competent central government authorities);

□ C. Transcripts of land registration and cadastral maps;

□ D. Certificate of Land Zoning (the non-urban land may be exempted from submission of the certificate);

□ E. Certificate of farmland used for agricultural purpose or in compliance with restrictions of land use. (In case of farmland, the certificate shall be required);

□ F. Reciprocal documents notarized by Chinese Taipei representative offices or other agencies authorized by Chinese Taipei. (The applicants from the economies listed on the List of Reciprocal Economies for Aliens Acquiring Land in Chinese Taipei, may be exempted from submission of the document).

□ G. Other relevant documents (please specify)__________________________

VI. Summary of Business Plan

VII. Statements: the land shall be exploited within the specified time and used

according to the purpose approved upon acquisition of the land.

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VIII. Other Statements:

Applicant: __________________(Signature & Seal) Notes: 1. Please use A4 paper for the application form and adjust each column or attach a

separate sheet as appropriate. 2. Please submit the application in quintuplicate with signature and seal of the

applicant to the competent government authority. In case the investment project involves two or more competent government authorities, the applicant shall file the applicant to the competent government authority most closely related to the main project.

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Appendix 3: Questions from Member Economies and ABAC Chapter 1: Tariffs Q1.1 (ABAC)

Category Issue Issue Detail Request Relevant Law

Restrictive export/import trade, duty, and customs clearance

High tariffs

· Tariffs have been reduced pursuant to the tariff concession schedule but they still remain high even after expiration of the transitional period: 0~30% on motor vehicles for special use, 0~60% on commercial motor vehicles, 60% on passenger motor vehicles, 0%~60% on auto parts, 0%~14% for VTR/DVD, 10% for automatic vending machines, 8~10% for air-conditioners, and 4%~6.2% for wrist watches. Obviously, these high tariffs push up the sales prices, and it is feared, could induce parallel imports.

- The Customs Law

Domestic stationary markets are stagnant for a while, and the companies are trying to shift to exports, but are not successful due to high tariff rates.

It is requested that the tariffs be removed or lowered.

Tariffs were lowered for many products when Chinese Taipei joined the WTO (some are in the process of lowering), but still the combination of import tariffs and commodity tax is high, having an adverse impact on the market price. Examples: TVs duty 10 percent + commodity tax 13 percent = 23 percent (tariffs bound) Camcorders 5 percent + 13 percent = 18 percent (tariffs bound) Video/DVD Recorder/Players 29.6 percent (breakdown not confirmed/tariffs being lowered)

GA products 10 percent + 10 percent = 20 percent (tariffs bound)

It is requested that the tariffs and commodity tax be lowered.

(Actions) - In February, 1997, pursuant to the Japan-Chinese Taipei Agreement concerning the WTO accession, Chinese Taipei committed to remove high tariff rates over 10 items of textile products, 5 items of motor vehicles such as engines, 3 items of mirrors, in total of 18 items.

- By Chinese Taipei’s accession to WTO, the simple average tariff rate for agricultural produce in 2002 was reduced to 14.01%, and industrial products to 5.78%. Chinese Taipei committed, after a transitional period (until 2004 for majority of the items and some of the motor vehicles and their parts until 2011), to reduce tariffs on the concession items down to 5.5% in average (4.15% on industrial products and 12.86% on agricultural produce).

(Improvement) - Manufacturing industries in Chinese Taipei will be exempted from tariffs on import of machinery & equipment used for development of new products, product quality enhancement, increase in production capacity, achievement of energy saving, promotion of recycling, and new technology not yet introduced to Chinese Taipei. This measure affords benefits to business entities entering Chinese Taipei with machinery & equipment not yet manufactured in Chinese Taipei.

A: In fact, the tariff(at 60%) levied on commercial motor vehicles, passenger motor vehicles, and chassis is for the out-quota rate. The TRQ’s for commercial motor vehicles, passenger motor vehicles, and chassis will be phased out at the end of year 2010, and

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the final bound rate for these lines will be 17.5%. In addition, the rates for VTR’s/DVD’s, automatic vending machines, air-conditioners, and wrist watches are according to the commitments undertaken on our accession to the WTO. In the matter of further reductions in the tariff on these products, we will make due consideration as part of the results of the future Doha Round negotiations. Q1.2 (Hong Kong, China) We appreciate Chinese Taipei's efforts in improving its tariff regime in recent years in accordance with its WTO accession commitments. Chinese Taipei has now bound all tariff lines at an average rate of 5.71% which is fairly low among APEC member economies. We encourage Chinese Taipei to keep up with its efforts in improving its tariff regime, particularly in respect of the liberalization of tariff quotas and the conversion of specific duties to ad valorem ones. A: We express our thanks for the opinion from Hong Kong, China. Chinese Taipei will spare no effort in promoting the further liberalization and facilitation of trade and investment. Chapter 2: Non-Tariff Measures (NTMs) Q2.1 (ABAC)

Category Issue Issue Detail Request Import restrictions of motor vehicles from Japan

- Annual quantitative restrictions exist for import of finished small motor vehicles from Japan (and from South Korea), although no such restrictions exist for imports from the U.S. and EU.

- It is requested that the authority repeals the discriminatory import restrictions by exporting economies.

Restrictive export/import trade, duty, and customs clearance

(Improvement) - In December 1996 for Republic of Korea (“ROK”) and in February 1997 for Japan, Chinese Taipei made a partial liberalization of passenger motor vehicles and small commercial motor vehicles as a means to permit advance investments in Chinese Taipei prior to the Chinese Taipei’s accession to WTO. Upon accession to WTO, Chinese Taipei will replace these measures with an introduction of a tariff quota system (that annually expands by 20%) for a full liberalization within a certain period (8 years after accession) (at the final tariff rate of 17.5%). Under this tariff quota system, while the import quota is allocated per country, the global quota is allocated per local manufacturer in Chinese Taipei for export to the world market. (The quotas for WTO members, excluding the U.S., Canada, and the EU, are 14,400 units for 2004, 17,280 units for 2005, and 20,736 units for 2006.)As to the quota allocated to Japan, Japanese government will notify the Chinese Taipei authority concerning the quota per applicant established by the export performance, etc. of each applicant. Passenger motor vehicles and commercial motor vehicles of less than 3.5 tons are subjected to this quota system. Japanese quota comprises of 10,000 units in 2002, annually increasing by 20%, at 29% tariff rate in 2002. The tariff rate will be reduced in stages, down to 24.6% in 2005, and 20.3% in 2008, until it reaches 17.5% in 2011. The tariff quota system will continue until 2010 and will be liberalized after 2011. Furthermore, Chinese Taipei will repeal the import ban on motorcycles in excess of 150cc within 6 months, and on passenger motor vehicles with diesel engine within 2 years, respectively, after her accession to WTO and will turn import restrictions on leisure motorboats into an automatic licensing system.

A: The Current TRQ system on passenger cars is implemented in accordance with the negotiation results of our accession to the WTO.

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Q2.2 (ABAC) Category Issue Issue Detail Request Relevant

Laws Restrictive export/import trade, duty, and customs clearance

Import license

- An application must be filed before hand with the Bureau of ForeignTrade to import hi-tech components and used machinery. Approximately one week is required before the approval is issued. The import procedure begins by sending the original import approval to the importer.

- It is requested that the authority repeals this restriction for imports of used machinery.

Article 11 of the Trade Law - List of Commodities Subject to Import Restrictions (Minus List)

(Actions) - After accession to WTO, Chinese Taipei plans to: observe the GATT 1994 Agreement On Import Licensing Procedures by substantially reducing the item 2 under “Note 1”, execute automatic import licensing, and simplify and expedite the import licensing procedures.

- Bureau of Foreign Trade renewed the Law to Regulate Compact Discs on January 30, 2002, and published the Definition List for 12 items of the 2nd class. While 6 items, including injection-molding machines for optical discs, are added to the List, tools and molding dies for rubber or plastic injection or compressing molding machines are excluded from the List. To import items subject to the List, Optical Disc Manufacturing Certificate (“ODMC”) issued by the Foreign Trade Commission of the Ministry of Economic Affairs is required.

(Improvement) - Pursuant to the regulations by the Bureau of Foreign Trade, application for ODMC is no longer required for an old machinery used for wiring of railroad cars.

- In April 2002, Chinese Taipei announced to deregulate import control restrictions on certain engines for motor vehicles and electric cords.

A: 1.In order to prevent optical disks piracy, current regulation requires that importers of

optical disk manufacturing implements present a copy of the “Application for Optical Disk Manufacturing Implement Import” when clearing the goods from customs, so that the relevant authorities can keep track of the final destination of such goods.

2.In line with the above regulation and policy objective, on January 30, 2002, the

Bureau Of Foreign Trade announced that henceforth a copy of the “Application for Optical Disk Manufacturing Implement Import” should be presented to the BOFT in order to import items falling under the categories of CCC8477.10.90.20-3 (injection moulding machines for optical disks), CCC8479.89.99.20-8 (laser beam recorder systems for optical disks), and CCC8480.71.90.10-6 (moulds for optical disks).

3.Regarding licensing requirements on the import of Strategic High-tech Commodities

(SHTCs), the relevant regulations applied are fully in accordance with those in regulating the imports of general merchandise. There is no evidence that the adoption of the SHTC control system has any negative impact on normal commercial transactions. In addition, the SHTC control system has been established in accordance with international agreements that cannot be repealed by one-sided action or by the initiative of one party.

4.Imports of used machinery do not require prior approval, as stated under the

“Improvement” column.

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Q2.3 (ABAC) Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Import restrictions on products from PRC

- By accession to WTO, both PRC and Chinese Taipei are required to give mutually the Most Favored Nation treatment. While business relations between the two are getting closer as evidenced by the sudden rise by the Chinese Taipei’s business entities investing in PRC, and direct trade business contracts can be made by both natural persons and corporations with their PRC counterparts, there still remain measures conflicting with the WTO rules, such as product by product import restrictions in Chinese Taipei for PRC products, requirements to route the products destined to PRC via third countries or areas, etc. - Due to the import restrictions on some of the products manufactured in PRC (double-strengthened glass), there was a problem in the progress of a construction project because it took a long time for procurements of substitute products. - Due to the import restrictions on clothing made in PRC, it is impossible to import Japanese, US, and European brand products made in PRC. So the top Japanese, US, and European apparel makers gave up advancing into Chinese Taipei, and thus development and activation of Chinese Taipei’s distribution markets (in particular, the fashion and apparel industries) are not promoted.

- While a significant deregulation has been achieved in the recent years, it is requested that Chinese Taipei further deregulates. - It is desirable if the import-restricted items are eased, as PRC is the nearestmarket, for materials procurements. It was requested that such restrictions as shown in left were removed completely and as soon as possible (or substantial easing), since they do not have much effect from the domestic industry protection point of view.

(Improvement) ①Imports of steel sheets and others (173 items) were deregulated in addition to indirect imports of billets, scrap, and pig iron (72 items) previously deregulated. ②The import deregulation period was extended from December 31, 2004, to June 30, 2005, concerning medium-thickness sheets (thickness of 4.75-50) and 7 other items. 10 items of the HS code 61 categories (knit category) and 13 items of the 62 categories were finally deregulated (effective as of June 30, 2005). - The 5,000,000 U.S. dollars cap per investment was repealed during the course of the review started in November, 2001, while the automatic examination system (whereby the application is automatically approved in the absence of dismissal within one month from the filing of application) was adopted for investments not reaching 20 million in U.S. dollars. The number of prohibited items for investment into PRC was reduced. As a result, filing of applications for investment in PRC is made possible over 61 items of electric and electronic products such as lap-top computers, digital cameras, camcorders, large screen CRT's, and cellular phones. In March 2002, Chinese Taipei published its policy to permit investment into PRC of semiconductor wafer fabrication, albeit with strict conditions. In April, the Ministry of Economic Affairs issued a new Prohibited List of items for investment in PRC, limiting them to 436 items of agricultural products and 102 items of manufactured products such as TFT-LCD panels, and test package for semiconductors. Investment into PRC was made possible for the rest of the items, now classified under the general category, the license of which is granted through examination by the Investment Examination Committee of the Ministry of Economic Affairs.

- In February 2002, the Chinese Taipei authority substantially deregulated investment in PRC. As a result, Chinese Taipei business entities or individuals may conclude a direct trade contract with their PRC counterparts. Furthermore, the Chinese Taipei authority substantially reduced the number of items subject to import suspension (with over 835 items of agricultural products and 1,223 items of industrial products made in PRC having been added to the list of items for which import is permitted.) Representative liberalized items include, among others, computer related products such as semiconductor chip wafers for DRAMs and

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SRAMs, chemical products, machinery for processing metals and plastics, facsimile, printers, cameras, 15 LCD monitors, VCD players, and electric tools. . As of August 2004, the prohibited items for investment into PRC comprise of 436 items in agriculture, 102 items in manufacturing (all on the basis of 8 digits tariff code), 5 business categories in service sectors (postal, telegraphic communication, finance, marketing, handing in the forward market and semiconductor design), and 13 business categories in the construction of infrastructure.

- On 18 November 2002, an announcement was made to lift the import embargo on 316 items from PRC (comprising of 287 items of industrial products and 29 items of agricultural and fishery products). · Effective from 1 March, 2004, investment into PRC by means of prior filing of application has become possible, under the licensing system by the Chinese Taipei Investment Examination Committee, in the case where the total investment in aggregate is less than 200,000 in US dollars. · As of August 2004, a significant degree of deregulation has taken place, namely, imports from PRC are approved on 7,964 items, and prohibited on 2,668 items, while 565 items are conditionally approved.

A: The percentage of items permitted to be imported into Chinese Taipei from PRC as a share of total possible import items (based on HS code numbers) rose from 56.3% in 2002 to 79.6% as of July 2006. Most of the items that are still restricted from import are agricultural products or sensitive items. Chinese Taipei has a review mechanism under which reviews on further lifting of restrictions are regularly conducted, and any individual or business may apply to the Bureau Of Foreign Trade of the Ministry of Economic Affairs to have the restriction on particular items reviewed, and the BOFT will handle the application according to a regular procedure.

1.Statements regarding restrictions on imports from China In light of the present circumstances of cross-strait relations, as well as geographic, cultural and economic factors, PRC is uniquely positioned to export a tremendous volume of goods and products to Chinese Taipei. Both parties have not conducted consultations with regard to PRC’s imports to Chinese Taipei. Chinese Taipei has implemented policies to open up cross-strait trade, which includes gradually opening its market to goods and products from PRC.

2.Conditions on lifting restrictions

Pursuant to Article 8.1 of the “Regulations Governing Permission of Trade Between the Taiwan Area and the Mainland Area,” the Ministry of Economic Affairs will lift restrictions on imported goods originating in PRC as long as such deregulation fulfills the conditions of not endangering public safety and not seriously impacting the related domestic industries.

3.Review process of opening markets:

In order to further liberalize imports from PRC, the Bureau Of Foreign Trade not only holds regular meetings once every two months to review applications from individuals but also conducts regular comprehensive reviews of all the remaining items subject to restrictions for import from PRC once every six months.

4.Liberalization efforts to date:

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As of July 24, 2006, a total of 8,660 items, accounting for 79.61% of all the 10,878 items under HS ten-digit code, could be imported from PRC freely. Of those items, 7,255 were industrial products and 1,405 were agricultural goods.

5.If individual businesses are interested in importing into Chinese Taipei certain

commodities from PRC that are currently banned for import, they can recommend those commodities to the BOFT for liberalization review. BOFT then deals with those requests with full discretion.

Q2.4 (ABAC) Category Issue Issue Detail Restrictive export/import trade, duty, and customs clearance

Tariff drawback - No refund is generally available where the tariff rate is less than 5%.

A: According to Article 63 of the Customs Act of Chinese Taipei, Customs duty paid on raw materials used in the manufacture of articles intended for export is refundable following exportation of the finished products according to the standards for the raw materials in the quantity required for normal production, unless the item of duty refund has been cancelled by the MOF by public notice or the amount of the refundable duty or percentage of it (at this point in time, 1%) contained within the FOB price of the finished products is lower than the limit prescribed by the MOF. In the case that the duty refund on raw material the tariff for which is at or below 5% has not previously been cancelled by the MOF, the Customs duty can be refunded. Q2.5 (ABAC)

Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Export note - Where the processing trade is involved, Chinese Taipei manufacturers are required to secure quota for the imported materials by issuing an Export Note, pursuant to the contract for the importing materials and the contract for exporting the finished products. However, at times and depending upon manufacturers, anomaly can arise whereby purchased materials cannot be used for production or required materials cannot be secured. An order involving many models with small production quantity per model can create this problem, particularly if there is a change in export model numbers, etc.

- While the protective policy for trade and foreign exchange must be appreciated, it is requested that Chinese Taipei discontinues the practice of letting the discretionary power of the officer in charge come before the rules and regulations.

Upon issuance of Notes, parts code numbers can vary by officials in charge. There is no uniform interpretation within the customs offices.

A: We have not received any other such complaint from a business in the past, so we would like you to provide more specific information, please. Q2.6 (ABAC)

Category Issue Issue Detail Request Relevant Laws

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Restrictive export/import trade, duty, and customs clearance

Introduction of IC/DV system

- From January 1995, the Import Certificate/Delivery Verification (IC/DV) system was introduced by amending the Trade Law and Export/Import Law. As a result of this new system, clerical works have become extremely complicated for importing into Chinese Taipei and exporting from Japan of machinery & equipment.

- It is requested that the authority repeals the IC/DV system.

- Trade Law and Export/Import Law

A: Chinese Taipei’s requirement that importers must apply for Import Certificate (IC) or Delivery Verification (DV) documents for their imports of Strategic High-tech Commodities (SHTCs) are based entirely on the request of offshore governments and exporters, and its application procedure is fairly simple. Our IC/DV system is established pursuant to the “Regulations Governing Export and Import of Strategic High-Tech Commodities,” which is in accordance with international agreements that cannot be repealed by one-sided action or by the initiative of one party. Q2.7 (ABAC)

Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Tax exemption system on re-export yet to be established

- The tax exemption system for re-export is not yet established.

- It is requested that the tax exemption system for re-export is established.

A: The tax exemption system for re-export is stipulated in Article 52 of the Customs Act of Chinese Taipei. Q2.8 (ABAC)

Category Issue Issue Detail Request Relevant Law

Restrictive export/import trade, duty, and customs clearance

Import restrictions on construction business

An import license is not granted to construction business now, but it should be granted, as there are import needs from abroad when conducting construction projects.

It is requested that the import license be granted to the construction business.

Construction business law

A: The restrictions on construction businesses stating that they may not engage in business activities other than those for which they have registered and are not permitted to engage in import/export trade operations have been removed. Q2.9 (ABAC)

Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Implementation of I/L system

①Obligation of import declaration (471 items)

②Abolishment of import declaration system (465 items) ③A decision was made considering the shortage of steel products in addition to the government’s trade promotion policy. The system was not abolished for the remaining 6 items (reinforced steel, H section steel, and others), in consideration of the safe quality of the public construction projects (the system continues to be effective).

Abolishment of the system

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A: The import licensing system on steel/iron products introduced in 2002 covered 471 commodity items, and then was liberalized in 2004 to with only 6 items (reinforced steel, H section steel and others) subject to import licensing requirement. Import surveillance is conducted on the remaining 6 items, based on custom import statistics, so that in case of any dumping activities by other source economy, safeguard measures would be adopted in due time. Q2.10 (ABAC)

Category Issue Issue Detail Request Relevant Law Restrictions for sales/service companies within the bonded area

- Although the applicable law permits establishment of sales, service and/or maintenance business entities within the bonded area, because of the shortage of available space, manufacturing business enjoys the priority, effectively closing out sales and service business entities from having their offices within the bonded area. (Business entities established outside the bonded areas incur tariffs upon sales of goods to purchasers within the bonded area.)

- It is requested that Chinese Taipei opens the bonded area to business entities engaged in sales, service and/or maintenance.

- Administrative Guidance

Restrictive measures for operations in Free Trade Zones (“FTZs”) and Special Economic Zones (“SEZs”)

(Improvement) - Pursuant to the amendment of the Law concerning Establishment and Control of Business Entities within the Economic Processing Zones, business entities may now choose the place of customs clearance either within the Economic Processing Zone or at the place where import/export takes place (whereas customs clearance was permitted only within the Economic Processing Zones before the amendment).

A: The relevant Ministries may request approval from the agencies of Chinese Taipei for provision of a definition of a bonded area in order to provide the convenience of bonding operations. A business entity may apply to enter the above bonded area to engage in sales services and/or maintenance unless it is unable to meet the criteria of application to engage in such business in the relevant bonded area. In addition, according to Article 4 of the Act for the Establishment and Management of Free Trade Zones, we permit enterprises that are engaged in sales, service and/or maintenance establish within FTZs. Q2.11 (ABAC) Category Issue Issue Detail Request Exchange controls

Exchange control

- Chinese Taipei limits Invisible offshore Trade to within 50 million U.S. dollars or its equivalent in NT dollars as to corporations and within 5 million U.S. dollars or its equivalent in NT dollars as to individuals. · Borrowing in currencies is, in principle, restricted only to trade related transactions, excepting the borrowing from the offshore financial markets.

- It is requested that Chinese Taipei repeals the limits in regard to the invisible offshore trade.

(Improvement) - Subject to obtaining approval of the central bank of Chinese Taipei (“CBC”), the upper limit in the exchange has been removed, concerning sales and purchase of currencies exceeding the limit amount. - On March 29, 2005 April 8, 2005, CBC abolished the regulations concerning the remittance of profits of the bank’s branches, and banks can remit profits without the

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prior approval of the central bank Financial Supervisory Commission.

A: At present, capital movements in Chinese Taipei are almost completely liberalized. Remittances not involving the conversion of NT dollars are completely liberalized. Where the conversion of NT dollars is involved, remittances related to trade in goods and services as well as investments approved by competent authorities are completely liberalized. Other transactions, total annual remittances by a company not exceeding US$50 million and total annual remittance by an individual not exceeding US$5 million may proceed directly through authorized banks. Prior approval from the CBC is required for remittances in excess of the above-mentioned limits. Therefore, remittances related to trade in services –invisible goods – is completely liberalized. Q2.12 (ABAC)

Category Issue Issue Detail Request Exchange controls

Advance booking of exchange

- The advance booking of exchange was deregulated in 1995, subject, however, to submission of evidential documents based on actual transactions.

- It is requested that the authority implements further deregulations.

A: The question is not clear. Please provide more specific information. Q2.13 (ABAC)

Category Issue Issue Detail Request Exchange controls

Advance booking of exchange and risk hedge

- Not enough means are established in Chinese Taipei to hedge risks against fluctuations in other currencies in the context of transactions in NT dollars.

- It is requested that the risk hedge is made possible at commercial banks.

- Excepting the exchange of currencies for travelers, non-residents are not permitted to deal directly in NT dollars.

- In effect, a licensing system is adopted in the Chinese Taipei domestic market. Banks are required to obtain government approvals to conduct any new business such as currency options. Even where the transaction is approved (e.g., NDF), the upper limit in the transaction amount is established. The limit established in respect of product variety and the amount of transaction effectively restricts expansion of the finance market in NT dollars.

- It is requested that Chinese Taipei deregulates various restrictions for the expansion of the finance market in NT dollars.

- While non-residents’ entry into the finance market in NT dollars is restricted in Chinese Taipei, large price gaps exist between the domestic NT dollar forward market and the NDF, the latter of which does not suffice to ensure a full risk hedge emanating from the fluctuations in currency exchange.

- It is requested that Chinese Taipei opens the domestic NT dollar finance market to non-residents.

- Because of the special nature of Chinese Taipei, no offshore market is available for NT dollars and this has been a restricting factor for foreign-funded enterprises to protect against currency fluctuations when capital funds must be remitted. Because of the relatively small market size, the remittance of the large sum such as the

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capital fund can readily affect the demand and supply of the money market, swinging the exchange rate up and down, which is risky for offshore investors.

(Actions) - In February, 1997, Chinese Taipei introduced a restriction whereby the net position of the NDF (Non-Deliverable Forward) is limited to one third of the amount of the exchange granted by the CBC. - In May, 1998, Chinese Taipei instituted further restrictions concerning the NDF, whereby banks established in Chinese Taipei may deal in NDF only within the Chinese Taipei’s banks, while offshore banks may deal in NDF limited only to the transaction between a parent and its subsidiary and may not deal with any Chinese Taipei’s banks. (amended) In July 1996, Chinese Taipei stipulated that the net NDF (Non–Deliverable Forward) position of any authorized exchange bank must not exceed one-third of that bank’s exchange position limit set by itself and approved by the CBC.

A: There are already some instruments, such as outright forwards, exchange swaps, cross currency swaps and currency options, available for businesses to hedge their exchange exposure.

With the exception of the following exchange derivatives products which require prior approval, as of Jan 3, 2005, authorized banks have been allowed to engage in exchange derivatives business by notifying the CBC after commencement of business for reference and filing:

(1) Initiating a new product（including products initiated within 6 months）and new

financial product linked with above-mentioned product. (2) NTD exchange rate related product. (3) Domestic risk related product. Q2.14 (ABAC)

Category Issue Issue Detail Request Exchange controls

Requirement to attach proof of payment in remitting to PRC

··· The State Administration of Foreign Exchange in PRC requires attachment of proof of payment establishing the due payment made by a Japanese company (“the Company”) to cover the cost of the finished product purchased from a process factory (“P Factory”) in the Shanghai Process Zone (“SPZ”), before a customer in the same SPZ (“the Customer”) can remit the accounts receivable to the Company, in a transaction involving the Company’s supply of cells to the P Factory and the Company’s sales of finished products by drop-shipment to the Customer. Recently, a similar requirement has been implemented by the Chinese Taipei Government, and this disrupts the Company’s discharge of its remittance obligations.

・ The interpretation of this requirement varies from one bank to another in Chinese Taipei. It is requested that Chinese Taipei publishes its uniform interpretation.

A:

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Since triangular trade is a category of trade in services, remittances related to triangular trade are completely liberalized. Hence, there is no need to have a company receive payments from abroad before repaying their account payable. Q2.15 (ABAC) Category Issue Issue Detail Request Finance Local Letter

of Credit transactions

- Excessive deposits upon payer are required by the banks for transactions in the Local Letter of Credit in Chinese Taipei. This makes it more difficult for business entities to hold stocks of products for domestic sales in Chinese Taipei, compared to selling them in the international markets.

- It is requested that the financial service in Chinese Taipei is improved so that the Local Letter of Credit can be treated as if it is an L/C for foreign trade.

A: There is no regulation that requires banks to collect excessive deposits when issuing a Letter of Credit. The percentage of margin collected by banks is based on each payer’s credit and market practice. Generally speaking, banks require the same deposits from any given payer regardless whether issuing a local or international letter of credit. Q2.16 (ABAC) Category Issue Issue Details Request Relevant

Law Taxation Systems

High freight tax

- High freight tax (commodity tax) is imposed on imported passenger motor vehicles, comprising one of the factors for high prices of motor vehicles in Chinese Taipei. Taxable base price (= taxable amount + import duty + commercial port construction fee): (1) under 2000cc … 25%; (2) 2000cc and up … 35%

- It is requested that Chinese Taipei reduces the freight tax on passenger motor vehicles.

- Ordinance on Freight Tax

(Actions) - Chinese Taipei plans to reduce its freight tax on motor vehicles after accession to WTO: In the 1st Year of Accession: under 2000cc … 25%; 2000cc or more… 35% and in the 6th Year of Accession: under 2000cc … 25%; 2000cc or more… 30% which will be taxed on the CIF price.

A: 1. According to item 1(2), Subparagraph 1, paragraph 1 of Article 12 of the existing

Commodity Tax Act, sedans with cylinder volume above 2,001cc are taxed on an ad valorem basis at 35%. From the same day of the sixth year after the implementation of this Article, the ad valorem tax rate shall be reduced to 30% (e.g., from 1st January, 2007 the tax rate on sedans above 2,001 cc, which is currently 35％, shall be reduced to 30%).

2. As part of our preparations for entry to the World Trade Organization (WTO), we deleted “the commercial port construction fee” from the taxable value. According to the existing Commodity Tax Act, for imported commodities, the taxable value is calculated based on the aggregate amount of taxable value for customs duty and customs duty.

Q2.17 (ABAC) Category Issue Issue Details Request Taxation Systems

The method of collecting

- Business tax of 5% used to be collected upon sale of goods. However, since January 2002, the

- After Chinese Taipei’s accession to WTO, the tax

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business tax collection method has been changed so that the tax is collected upon purchase of goods (which means assumption of business tax in advance), for refund at a later date upon collection of goods sold. The new collection method bears heavy on business entities whose interest burden has become greater.

burden has become greater for exporting business entities. When there is but a lean prospect for economic recovery and amid the exodus of production facilities to PRC, it is high time that the economy is revitalized by a deeper tax benefit.

A: 1.According to Article 1 of the Value-Added and Non-Value-Added Business Tax Act

(hereinafter referred as the Business Tax Act), business tax, in the form of value-added or non-value-added, shall be levied in accordance with this Act on the sale of goods or services within Chinese and the imports of goods. Business tax in Chinese Taipei has followed the VAT system since November 15, 1985. In the first decade of implementing the VAT, VAT entities were not required to pay the business tax at the time of importation, except when importing automobiles, under the consideration that the business tax paid at the importation would ultimately become the input tax credit of the importers. However, some shortcomings gradually emerged from this practice. The function of VAT on matching sales and purchases and preventing tax evasions became less effective, and the cost of tax administration and the tax revenue were also impacted.

2.Most economies that adopt a VAT impose a VAT on imports. This includes European economies such as the U.K., France, Germany, the Netherlands, Belgium, Ireland, Italy and Greece as well as Asian economies such as South Korea, Japan, Indonesia, the Philippines, and Thailand. Furthermore, business entities purchasing domestically manufactured goods and services have the burden of the input tax according to Subparagraph 3, Article 15 of the Business Tax Act. Imposing the business tax at the point of importation will make the tax burden of imported and domestically manufactured goods equal. Therefore, the practice of exempting VAT on imports was abolished, and importers have been required to pay the business tax to the Customs at the time of importation starting from Jan. 1, 2002. The new practice not only keeps in line with international practice but also can be administered more efficiently; it prevents tax evasion more effectively and suppresses the growth of bogus companies and underground economy.

3.The business tax paid upon importation is a prepaid tax. This prepaid tax shall be offset against the output tax liability when filing the Business Tax Return. If the amount of prepaid Tax exceeds the output tax liability and the goods thereof are for exporting purpose, business entities are entitled to claim the refund on the overpaid tax. In general, under normal condition, the business entities pay the business tax at the time of importation, the increase in their working capital requirement is not significant.

4.The current practice of imposing the business tax at the point of importation shall be remained to prevent tax evasion, to maintain neutrality of the tax system, and to suppress the growth of bogus companies and the underground economy.

Q2.18 (ABAC) Category Issue Issue Details Request

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Taxation Systems

Levying of Stamp Duty on both contracting parties

· Since Stamp Duty of 0.1% is levied and collected from both parties to the contract, contractor incurs it each time a subcontracting agreement is concluded.

· It is requested that Stamp Duty is levied and collected only from the sub-contractor.

A: According to Article 1 of the Stamp Tax Act, documents provided in this Act and

drawn up in the administrative area of Chinese Taipei shall be subject to the levy of stamp tax according to this Act. Subparagraph 4 of Article 5, Contracting Agreements, states that in reference to agreements executed for the completion of a specifically ordered work or task, such agreements are subject to the levy of stamp tax. Article 12 stipulates that a taxable document shall have at least two copies, to be held each by the parties, concerned or related parties, while each copy shall be affixed with tax stamps respectively. The duplicates or transcripts of the same document shall be affixed with tax stamps, provided they are regarded the same as the original.

Therefore, the document is subject to the stamp tax if it is in accord with the tax

scope of the Stamp Tax Act. Q2.19 (ABAC) Category Issue Issue Detail Request Relevant Law Taxation Systems

transfer price taxation

There is no tax convention between Japan and Chinese Taipei. Under this condition, if the government of either Japan or Chinese Taipei takes transfer pricing of a company as a problem, the company must negotiate with the governments of both economies and settle the issue of transfer pricing. These procedures are burdensome for the company. And if the issue of transfer pricing is not settled successfully, the company is subject to the risk of double taxation. The burden of the expense for preparing accounting documents associated with the enforcement of the transfer price taxation (effective from January 2005) is heavy. When the financial reporting of the company as of December 2004 was made, it was required to submit the materials (so-called four attached sheets) concerning the transfer price in addition to the above documents, and the accounting firm’s signature is required on such documents. When the company requested the accounting firm to prepare the materials and to sign, an exorbitant cost (almost the same amount as the annual accounting service fee) was charged. Effective from this fiscal year, a submission of reports is supposed to be required, which requires the accounting firm’s signature, and the cost of US$30,000 is claimed.

It is requested to improve the system that allows the accounting firms to make unreasonable profits. (1) Conclusion of transfer price taxation agreement between Japan and Chinese Taipei (2) Cost reduction

Article 43, paragraph 1 of the Chinese Taipei Income Tax Law Article 114, paragraph 1 of the Corporate Tax Audit Sub-rules (Ministry of Finance)

Promulgated on January 2, 2004 (effective from January 1, 2004). Transfer Price Taxation Audit Sub-rules under the Principle of Non-independent Corporations concerning the Corporate Tax (promulgated on December 31, 2004 by the Ministry of Finance).

A: 1. Conclusion of transfer price taxation agreement between Japan and Chinese Taipei.:

In the case that a collection authority-in-charge has conducted the adjustment of profit-seeking enterprises with regard to taxable income or tax payable pursuant to the Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm's Length Transfer Pricing, the authority shall make corresponding adjustments to the taxable income of the counterpart of the enterprise if both parties are liable to the income tax obligation of Chinese Taipei. In the case of an offshore enterprise, the

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collection authority-in-charge shall negotiate with the responsible tax jurisdiction to make corresponding adjustments to the taxable income under the tax agreement framework. Since there is no tax agreement between Chinese Taipei and Japan, tax issues arising from economic activities of the enterprises in both Japan and Chinese Taipei are unable to be resolved in a complete and satisfactory manner on the basis of mutual benefit. In order to make corresponding adjustments through a Mutual Agreement Procedure or by signing of a bilateral or multilateral Advance Pricing Agreement under the tax arrangement framework, our position is that both sides make best efforts to promote the conclusion of a tax agreement between Chinese Taipei and Japan.

2. Cost reduction: Profit-seeking enterprises are able to use the following methods to reduce costs with regard to transfer pricing:

(1) Full utilization of the "Safe Harbor Rule" to simplify the process of the analysis of the transfer pricing.

In order to alleviate the taxpayers' burden and the costs of compliance in preparing "Transfer Pricing Reports," the MOF has established a "Safe Harbor Rule." The profit-seeking enterprises of which the controlled transactions meet the requirements regulated under the "Safe Harbor Rule" may replace their Transfer Pricing Report with other evidentiary documents that are able to sufficiently prove that the results of such transactions are at arm's length.

(2) Preparation of a transfer pricing report by the profit-seeking enterprise itself instead of the use of out-sourcing so as to reduce costs.

The cost of the preparation of a transfer pricing report by the profit-seeking enterprise itself could be lower than the costs incurred in out-sourcing in the general case. In the case that the functional and risk analysis of the controlled transactions which a profit-seeking enterprise is checking are not complicated, or the profit-seeking enterprise has the ability itself to conduct an analysis of the transfer pricing issues, the model of a transfer pricing report published by the MOF could be used as a reference by taxpayers in the preparation of the materials.

(3) Effecting a reduction in the number of items required in a transfer pricing report that are out-sourced so as to reduce costs.

The preparation of items involved in a transfer pricing report such as the industry and economic analysis of the profit-seeking enterprise; the functional and risk analysis of all the participants of the controlled transaction; and the data of comparables and transfer pricing methods adopted by the other related participants could be prepared by the profit-seeking enterprise itself instead of being out-sourced. The valuation of the elements in a transfer pricing report usually relies on an investment in time and staff. If a profit-seeking enterprise were to effect a reduction in the amount of items the preparation of which needs to out-sourced, the costs accruing in the preparation of the transfer pricing report could be saved in an efficient manner. Q2.20 (Hong Kong, China) We appreciate Chinese Taipei's efforts in reducing NTMs in accordance with its WTO accession commitments, and the commitment to make further improvements in areas including "quantitative import restrictions/prohibitions" and "automatic import licensing". We encourage Chinese Taipei to set out in its IAP

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concrete timelines for the liberalization of its NTMs when available. A: Liberalization of NTMs in Chinese Taipei is a constant and continuous process, and there is no need to set out concrete timelines for it. Q2.21 (Japan) Import Customs duty: The import customs duty is still on a high level and affects the mean price. We would like to hear if Chinese Taipei is going to reduce their tariffs. A: Chinese Taipei’s average nominal tariff rate for industrial products in 2006 is 4.3%, and 1/3 of all industrial products are at zero tariff. This is quite low in comparison with most economies. Some of the staged reductions of the accession commitment to WTO are still being implemented. In the future, tariff cuts will be implemented in accordance with the conclusion of the new round negotiation of the WTO. Q2.22 (Japan) Import restrictions on products from PRC: In Chinese Taipei, even though both individuals and companies are able to make international trade directly, there still remains a barrier, such as product by product import restrictions in Chinese Taipei for products from PRC, requirements to route the products destined to PRC via third countries or areas. We welcome the fact that deregulation has begun and we would like to hear of further deregulation. A: 1.The number of Chinese products permitted for import into Chinese Taipei as a share

of all possible importable products has increased from 56.3% in 2002 to 79.6% as of July 2006. Most of the restricted product categories are agricultural products or sensitive items. Our government has a mechanism that regularly reviews the list of products permitted for import, and any economy or business that is concerned about a particular item can apply to the Bureau Of Foreign Trade, MOEA to have it reviewed, and the item is then put on the schedule for review and processing.

2.Our government has a long-standing fixed policy of promoting “direct navigation”

across the strait, but in reality that also involves many other cross-strait issues, such as which flag the ships can display, matters of port administration, shipping rights, management of aircraft security, navigation management, and so on. We have adopted a number of temporary measures, such as having ships sailing under flags of convenience travelling between certain designated ports on either side of the strait, and permitting charter aircraft to fly across the strait during the Lunar New Year festival. In addition, our government has made the flights of chartered passenger aircraft a priority for negotiation, and at present the two sides are in contact about this issue. We reached agreement on four chartered flights that have been carried out recently. In the future, using this as a precedent, we will continue with related negotiations.

Q2.23 (Japan) Improvement in business mobility between Chinese Taipei and PRC: The business sector expects to have direct freight between Chinese Taipei and PRC to promote effective trade. What measures will be taken in the future to improve business mobility in terms of both formalities and operational aspects? We would like to hear

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about specific policies. A: 1. Please refer to the answer to the previous question. 2. To make it more convenient for PRC business people to visit Chinese Taipei to do

business, our government promulgated the “Permit Regulations Governing the Entry of Professionals of the Mainland Area into Chinese Taipei for Business Activities” on February 1, 2005. This greatly relaxed the restrictions on the inviting organizations and on the qualifications of the PRC professionals, and at present most such applications handled under these regulations may be completed within 5 to 10 days. Our government has also specified that the Investment Commission, MOEA serve as the “single window” of review and possible assistance, so that the applications can be processed speedily. In the future, our government will continue to review related measures to facilitate the flow of business personnel across the strait.

Q2.24 (Japan) Green Mark Program: Under the current situation, complicated formalities to obtain a green mark for products which are produced outside Chinese Taipei are barriers to the promotion of offshore trade. Green Mark program for plastic components of printers and of multi-function devices is much stricter than that of RoHS. For instance, it requires that:

Plastic components of the product weighing 25g or greater shall meet the following requirements; -shall not contain cadmium, lead, hezavalent chromium or mercury

The components which are produced through ordinal operations could hardly be avoided to contain impurity. To follow the standard, manufacturers need sufficient time to make additional capital investment. A: 1. At present, the Operating Rules for the Green Mark Program treat the domestic

products and imported products equally; there is no discrimination against offshore manufacturers or importers which may be construed as unnecessary trade barriers. The Rules stipulate that, with the consent of the Green Mark Program implementation organization, applicants with offshore manufactured products may commission independent third parties (including environmental management system certification organizations in an offshore economy) to conduct on-site audit where the products are manufactured, and that the audit/certification results may be valid for two years. By contrast, for applicants with domestic manufactured products, on-site audit needs to be conducted every time the application is submitted, and the audit can only be conducted by the organization commissioned by this Administration. In reality, the treatment toward domestic applicants is more rigid than the treatment toward offshore applicants.

2. The Green Mark Program in Chinese Taipei is an eco-labeling program that complies

with the ISO 14024 Standard, and participation is voluntary. The objective of the Program is to identify environmentally preferable products within specific product categories, in order to encourage consumers to purchase products which are resource/energy-saving, low pollution and recyclable. Therefore, the Green Mark logo is only offered for use on products with the top 20-30% environmental performance within a specific product category. While the RoHS Directive as

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mentioned in the Japanese question is an EU Directive which specifies that all regulated electrical and electronic products for sale in the EU market after July 1, 2006 shall not contain lead, cadmium, mercury, hexavalent chromium, PBBs and PBDEs in their parts or components, this Directive applies to regulated products bound for the EU market, and products that fail to comply with the requirements may be banned or fined by the EU member states. Therefore, this Directive is a mandatory, minimum requirement legislation, which is totally different from the voluntary Green Mark Program, and there is no comparison between the two.

3. In the Green Mark product criteria, the hazardous substance restriction only applies to

the contents of lead, cadmium, mercury, hexavalent chromium, PBBs, PBDEs and short-chained chlorinated paraffins, on single material plastic parts/components weighing more than 25g. While adopting this requirement, relevant research organizations have been consulted, in order to confirm that on the plastic components that are unrelated to the electrical properties of the products, there is no need for the addition of the aforementioned hazardous substances. In addition, public hearings were held by this Administration while developing and revising these criteria, and the industry representatives (including Chinese Taipei’s subsidiaries and agents of major Japanese electrical and electronic manufacturers) did not express any objection.

4. Currently, 453 electrical and electronic products are approved to use the Green Mark

logo. During the last Green Mark Review Committee meeting held on June 29, 2006, 34 electrical and electronic products from 9 manufacturers (including office equipment from Fuji Xerox) were also approved. These results indicate that the hazardous substance restriction requirement in the Green Mark criteria is not difficult to comply with.

Q2.25 (Japan) Restrictions on the Manufacture, Import, and Sale of Dry Cell Batteries: According to “Official Announcement of Restrictions on the Manufacture, Import, and Sale of Dry Cell Batteries” on March 27th this year, it requires that

(1) The manufacture or import of designated batteries may begin only after the manufacturer or importer has submitted an application to the competent authority that includes a testing report that indicates said batteries have a mercury content lower than 5 ppm, and the said authority has issued confirmation documents.

(2) Manufacturers and importers shall attach labeling to designated battery packaging that clearly displays the message "This battery complies with Environmental Protection Administration regulations on mercury content" and the confirmation document number issued by the competent authority.

The restrictions require the submission of an application by September 1st, 2006, and labelling of designated battery packaging by December 1st, 2006. However, these deadlines seem to be too short for the companies, and they need the guide and Q&A for the testing. A: The application term of “Restrictions on the Manufacture, Import, and Vending of Dry Cell Batteries” can be divided into three stages: (1) From September 1st, 2006:

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Designated batteries must comply with correlative regulations, such that a vendor may not sell or give away designated batteries that have not been confirmed by the EPA as having a mercury-content less than 5 ppm or do not bear the confirmation document.

(2) From December 1st, 2006:

Manufacturers and importers shall attach labelling to designated-battery packaging that clearly displays the confirmation document number and the phrase, “This battery complies with Environmental Protection Administration regulations on mercury content.” However, this term does not apply on the said batteries, placed on the market prior to September 1st, 2006.

(3) From September 1st, 2007:

All designated batteries on the market must have clear labeling of confirmation document number and the phrase, “This battery complies with Environmental Protection Administration regulations on mercury content.”

This announcement is directed at domestic manufacturers, importers, and vendors of

the designated batteries. Applying for the confirmation document and labeling are the responsibility of the domestic businesses. The importer of a designated battery that has already been marketed within Chinese Taipei before the application term may directly deliver samples of the battery to the analytical laboratories that have received permits to test mercury concentration from the competent authority, according to the application for the confirmation document. In addition, the initial confirmation document has an effective duration of two years, and during that period the manufacturer and importer do not need to reapply for testing and reapply for confirmation documents: they use the original confirmation document to process the importation.

Before the announcement of this policy, full communication was made with the

domestic businesses, and the content of the announcement has already been forwarded to the WTO. Moreover, this announcement was issued formally only after the 60 day waiting period, during which no WTO Member raised a difference of opinion. After this policy announcement, the EPA also invited domestic manufacturers, importers, and vendors to participate in 16 seminars on this issue. Therefore, they already have a full understanding of the relevant regulations. If offshore manufacturers still have questions, they may contact their local agents and learn about these regulations through them. Q2.26 (US) SPS Issues: Chinese Taipei has affirmed the importance of adhering to the WTO SPS Agreement and OIE guidelines in the development of import requirements. Can Chinese Taipei provide an update of plans to appropriately revise import requirements on beef and BSE-related bans on non-meat products (protein-free tallow, poultry and porcine meal, and inspection requirements for pet food)? A: 1. Import suspension on poultry and porcine meal and protein free tallow: According to our regulations, the importation of poultry and porcine meal from BSE

infected economies into Chinese Taipei is prohibited. It is our major concern regarding the possibility of cross contamination with materials of ruminant origin,

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therefore the effectiveness and implementation of US non-commingling system must be evaluated carefully and verified through on-site inspection. If the US would like to export poultry and porcine meal to Chinese Taipei, relevant information has to be provided to the Bureau of Animal and Plant Health Inspection and Quarantine (BAPHIQ) so that risk assessment can be conducted. BAPHIQ has informed the US of this many times, but the information required for risk assessment has not been received yet. As to protein-free tallow, risk assessment is ongoing and BAPHIQ will inform the US of the result as soon as possible after the process is complete.

2. Inspection requirements for pet food:

As for the proposal that US personnel randomly conduct facility inspection on behalf of BAPHIQ, BAPHIQ suggests that this issue be discussed through formal consultation.

Q2.27 (US) Pharmaceuticals and Market Access for Medical Products: Offshore firms have raised concerns about a range of health care system reform issues including: pharmaceutical pricing and reimbursement policies of the bureau of health insurance (particularly problems with the price volume survey which is used to determine reimbursement rates); the failure to implement separation of prescription and dispensing, and the lack of recognition accorded to chiropractic services. Can Chinese Taipei provide information about plans to address these concerns? A: Concerning prices for new drugs, according to Pharmaceutical Benefit Scheme regulations, the upper limit for reimbursements for new drugs is the medium price for that drug in ten advanced economies. Currently innovative drugs are divided into a three-category system based on their therapeutic effectiveness and prices set at the price of the drugs in the US, Canada, the UK, Germany, France, Switzerland, Sweden, Belgium, Japan and Australia. Work under this scheme is conducted by a Pharmacy and Therapeutics Committee composed of experts in therapeutics and pharmaceuticals that meets monthly. Applications for new drugs are reviewed by experts within three months after receipt and forwarded to the committee, after which results of the review process are to be passed on to the applying pharmaceutical firm within six months. If the applicant agrees with the results, the drug will be included among drugs for which reimbursement is given. If the applicant does not agree with the price set by the committee, a further application may be made for which a request for a hearing may be made.

Price discrepancies appear mainly with drugs for which patent has expired. Large hospitals use their purchasing power to obtain large quantities of freebies, thereby resulting in a vast difference between the amount received from the bureau of health insurance and the actual purchasing prices. This has been a major concern for the all the relevant stakeholders. Starting in 1999, based on the the “Drug Pricing Criteria of the Health Insurance System” and the “Regulations on the Adjustment of Drug Prices in the Health Insurance System,” the current drug pricing system was launched, in place of the earlier system of using the trading price of new medicines. The bureau of health insurance has been paying drug benefits under the system. The surplus is used to cover the cost of new drugs for patients suffering from serious illness like hepatitis B and C.

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The drug pricing system is being gradually relaxed so that people can benefit from higher-quality health care. Chiropractic Services: 1.The Department of Health organized three public hearings concerning the draft

“Chiropractic Physicians’ Law” in Taipei on January 10, 2006, in Taichung on February 16, and in Kaoshiung on February 21, to collect various opinions and views from different interested groups. In these three public hearings, relevant medical groups and the Ministry of Examination indicated their opposition to this draft.

2. Chinese Taipei’s legislature also held a public hearing on March 22, 2006, and had a

general discussion in the Committee of Health, Environment and Welfare on March 22, 2006.

3.The interested groups have different points of view on the draft, such as the issues of

name of profession, right to make diagnosis, scopes of practice, prescription rights, emergency care ability, education process, and education, examination and employment, etc.

4.The Department of Health has planned steps to provide this kind of service to the public. The first step is to allow those people who have studied chiropractic abroad to provide this kind of service only under the condition that its advertisements do not contain commercial purposes to attract patients for professional treatment.

5.The Department of Health held a meeting on the possibility of opening Chiropractic

courses with several medical school representatives on July 4th, 2006. It was agreed that The issue of opening the Chiropractic courses in colleges will be discussed and arranged. Chiropractic courses will be introduced into the formal education system step by step so as to ensure that the training and teaching of appropriate and empirically substantiated Chiropractic be delivered.

Chapter 3: Services Q3.1 (ABAC) Category Issue Issue Details Request Taxation Systems

Delay in the procedure to obtain a special approval on withholding tax

· Withholding tax of 20% is imposed on services rendered within Chinese Taipei if such tax is paid in a third country, provided however that, the tax rate of 3.75% can be applied on the deemed profit of 15% as regards the construction business. However, more than one month is required to obtain its governmental approval.

It is requested that: · its approval is expedited; · Japan-Chinese Taipei taxation agreement is ratified; and that · the withholding tax rate is reduced.

A: An offshore enterprise can be allowed to be taxed on deemed net income that would result in a net tax liability of 3.75% of gross revenue only if it is in conformity to the provisions under Article 25 of the Income Tax Act (ITA). The Article stipulates that in the case that an offshore enterprise is engaged in construction contracting, providing technical services, or machinery and equipment leasing in Chinese Taipei, and the cost

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and expenses of which are difficult to calculate, such enterprise may apply to the Ministry of Finance for approval to deem its 15% of its gross revenue as its net income. Once the offshore enterprise obtains approval from the MOF, the tax on the aforementioned deemed net income shall be withheld at a rate of 25% if the enterprise has no branch office in Chinese Taipei, and as a result there is a net tax liability of 3.75% of gross revenue. If an offshore enterprise is not eligible under Article 25 of the ITA, its gross revenue will be subject to a withholding rate stipulated by the Standards of Withholding Rates for Various Incomes. The enterprise will incur a tax liability in accordance with the applicable withholding rate, which in most cases is 20% of gross income. Therefore, the approval of the applications under Article 25 of the ITA requires a close, case-by-case review by the MOF. The applicants are required to submit a copy of the contract along with an application form and the MOF will conduct a preliminary examination on the contract. If the terms of contract appear to involve any business that is not qualified under Article 25 of the ITA, the MOF, instead of outright rejection of the application, will take some time to do further investigation into the case and gather more evidential documents before issuing the final decision so as to avoid disputes. However, the MOF has noted the concerns voiced in relation to the time taken in the processing of the approvals and will seek to expedite the process of approval in a due manner. Q3.2 (Canada) General Services: Under the heading “Temporary Entry and Stay of Service Providers and Intra-corporate Transferees”, Chinese Taipei has described the process for entry of offshore workers. Bullet 4 says that permission for offshore worker entry must be granted by the Bureau of Employment and Vocational Training. Does Chinese Taipei consider this to be an economic needs test or a labour market test? What are the criteria considered by the Bureau when determining if permission will be granted? A:

The process of obtaining work permits for offshore service providers and intra-corporate transferees from the Bureau of Employment and Vocational Training should not be regarded as an economic needs test or a labor market test. In every economy, the labor authority has a mechanism for issuing work permits to non-Chinese Taipei persons. As for the criteria that we use, please check out qualifications and criteria standards for non-Chinese Taipei persons undertaking the jobs specified under Article 46.1.1 to 46.1.6 of the Employment Service Act. The most common qualification requirements include working experience, educational background, licenses or certificates, and so on. Chapter 3b: Business Services Chapter 3b:1: Business Services: Legal Q3.3 (Canada) It states "A non-Chinese Taipei person who passes the Attorney Qualification Examinations and receives an Attorney license should be subject to approval before practicing as a lawyer in Chinese Taipei". What steps must a non-Chinese Taipei attorney take to seek such approval? Are there additional criteria that a non-Chinese Taipei attorney must meet in order to practice as a lawyer in Chinese

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Taipei? A: Paragraph 1 of Article 17 of the Enforcement Rules of our Attorney Regulation Act provides that when a non-Chinese Taipei person who is a qualified attorney in Chinese Taipei intends to practice law in Chinese Taipei, he or she shall present their attorney certificate to the Minitry of Justice for verification when applying for a license. Therefore, a non-Chinese Taipei person who has passed our bar examination can practice law after having obtained from the Ministry a “license for a non-Chinese Taipei person practicing law.” The application for such a license must be accompanied with the attorney certificate. Besides this, we have no other procedure or standard prescribed for a non-Chinese Taipei person who has a Chinese Taipei attorney certificate if he or she wants to practice law in Chinese Taipei. Q3.4 (Canada) In addition, it states that "A non-Chinese Taipei legal affairs attorney shall not hire a Chinese Taipei lawyer or join with a Chinese Taipei lawyer in a law firm partnership. If however in fulfilling the obligations of international treaties a non-Chinese Taipei legal affairs attorney who obtains permission may hire a Chinese Taipei attorney or join with a Chinese Taipei attorney to operate a law firm." A: This is a comment, not a question. Q3.5 (Canada) Can Chinese Taipei please clarify what steps a non-Chinese Taipei legal affairs attorney must take to obtain this permission? A: According to the “regulations governing the approval and supervision of a non-Chinese Taipei legal affairs attorney hiring a Chinese Taipei lawyer or joining with a Chinese Taipei lawyer in a law firm partnership,” announced on 2 February 2002, if a non-Chinese Taipei law attorney wishes to apply to the Ministry to hire a Chinese Taipei attorney, then according to Article 3 of those Regulations, the following documents must be submitted: 1. An application form (two copies); 2. Documents proving the status of the international law attorney and the Chinese

Taipei attorney, the attorney certificates, and proof of having been admitted to the bar association (two copies of each);

3. The employment contract (two photocopies). In addition, if a non-Chinese Taipei law attorney wishes to apply to form a jointly managed law firm with a Chinese Taipei attorney, then according to Article 4 of those Regulations, then he or she must submit an application using the names of all the natural persons of the non-Chinese Taipei law attorney and the Chinese Taipei law firm and provide the following documents: 1. An application form (two copies); 2. The IDs (or Alien Residence Certificates) of the non-Chinese Taipei law attorney

and of the Chinese Taipei attorneys, their attorney certificates, and proof of their having been admitted to the bar association (two copies of each);

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3. The partnership contract (two photocopies). Q3.6 (US) Non-Chinese Taipei attorneys have raised concerns about the difficulty of entry into the legal profession. Can Chinese Taipei provide information about the barriers and opportunities for international professionals who wish to gain licences to practice law? What steps are being taken to facilitate this process for qualified non-Chinese Taipei professionals? A: According to Article 47-3 of our Attorney Regulation Act, a non-Chinese Taipei attorney can apply to the competent Ministry for a “certificate for practicing legal affairs of an offshore economy” to practice the law of his or her home economy or perform international legal affairs adopted by that economy as long as he or she can meet one of following two conditions:

1. Has practiced for at least five years within their “home jurisdiction” and has appropriate supporting certificate. However, should they have been employed by a Chinese Taipei attorney, as an assistant or a consultant for legal affairs of their “home jurisdiction,” or has practiced the law of their “home jurisdiction” in other ecnomies or regions, that period, not to exceed two years, may be accredited into the experience period. 2. (Prior to the relevant WTO Agreement taking effect in Chinese Taipei, the following applies.) If the applicant has been hired to work as an Assistant or Consultant according to the regulation concerning Chinese Taipei lawyers’ employment of non-Chinese Taipei persons and administration thereof, and has so worked for at least two years. Chapter 3a:2: Business Services: Accounting Q3.7 (Canada) It states that "A non-Chinese Taipei person who has passed Chinese Taipei's CPA examination and has acquired a CPA certificate is required to obtain permission from the Financial Supervisory Commission before commencing to practice as a CPA in Chinese Taipei." What steps must a non-Chinese Taipei person take to receive permission from the Financial Supervisory Commission? Are there additional criteria that a non-Chinese Taipei person must meet in order to practice as a CPA? A: Please refer to the answer of Q3.12 for Questions from Experts. Chapter 3a:3: Business Services: Architectural Q3.8 (Canada) Under "Operational Requirements", it states that "a non-Chinese Taipei person who has passed Chinese Taipei's architect examination and is in possession of an architect's license is required to seek approval from the Ministry of Interior prior to practising architecture in Chinese Taipei." What steps must be taken to seek such an approval? Are there additional criteria that a non-Chinese Taipei person must meet in order to practice as an architect in Chinese Taipei? A: After being awarded the architect’s license of Chinese Taipei, an architect must satisfy

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the following requirements prior to practicing architecture in Chinese Taipei: 1. Possess at least 2 years of practical experience in building construction; 2. Establish an office in Chinese Taipei; 3. Apply for the Architect Practicing Certificate from the local government of practice

jurisdiction; and 4. Join the local architects’ association. The above-mentioned requirements apply to everyone who intends to be recognized as a licensed architect in Chinese Taipei. There are no discriminatory treatments for non-Chinese Taipei persons. Chapter 3a:4: Business Services: Engineering Q3.9 (Canada) Under "Operational Requirements", it states that "According to the "Professional Engineers (PE) Act," to acquire a PE certificate, a Chinese Taipei person is required to pass the PE examination; a non-Chinese Taipei natual person is required to follow the provisions of the "Professional and Technologists Examination Act". Can Chinese Taipei please clarify the process that a non-Chinese Taipei person must follow to obtain a professional engineer (PE) certificate? For example, is it correct that he or she must follow the provisions of the "Professionals and Technologists Examination Act" in order to write the examination to obtain a PE certificate? A: A non-Chinese Taipei person can acquire a PE certificate after passing the PE written examination in accordance with the “Professionals and Technologists Examination Act.” This written examination is conducted in Chinese. Any person who has a PE certificate and over 2 years’ related working experience can apply for a PE license issued by the Public Construction Commission (PCC). After getting a PE license and joining a local PE association, this person is allowed to provide PE services. Q3.10 (Canada) The same section also states that "commercial presence must be in accordance with the requirements of the Company Act." Can Chinese Taipei please elaborate on the provisions of the Company Act that a non-Chinese Taipei service provider must follow in order to establish a commercial presence to provide PE services? A: According to Article 8 of “Act Governing the Administration of Professional Engineering Consulting Firms,” a professional engineering consulting firm shall first obtain permission from the competent authority (Public Construction Commission) before being entitled to apply for incorporation or alteration registration. A professional engineering consulting firm shall, within three months from obtaining permission, complete the incorporation or alteration registration and apply to the competent authority for issuance of the registration certificate for the professional engineering consulting firm. After completing the incorporation or alteration registration, it shall apply to and obtain from the competent authority (Public Construction Commission) the registration certificate for professional engineering consulting firm and shall further join the Association of the Professional Engineering Consulting firms or the local

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association of the professional engineering consulting firms before starting business operation. Chapter 3a:5: Business Services: Other Professional Services Q3.11 (Canada) It states that "According to the provision of Article 47 of the CPA Law, any non-Chinese Taipei person who has passed the CPA Senior Examination and received the CPA certificate in Chinese Taipei can perform professional services after being approved by the MOF." What steps must a non-Chinese Taipei person take to seek approval from the Ministry of Finance? Are there additional criteria that he or she must meet in order to practice as taxation services in Chinese Taipei? A: 1. The procedure whereby a Certified Public Accountant may register as a Tax Attorney

is as follows: According to Article 2 in the Regulations for Accountants Acting in Income Tax

Affairs, the applicant should fill in two application forms and file it together with (1) three 2-inch photographs of the applicant taken recently, (2) three specimen cards of the person’s chop and signature, (3) a copy of the Certificate Membership of the Certified Public Accountants’ Association, and (4) the certification fee, and send them to the Taxation Agency of the Ministry of Finance (MOF) by post. A tax attorney registered with the MOF may be appointed by an enterprise to exercise income tax affairs in accordance to Article 3 in the Regulations for Accountants Acting in Income Tax Affairs.

2. There are no additional criteria that a non-Chinese Taipei person must meet in order to practice in taxation services provided that he or she is registered with the MOF of Chinese Taipei.

Chapter 3b: Communications Services Chapter 3b:1: Communications Services: Postal [No questions received] Chapter 3b:2: Communications Services: Express Delivery [No questions received] Chapter 3b:3: Communications Services: Telecommunications Q3.12 (Canada) As of September 2004, the minimum paid-in capital for an integrated network operator was adjusted to NT$16 billion and the build out requirement for the self-constructed local network was adjusted to 400 thousand subscriber lines or ports. Capital requirements of approximately $560 million and 400 thousand lines are large and limit entry to only relatively large carriers. Is there a policy reason for such a significant capital requirement for entry? A: The current operation conditions for the fixed–line network services are set to ensure

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that licensees can provide good quality services based on the required economics of scale and level of network construction. The conditions set through public consultation with consensus are also based on objective and transparent criteria to qualify operators’ competence and ability to provide services. Chinese Taipei will continue to review the conditions in light of market development and welcomes specific feedback, if any, from Canada and other members. Q3.13 (Canada) The NCC determines the number of licences to be awarded to Type I (facilities-based) operators. In awarding licences, the NCC may "adopt a system of evaluation and examination, open tender or any other appropriate method, in consideration of the objectives of liberalization policy, conditions of the telecommunications market, consumers' rights, and other needs of public interests". What factors are taken into account in determining whether a licence would be in the “public interest”? A: The key factors to be taken into account by the NCC for public interest include the promotion of cultural diversity, the protection of minority rights and interests, and the provision of universal services. Q3.14 (Hong Kong, China) We note from Chinese Taipei's IAP that the cap on direct and indirect offshore investment in Chunghwa Telecom Ltd. is 40%. The cap is, however, found to be 20% as inscribed in Chinese Taipei's GATS schedule of specific commitments. Would Chinese Taipei consider reflecting its more liberal de facto offshore investment cap in its offers in the context of GATS negotiations so as to bring its commitments into line with its actual regime and to increase the predictability of the regime? A: Chinese Taipei notes Hong Kong, China's comments and thanks Hong Kong, China for highlighting this. We will take due consideration on this issue by reviewing our policies, and amend those whenever appropriate. Moreover, Chinese Taipei will continue to actively take part in GATS negotiations to seek substantial improvements in GATS telecom commitments from all WTO members. Chapter 3b:4: Communications Services: Audio-Visual Q3.15 (Hong Kong, China) "Requirements of Service Providers": As stated in Chinese Taipei's IAP, offshore companies operating cable radio or television systems are subject to certain discriminatory limitations, including offshore shareholding caps and Chinese Taipei identity requirements. It is however found that the concerned limitations are not among those specified for the sub-sector of "Radio and Television Services" in Chinese Taipei's GATS schedule of existing commitments. Would Chinese Taipei share with us their views on the compatibility of the applicable domestic regime with the existing commitments that it has undertaken for the sector in the GATS context? A: The Cable Radio and Television services operators are not regarded as Type I telecommunications enterprises and are not subject to the offshore ownership and

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Chinese Taipei identity limitations for telecommunications services in its GATS schedule. We made commitments for “radio and television services” sectors corresponding with CPC 96131 (Radio services) and 96132 (Television services) for the production services of radio and television programmes whether live or on tape or other recording medium for subsequent broadcast. These programmes may be for entertainment, for promotion, education, or training or news dissemination, including pictures or plays that are normally produced in radio and television studios. Also included are productions such as sport covering, weather forecasting, interviews, etc. The above commitments are for Radio and Television Program Supply Businesses. Since the offshore ownership and identity limitations on cable radio and/or television system operators are not included in our services commitments, there should be no confusion about inconsistency between our domestic regime and our GATS commitment in the area of offshore investment in cable and television services, nor do so-called "discriminatory limitations" exist. Chapter 3c: Construction and Related Engineering Services Q3.16 (ABAC)

Category Issue Issue Detail Request Relevant Law Employment Legal

division between the permanent worker and the temporary worker at the J/V

A J/V status is necessary to acquire and implement the construction project, but there is no legal division between the employee of the J/V (temporary employee) and the permanent employee of the company, and such obligations are imposed as the establishment and the reporting of management of the labor welfare committee, and holding and reporting of the labor-management committee, if the number of employees is more than stipulated in the labor law.

Some kind of legal treatment should be established to distinguish the treatment of the temporary employees of the J/V and the permanent employees of the company.

A J/V status is necessary to bid for public works projects, but a J/V entity does not have the legal status, and when a temporary employee (J/V staff) is to be employed, one of the J/V partner companies has to sign an employment agreement, but there is no distinguishing from the permanent employee of the company, and all employees are to abide by the labor law. The J/V partner companies are constantly changing, so it is difficult to treat all temporary employees (J/V staff) equally.

It is requested to improve the laws (labor law, tax law, and others) that will give a legal entity status to the J/V companies.

Ordinance on the Labor Welfare and Article 1 of the detailed rules require the establishment of the Labor Welfare Committee if more than 50 employees. Article 38 of the Labor Standards Law stipulates holding of the labor-management meeting if more than 30 employees.

A: 1.For the purposes of coordinating worker-employer relationships, promoting worker-

employer cooperation and increasing work efficiency, a business entity covered by Labor Standard Act, no matter how many staff (including permanent employee and temporary employee) it employs, shall convene the labor-management conference according to Article 83 of the Labor Standard Act. If a branch organization of such entity exceeds 30 employees, a separate conference may be convened for the branch.

2 . There is no different standard on individual industries in this regard (e.g., the

construction and related engineering services) in the Employees' Welfare Funds Act. In

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line with the principles of fairness and universality, it does not discriminate between permanent employees and temporary employees. Accordingly, they have exactly the same legal rights under the Act. Regarding the requirement of having more than 50 employees before establishing a Labor Welfare Committee, in the future we will be drafting a revision to the Act that will reduce the 50 person threshold.

Chapter 3d: Distribution Services

[No questions received] Chapter 3e: Education Services [No questions received] Chapter 3f: Environmental Services Q3.17 (Canada) In the WTO context, Chinese Taipei has made market access commitments/offers in the GATS under modes 2 and 3 for the entire range of environmental services. Mode 4 remains unbound except as indicated in the horizontal section (offer on contract service suppliers and independent professionals but coverage does not include environmental services). However, with respect to mode 1, Chinese Taipei remains unbound for mode 1 due to lack of technical feasibility for most sub-sectors except for consulting services incidental to remediation and clean up of soil and water and for consulting services incidental to nature and landscape protection services. In Canada’s view, cross-border supply of services is technically possible for the entire range of the environmental services. We feel that Mode 1 commitments can be comprehensive, going beyond consultancy services, particularly in the case of services often provided on a private basis – e.g. nature and landscape protection services, air pollution control services, noise abatement services and other environmental protection services. Even in the case of so-called environmental infrastructure services, Canada has identified clear examples of environmental services being supplied via Mode 1 (electronic monitoring of sewage levels/quality, garbage truck that crosses the border to supply refuse disposal services). Is Chinese Taipei considering taking mode 1 commitments for the entire range of environmental services? Will Chinese Taipei expand its horizontal mode 4 commitments on contract service suppliers and independent professionals to include environmental services? A: Chinese Taipei recognizes that the cross-border supply of environmental services is technically feasible. We are considering revising our commitment on mode 1 for environmental services. The issue of the horizontal mode 4 commitments on contract service suppliers and independent professionals has been noted. We will have further study. Chapter 3g: Financial Services Q3.18 (ABAC)

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Category Issue Issue Detail Request Finance Undeveloped long-

term financial market

- Forward financial market in Chinese Taipei is yet to be developed.

- It is requested that Chinese Taipei invites Japanese affiliated banks to Chinese Taipei.

A: This issue may be discussed on a case-by-case basis, since the details of this issue are not very clear. Chapter 3h: Health and Related Services [No questions received] Chapter 3i: Tourism and Travel Related Services [No questions received] Chapter 3j: Recreational, Cultural and Sporting Services Q3.19 (Hong Kong, China) We would like to know more about Chinese Taipei's licensing requirements for offshore service providers of arts and cultural services. We would also like to know whether Chinese Taipei has any regulations on sports industry as well as entertainment business. If yes, we would like to have a brief account on the regime. A: According to the Employment Service Act and relevant regulation, offshore workers who are employed in performing arts assignments and intend to engage in sports coaching and athletics, artistic activities, and show business work should present documents to prove their said specialties or recommendations and/or certificates issued by the economy of origin. Chapter 3k: Transportation Services Q3.20 (ABAC)

Category Issue Issue Detail Request Inefficient administrative procedures, regimes and practices

Direct flights between PRC and Chinese Taipei

In the case of intermediary trade by a Chinese Taipei company among Japan, the Chinese Taipei HQ, and a PRC’s subsidiary company.

It takes time. Direct flights between PRC and Chinese Taipei should be established.

It is necessary to communicate among Japan, Chinese Taipei, and PRC simultaneously, but we are unable to gather in Chinese Taipei, which is inefficient when coordination is necessary.

There are frequent misunderstandings and discrepancies on the side of PRC. PRC business persons who are engaged in manufacturing are prohibited entry into Chinese Taipei. This company is placing orders to Chinese Taipei companies for knowledge-intensive products including devices, and its quality and delivery timing are important. If

It is requested that the direct flights between mainland China and Chinese Taipei should be established.

It is requested that the PRC managerial staff of the Japanese companies should be issued entry permits if an invitation letter for business purposes is provided.

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PRC managerial staff are allowed entry to Chinese Taipei, proper education can be given to them in Chinese Taipei for manufacturing and delivery of products. This will result in the improvement of the competitiveness of HQ products of Chinese Taipei companies. To help staff from mainland China to understand correctly, the company is working to grade up the education level for them, but they are unable to come to Chinese Taipei for a meeting despite the fact that they are excellent personnel with some business authority after employment, education, and training in Japan.

Ａ: 1. Promoting direct flights across the strait has been a long-established policy of this

government. However, direct flights across the Strait involve a wide range of issues, such as the flags used by the carriers, the management of airports and ports, negotiations over navigational rights, management of flight security, supervision of aviation administration, and so on, and thus are of much complexity. Chinese Taipei has adopted several temporary measures, such as permitting the two sides’ ships to navigate directly between specified ports while sailing under flags of convenience. We have also promoted direct cross-strait charter aircraft flights around the time of the Lunar New Year.

2. To make it more convenient for PRC business people to visit Chinese Taipei to do

business, our government promulgated the “Permit Regulations Governing the Entry of Professionals of the Mainland Area into Chinese Taipei for Business Activities” on February 1, 2005. This greatly relaxed the restrictions on the inviting organizations and on the qualifications of the PRC professionals, and at present most entry permit applications handled under these regulations may be completed within 5 to 10 days. Our government has also specified that the Investment Commission, MOEA serve as the “single window” of review and possible assistance, so that the applications can be processed speedily. In the future, our government will continue to review related measures to facilitate the flow of business personnel across the strait.

Chapter 4: Investment Q4.1 (ABAC) Issue Issue Details Requests Governing Laws

- The business areas of investment are divided into two parts, prohibited and restricted. The details of restricted business areas vary depending upon the business categories.

- It is requested that the Government will deregulate restrictions on offshore investment.

Restrictions on entry of offshore capitals

· In Chinese Taipei, 11 categories of business are prohibited to non-Chinese Taipei persons , including without limitation, forestry, selected manufacturing such as chemicals, land transport, broadcasting, and communication, while 23 categories, including without limitation, agriculture, fishery, electric power, mining, selected

- Article 7 of statute for investment by non-Chinese Taipei persons (“SIFN”) - Statute to Promote Upgrading of Industries

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Issue Issue Details Requests Governing Laws manufacturing, finance, insurance and medicare industries are restricted to non-Chinese Taipei persons.

(Improvement) - On January 4, 2002, the bill to amend in part “Statute to Promote Upgrading of Industries” was carried and approved by the legislature, with the express intent of upgrading the industry through preferential tax treatment, etc. The new amendment permits, among other things, corporate tax exemption for offshore business entities, tax exemption for merger and transactions in securities, and deduction of loss in proportion to the rate of share transfer. Under the new amendment, deduction of business tax up to 5~20% of the cost incurred in introduction of factory automation, which can be extended over the 4 year period, if a full deduction cannot be made in a single year. Furthermore, the deductible limit from business tax for research and development (“R&D”) and human resources development (“HRD”) has been raised from the current 25% to 35%. In addition, business entities that exceeded the expense for R&D and HRD by more than 50% of the average of the preceding two years, may deduct from the business tax, 50% of the exceeding portion of such expenses over a period of 4 years, if a full deduction in a single year is not workable. The Committee for the Economic Construction approved, on May 11, 2002, the bill to amend “Statute to Promote Upgrading of Industries”, exempting business tax for 5 years on new investments or new capital increment in the manufacturing industry and its related technical service business entities, with the intent of reducing unemployment for two years beginning on January 1, 2002. The legislature will examine the bill after approval by the government. While the initial 10 year limited validity of this Statute was extended by 10 years until December 31, 2009, its revision in 2003 expanded substantially the scope of the preferential measures. In May 2004, investments by non-Chinese Taipei persons were permitted in energy, mining, and motor freight, businesses while they were prohibited to auto lease business. In December 2005, the investment criteria for distribution centers were eased, and the branch offices of offshore companies were permitted to establish distribution centers with investment capital of 200 million NT dollars.

A: The removal of industries from the “prohibited and restricted industries” list is under constant review by different competent authorities in accordance with their respective laws or regulations. Q4.2 (ABAC)

Category Issue Issue Detail Finance Restrictions on

loans - Restrictions on loans on account of operation fund to a Japanese affiliate in Chinese Taipei prevent its parent in Japan from remitting the required amount. The only alternative left is to increase the capital of its Chinese Taipei affiliate. · The general small scale of Chinese Taipei’s banks necessitates a stricter application of loan limits. Loans by local banks are made within 15% of the net asset in total of the loans in both NT$ and offshore currencies, of which loans without collateral are limited to 5%. Loans by offshore funded banks are made to the limit of the larger of the two amounts, namely, not more than 10% of the net assets after completion of the financial statement for the preceding year or NT$1 billion (where the net asset is less than NT$300 million), or the larger of the two amounts, namely, not more than 15% of the net asset or NT$2 billion (where the net asset exceeds NT$300 million). Bank loan in offshore currencies is limited to the amount not exceeding 25% of the net assets of the main office of the offshore bank.

A: Article 14 of regulations governing offshore bank branches and representative offices” was revised on Dec. 2005 as follows: The ceilings of aggregate amount of credit that may be extended by an offshore bank branch to the same person, the same concerned party and/or the same related entities shall apply mutatis mutandis to Article 33-3 of the Banking Act. After this revision, local banks and offshore banks in Chinese Taipei will have the same treatment on the limitation of credit extension to the same person or

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related parties. Furthermore, such limitation is based on the total net worth of the offshore bank rather than that of the branch in Chinese Taipei. Therefore, this matter is no longer an issue. Q4.3 (ABAC) Category Issue Issue Detail Request Finance Borrowing

restrictions on offshore capital

Bank loans are not permitted to us after 10 years since the establishment of our local factory. It was said that the reason was because we are a 100-percent subsidiary of offshore capital. Our business is profitable and pays taxes.

It is not clear which regulations restrict borrowing, but it is requested that the local loans be permitted.

A: Our financial regulations accord National Treatment to companies owned by non-Chinese Taipei persons for borrowing activities. However, it should be noted that not all of such companies are qualified to get loans from banks. Q4.4 (ABAC) Category Issue Issue Detail Request Taxation Systems

Interpretation of Permanent Establishment

- The scope of taxable Permanent Establishment (“PE”) extends widely, requiring tax registration per project in principle, as well as filing of tax return on each itemized project (such as field erection work, local procurements of materials, dispatch of engineers, etc.) whose source of income is considered to emanate from Chinese Taipei. The Regulation concerning treatment of the Permanent Establishment lacks clarity. Thus, sometimes, the portion of work, which is executed offshore, is lumped together into a taxable category. (This occurs even where the contract amount, payment terms and other details are separately shown clearly in the contract. This is because: (1) no bilateral taxation agreement is concluded between Chinese Taipei and Japan; (2) there is no legislative provisions governing the Permanent Establishment, and the taxable income is not clearly defined in the corporate taxation law; and (3) the legislative provision, governing offshore business entities in Chinese Taipei, recognizes only branch office or locally incorporated operations, and tax registration of a specific project is made by the discretionary judgment of administration, without a clear-cut statutory definition as to its status.)

- It is requested that Chinese Taipei provides a clear-cut definition of the Permanent Establishment.

A: The definition of "fixed place of business" refers to fixed places for operation of

business, including administrative offices, branch or sub-branch offices, business offices, factories, workshops, warehouses, mining fields, and construction sites. However, this shall exclude warehouse or storage sites used exclusively for purchase of goods and maintenance shops not used for processing or manufacturing products, in accordance with the provisions of Paragraph 1, Article 10 of the Income Tax Act.

In cases where offshore enterprises having no fixed places of business and business

agents in Chinese Taipei derive service income sourced from Chinese Taipei, the income shall be subject to withholding tax in accordance with our Income Tax Act.

Whether or not the income is sourced from Chinese Taipei is determined based on the

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fact of each case in accordance with Article 8 of the Income Tax Act. To take the provisions in Subparagraph 3 of the Article as an example, the income incurred from aservices rendered outside Chinese Taipei is not seen as income sourced from Chinese Taipei. However, if the related services are furnished simultaneously both within and outside Chinese Taipei such as underwriting fees on issuance of overseas securities derived by offshore enterprises under the consignment of domestic enterprises, the income incurred from the services is recognized as that sourced from Chinese Taipei because such services are not purely provided outside Chinese Taipei.

Owing to the diverse nature of the source rules and the fixed places of business

adopted by various economies under their respective domestic laws, international double taxation may be imposed on cross border transactions. The better way to avoid international double taxation is through the conclusion of tax agreement between Chinese Taipei and Japan, and this would rely on the mutual efforts of both sides. Q4.5 (ABAC) Category Issue Issue Detail Request Taxation Systems

Double taxation - Withholding tax is doubly imposed when importing software from Japan such as those used for aesthetic design, design engineering, and consultancy business. There is no refund in Japan. No comprehensive tax agreement has been ratified between Chinese Taipei and Japan as of today. Therefore, remittance of commission incurs 20% withholding tax, which is quite high compared to the tax imposed by other economies, with which Japan has ratified a comprehensive tax agreement.

- It is requested that the double taxation is eliminated. '- It is requested that the tax agreement is ratified between Chinese Taipei and Japan.

A: It is an international norm that the withholding tax is imposed on gross revenue for non-residents who do not have permanent establishments in the source economy, and the responsibility of eliminating double taxation is resting with the residence economy. The problems of double taxation in common practice are dealt with by the authority of its resident, and may be possibly further alleviated by concluding a DTA. Since a DTA is applied bilaterally on a reciprocal basis, the rate applied in accordance to domestic laws cannot be in line with those provided in DTAs. The withholding rate can only be reduced through a DTA. The signing of a Double Taxation Agreement (DTA) would, in the first instance, depend on whether both sides are interested and express willingness in concluding such a DTA. Given the fact that a DTA involves a wide scope of application, it usually requires a comprehensive evaluation of its effect on fiscal and economic conditions and other factors by both sides before consultation can be commenced. Q4.6 (ABAC) Category Issue Issue Detail Request Relevant

Law Taxation Systems

Tax levy on accumulated profits in excess of the capital

- 10% of income tax is imposed on accumulated profits (retained earnings) in excess of the capital. To avoid this tax, a business entity has no alternative but to increase its capital or distribute such retained earnings as dividends to its shareholders. (A

- It is requested that Chinese Taipei deregulates tax on retained

- Article 15 of Statute for Upgrading Industries

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corporation is allowed to retain earnings up to the amount equal to the paid-up capital without having to distribute it as dividends. Industries designated as “important” by the government may retain such earnings in the amount equal to twice the paid-up capital without having to distribute it as dividends. Any retained earnings in excess of such limits are additionally taxed at the rate of 10/100 without any further restrictions under the taxation law. The scope of the important industries is reviewed once every two years.)

earnings in corporation.

A: The 10% profit-seeking enterprise income surtax that was charged on retained

earnings which exceeded the limitation of the multiple of paid-in capital in accordance with the provisions of Article 15 of the Statute for Upgrading Industries (amended on December 31, 1999) was eliminated after the Integration System of full imputation was put into practice.

Due to the 15% discrepancy between the highest marginal profit-seeking

enterprise income tax rate and highest marginal individual income tax rate, and that some profit-seeking enterprises enjoy numerous tax incentives, enterprises have a motive to retain earnings rather than distribute them to shareholders. In order to maintain neutrality in the decision between whether to distribute or retain earnings, Article 66-9 of the Income Tax Act was augmented with relation to an additional 10% profit-seeking enterprise income surtax to be payable on undistributed earnings to be in accordance with the set of measures included in the Integration System.

Regarding the regulation of 10% profit-seeking enterprise income surtax charged

on undistributed earnings, numerous different view points have been raised with various proposals in regard to amendments, and our government will consider all the suggestions in line with the principles of tax equity and neutrality, and the need of balance of finance and economic development so as to recommend concrete and feasible plans for reform. Q4.7 (ABAC) Category Issue Issue Detail Employment Brain drain Workers do not stay at a company, as they seek higher-paying jobs. Japanese

companies’ efforts to teach them expertise are therefore in vain, and there are often problems in the operations that require continuity, such as maintenance service.

A: There are no regulations on the issue of brain drain. The employee and the employer should reach an agreement by negotiation and specify it in the employment contract. Q4.8 (ABAC)

Category Issue Issue Detail Request Employment Restrictions

of overtime - The filing of application for overtime is accepted only on the first day of the consecutive holidays, regardless of how many days the holiday in question extends.

- It is requested that the authority accepts filing of application for overtime on any day of the consecutive holidays.

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(Improvement) - Council of Labour Affairs has decided to apply universally to manufacturing sectors, etc., Article 30 of Labour Standard Act, which provides for the 8-week-flexible-work-hours system. This system allows allocation of work hours for employees within the 8 weeks unit, while the upper limit (of 8 hours a day, 48 hours a week, 1 holiday per week) is maintained. By adoption of this system, the problems confronting semiconductor manufacturers, etc. have been resolved, such as those arising from having to operate 24 hours a day with 4 teams and 2 shifts. It also made it possible for them to cut down on overtime costs.

A: The Labor Standards Act does not specify that the filing of application for overtime is

accepted only on the first day of the consecutive holidays.

According to Article 39 of the Labor Standards Act, when employers have the approval of employees to work on holidays, payment should be doubled. In the case of rush work owing to seasonal causes, the approvals of employees or unions are required as well. The holidays are defined in Articles 37and 38.

Article 36 stipulates that in every seven days of labor work at least 1 day leave should be given. There is no obligation to work on this day in order to protect the workers’ health, let them regulate their lives, and promote efficiency. The same requirement may be found in ILO conventions nos. 14 and 106 as well as in Japan’s Labor Standards Act.

In natural disasters, catastrophes, and unexpected events, unless Article 40 applies, business entities may not cause employees to work on these days, even with the employees’ consent. Based on the principle of protecting the physical and mental health of laborers and being consistent with international regulations, it is the opinion of the Council of Labor Affairs that employers may not demand employees to do errands on regular holidays; Article 36 will be remain in force. Q4.9 (ABAC)

Category Issue Issue Detail Request Relevant Law Employment Payment of

severance indemnities

· Regulations as regards severance indemnities are inflexible without regard to the paying capacity or solvency of business entities.

· Regulations as regards severance indemnities should not be uniformly set out. Rather, it is requested that they are left to the pay scale of individual business entities.

Article 55 of the Labor Standards Law Ordinance on Worker’s Severance Payment (regular retirement payment) and the Detailed Rules of the Ordinance on Worker’s Severance Payment (regular retirement payment). The employer is obligated to contribute at least 6 percent of the wages paid to the workers to the account of individual worker at the Bureau of Labor Insurance, as a severance allowance. The above individual account at the Bureau of Labor Insurance is owned by the individual work. The employer is not obligated to the pay severance allowance at the time of the worker’s retirement (the Bureau of Labor Insurance is obligated to pay). The obligation period of contribution by the employers for severance allowance is from the employment date to the retirement date

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of the worker. The contribution can be suspended during the period of the worker’s unpaid leave, military service, suspended service, arrest before a public trial, and in police custody.

A: 1. The regulations on severance indemnities had been studied for 14 years. In 1997’s

Labor Pension Act draft, the rate of contribution by an employer to the Labor Pension Fund per month was at least 6 percent of the worker’s monthly wage. There was still 1 year between the Labor Pension Act promulgation and entry into force. Business entities could restructure their constitutions during the period of time. The same occurred in the present version of the Act: after the legislature passed it on June 30, 2004, there was a one year period before it went into force on July 1, 2005, so that businesses would have enough time to adjust, and requiring employers to contribute at least 6% of the worker’s monthly wage to the Labor Pension Fund should be considered appropriate.

2. As for self-employed workers voluntarily making contributions to the Fund, this has

been one of the objects in drafting the revised act. Q4.10 (ABAC)

Category Issue Issue Detail Request Relevant Laws

Inefficient administrative procedures, regimes and practices

Appointment of auditors

- Auditors are appointed from the shareholders.

- It is requested that the capital and management of business corporations are segregated.

- The Commercial Law

A: After the Company Act was amended on November 12, 2001, supervisors (not auditors) have not been elected from the shareholders. Q4.11 (ABAC)

Category Issue Issue Detail Request Inefficient administrative procedures, regimes and practices

Cumbersome procedure for change of directors and managing directors

- In Chinese Taipei, the president (chief representative) is appointed under the premise for a long-term office. Thus, its change can take a long time (at least 6 months).

- With offshore affiliated business entities, the change of the top executive is not infrequent. Thus, the Corporate Law in Chinese Taipei should be modified accordingly so that such change can be easily made expeditiously.

A: According to the provisions of the Company Act, a director may be discharged at any time by a resolution adopted at a shareholders’ meeting. Q4.12 (ABAC)

Category Issue Issue Detail Request Relevant Laws

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Inefficient administrative procedures, regimes and practices

Complexities and delays in approvals, permits and licenses

- To secure land property requiring construction permits and have it examined from the environmental aspect by relevant governmental authorities takes much time. The land property is limited only to those developed by the government, and acquisition of the land property may be made only by the local joint venture industries. In one case in which the project was premised on the lease of the land property from the joint venture partner, the joint venture partner and the industrial board could not come to terms as to the use and application of the land property after a lengthy negotiation.

- It is requested that the authority expedites the requisite procedure in terms of approvals, permits and licenses.

- Statute for Promoting and Upgrading Industries, the Ministry of Economic Affairs

- All documents to be sent from Japan in a case of Japanese affiliated industries must go through a number of complicated procedures before they can be finally accepted. In principle, it requires validation by the Chinese Taipei Economic Board, which must be notarized by a public notary office, if the named person in the document is unable to present himself/herself to the authority.

- It is requested that Chinese Taipei simplifies the procedure to submit documents by offshore affiliated business entities.

- It takes too much time for issuance of permits and approvals after the filing of applications. It is a far cry from an efficient processing.

(Improvement) - On May 30, 2002, Bureau of Customs issued “The Implementing Measure for Export and Import Goods of Strategic Partners” subject to exporters, importers, and customs brokers meeting certain level of conditions.

- Thanks to the intervention of Interchange Association (Japan), a Japanese affiliated business entity was able to lease the land property direct from the Bureau of Industry.

A: As for the procedures to be followed in the establishment of industrial parks, according to Article 23 of the Statute for Upgrading Industries, a feasibility report and the documents required by the environment Impart Assessment Law, are required to be submitted to the Industrial Development Bureau, MOEA. In this regard, the IDB is actively striving to provide service and assistance to industries during the establishment of industrial parks. In order to integrate governmental resources and promote efficiency, one-stop service is being provided in 47 Industrial Park Service Centers to deal with issues permit, license and certificate applications. For the examination procedures required by Regional Planning Committee of the Construction and Planning Agency and the Environmental Impact Assessment Committee of the Environment Protection Administration, a Joint Committee has also been set up so as to simplify and speed up applications. Q4.13 (ABAC)

Category Issue Issue Detail Request Relevant Laws

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Inefficient administrative procedures, regimes and practices

Procedural complexities to change registration details

- A vast amount of documents must be supplied to effect changes on articles of incorporation, for example to add new products and it is extremely time consuming (taking about 6 months for the change of articles of incorporation.) Especially cumbersome was the Environmental Bureau to which documents had to be additionally furnished time and time again.

- It is requested that Chinese Taipei expedites its procedure in adding new products to articles of incorporation.

- Chinese Taipei Economic and Cultural Representative Office in Japan, etc.

- A company names officially registered can be described only in Chinese characters, and no mention of any economy name, such as Japan, can be admitted. Conversely, any company name not using Chinese characters is required to provide a Chinese version of its company name for the purpose of official registration.

A: If the addition of new products involves any change to the company’s scope of business as specified in its charter, the company is required to apply for a change in its registration with the competent authority. The procedure takes 11 days. If the said item of business requires prior approval from government, it is required to obtain a letter of permission from the competent authority specifically in charge of the business, before processing the change of registration, and the length of time for the procedure will depend on the relevant regulations of the competent authority. Since the permits issuance involves many different agencies, please provide more concrete details of the issue, so that we can forward it to the related agency to study whether there is any room for further simplification. The registered names of domestic companies or recognized offshore companies shall be only in Chinese language in order to ensure that all companies operating in Chinese Taipei have different Chinese names. This is to prevent confusion in transactions and protects the rights of both business and consumers (for instance, two different companies having the same name would have difficulties executing various transactions). There is indeed a necessity for having such a regulation, and it cannot be eliminated. In addition, according to Article 370 of the Company Law, “The name of an offshore company shall . . . also indicate its economy of origin,” and its original name shall be registered in “Recognition Form.” Therefore, it is not the case that no specific economy name can be admitted. Q4.14 (ABAC)

Category Issue Issue Detail Request Inefficient administrative procedures, regimes and practices

Requirement to establish a branch in Chinese Taipei

- In line with the Chinese Taipei industry’s extension of business overseas, when equipment is exported to a Chinese Taipei’s industry under credit terms, the Japanese entity is required to establish its own branch office in Chinese Taipei.

- It is requested that Chinese Taipei authority permits such export of equipment without needing establishment of a branch operation, in so far as its affiliate is incorporated under the Chinese Taipei laws (as it is too costly to have both in parallel).

A: Chinese Taipei does not require offshore companies to establish its own branch office in

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Chinese Taipei before exporting machinery and equipment to Chinese Taipei. Please provide us detailed and concrete examples of such a case for our reference. The Department of Investment Services under the Ministry of Economic Affairs is our service window for offshore companies, and any company that encounters difficulties in investment and business operation in Chinese Taipei is welcome to contact DOIS for further assistance. Q4.15 (Hong Kong, China) We note that Chinese Taipei has removed some sectors from the lists of "Prohibited Industries" and "Restricted Industries" since the last IAP peer review in 2004. We would like to know the industries currently categorized under the list of "Prohibited Industries" and "Restricted Industries", and whether Chinese Taipei has a time-frame to remove them from these categories. A:

The latest list of “prohibited and restricted industries” under the “Negative List for Investment” by overseas Chinese and non Chinese Taipei persons” is available in the website of Investment Commission, MOEA at http://www.moeaic.gov.tw/. To liberalize the current offshore investment regime further, the removal of industries from the “prohibited and restricted industries” is under constant review by different competent authorities in accordance with their respective laws or regulations. Q4.16 (Japan) (Question in regard of "Current Investment Measures Applied" under "General Policy Framework"）Is prior approval required for all investments? If so, does Chinese Taipei have any plans in the near future to gradually liberalize its investment regime? A: 1. According to the provisions of the current Investment Act, the offshore investor shall

fill in an application form together with relevant documents to the Investment Commission of MOEA for receiving prior approval.

2. To further liberalize the current investment regime, the Investment Act is under

constant review by the MOEA and relevant competent authorities. Q4.17 (US) Non-Discrimination in Investments: The IAP states investors can transfer their investments freely as long as the assets are proved to be belonging to the “same beneficiary.” What does “same beneficiary” mean and what are the reasons for this requirement? A: 1. The alleged “same beneficiary” means the final beneficiary of the assets belongs to

the same person or legal entity. 2. The aforementioned measure is to facilitate offshore investors. It allows them to

transfer securities between different IDs instead of trading above securities on securities market. This measure is an extra-National Treatment.

Q4.18 (US) Investments in Land: The IAP says offshore investors may be allowed to

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acquire land for investments that are helpful to major infrastructure projects: “Offshore Investors may be allowed to acquire land for investments that are helpful to major infrastructure projects…” How is “major infrastructure” project defined? A: Investment in major infrastructure projects refers to investment projects that are approved by the government authorities concerned. Non-Chinese Taipei persons acquiring land for the above-mentioned major infrastructure projects are required to file a land acquisition application to the competent central government authorities for approval. Please find Attachment D for the land acquisition application form (in English). Chapter 5: Standards and Conformance Q5.1 (ABAC) Category Issue Issue Detail Request Relevant Laws Industrial standards, approval of safety standards

Certification procedure for large commercial motor vehicles

- An inspection by the Ministry of Communications and Transport is required during the certification period for large trucks and buses in excess of 3.5 tons in gross vehicle weight (GVW). Japanese vehicles must be identical to the commercial-type as specified in the Motor Vehicle Specifications (for vehicles sold in Japan) issued by the Japanese Ministry of Land, Infrastructure and Transport (“MLIT”). On the other hand, submission of manufacturer’s pamphlet containing specifications suffices for non-Japanese vehicles manufacturers. Because the emission control specifications in Chinese Taipei are different from those applied in Japan, it is unreasonable for Chinese Taipei to require the same E/G as is applied in Japan.

- It is requested that the authority discontinues its requirement for submission of the Motor Vehicle Specifications by the MLIT which is required only for motor vehicles from Japan and that the manufacturers pamphlets containing the specifications are accepted by the Chinese Taipei authority.

- Transportation Bureau, Road Administration Office - "Inspection Standards on Specifications of Foreign Vehicles" - 3574 Ministry of Communications and Transport (1972)

A: The question needs further clarification, so please provide more specific information. However, we can provide the following possibly relevant reply: Regarding the requirements for the Heavy Duty Diesel Vehicles Certification Application, the main purposes of attaching a Chinese version of the vehicle user’s manual (the same requirements exist for gasoline vehicles and motorcycles) that includes a warranty for exhaust emissions control systems, maintenance guidelines, inspection items, and component change schedules are as follows: 1.To facilitate the vehicle owners to maintain their vehicles properly and therefore

ensure that the emissions control systems function properly within the warranted period for the diesel vehicles or engine families.

2.To meet the requirements of the In-Use Motor Vehicle Recall and Correction

Regulations, which have been in effect since 2003 in Chinese Taipei. The objective of this regulation is to check the compliance of the design and devices for in-use vehicle

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emissions control systems. To confirm the qualification of the selected vehicle for the conformation test, one item is to check whether the vehicle owner has properly maintained the vehicle by following the schedules and instructions listed in the user’s manual.

For these reasons, the EPA has decided to keep the same requirements to ensure good air quality in Chinese Taipei. Q5.2 (ABAC) Category Issue Issue Detail Relevant Laws Industrial standards, approval of safety standards

Pasting shipping marks

- The Shipping Mark for Chemical products is normally placed on containers, and pallets. However, where products are contained in paper bags, the same Shipping Mark (seal) must be pasted on to each individual bag also which is a costly and time-consuming requirement.

- It is requested that Chinese Taipei discontinues, as is done in other countries, its requirement for marking the Shipping Mark on individual bags.

A: We do not quite understand the meaning of “Shipping Mark” and the specific chemical products referred to in the question. We would be in a better position to explain further or take actions in response to the question if the information on the sources of cases, such as the name of laws, products affected, or responsible authority, could be provided. Q5.3 (ABAC) Category Issue Issue Detail Request Relevant Laws Industrial standards, approval of safety standards

Electromagnetic compatibility certification system

- Content certificates are required to import electrical parts for use with production facilities. A prior submission of certificates does not result in expedited customs clearance because of the language problems, etc. It simply takes too much time for customs clearance. PPLs and electromagnetic clutches are examples of commodities affected by this system.

- It is requested that Chinese Taipei deregulates in accordance with the purpose of use of commodities in concern.

- Electromagnetic compatibility certification system

A: Products regulated by the BSMI for EMC, except for those subject to DoC, may use either the Type-Approved Batch Inspection (TABI) or Registration of Product Certification (RPC) scheme. For TABI and RPC, the time for customs clearance is short if the required certificates are presented. The question is not clear in terms of the products affected, which prevented us from providing more clarification. Please provide more detailed information on the problems encountered. Q5.4 (ABAC) Category Issue Issue Detail Request Relevant Laws Industrial standards, approval of safety standards

Recognition of test results by Japanese testing institutions

- Since January 1998, a model approval has become necessary for consumer electronic and electrical products newly sold in Chinese Taipei, after the test conducted by one of the testing laboratories designated by the Bureau of Commodity Inspection and

- It is requested that Chinese Taipei recognizes the test results by the authorized test laboratories in Japan.

- Article 17(2) of the Commodity Inspection Law.

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Quarantine, the Chinese Taipei Ministry of Economic Affairs (“BCIQ”). Test results by the Japanese laboratories are not recognized, unless based on the test data verified by one of the Chinese Taipei’s officials at the test site in Japan. On the other hand, Chinese Taipei recognizes the test data for which the EMI (FCC) approvals for radio emission have been obtained without needing such on site verification. In this regard, Japanese manufacturers are unduly handicapped against their counterparts in the U.S..

(Improvement) - On January 4, 2000, BCIQ under the umbrella of the Ministry of Economic Affairs instituted a new system simplifying the test procedure for home electric appliances (“HEAs”). The new measure exempted 200 items of HEAs from the test requirements on a shipment-by-shipment basis. The new measure, however, requires registration of approved inspection records of the affected products. According to BCIQ, the new expeditious and simplified measure will be implemented in incremental stages over a larger number of HEAs until January 2003.

A: Chinese Taipei signed an Arrangement with the United States on the acceptance of EMC test report and is willing to negotiate a similar MRA with Japan to recognize test results from test laboratories in Japan. Q5.5 (ABAC) Category Issue Issue Detail Request Industrial standards, approval of safety standards

Regulations on safety and hygiene not clearly defined

・The scope of the legislative provisions is not clearly defined concerning safety and hygiene. As a result, much is left to the discretion of each inspector. As a result, on site inspection for the same case can produce different results, depending upon who the inspector is, leaving business entities without an effective means to make the requisite preparation.

- It is requested that Chinese Taipei provides a clear-cut legislative provisions.

A: The question is not clear. Please provide more specific information. Q5.6 (ABAC) Category Issue Issue Detail Request Relevant

Laws Industrial standards, approval of safety standards

Product safety approvals not clearly defined

・Out of the three product safety approvals, i.e., PRC, TA and DoC, it is extremely difficult for applicants to determine which approval applies.

・ It is requested that the authority harmonize these into a single approval applicable to all.

CCC Approvals

A: The BSMI’s web site (http://civil.bsmi.gov.tw/bsmi_pqn/do/pqn5110/form) contains the information on the applicable conformity assessment procedures that a certain product item could use. Most of the products that require inspection are eligible for two alternate conformity assessment procedures from which manufacturers may choose to apply. In

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case applicants have any problems concerning these inspection schemes, they may contact the BSMI. Q5.7 (ABAC) Category Issue Issue Detail Request Industrial standards, approval of safety standards

Nebulous standard for factory approvals

・It appears that there are variances in the standard of approval as regards ASMEU Stamp factory, while such standard should be absolute and without variations.

・ It is requested that ENAA effects evaluation of major business entities (as to the Quality Control) the results of which should be made available for public inspection.

A: Please provide more specific information. Q5.8 (ABAC) Category Issue Issue Detail Request Industrial standards, approval of safety standards

Nebulous standard for handing of hazardous goods

・ The revision in the standard for handling hazardous goods for export has created some ambiguities.

・ It is requested that the precise definition for the Standard for handing hazardous goods is made public, if it is at all available..

A: Please provide more specific information. Q5.9 (ABAC)

Category Issue Issue Detail Request Industrial standards, approval of safety standards

Obligation to register product certification

Concerning the RPC (Registration of Products Certification) that is required when importing finished products, there are more product items and more test items required for RPC than before. The test results conducted by the agencies of other countries are not accepted with only a few exceptions. For this reason, there are such impacts arising as an increased cost of samples, applications, delayed marketing schedule due to additional tests, and re-examination of the introduction of particular products to the market.

It is requested that the test for RPC that is required when importing finished products be simplified, and more acceptance of the result of the safety test conducted by the agencies of other economies (e.g., JQA).

A: The RPC Scheme was introduced to provide an alternative conformity assessment procedure to the traditional time-consuming batch inspection. To facilitate trade, in the future we will announce more product items to which the RPC Scheme is applicable. For safety test reports required by the RPC Scheme for IT products, the BSMI accepts IECEE CB test reports and test reports issued by recognized offshore third-party safety testing laboratories. The JQA may apply to the BSMI for becoming one of its designated testing laboratories in order for their safety test reports to be recognized by the BSMI. Chapter 6: Customs Procedures Q6.1 (ABAC)

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Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Imposition of construction tax for Commercial Ports

- Customs collect a Commercial Port Construction Surcharge of 2% on CIF price of imported goods and 2% on FOB price of exported goods. By the strong protest of the U.S. against imposition of 5% on imported goods alone, such surcharge has been imposed on both imported and exported goods. Such imposition of surcharge does not sit well with the trade liberalization.

- Import duties go against trade liberalization and should be repealed.

(Actions) - Chinese Taipei has committed to comply with Articles IV and VIII of GATT and has reduced the tax base by 0.3%.

A: To comply with Article VIII of the GATT 1994, the former Harbor Construction Dues have been replaced by the Harbor Service Dues since Jan 1, 2002 in Chinese Taipei. Nowadays, the Harbor Service Dues are imposed only on GT of inbound vessels, revenue ton of cargo loading and outbound passengers. Additionally, there is no discrimination between different nationality operators.

Q6.2 (ABAC)

Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Bringing in/out of commercial samples

- Because Chinese Taipei has not ratified the TIR Carnet, it is not possible to accompany commercial samples in and out of Chinese Taipei. This is hampering both import and export trades. - Malaysian International Chamber of Commerce and Chinese Taipei External Trade Development Association have signed the ATA Carnet Agreements. (Improvement) ·Effective from October 5, 2005, businesspersons can bring in or take out commercial samples by a temporary customs pass without submitting customs declaration documents.

It is requested that Chinese Taipei ratifies the TIR Carnet and deregulates.

A: Chinese Taipei is not a member of the WCO and thus is not in a position to ratify both ATA and TIR Conventions; however, in order to implement a system for the temporary duty-free admission of goods, we have signed ATA Agreements with 15 economies or areas. Q6.3 (ABAC)

Category Issue Issue Detail Request Relevant Law

Restrictive export/import trade, duty, and customs clearance

Requirement to submit prescription certificate

- To export to Chinese Taipei cosmetics containing medical ingredients (such as ultraviolet ray absorbent, and vitamins), exporters must incur considerable time and expense to obtain the requisite prescription certificate issued by the cosmetic manufacturer, endorsed by the resident Chinese Taipei-Japan Economic-Cultural representative in Japan and by a public notary office.

- No governmental certificate is required in Japan, EU or the U.S. It is requested that the authority accepts the prescription certificate as issued by the cosmetic manufacturer without needing any additional endorsements.

- Cosmetic Hygienic Control Law

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A: Regarding the question on “prescription certificate” for cosmetics containing medical ingredients raised in Q6.3 (ABAC): According to the Department of Health (DOH) regulation, those intending to export cosmetics containing medical ingredients to Chinese Taipei are required to submit free sale certificate, list of ingredients, and other documents as required, to a Chinese Taipei consular office or representative office in the economy of origin for notorization, before registering it with the DOH as a cosmetics product containing medical ingredients. However, in line with the principles of risk management, and international practice, the DOH may, on the reciprocal basis, consider changing the present requirement for notorized free sales certificates to a self-declaration from the manufacturer that it assumes responsibility for the product. Q6.4 (ABAC)

Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Complexity of customs clearance procedure for test equipment and machinery

- Customs procedures including filing of the documents are too complicated for accompanying test and research machinery & equipment for conducting a test in Chinese Taipei. The same complications are repeated upon return to Japan accompanying the same machinery & equipment.

- It is requested that Chinese Taipei simplifies the customs clearance procedure.

A: The ATA agreement between Japan and our Customs has existed for many years. Thus, the clearance procedures for the test equipment and machinery can be simplified by utilizing the ATA carnet, whereby formal importation and exportation declarations are to be waived. Q6.5 (Hong Kong, China) "Implementation of WCO Guidelines on Express Consignment Clearance": We note that once the risk management system of a given express carrier passes Customs review, it is eligible to conduct self-audits. We would like to know the general criteria in the Customs review. A: The criteria of eligibility to conduct self-audits are as follows: 1.Express carrier that establishes computerized cargo selectivity system in accordance

with the requirement of Customs check. 2.Express carrier that has a strict control on its import/export cargo and its control

procedures are approved by Customs. 3.Express carrier that has assigned enough experts to check its import/export cargo and

report to Customs. Chapter 7: Intellectual Property Rights Q7.1 (ABAC)

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Category Issue Issue Detail Request Restrictive export/import trade, duty, and customs clearance

Measures taken against parallel imports are insufficient

- There seems to be no end to parallel imports from Japan, U.S., etc., damaging the price competitiveness of official products.

- It is requested that the authority tightens its effort to crack down on parallel imports.

A: Chinese Taipei has provisions for the parallel import of patented goods, adopting the principle of international exhaustion, with the court determining the exhaustion of rights. This also applies to utility model and design patents. Chinese Taipei also has provisions for the parallel import of trademarked goods and layout designs. Parallel import of copyrighted products is prohibited under the Copyright Act, and importation without the authorization of the right holder incurs only civil liabilities and not criminal liabilities. Q7.2 (ABAC)

Category Issue Issue Detail Request Implementation of intellectual property rights ("IPRs")

Infringement of intellectual property rights

- Insufficiency of the protection of intellectual property rights in Chinese Taipei makes cracking down on copy and imitation products ineffective in practice, depriving business entities of the right to exploit the rightful business opportunities. There is no arrangement between Japan and Chinese Taipei governing the mutual recognition of the copyright and the priority on trademarks. - Protection of intellectual property is extremely inadequate. Leakage of plans and designs has become a daily affair. Intellectual property rights of manufacturers are hardly recognized in public.

- Illegal copy products from Japanese originals are abundant in the market. (Copy products appear even on product catalogs in the absence of the effective control by the authority.)

- Copyrights are infringed in Chinese Taipei on sport shirts, branded shirts, shirts, underwear, and pantyhose made in Chinese Taipei, [and branded apparels made in Indonesia. In addition, copyrights/patents are infringed on branded apparels made in PRC. :Chinese Taipei revised]

·

- It is requested that Chinese Taipei reinforces protection of intellectual property rights, (especially in enforcement and judicial prosecution.) '- It is requested that Chinese Taipei secures transparency and effectiveness in the enforcement of WTO-TRIPs Agreement by early accession to WTO. · It is requested that protection of intellectual property rights (IPR’s) is urged strongly by the government.

There are problems of piracy and fake products of game peripherals and software. Due to continued countermeasures, such as crackdowns by police, import prohibitions by customs, and court convictions of violators and others, there are some deterrent effects. However, there are still on going sales of pirated products, so it is requested to take countermeasures continuously.

It is requested to take continued and stepped-up responses to the violation of intellectual property rights.

Presentations are made using the specification sheets that contain expertise developed in Japan, but such sheets are disclosed to Chinese Taipei makers. And there are price competitions Chinese Taipei makers are good at. A presentation sheet with the

Protection of intellectual property rights

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contents converted into a black box must be used, but there are many obviously unlawful acts, under the atmosphere of admiring such actions in Chinese Taipei, which are denounced acts in Japan.

This company had experiences from time to time where such good products as cosmetics and toiletries were imported from Japan, and there were violations of design rights and fake products. Since there are almost no penalties for such violations in retail business in Chinese Taipei, and the government, people, and the retail industry are not paying attention to this matter for a long time. The products made by an unknown maker are sold at the shops indicating Japanese makers’ names and addresses.

There are certain penalties for such violating acts in retail business, but the campaigns by the media and the government are necessary. The current satiation has to be improved.

There are many cases of orders from the users who require to improve the local content ratio (ratio of locally-made parts), and to meet their requirements, manufacturing of equipment is conducted by the local makers, based on the expertise we disclosed, and at the next business opportunity they become our direct competitors. A confidentiality agreement does not help, as they find a loophole and argue that they do the right thing.

Protection of intellectual property rights. We take measures to protect it through patent applications, but the government is requested to ensure compliance with the intellectual property right, so that protective measures will not be necessary.

(Actions) - Since 1993 or thereabout, preparation has been underway to revise legislative provisions related to intellectual property rights in preparation for attracting offshore investments and for Chinese Taipei’s accession to WTO. Amended patent law (effective from January, 1 2001), trademark law (effective from November 1, 1998), and copyright law (effective from January 23, 1998) have been prepared in the manner compatible with the TRIPs Agreement and will be implemented upon accession to WTO, without allowing for a transitional period.

- In January1999, Intellectual Property Office was established under Ministry of Economic Affairs. In February 1999, significant improvements were made: penalties for violators were raised from NT$1 million to [NT$100 million by Fair Trade Act, businesses were suspended,:Chinsese Taipei revised] a training was provided to judges, a task force was established by the governmental agencies, and an action plan was formulated for enforcement of rights. On the other hand, by amendment on 24 October 2001 of the Patent Act, the criminal penalty was repealed for infringement of invented patents, and another amendment on 6 February 2003 repealed again the criminal penalty for infringement of patent and utility rights. The latter amendments are problematic in that they lessen the deterrent effect to kerb the infringing conducts.

- In April, 1998, the Ministry of Economic Affairs announced its comprehensive action plan for executing intellectual property rights by focusing on three major issues, namely, to: (1) reinforce coordination among the governmental authorities in enforcement of the intellectual property rights laws; (2) reinforce the educational aspect for protection of the intellectual property rights; and (3) participate in the international effort for protection of intellectual property rights.

- As to enforcement, Chinese Taipei announced its improvement measures, such as heavier penalties for infringement, and [injunction supervision: Chinese Taipei revised] of business activities under the Fair Trade Law, training of judges and related personnel, formation of task force in the governmental

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agencies, and action plan for execution of intellectual property rights. - Currently, a bill to amend the Patent Law of Chinese Taipei, now being

submitted, includes, among others, expanded first file system similar to the Article 29(2) of Japan Patent Act, establishment of domestic priority right, repeal of additional patent, deregulation for the deposit of micro-organisms, and introduction of system to lay open patent applications for public inspection. However, it is not clear when the bill will be made into the law. (“Koryu [JiaoLiu]”, November 15, 2000)

- On November 1, 2001, “The Law to regulate compact discs” was amended to the effect that only business entities granted with both the approval and the ID number by filing a prior application to the competent authority might manufacture pre-recording compact discs. Immediate injunction will be issued to business entities that have manufactured compact discs without prior approval with a fine in the range of NT$ .5~3 million, unless application is filed within 15 days.

-[ Article 9(1) of “The Law to Regulate Compact Discs”, which was enacted on June 15th, 2005, states that business entities may manufacture, possess, and export pre-recorded compact discs, only if they are legally authorized by offshore obligees to manufacture the said compact discs for exportation, if they possess copyright licenses from the said obligees for the said compact discs, and if the exporters have signed an undertaking stating that they will not violate the laws of the importing countries. The said compact discs cannot be distributed, broadcasted, and sold in domestic market. :Chinese Taipei revised]

- On 6 June 2003, Legislative Yuan approved the bill to amend the Copyright Act, under which the copyright owner (plaintiff) is not required to make a formal accusation to render an offence, such as illegal copying, dubbing and sales of CDs, DVDs and optical disks, subject to prosecution. Furthermore, the penalty cap was raised from NT$450,000 to NT$8 million.

- [Our Copyright Act, revised in 2003 and 2004, has adopted “distribution right”(Article 28bis), made the offenses of “pirating optical disks for the purpose of selling or leasing”and“sale of pirated optical disks”be public crime, i.e., prosecution without complaint by right holder; granted competency to the judiciary police to confiscate infringing products or implements used for commission of infringement (Article 98bis);and increased the levels of fines (Article 91 to Article 95). In addition, we already have deleted the provisions of vocational crimes of the Copyright Act and combine punishments for several offences in accordance with Criminal Code revisions that took effect in July 2006. :Chinese Taipei revised]

- On 6 February 2003, a comprehensive amendment was made on the Patent Act, such as granting the right to assert priority to all applicants from WTO member states and introducing the exclusive right of importation for the patented goods.

- The Police Troop under the jurisdiction of First Bureau was officially formed on 1 January 2003 to crack down on infringements of intellectual property rights exclusively. Already more than 200 cases were pursued. Furthermore, Intellectual Property Protection Police Battalion comprising of 220 police forces was formed on January 1, 2004 Ministry of the Interior and this was incorporated into law on November 1, 2004.

- On 6 June 2003, the legislature approved the bill to amend the Copyright Act, under which the copyright owner (plaintiff) is not required to make a formal accusation to render an offence, such as illegal copying, dubbing and sales of CDs, DVDs and optical disks, subject to prosecution. Furthermore, the penalty cap was raised from NT$450,000 to NT$8 million.

· On February 6, 2003, Patent Act was amended effective from July 1. Major amendments include:

Prior 3 months Provisional Approval Period is abolished, and the patent right is granted concurrent with the approval;

The re-examination period is extended from 30 days to 60 days; Fees are reduced (NT$800 for patent protective periods for the1st to the

3rd years and NT$1,200 for the 4th to the 6th years); The system of dividing patent after examination is discontinued; and Introduction of form examination for utility model, and the 10-year term

right.

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On December 24, 2005, penalties on smuggling the products that are violating the intellectual property right were strengthened, and confiscation of declared products and the maximum fine of 1 million NT dollars are established. On February 7, 2006, the maximum reward money to those informed the authorities about the pirated disks has been increased to 1 million NT dollars, plus 10 percent of the value of the pirated disks, with a maximum reward of up to 10 million NT dollars.

A: 1.Since its accession to the WTO on January 1, 2002, Chinese Taipei has been in

compliance with WTO/TRIPS regulations. 2.The 2003 Copyright Act revision included amendments on “public transmission”

rights and heavier criminal punishments; the 2004 Copyright Act revision added “technological protection measures”. These provisions are in full compliance with the WCT and WPPT. The 2003 Patent Act was revised to streamline patent examination by abolishing opposition system and adopting formality examination for utility model patents, as well as repealing criminal liabilities for utility model and design patents. The 2003 Trademark Act revision included an amendment on the conditions constituting “likelihood of confusion” and added protection for three-dimension, color and sound marks.

3.To ensure effective implementation of IPR policies, inter-ministry coordination

meetings are held on a regular basis to review implementation progress. The IPR Police and other inspection task forces conduct around-the-clock inspections of optical disk factories and shopping areas to crack down on infringements. The latest International Intellectual Property Alliance (IIPA) report showed marked decreases in piracy rates for 2004 and 2005: music piracy decreased from 36% to 26%, business software piracy from 43% to 42%, and entertainment software piracy from 63% to 42%; total loss of revenue due to book piracy have also decreased by 10% in the same period. These results clearly demonstrate that Chinese Taipei’s diligent efforts for IPR protection have been fruitful, and drawn the acknowledgement of international rights holder groups.

4.The MOEA received many reports in recent years from local law enforcement

agencies, noting that when local representatives or other legal representatives for Japanese trademarks are notified of the discovery of alleged infringing items, they are often unable to aid in identification (such as when product representatives are unable to join law enforcement in central or southern part of Chinese Taipei to assist with identification in a timely manner) or unwilling to cooperate (such as when the quantities uncovered are small), which is a serious detriment to enforcement results. We hope that Japanese businesses can establish a joint rights-holder group or single contact-window agency on the island, so as to better safeguard their own interests.

Q7.3 (ABAC)

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Category Issue Issue Detail Request Implementation of intellectual property rights ("IPRs")

Patent system - The Patent Law in Chinese Taipei is not open for public inspection and is vulnerable to prosecution even after the patent is issued. The exclusive right, thus, has no authority and it takes a long time for court proceedings in Chinese Taipei.

- It is requested that Chinese Taipei will amend its Patent Law to align it to the international norm.

A: Our early publication and request for examination system was introduced in our Patent Act in 2001. Under the system, TIPO is to publish the patent case 18 months from the date of applicationfor public perusal of its technical contents, so as to prevent any commercial unrest and duplicate R&D and unnecessary investment. When a right holder discovers any infringement of his patent right, he may file a civil suit against the infringement act. Should the opposition party file for invalidation, the court will defer all rulings until the invalidation claim is ascertained. TIPO will also give priority to the examination of said invalidation claim, to facilitate the conclusion of litigation. Chinese Taipei is in the process of establishing an IP Court; all IPR civil and administrative litigation will be handled under said court. The establishment of the IP Court will serve to simplify litigation procedures and ensure patent right stability. Q7.4 (ABAC)

Category Issue Issue Detail Request Relevant Law

Implementation of intellectual property rights ("IPRs")

Establishing the design right

- Design right on cartridge cannot be established in Chinese Taipei, despite the absence of any contrary provision in the law. The application is refused at the examination stage by the competent authority.

- It is requested that Chinese Taipei modifies its examination procedure so that design right can be established in Chinese Taipei.

- The Design Law

A: Approval for toner cartridges design patent is the same as approval for any other patents. Patent applications are approved so long as they do not violate Patent Act regulations regarding novelty and innovation. There have been some 300 related applications since 1987, with 60% approval rate. Q7.5 (ABAC)

Category Issue Issue Detail Request Implementation of intellectual property rights ("IPRs")

Examination of patent applications

- The quality of patent examination in Chinese Taipei is a far cry from that of the international norm: (1) Refusal on the ground of absence of novelty, and technical advance, without any cited reference; (2) Refusal of examination without giving reasons for refusal; (3) Diametrically opposed reasons for refusal, between the preliminary and the first examinations; (4) Substantial difference in the quality of examination depending upon who the examiner is; (5) No consideration afforded to the sub-claims; and (6) Reasons of refusal upon re-examination, more

- It is requested that Chinese Taipei: －provides cited references and provide the grounds for refusal; －discontinues an abrupt refusal; －discloses at the initial examination all reasons for refusal; －pursues the uniform level of examination; －provides its opinion also on the sub-claims;

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often than not, result in substantial shrinkage of reduction to practice without giving any cited reference.

－provides proper training to examiners to ensure that a fair and proper examination structure is established.

(Improvement) - While it is appreciated that the patent examination procedure is being expedited, a further improvement is requested.

A: Since July 1, 2004, all invention patent applications deemed with reasons for disapproval during preliminary examination are issued advance notices of the reasons for disapproval before the finalized decision is rendered. This is to allow applicants the chance to state their case regarding the matter. At the same time, independent claim examinations for invention patents were initiated; the “Explanation on Filing Invention Patent Independent Claim Examination Forms” was drafted and “Standard Operating Procedure for Invention Patent Independent Claim Examinations” was compiled with reference to offshore case studies and practices; on-the-job training was also provided to examiners to strengthen competence and comprehensively elevate examination quality. According to the TIPO Criteria for Patent Examination, if an application is rejected for the lack of novelty or inventive step, examiners must cite prior art in support of the rejection decision; a task that is strictly supervised and followed. However, the examiner does not need to cite prior art, but only concrete reasons, in the four following instances: 1. The prior art cited by the examiner in preliminary examination is sufficient to

reject the application. 2. An invention not industrially applicable.(Paragraph 1, Article 22 of the Patent Act)

3. The Specification does not meet Patent Act criteria. (Paragraph 1, 2 and 4, Article 26 of the Patent Act)

4. The scope of claims cannot be supported by the specifications and drawings submitted. (Paragraph 3, Article 26 of the Patent Act)

Therefore, “reasons of refusal [without] any cited reference” is likely to have occurred in the aforementioned instances. TIPO will, however, continue to request that all examiners cite prior art in cases of rejection. Q7.6 (ABAC)

Category Issue Issue Detail Request Implementation of intellectual property rights ("IPRs")

Restrictions on naming the company

- Regulations exist in Chinese Taipei prohibiting the use of a corporate name which implies two different business categories. Upon establishment of a special gas company in Chinese Taipei, the use of the company name as used in Japan was refused:

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Preferred name: 〇〇 Electric Manufacturing and Special Gas (2 business categories) Approved name: 〇〇 Special Gas (1 business category)

- Because of the absence of legislative provisions, the request for change of company name has been refused by the authority.

- A company names officially registered can be described only in Chinese characters, and no mention of any country name, such as Japan, can be admitted (a problem unique to countries using Chinese characters). Conversely, any company outside the Chinese speaking zones, such as English zones, is required to provide a Chinese version of its company name for official registration.

- It is requested that the use of a country name is permitted as a part of a company name, unless prior registration in the same name exists.

A: 1.According to Article 9 of the Regulations Governing Review of Applications for

Reservation of Corporate Names and Business Scopes, “Only one type of business is allowed to be reflected in a corporate name. The restriction set forth in the preceding Paragraph does not apply to an offshore company which has submitted an evidentiary document issued by a competent representative office of [Chinese Taipei] overseas.” Where the corporate names of two companies contain any marks or identifying words, respectively, which serve to distinguish the different categories of business of the two companies, such corporate names shall not be considered identical to each other. If a corporate name were sanctioned to imply two or more business categories, the aforementioned regulation would be difficult to enforce, and the difficulty in distinguishing the difference between two companies will harm exclusivity. Therefore, our Company Act allows only one type of business description.

2.According to Article 12 of the Company Act, “In a company, after its incorporation,

fails to register any particular that should have been registered or fails to register any changes in particulars already registered, such particulars or changes in particulars cannot be set up as a defense against any third party.” Therefore, the applicant who requests a change of company name must apply to the competent agency.

3.According to Article 10, Paragraph 1, Subparagraph 3 of the Regulations Governing

Review of Applications for Reservation of Corporate Names and Business Scopes, “[the specific part of a corporate name shall not contain] the name of [Chinese Taipei] or any other economy, except where the corporate name of a foreign company contains the name of its home economy.” Article 7, Paragraph 3 states, “The corporate name of a foreign company shall indicate the company’s economy of origin which shall be placed before the district name or the specific part of the corporate name.”

Q7.7 (ABAC)

Category Issue Issue Detail Request Relevant Law

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Implementation of intellectual property rights ("IPRs")

Difficulty in patent search due to Chinese Taipei not being a signatory to Strasbourg Agreement

- Chinese Taipei has not yet ratified Strasbourg Agreement concerning International Patent Classification (“IPC”). It is extremely difficult to conduct timely and accurate patent search, because the Patent Law in Chinese Taipei does not require reference to IPC.

- It is requested that Chinese Taipei ratifies Strasbourg Agreement.

- Strasbourg Agreement

A: Patent classification in Chinese Taipei adopts the IPC system. We currently use the 7th edition of the IPC. We will adopt the 8th edition beginning November 1, 2006. Q7.8 (ABAC)

Category Issue Issue Details Request Implementation of intellectual property rights ("IPRs")

Intellectual property right yet to be ratified

Chinese Taipei is not a signatory of such important international treaties as the WIPO Copyright Treaty.

Such important international treaties as the WIPO Copyright Treaty should be ratified as soon as possible.

A: Though Chinese Taipei is not a signatory of WCT and WPPT, we have revised our Copyright Act in 2003 and again in 2004 in response to trends in digital technology development to regulate distribution rights, public transmission rights, electronic rights management information, and technological protection measures. These revisions are in compliance with the WCT and WPPT. Q7.9 (Canada) Chinese Taipei's General Approach to Intellectual Property Rights in 2006 - Effective Enforcement of IP rights - Par. 2. Could Chinese Taipei provide information on the functioning of the "Implementation Plan for Enhancing Computer Software Protection"? A: To further strengthen computer software protection, the “Implementation Plan for Enhancing Computer Software Protection” was promulgated on September 1, 2004. Major measures include the designation of special auditing staff by government agency and right holder groups to perform periodic online checks and to report to enforcement agencies immediately upon the discovery of any illegal activities, provide assistance to small and medium-sized businesses and schools in the use of legal software, strengthen the inspection of sales channels for pirated software, and promote anti-piracy awareness. Q7.10 (Canada) Chinese Taipei's General Approach to Intellectual Property Rights in 2006 - Effective Enforcement of IP rights - Par. 6. Could Chinese Taipei elaborate on the differences in the previous and new approaches pertaining to the protection of computer related exports? A: Although the Export Monitor System (EMS) was abolished as of January 1, 2005, rights holders of computer program related products may assert and protect their rights by reporting any violations and providing relevant information to Customs based on the “Operational Directions for Customs Authorities in Implementing Measures for Protecting the Rights and Interests of Patent, Trademark, and Copyright” (herein

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referred to as the Operational Directions).Since the implementation of the Operational Directions on July 1, 2003 (revised on June 1, 2005), Customs has received reports of infringement from 38 rights holders, and acted accordingly in compliance with regulations. This measure provides broader IPR protection than the EMS; at the same time, Customs has continued the implementation of the “Operational Directions for the Enforcement Task Force against the Export of Pirated Optical Disks” and the “OD Manufacturing Implement and Border Inspection System.” Thus, the EMS’ abolishment has not had any adverse effect on IPR protection. Q7.11 (Japan) APEC adopted model guidelines based on APEC Anti-Counterfeiting and Piracy Initiative into new revised Comprehensive Protection Action Plan for IPR. Please explain if your government is planning to amend the Copyright Law to implement the model guidelines (especially concerning “Service Provider’s Measures against Infringement”). A: 1. Chinese Taipei’s legislature has proposed drafts for the regulation of P2P technology

providers and ISP liability. On April 24, 2006, the legislature passed the first reading of the Copyright Act revisions, stipulating penal provisions for operators who illegally provide computer programs or other technologies with the intent, and where such intent can be reflected through advertisement, to induce their users to infringe on copyright, to gain profits as a result thereof. The revisions also provide the competent authority with the capacity to order the operator to cease or stop operation, if any serious infringement acts for which the operator is convicted is not rectified within the prescribed period of one month. These measures have taken into consideration to resolve the dilemma that has long existed between technological R&D and copyright protection. Once passed, these regulations will undoubtedly be a powerful and effective deterrent to Internet piracy.

2. Coordinating ISPs and rights holder groups to establish protection mechanisms:

A draft amendment addressing ISP liability was submitted to the legislature in March 2006. The spirit of this revision is to clarify the ISP’s legal liability for infringement acts committed by its clients using ISP-provided services. Should infringement be the result of negligence or deliberate intention on the part of the ISP, it shall be held legally liable according to related laws and regulations. However, if the ISP, after being notified by the rights holders, terminates service to the client who is allegedly engaging in infringement activities and removes the contents of the alleged infringement, then this may serve as the basis for legal liability exemption. This revision will have a positive effect on the implementation of IPR protection, as it keeps Internet industry development channels open while providing the necessary filter to block and prevent Internet infringements.

Q7.12 (Japan) Your Government amended the Copyright Law to comply with the WCT and the WPPT. Please explain which provisions have not been implemented in the Copyright Law yet. A: In response to trends in digital technology development, Chinese Taipei has revised its Copyright Act in 2003 and again in 2004, to regulate public transmission rights,

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electronic rights management information, and technological protection measures. These revisions are fully in compliance with the World Intellectual Property Organization Copyright Treaty (WCT) and Performances and Phonograms Treaty (WPPT). Q7.13 (Japan) Anti-Counterfeiting and Piracy Initiative: After Chinese Taipei joined the WTO, a patent infringement in October 2001 and infringements of utility model rights and design rights in January 2003 were exempted from criminal penalties. As a result, we think the inhibiting effect in response to these infringements was greatly reduced. What measures will be taken in the future in terms of Anti-Counterfeiting and Piracy Initiative? We would like to hear about specific policies. A: 1.Most economies adopt civil remedies in dealing with criminal liabilities for patent

infringement. Article 61 of TRIPS specifies, “Members shall provide for criminal procedures and penalties to be applied at least in cases of willful trademark counterfeiting or copyright piracy on a commercial scale. Remedies available shall include imprisonment and/or monetary fines sufficient to provide a deterrent, consistently with the level of penalties applied for crimes of a corresponding gravity… Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights, in particular where they are committed willfully and on a commercial scale,” leaving to members’ discretion whether to apply criminal liabilities to patent infringement. In practice, most members adopt only civil liabilities for patent infringement, while those who have criminal provisions seldom prosecute in criminal court; some members have also decriminalized patent infringement.

2.Since invention patents require complicated technical and professional legal

knowledge, it is difficult to render judgment on infringements. In practice, it is not uncommon for patent holders to frequently initiate criminal procedures and appeal to prosecutors for search and seizure. Although cases of this kind are generally acquitted, the damage has already been done. To ensure fairness and reasonable treatment, we decriminalized patent infringement.

3.To ensure protection for patent right holders, compensation for damages is increased

from twice the amount of damage to triple the amount of damage. (Article 83, Paragraph 3 of Patent Act)

4.The February 6, 2003 revision of the Patent Act adopted formality examination for

utility model patents, and as such, whether utility model patents examined under this new system is consistent with substantive conditions is uncertain. This is especially true in criminal lawsuits, whereby rights holders can take advantage of criminal liability laws to work against their competitors, often causing irrevocable damage to their business and reputation by appealing to have their assets searched and detained. To ensure uniform legislative value, decriminalization extends to new design and utility model patents as well.

Q7.14 (Japan) Concerning the training of patent and trademark examination personnel,

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Japan has been requesting Chinese Taipei to abolish the outside examiners system in the TIPO. We have learned that the number of such examiners has been decreasing. We would appreciate your giving us more concrete information about how and through what processes you plan to abolish the system and when an end will be put to it. A: Former policy to engage outside examiners was employed for the following reasons: As TIPO did not have the manpower to examine the enormous number of patent applications, it had employed the assistance of outside examiners to shorten the examination period for the benefit of applicants. However, as it is difficult to control the time frame and quality of examinations conducted by freelance examiners, TIPO planned to elevate examination quality by shifting towards an entirely official examination service. To that purpose, revisions to the TIPO Organizational Statutes (herein referred to as “the Statutes”) were drafted according to Article 17 of the Statutes and announced on July 17, 2002, stating that the number of outside examiners shall be reduced annually for eight years from the implementation of the Statutes, to not exceeding 10% of the legally allotted total of 806 examiners. The time frame of eight years following the January 1999 legislation of said Statutes will conclude in January 2007, at which time the total number of outside examiners, who will be employed for their special areas of expertise, will be reduced to 80.

Year 2002 2003 2004 2005 2006 2007 Outside Examiners 775 775 675 575 475 80

Q7.15 (US) While significant progress has been made in improving enforcement of intellectual property rights in recent years, concerns remain with respect to the need for: strengthening enforcement, with a focus on border enforcement, particularly against exports and goods in transit; internet piracy and ISP liability; book piracy; unauthorized use of copyright material on government and university computer networks; counterfeit pharmaceuticals. Can Chinese Taipei outline what policies will be implemented to address these issues? A: With regard to coordinating ISPs and rights holder groups to establish protection mechanisms: A draft amendment addressing ISP liability was submitted to the legislature in March 2006. The spirit of this revision is to clarify the ISP’s legal liability for infringement acts committed by its clients using ISP-provided services. Should infringement be the result of negligence or deliberate intention on the part of the ISP, it shall be held legally liable according to related laws and regulations. However, if the ISP, after being notified by the rights holders, terminates service to the client who is allegedly engaging in infringement activities and removes the contents of the alleged infringement, then this may serve as the basis for legal liability exemption. This revision will have a positive effect on the implementation of IPR protection, as it keeps Internet industry development channels open while providing the necessary filter to block and prevent Internet infringements.

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Chapter 8: Competition Policy [No questions received] Chapter 9: Government Procurement Q9.1 (ABAC)

Category Issue Issue Detail Requests Governing Laws

- A minimum of 90% local contents is required for locomotives.

Grant of a preferential tariff rates based on increased home production, and/or local procurements

Local contents requirement - In a project for the Taipei City, involving

36 subway cars, en bloc with land, the following excessive demand for the local production and the local contents was made by the authority under the Industrial Cooperation Program: 1) Hexagonally structured panels for the chassis are required to be joined and manufactured in Chinese Taipei by assembly. 2) Out of the 36 cars in all, 30 cars must be assembled in Chinese Taipei. 3) Out of the 72 bogies, the majority must be manufactured in Chinese Taipei. 4) All electric wires used must be made in Chinese Taipei. 5) Lighting equipment, air-conditioning and seats must be made in Chinese Taipei. 6) The requisite technology is transferred for the traction motor to permit its local manufacturing in Chinese Taipei. 7) All contracts are made and executed in Chinese.

- It is requested that the Government repeals or deregulates the restrictions.

- The bill to promote motor vehicles industry (Governmental Guideline) of 1998

- Regulation to implement the self-manufacture plan of electrical machinery industry.

- Industrial Cooperation Program

A: Chinese Taipei is continuing to open our market for government procurements. According to our government statistics, the proportion of government procurements that went to imported goods or was awarded to overseas bidders from 2001 to 2004 stood around 14.3%~17.8%. That a high proportion of bids is being won by offshore firms shows that Chinese Taipei’s government procurement market is highly liberalized. 1.Chinese Taipei abrogated the regulation to implement the self-manufacture plan of

electrical machinery industry upon its accession to the WTO in January 2002. 2.The Industrial Cooperation Program requirement on locomotives will be phased out

after Chinese Taipei becomes a Party to the GPA. Q9.2 (ABAC)

Category Issue Issue Detail Request

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Government procurement

Preclusion of offshore fund in a thermal power plant bid

・ Tenders for cooling water pumps purchased by Chinese Taipei Thermal Power (state-owned) are open exclusively for domestic manufacturers in most cases. A tender due on April 8, 2004 involving Da Tan Thermal Power Plant (LNG 4000MW) is open for domestic tender, despite the fact that no local pump manufacturers are technically capable of manufacturing such product. Thus, they must rely on import of finished products or on a joint manufacture with offshore entities. The reporting company has no alternative but to make a joint bidding through selling finished product s to a Chinese Taipei’s manufacturer. A similar situation occurred in July 2002. The tender for cooling water pumps by Chinese Taipei Thermal Power and Taichung Thermal Power 910 (550MWx 2 units) was also exclusively open to domestic manufacturers.

・It is requested that more opportunities are made available for direct bidding by offshore manufacturers.

A: Please refer to the answer of Q9.1 Q9.3 (Hong Kong, China) We appreciate that Chinese Taipei has accomplished several concrete reform measures on GP in the past few years. We note however that Chinese Taipei has no further improvements planned. We encourage Chinese Taipei to keep up with the efforts in moving towards an open and non-discriminatory GP regime. A: Chinese Taipei is currently promoting the “Government Procurement Electronic Plan,” including the “Government Procurement Information System,” “Inter-entity Supply Contract System,” and “Electronic ITB/RFP Document and Electronic Bidding System.” The electronic invitation to tender and electronic bid retrieval system can promote efficiency and transparency in the GP regime. Chapter 10 Deregulation and Regulatory Review Q10.1 (ABAC)

Category Issue Issue Detail Requests Governing Laws

Grant of a preferential tariff rates based on increased home production, and/or local procurements

Local contents requirement

- A minimum of 90% local contents is required for locomotives. - In a project for the Taipei City, involving 36 subway cars, en bloc with land, the following excessive demand for the local production and the local contents was made by the authority under the Industrial Cooperation Program: 1) Hexagonally structured panels for the chassis are required to be joined and manufactured in Chinese Taipei by assembly. 2) Out of the 36 cars in all, 30 cars must be assembled in Chinese Taipei. 3) Out of the 72 bogies, the majority must be manufactured in Chinese Taipei. 4) All electric wires used must be made in Chinese Taipei.

- It is requested that the Government repeals or deregulates the restrictions.

- The bill to promote motor vehicles industry (Governmental Guideline) of 1998 - Regulation to implement the self-manufacture plan of electrical machinery industry.

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5) Lighting equipment, air-conditioning and seats must be made in Chinese Taipei. 6) The requisite technology is transferred for the traction motor to permit its local manufacturing in Chinese Taipei. 7) All contracts are made and executed in Chinese.

- Industrial Cooperation Program

A: Please refer to the answer of Q9.1 Q10.2 (ABAC)

Category Issue Issue Detail Requests Governing Laws Export requirements

Requirement imposed upon Japanese affiliated motor vehicles manufacturers to export to Japan

- Chinese Taipei implements its administrative guidance, requiring Japanese affiliated motor vehicles industry to promote export to Japan. Since 1997, Japanese affiliated manufacturers have been required to export more than 12% in the ratio obtained by the following formula: the amounts of [exports to Japan + (Export of finished motor vehicles － CKD imported)]/(CKD parts price for assembly of finished motor vehicles destined to domestic consumption) x 100%. While no penalty is imposed, the performance of business entities is published, and those failing to meet this requirement are reminded by the authority with a demand to fulfill this obligation. (In the background, there exists a huge deficit in Chinese Taipei’s trade balance against Japan.)

- The Chinese Taipei authority, in the middle of free competitions, should direct its effort more on enhancing the competitive strength of its domestic parts industry in respective of both quality and price, and should repeal its administrative guidance.

- Administrative Guidance, Industrial Bureau, Ministry of Economic Affairs on “Major points concerning promotion of export to Japan by motor vehicles manufacturers”.

(Actions) - The Chinese Taipei authority imposes export obligations upon Japanese affiliated business entities for products manufactured in Chinese Taipei, upon issuance of a resident permit (for more than 6 months) to a Japanese expatriate who wishes to work in such business entities in Chinese Taipei. Depending upon the performance of the export obligations so imposed, the authority imposed a further set of various conditions, among others, reduction in the number of resident permits issued, requirement for further information and materials, and the lengthening waiting period before the permit was issued. Less than complete legislative provisions left many areas of questions as to their interpretation. In May 1992, Alien Work Permit Law was promulgated to provide for aliens working in Chinese Taipei, followed by Regulations concerning the Resident Certificate for Alien Professionals, Engineers and Managerial Staff, which was subsequently amended on September 17, 1997. - The conditions for issuance of a resident permit have now been laid down precisely for any alien investors or any representative of alien corporations, wishing to reside for more than 6 months in Chinese Taipei as follows: (a) a resident permit application for a single person may be filed by an offshore corporation for which offshore investment is already approved and more than US$200,000 is already invested; (b) additional applications up to 4 persons may be filed by an offshore corporation in which more than US$200,000 is already invested. In this context, each time an additional investment reaches US$500,000 beyond the US$200,000 initially invested, an additional application for a single person may be filed.

- Directors (in the capacity of director, auditor, or the like) in a Chinese Taipei’s corporation desiring to stay in excess of 6 months are required to satisfy either of the following conditions commensurate with the paid-in capitals, pursuant to “The

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Regulation Concerning the Resident Permit For Alien Investors Or Any Representative Of Alien Corporations”: (a) a resident permit application for a single person may be filed by an offshore corporation for which offshore investment is already approved and more than US$200,000 is already invested; (b) additional applications up to 4 persons may be filed by an offshore corporation in which more than US$200,000 is already invested. In this context, each time an additional investment reaches US$500,000 beyond the US$200,000 initially invested, an additional application for a single person may be filed.

- Furthermore, person(s) filing application for a resident permit in the capacity of the president, branch general manager of a Chinese Taipei branch office, or equivalent is(are) required to satisfy one of the following conditions in accordance with Article 46 of Employment Service Act for Aliens. (a) The sales amount is more than NT$10 million in the most recent year or in average of the past 3 years. (b) The export/import results achieved is more than US$1 million in the most recent year or in average of the past 3 years. (c) The revenue for agency commission is more than US$400,000 in the most recent year or in average of the past 3 years. (d) For corporations newly established or with less than one year of operation, a minimum of NT$5 million paid-in capital for Chinese Taipei’s corporation, or a minimum of NT$5 million of the local working capital for a branch office of alien companies.

A: Please refer to the answer of Q9.1 Q10.3 (ABAC) Category Issues Issue Detail Request Export Requriements

Linkage of permit issuance to the requirement for export to Japan

- It takes much time before a resident permit is issued to Japanese expatriates, wishing to work in a Japanese affiliated business entities in Chinese Taipei, because of the need for the authority to verify the export performance of the business entity filing applications, based on which the number of resident permits per applicant is determined. Some applications are either reduced in number or rejected.

- It is requested that the authority discontinues the tying of the resident permit issuance to the export performance of business entities filing applications. Export business should be left to the discretion of the business entity in concern, since it could be affected up or down by the inter-relationship between the applicant and importers.

A: Export performance is not the only prerequisite for some business entities (such as manufacturers and wholesalers) that are filing of applications for offshore professionals. If one of the criteria including minimum capital, business volume, and commission agent is met, the business entity can apply to hire offshore professionals as well. Therefore, export performance shouldn't be regarded as the trade barrier. Q10.4 (ABAC)

Category Issue Issue Detail Request Environmental pollution and waste disposal

Not enough involvement by the public offices

- The operation of “Shengli”, one of the leading companies in Chinese Taipei in disposal of waste liquid, has been suspended. This kind of material importance has not triggered the intervention by any governmental authorities. The authority is leaving the private business entity to resolve the problems all by itself. Shengli is the only company in Chinese Taipei holding “the Class A License for Disposal of Industrial Wastes” with the 25% overall market share in disposal of waste liquids or the 80% of market share at Shinzhu

- A prompt intervention is requested by the governmental authority in the area where its intervention can expedite the solution of the problem.

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Scientific Industrial Zone. The suspension of its operation has been affecting a number of business entities including Japanese affiliates operating in this Zone.

(Actions) - After the case of the illegal disposal of organic solvent of July 2000 in which the life sentence (based on the law introduced in 1999) was handed down, penalties on illegal disposal has been tightened up in that the consignor can also be penalized.

A: Follow-up management after illegal dumping of waste solvent by Shengli Company: 1.After the incident involving illegal dumping of waste solvent by Shengli, (the solvent was generated by Eternal Chemical Co. Ltd.), Shengli Company’s treatment license was suspended. The competent authority allowed the waste to be temporarily stored onsite if treatment capacity was insufficient to treat all the waste. 2.To more effectively manage industrial waste treatment after this incident, Chinese Taipei’s EPA and other relevant government agencies jointly initiated the “Industrial Waste Control and Treatment Program.” This program ensures treatment of industrial waste by reinforcing source management of waste and controlling waste flow via mandatory reporting, performing inspection and auditing, constructing waste disposal and treatment facilities, surveying waste baseline information, amending regulations when necessary, subsidizing investments in pollution prevention equipment or facilities, and carrying out remediation of polluted sites. As for division of labor, Chinese Taipei’s EPA plans, coordinates and sees to the treatment of general industrial waste. The Industrial Development Bureau, under the Ministry of Economic Affairs, plans, coordinates and sees to the construction of hazardous industrial waste treatment facilities. Those facilities are the industrial waste special treatment centers located in northern, central, and southern regions. 3.The Industrial Development Bureau, under the Ministry of Economic Affairs, has drafted the Principles of Waste Solvent Used as Auxiliary Fuel in Cement Kilns. Chinese Taipei’s EPA permits the use of waste solvent as an auxiliary fuel in cement production according to the Waste Disposal Act. This solves the problem of treating waste solvent. 4.The Ministry of Economic Affairs announced that waste solvent is a reusable resource; if the properties of a waste solvent fit the regulatory requirements, then it can be used as auxiliary fuel for cement production. 5.Thus the original problem of insufficient treatment capacity for waste solvent has been successfully resolved. 6.According to Article 30 of the Waste Disposal Act, waste generators can dispose of their waste through commissioned public or private owned waste disposal facilities. If the entrusted facility is permitted by the competent authority and the facility submits the proper disposal records after disposal, then the waste generator will not be held liable

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for ameliorating environmental damage resulting from improper disposal of waste. Q10.5 (ABAC)

Category Issue Issue Detail Request Environmental pollution and waste disposal

Change in emission limit

- It is rumored that the emissions requirements in Chinese Taipei now based on USTIER I (US94) can be tightened up shortly, by shifting to USTIER II or Euro 4 after the year 2004. If this is true, manufacturers of motor vehicles will be burdened with a massive investment to achieve compatibility in respect of upgrading the engine performance and the man-hours required for development. If the worst happens, it is highly likely that the motor vehicles now sold in Chinese Taipei must be phased out. (Trend) The new emission gas regulations for diesel engine powered compact cars are scheduled to be implemented on October 1, 2006, ahead of the original schedule. The diesel engine powered compact car models that obtained the approval for the emission gas standards by the Environmental Protection Bureau are allowed to be manufactured or imported until December 31, 2006, but those models not approved are required to comply with the new emission gas standards.

- It is requested that Chinese Taipei gives a prior notification of its intended changes in regulations well in advance with a sufficient transitional period to enable manufacturers to prepare for the required changes.

A: 1.The Chinese Taipei EPA revised the diesel vehicle emission standards in Article Five

of the Vehicle Air Pollutant Emission Standards. The standards were originally set to take effect on 1 January 2007, but in the latest version, it will be amended on 1 October 2006. The Chinese Taipei EPA held two conferences with relevant vehicle manufacturers on 26 August 2005 and on 11 October 2005, and also a public hearing on 6 December 2005. The participating parties had no objection and accepted the revised standards. Vehicle manufactures have enough time to make the necessary adjustments.

2.According to Section 2.9.2 of the WTO Agreement on Technical Barriers to Trade

(TBT), the Chinese Taipei EPA submitted the draft to the Secretariat of WTO through the Bureau of Standard, Metrology and Inspection, MOEA on February 22, 2006. The WTO Secretariat delivered the document “G/TBT/TPKM” to notify its members on March 6, 2006. The end of the 60 day period for members to make comments was on May 31, 2006, and we did not receive any comments. This also showed that vehicle manufactures have enough time to make the necessary adjustments.

Q10.6 (ABAC)

Category Issue Issue Detail

Environmental pollution and waste disposal

Restrictions on handling export , etc. of wastes

・ Since April 2001, handling export, etc. of industrial wastes has been restricted. Since Basel Convention does not apply in Chinese Taipei, no export license is issued for hydroxide-copper sludge. (Trend) On January 5, 2005, the export and import regulations for industrial wastes were revised, and the export and import approval procedures are clarified

A: According to the Regulations Governing the Import, Export, Transit and Transshipment of Waste, drafted in compliance with the spirit of the Basel Convention, waste for export

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shall be properly treated (for instance, if waste is treated as recyclable or reusable resources, its hazardous or toxic property shall be effectively transformed as non-hazardous or nontoxic). To obtain approval for export of waste, the importing competent authority must issue an import permit. The types of waste for export are mainly recyclable and reusable wastes, or waste for which we have no adequate treatment facilities. This includes mixed metal scrap, electroplating sludge, waste printed circuit boards and their peripheral products, wastes containing polychlorinated biphenyl, and wastes containing mercury. Chinese Taiepi signs agreements with members of the Basel Convention according to the Convention Charter. On 1 December 2005, we signed an agreement with Japan on transboundary movement of waste. This agreement became effective on 1 January 2006. All transboundary movement of waste between Chinese Taipei and Japan will be carried out according to the Basel Convention. Regular information exchange involving regulations or import/export statistics shall be done through the Far Eastern Association, Japan and other associations stipulated by both Japan and Chinese Taipei. To effectively manage the import/export of waste and adhere to the Basel Convention, we promulgated the Regulations Governing Permits for Import and Export of Hazardous Waste on January 29, 1993; later it was revised as the Regulations Governing the Import, Export, Transit and Transshipment of Waste on 2 January 2003. In this revision, we included general industrial waste and general waste listed under international conventions as waste items deemed for import/export management. On 25 January 2005, we amended the regulation again to facilitate the export/import of recyclable resources not yet listed by the Basel Convention and other economies. Q10.7 (ABAC)

Category Issue Issue Detail Environmental pollution and waste disposal

Lack of transparency in the environment related legislation

・ An increasing awareness of environmental issues has prompted review of new energy bills, among others, without, however, indication of any contents thereof, due to political reasons, etc. Existing industries are concerned that they could be negatively affected depending upon their contents, with possible new restrictions.

A: The question is not clear. Please provide more specific information. Q10.8 (ABAC)

Category Issue Issue Detail Inefficient administrative procedures, regimes and practices

Delays in collecting accounts receivable

- Certain customers do not honor their payment obligations in accordance with the contract.

A: These are individual cases not regulated by the government sector. We would suggest that the parties concerned solve the problems through private channels, dispute resolution, or civil law. Q10.9 (ABAC)

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Category Issue Issue Detail Request Relevant Laws

Inefficient administrative procedures, regimes and practices

Delays in liquidation procedure

- It takes much time (more than 3 years) to obtain the court approval in liquidating a company (because it takes much time to get the corporate tax finalized for the liquidating company.)

- It is requested that the authority shortens the time required for company liquidation.

- The Tax Law

A: According to the provisions of Article 75 and Article 80 of the Income Tax Act,

any income earned from liquidation during the period of liquidation shall be reported to the local collection authority-in-charge within thirty days from the date of completion of liquidation, and the taxpayers shall make tax payment by themselves before filing their tax return. The collection authority shall, after receipt of the income tax return, appoint a person to make investigation thereof and determine the amount of income and tax payable. The assessment of liquidation cases is usually completed within due time with certain exceptions for complicated cases.

In the case of there being a query as to the length of time which may be required

for the finalization as the corporation tax payable by a company undergoing liquidation, we will request provision of the details of the case in order to provide a response in the matter. Q10.10 (ABAC)

Category Issue Issue Detail Inefficient administrative procedures, regimes and practices

Agreements and declaration documents in Chinese.

Translation is necessary, because almost all the agreements and declaration documents are written in Chinese. The accuracy of translations needs to be checked every time, which increases the cost of lawyer’s fees.

A: It would be impossible to provide English versions for all government agreements and announcements. However, important laws, regulations, and announcements are translated into English and notified to the WTO, according to WTO regulations. Q10.11 (ABAC)

Category Issue Issue Detail Request Indigested legislation, abrupt changes

Sudden changes in legislative provisions

- Legislative amendments are enforced on the date of their publication without allowing for a transitional period. This practice presents much difficulty for business entities operating in Chinese Taipei.

- It is requested that 6 months notice at minimum is requested when effecting such changes.

- It is not uncommon that governmental policies change twice and thrice, making it difficult for business entities to observe the new policies for lack of preparation in advance. For example, －The change of the Labor Standard Law decided in the congress on December 31 was enforced on the following day, on January 1.

(Actions) - It is hoped that the Chinese Taipei’s accession to WTO will enhance transparency in the governmental procedure. - The government revises the laws and regulations that are not certain nor

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complete when necessary. Many administrative agencies establish websites or designated telephone numbers to accept filing of complaints concerning administrative procedures, and are supposed to respond to them within one week. In addition, a transition period of 3,090 days after promulgation of new laws is stipulated, and it is supposed to be possible to submit an opinion within 3,090 days after promulgation, but such transition period and others are determined by the authorities concerned, and are different depending on the matter.

A: The setting or revision to laws and regulations in Chinese Taipei are the responsibility of the various responsible agencies. As for the process of setting or revising laws and regulations, whether or not there is a transitional period before the law goes into effect depends on whether there is a corresponding regulation on transitional period for that specific agency. In practice, however, many of the laws and regulations in Chinese Taipei contain “sunrise” or “sunset” provisions within them (i.e., provisions specifying transitional periods) in order to prevent conflicts arising due to such transitions. The enactment of laws must accord with socioeconomic changes. When a law is approved and promulgated, it goes into effect three days later. As for the day when it is implemented, it can be stipulated in the content of the law itself. Q10.12 (ABAC)

Category Issue Issue Detail Indigested legislation, abrupt changes

Arbitrary application of regulations

- More often than not while strict legislative rules do exist, their implementations are lax. Relatively speaking, business entities observing rules end up by becoming losers. Examples: －Environmental regulations

－Protection/Licensing/Approvals of intellectual property rights

A: Chinese Taipei carries out its governmental responsibilities as specified in its environmental regulations and does its utmost in asking local governments to enforce the environmental regulations consistently. Please provide further detailed information on this issue so that we can provide a specific response. Chapter 11: Implementation of WTO Obligation (including Rules of Origin) Q11.1 (Canada) In the first table entitled "Chinese Taipei's Approach to Implementation of WTO Obligations in 2006", Chinese Taipei has listed three obligations which have been promulgated since its last IAP review. Could you please clarify whether or not there are any outstanding obligations which need to be implemented and, if so, what they are? Also, while a description of the services sectors in which Chinese Taipei has taken commitments during its accession is useful, it has not indicated the current status of these obligations. Any additional detail in this regard would be useful. A: There was some mistakes in the chart and we have corrected it.

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Chapter 12: Dispute Mediation Q12.1 (ABAC)

Category Issue Issue Details Indigested legislation, abrupt changes

Difficulty in third country arbitration

Chinese Taipei does not have diplomatic relations with many countries, so it is not in the position to seek an arbitration in such third economies as Singapore, that are usually used to solve disputes in international agreements. As a result, the place of arbitration is limited to the U.S.; Hong Kong, China; and others.

A: Despite Chinese Taipei’s lack of diplomatic relations with many countries, arbitration is not limited to the U.S. and Hong Kong, China. Arbitration issued in any third economy is legally effective, as long as a concerned party applies to have it recognized by a Chinese Taipei court through the required official process. Once the court recognizes it, it becomes legally effective in Chinese Taipei. Chapter 13: Mobility of Business People Q13.1 (ABAC) Category Issue Issue Detail Request Employment Restrictions

and delays in issuance of to Japanese

· To obtain a resident permit for officers and directors of a offshore (Japanese) funded entity in Chinese Taipei, various conditions must be satisfied, including without limitation, the paid-in capital as it relates to offshore capital requirement (a single resident permit is issued if the threshold of 200,000 in US dollars is exceeded, up to a maximum of 5 resident permits, with one additional permit issued each time additional invested amount exceeds 500,000 in US dollars), the sales amount requirement in the most recent year or in average of three years, and the requirement for average import/export business. If such entity desires to increase its Japanese staff, various additional requirements must be satisfied, such as expansion in export performance, increase in revenue, etc.. It takes a long time to obtain or renew resident permits for Japanese expatriates.

- It is requested that Chinese Taipei repeals the restrictive conditions for issuing resident permits for Japanese expatriates and simplifies the procedure.

(Improvement) - Since February 6, 2001, the extension of the resident permit period for non-Chinese

Taipei professional employees (engineers) has been extended from one year to two years.

· Since May 1, 2003, the period of stay without resident permit has been extended to 30 days.

A: According to existing regulations, if a non-Chinese Taipei person intends to apply for a resident permit by reason of investment, the applicant’s employer should apply for an investment permit for the applicant first from Investment Commission, Ministry of Economic Affairs. Once approved, the applicant can then submit resident permit applications to our offshore representative offices or the Bureau of Consular Affairs. In short, the issuance of a resident permit by reason of investment is mainly based on having an approved investment permit. Therefore, interested parties are advised to contact the Investment Commission, Ministry of Economic Affairs for further

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information. Offshore investors or representatives of offshore corporations who intend to stay more than 6 months in Chinese Taipei for business purposes may, in line with the following requirements, apply for single-entry resident permits with a certificate letter issued by Investment Commission, MOEA: (I) If an offshore investment application has been approved and the paid-in capital

exceeding US$200,000 has been invested, one resident permit can be applied for. (II) If the paid-in capital exceeding US$200,000 has been invested, one resident permit

can be applied for every additional US$500,000 increment of investment, up to a maximum of four persons.

The above requirements are applicable to every offshore enterprise, regardless of economy of origin, and sales or export performance. Q13.2 (ABAC) Category Issue Issue Detail Relevant Law Employment Restrictions on

employment of alien workers and the accompanying procedure

· In the manufacturing sector, employment of offshore personnel is approved only to such investments as are approved by the Industrial Development Bureau, Ministry of Economic Affairs. The upper limit in the number of resident permit issued is established commensurate with the amount invested.

Employment Service Act Law on offshore engineering personnel at public and private enterprises and offshore business authorization Law on review of applications by non-Chinese Taipei persons hired by public and private enterprises

(Improvement) - By amendment of the Employment Service Act, the effective period of alien worker’s permit was doubled from 3 years to 6 years, albeit with certain conditions. In addition, Vietnamese workers are added to the list of alien workers permitted to work in Chinese Taipei, namely, Thai, the Philippines, Indonesia and Malaysia.

- In February 2003, Council of Labour Affairs reviewed the former basis of evaluation by the amount of investment, and by the industrial sector, and replaced it with the number of employment opportunities created and the degree of economic contribution achieved. It also disclosed its intention of liberalizing employment of offshore workers by manufacturing entities with less than 200 million yuan of investment.

A: The Council of Labor Affairs (CLA) agreed to allow manufacturers using special manufacturing processes to apply for 20,000 offshore workers on January 1st, 2006. At present, we are doing a feasibility study on whether we should allow factories that are operating in specific working hours to apply for offshore workers in order to alleviate the problem of lack of night-shift laborers. The CLA will find the best arrangement balancing the objectives of protecting domestic workers and fostering industrial development. Q13.3 (ABAC)

Category Issue Issue Detail Employment Restrictions on

issuing entry permits for people from PRC

People from the PRC who are engaged in manufacturing are prohibited entry into Chinese Taipei. This company is placing orders to Chinese Taipei companies for knowledge-intensive products, including devices, and its quality and delivery timing are important. If PRC managerial staff are allowed entry permits to Chinese Taipei, proper education can be

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given to them in Chinese Taipei for manufacturing and delivery of products. This will result in the improvement of the competitiveness of the HQ products of Chinese Taipei companies.

A: According to Article 3 of “Regulations Governing Permission of People from the Mainland Area to Come to Chinese Taipei to Engage in Commercial Activity”, promulgated on February 1, 2005, people from the mainland China area may apply to come to Chinese Taipei to engage in commercial activities provided that they are the persons in charge of their respective businesses, managers, professionals, or technicians. Most such applications may be processed within 5 to 10 days. Chinese Taipei has designated the Investment Commission of the Ministry of Economic Affairs to serve as a “single window” in this regard, one that can provide relevant assistance in hope that relevant incidents may be handled speedily. Q13.4 (Australia) Australia notes the measures taken by Chinese Taipei to update information regarding policies and procedures in respect of short-term travel and business temporary residency on the APEC Business Travel Handbook and on other official websites, including in English. A: Chinese Taipei appreciates the positive comments made by Australia on our efforts and measures to enhance smooth business mobility. Chinese Taipei will continue to facilitate business mobility among APEC economies and engage in APEC activities. Q13.5 (Australia) Australia appreciates the efforts undertaken by Chinese Taipei to streamline temporary business entry and to achieve the 14 day service standard in respect of pre clearance requests under the APEC Business Travel Card scheme. A: Chinese Taipei appreciates the positive comments made by Australia on our efforts and measures to enhance smooth business mobility. Chinese Taipei will continue to facilitate business mobility among APEC economies and engage in APEC activities. Q13.6 (Australia) Australia requests further information on short term business entry permit application procedures for those business people who are not from a “permit-exempt” or “reciprocal permit agreement” economy. For example:

− Can these people apply for their short stay business visitor permit online? − Is Chinese Taipei reviewing procedures to ensure that these business people

are issued multiple entry permits which are valid for at least three years, in accordance with the BMG’s collective action plan?

A: 1. If offshore business visitors have any queries about information of permit

applications, e.g. required documents, method of lodgment, processing time and application fee on short-term entry to Chinese Taipei, they may either browse the Travel Handbook of the APEC BMG website or the website of Bureau of Consular Affairs (www.boca.gov.tw) or contact our offshore representative offices.

2. Chinese Taipei currently does not accept online applications because of the need to

verify the original application documents and other processing considerations. 3.Currently, business people who visit Chinese Taipei frequently may be granted

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multiple-entry visitor permits with validity of 1 year. Persons from another economy which has a reciprocal entry permit agreement may be issued multiple-entry visitor permits with validity of 5 years. We will review the regulations on visitor permits in due time. Q13.7 (Australia) Australia notes Chinese Taipei’s efforts to streamline temporary residence processing arrangements and applauds the current 10-17 day entry permit and working permit processing standard for the intra-corporate transfer of senior managers, general managers, and experts. A: Chinese Taipei appreciates the positive comments made by Australia on our efforts and measures to enhance smooth business mobility. Chinese Taipei will continue to facilitate business mobility among APEC economies and engage in APEC activities. Q13.8 (Australia) Australia acknowledges Chinese Taipei’s progress on issuance of machine-readable travel documents (MRTDs), and notes that only a small percentage of previously overseas issued non-MRTDs are still in circulation. A: Chinese Taipei appreciates the positive comments made by Australia on our efforts and measures to enhance smooth business mobility. Chinese Taipei will continue to facilitate business mobility among APEC economies and engage in APEC activities. Q13.9 (Australia) Australia notes Chinese Taipei’s willingness to develop its own training programs in document examination and professional service management in line with APEC policy and appreciates Chinese Taipei’s active participation in various TILF funded Business Mobility workshops including the May 2006 seminar on e-passports and the application of biometric technology at immigration points. A: Chinese Taipei appreciates the positive comments made by Australia on our efforts and measures to enhance smooth business mobility. Chinese Taipei will continue to facilitate business mobility among APEC economies and engage in APEC activities. Q13.10 (Australia) Australia welcomes Chinese Taipei’s stated intention to send officials to attend future TILF-funded capacity building workshops. A: Chinese Taipei appreciates the positive comments made by Australia on our efforts and measures to enhance smooth business mobility. Chinese Taipei will continue to facilitate business mobility among APEC economies and engage in APEC activities. Q13.11 (Australia) Australia requests information on progress made in implementing agreed BMG standards in respect of:

- travel document examination - legal infrastructure; and - professional service.

A: Chinese Taipei has always been concerned about issues of facilitation regarding the issuance of entry permits to non-Chinese Taipei persons coming to Chinese Taipei, travel document inspection, laws on immigration and emigration, immigration and

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emigration services, and so on. In the future, we will continue to make further improvements in this area. In addition, we will continue to pay close attention to the issues of altering travel documents and dealing with persons suspected of terrorist activity. Chapter 14: Miscellaneous Questions Q14.1 (ABAC)

Issue Issue Detail Request Smmuggling ・Smuggled goods are flooding the market at low prices,

disrupting business activities of sales companies. ・The market is flooded with smuggled goods at low prices, without, as a matter of course, obtaining the Chinese Taipei’s safety approvals. In contrast, goods imported through regular channels must absorb much expense to obtain safety approvals, to set up a service network, and to develop localized activities.

・It is requested that the authority tightens its cracking down on smuggled goods. ・It is requested that Chinese Taipei government intensifies its effort to crack down on smuggled imports.

A: In order to maintain a safe and fair trade environment, Chinese Taipei’s Customs continues in its work to intensify its fight against smuggling. Q14.2 (ABAC)

Issue Issue Detail Holidays - Official holidays are not printed on calendars.

A: Please visit the following websites for information on official holidays; information on the years 2006 and 2007 may be found at the following specific pages: http://www.cpa.gov.tw/cpa2004/egfix/EEW60001.html http://www.cpa.gov.tw/cpa2004/egfix/EEW70001.html nformation on this problem. Q14.3 (ABAC)

Issue Issue Detail Request Change in policies due to the change of administration

- Because of the change of administration of the Conservative Party, the land property lease negotiation has been brought back to square one. The positive stance to tackle the environmental issues has been fading for want of the long-term vision of the state policy. This makes it difficult for business entities to set up their constructive plans.

- It is requested that Chinese Taipei prepares legislative provisions concerning its long-term city plan, and environmental improvement plan.

A: Chinese Taipei constantly reviews and updates its urban planning and development laws and regulations to meet physical needs. It has also drawn up the following plans: 1. It has launched the Town and Country Renaissance Project; 2.It is promoting urban regeneration and has established a new, comprehensive urban

regeneration system;

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3. It is implementing zoning control in all urban areas. In addition, the relevant laws and regulations of urban planning may be searched on the website: http://www.cpami.gov.tw . Q14.4 (ABAC)

Issue Issue Detail Restrictions - The venue for arbitrations in a civil case involving Chinese Taipei is limited only to a few

economies such as the U.S. and Hong Kong, China. Out of consideration for the special relationship of Chinese Taipei with PRC, a number of countries do not maintain a diplomatic relationship with Chinese Taipei. Thus, arbitration in third economies such as Singapore (used as a means to settle international contractual disputes) has no legal effect.

A: According to Article 47 of Chinese Taipei’s “Arbitration Law,” the arbitral award issued in third economy (an offshore arbitral award), after an application for recognition has been granted by Chinese Taipei court, shall be enforceable. This also applies to arbitral awards issued in PRC. Therefore, the problem of arbitral awards issued in third economies not having any effect in Chinese Taipei will not occur. Q14.5 (ABAC)

Issue Issue Detail Request Mandatory FOB contract

･Price negotiations in effect takes place at the local company (head office), while contract is concluded with a Japanese subsidiary of the customer. However, in lieu of ex-godown , prices must be based on FOB.

･It is requested that prices on ex-gown are permitted when the sales are made to a domestic subsidiary company.

A: This is an individual case not regulated by the government sector. We would suggest that they solve the problems through private channels, dispute mediation, or civil law. Q14.6 (ABAC)

Issue Issue Detail Request Refusal to conclude maintenance agreement

･Local customers refuse to conclude maintenance agreement. As a result, maintenance service at cost upon expiry of one-year free warranty period (after technical acceptance of delivery).cannot be collected from customers.

･It is requested that the maintenance agreement is concluded so that such service is afforded at cost upon expiry of the free warranty period.

A: These are individual cases not regulated by the government sector. We would suggest that the parties concerned solve the problems through private channels, dispute resolution, or civil law. Q14.7 (ABAC)

Issue Issue Detail Request Payment Delay There are cases of slow payment, complaining about

various problems after completion of project. Other companies had experienced a number of payment delays of about one year. Several companies provide such information, thus the collection of sales proceeds has an uncertain factor.

It is requested to establish a mutual assistance system for payment delays.

A:

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These are individual cases not regulated by the government sector. We would suggest that the parties concerned solve the problems through private channels, dispute resolution, or civil law.

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Appendix 4: APEC 2007 IAP Peer Review--Chinese Taipei Korean and Philippine Experts’ In-Economy Visitation

List of Participants 2006.9.27

Chapter

Agency Department Attendant Name Position

Host Bureau of Foreign Trade, Ministry of Economic Affairs

APEC Affairs Task Force Mr. Jien-Ping WANG Executive Secretary

Mr. Shang-Horn LIN Deputy Executive Secretary

Ms. Duen-Yi SHIH Commercial Secretary September 25 (Monday), 2006 0 Council for Economic

Planning & Development Overall Planning Department Ms. Ching-Ting CHUNG Executive Officer

Mr. Simon S.M. HSU Officer Council for Economic

Planning and Development Center for Economic Deregulation and Innovation (CEDI Services)

Ms. Jennifer Fang-Yu HUANG Section Chief

Mr. Tomas Hsi-Hsien CHANG Officer Department of Investment

Services, Ministry of Economic Affairs

Mr. Hung-Liang LEE Section chief

Investment Commission, Mr. Andy S. T. TENG First Commercial

174

Chapter

Agency Department Attendant Name Position

Ministry of Economic Affairs Secretary Ms. Sylvia H. H. LIN Researcher Financial Supervisory

Commission Banking Bureau Mr. Robert JAHN Section chief

Banking Bureau Ms. Wyn-ling GOU Section chief Securities and Futures Bureau Ms. Sophie CHOU Section chief Securities and Futures Bureau Mr. Morgan CHEN Section chief Insurance Bureau Ms. Yu-ching CHIANG Section chief Department of International

Affairs Mr. Hsi-Ho HUANG Section chief

Department of International Affairs

Ms. Shan-shan MA Officer

Council of Agriculture International Organization Section, Department of International Affairs

Ms. Dong-Chong HSIOU Section Chief

Mr. Lien-Sheng LEE Junior Specialist Agriculture And Food AgencyMs. Su-Jen CHEN Section Chief Mr. Chuan-Chi LIN Spcialist Industrial Development

Bureau, Ministry of Economic Affairs

Industrial Policy Division Ms. Tiffany P.L CHEN Section Chief

Bureau of Foreign Trade, Ministry of Economic Affairs

FTA Task Force Ms. Pei-Rou KAN Officer

175

Chapter

Agency Department Attendant Name Position

10 Council for Economic Planning and Development

Center for Economic Deregulation and Innovation (CEDI Services)

Ms. Jennifer Fang-Yu HUANG Section Chief

Mr. Tomas Hsi-Hsien CHANG Officer Council for Economic

Planning & Development Overall Planning Department Ms. Ching-Ting CHUNG Executive Officer

Mr. Simon S.M. HSU Officer 2 Council of Agriculture International Organization

Section, Department of International Affairs

Ms. Dong-Chong HSIOU Section Chief

Mr. Lien-Sheng LEE Junior Specialist Bureau of Animal and Plant

Health Inspection and Quarantine, Council of Agriculture

Planning Division Ms. Woan-Ru LEE Specialist

Directorate General of Customs, Ministry of Finance

Department of Collection & Procedures

Mr. Tzu-Chu CHEN Deputy Director

Mr. Jerry Y.C.LIEN Section Chief Ms. Judy Yo-Ming WU Auditor Department of Information

Management Mr. Mu-Jung CHEN Section Chief

Department of Valuation Ms. Pao-Chen MAO

Section Chief

176

Chapter

Agency Department Attendant Name Position

Department of Investigation Ms. Pei-Hsuan KUO Secretary Ministry of Finance Department of Custom

Administration Mr. Buhu-Shin BAU Section Chief

Industrial Development Bureau, Ministry of Economic Affairs

Industrial Policy Division Ms. Tiffany P.L CHEN Section Chief

Bureau of Foreign Trade, Ministry of Economic Affairs

Export/import Administration Division

Mr. Shao-Ching SHIH Second Secretary

Ms. Shu-Hua CHAN Secretary Mr. Hou-Ding AN Specialist 1 Ministry of Finance Department of Custom

Administration Mr. Buhu-Shin BAU Section Chief

Ms. Su-Chuan CHANG Auditor Directorate General of

Customs, Ministry of FinanceDepartment of Collection & Procedures

Mr. Tzu-Chu CHEN Deputy Director

Mr. Jerry Y.C.LIEN Section Chief Ms. Judy Yo-Ming WU Auditor Department of Information

Management Mr. Mu-Jung CHEN Section Chief

Department of Valuation Ms. Pao-Chen MAO

Section Chief

Department of Investigation Ms. Pei-Hsuan KUO Secretary Council of Agriculture International Organization Ms. Dong-Chong HSIOU Section Chief

177

Chapter

Agency Department Attendant Name Position

Section, Department of International Affairs

Mr. Lien-Sheng LEE Junior Specialist Industrial Development

Bureau, Ministry of Economic Affairs

Industrial Policy Division Ms. Tiffany P.L CHEN Section Chief

Bureau of Foreign Trade, Ministry of Economic Affairs

Multilateral Trade Affairs Division

Mr. Hsien-Chao TSENG Section Chief

6 Directorate General of Customs, Ministry of Finance

Department of Collection & Procedures

Mr. Tzu-Chu CHEN Deputy Director

Mr. Jerry Y.C.LIEN Section Chief Ms. Judy Yo-Ming WU Auditor Department of Information

Management Mr. Mu-Jung CHEN Section Chief

Department of Valuation Ms. Pao-Chen MAO

Section Chief

Department of Investigation Ms. Pei-Hsuan KUO Secretary Ministry of Finance Department of Custom

Administration Mr. Buhu-Shin BAU Section Chief

Department of Health Bureau of Pharmaceutical Affairs

Ms. Yi-jiun HUANG Senior Researcher

Mr. Fu-hwa CHANG Staff Officer Bureau of Foeign Trade, e-Commerce Task Force Ms. hui-chu CHANG Project Manager

178

Chapter

Agency Department Attendant Name Position

Ministry of Economic AffairsSeptember 26 (Tuesday), 2006 3 Bureau of Foreign Trade,

Ministry of Economic AffairsMultilateral Trade Affairs Division

Ms. Pauline LIN Section Chief

Financial Supervisory Commission

Banking Bureau Mr. Robert JAHN Section chief

Securities and Futures Bureau Ms. Sophie CHOU Section chief Securities and Futures Bureau Mr. Morgan CHEN Section chief Insurance Bureau Ms. Yu-ching CHIANG Section chief Department of International

Affairs Mr. Hsi-Ho HUANG 長 Section chief

Department of International Affairs

Ms. Shan-shan MA Officer

NCC Mr. Bruce Lee Section Chief Mr. Jiann-Jong LO Section Chief Mr. Andy J.A. CHEN Section Chief Mr. Ming-Chang WU Executive Officer Ministry of Education Bureau of International

Cultural and Educational Relationas

Ms. Tracy LANG Section Chief

Department of Social Education

Ms. Tzuhuei LIN

Ministry of Transportation Department of Railways and

179

Chapter

Agency Department Attendant Name Position

And Communications Highways Ministry of Transportation

And Communications Directorate General of Highways

Mr. Chen-Ming TSAI Senior Officer

Ministry of Transportation And Communications

Department of Posts And Telecommunications

Ms. Ying-Yuan XIE Senior Officer

Ministry of Transportation And Communications

Chunghwa Post Co., Ltd. Ms. Hui-Chu CHEN Section Chief

Ministry of Transportation And Communications

Department of Navigation And Aviation

Mr. Moses LIN Senior Officer

13 Ministry of Foreign Affairs Bureau Consular Affairs Mr. Chung-Hsing CHOU Section Chief Council of Labor Affairs Department of Planning Ms. Ching-Ya YANG Section Chief Ms. Shuan-Chen CHOU Executive Officer 4 Department of Investment

Services, Ministry of Economic Affairs

Mr. Heinz L. T. CHIEN Senior Executive Officer

Mr. Hung-Liang LEE Section Chief Ministry of the Interior Department of Land

Administration Ms. Yen-Yun LIN Researcher

Investment Commission, Ministry of Economic Affairs

Mr. Andy S. T. TENG First Commercial Secretary

Ms. Sylvia H. H. LIN Researcher Ministry of Finance Executive Officer Taxation

Agency Ms. Shu-chien CHEN

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Chapter

Agency Department Attendant Name Position

5 Bureau of Standards, Metrology and Inspection

Ms. Chun-Yi TU Section Chief

Ms. Amy TSAI Officer Environmental Protection

Administration Office of Science and Technology

Mr. Y.F. LIANG, Dr. Advisor

Department of Health

Bureau of Food Safety

Mr. Hsin-Tang LIN Senior Researcher

September 27 (Wednesday), 2006 7 Intellectual Property Office,

Ministry of Economic AffairsInternational Affairs and Planning Division

Mr. Bennet CHEN Director

Legal Affairs Office Mr. Shih-Wei CHUNG Director International Affairs and

Planning Division Ms. Susan HU Section Chief

Copyright Division Ms. Hsiu-Hui WANG Section Chief Trademark Division Ms. Joanne CHANG Trademark Examiner Copyright Division Ms. Bey-ru SHIAU Officer International Affairs and

Planning Division Ms. Shuying LIN Staff

8 Fair Trade Commission Mr. Tzu-Shun HU Senior Specialist Mr. Chun-Ting CHEN Inspector Ms. Hsin-Yi CHANG Officer Council for Economic

Planning and Development Center for Economic Deregulation and Innovation

Ms. Jennifer Fang-Yu HUANG Section Chief

181

Chapter

Agency Department Attendant Name Position

(CEDI Services) Mr. Tomas Hsi-Hsien CHANG Officer 9 Public Construction

Commission Department of Planning

Mr. Li-Chi YANG Director

Mr. Tsu-Chi YEH Section Chief Mr. Chen-Ping TSAI Desk Officer Ms. Wei-Hsu HUANG Assistant

Researcher 0 Chung-Hwa Institution for

Economic Research International Division Mr. Da-Nien Liu Research Fellow

Taiwan WTO Center Ms, Kristy Hsu Associate Research Fellow

0 Chinese Taipei APEC Study Center

Mr. David S. Hong President

Julius Caesar Parrñas Senior Advisor Division of International

Affairs Mr. Tzu-Chin Chu Associate Research

Fellow Division of International

Affairs Mr. Darson Chiu Associate Research

Fellow Division of International

Affairs Mr. Tsai-Lung (Honigmann) Hong

Associate Research Fellow

Division of International Affairs

Mr. Yi-Lan Chu Associate Research Fellow

182