Although a free trade zone involving the Association of Southeast Asian Nations (ASEAN) and China went into effect Jan. 1, the competitiveness of Taiwan's textile industry will not be threatened in the short term, the Taiwan Textile Federation (TTF) said Monday.
With the formation of the "ASEAN plus One" free trade area, 94 percent of the products in the countries involved will be tariff-free. However, Taiwanese textile products, which rely heavilyn on China's market, will still be subject to tariffs until a proposed economic cooperation framework agreement (ECFA) with China can be signed.
The TTF said that although Taiwanese textile products are subject to an average tax rate of 10 percent, the quality and delivery dates of Taiwanese products are highly competitive, while there is also a stronger petrochemical industry to provide raw materials for the textile business.
Among the Southeast Asian countries, Thailand is more competitive as it has more foreign investment and factories.
Taiwanese businesses, however, also have heavy investments in Vietnam and Cambodia and the formation of the "ASEAN plus One" will not affect their shipments, the government-backed TTF said.
According to the Ministry of Economic Affairs, textile exports totaled US$9.7 billion in 2008, with US$3.4 billion going to China.
Local textile businesses paid US$350 million in tariffs to China in 2008.
China applies import tariffs on 1,173 textile products and the average tariff rate for Taiwanese textile products is 10.3 percent, according to ministry data.
If textiles, which are expected to be included on the ECFA early harvest list, are given tax-free access after the signing of the trade pact, the textile industry will benefit a lot, the TTF said.
Minister of Economic Affairs Shih Yen-shiang said last month that about 500 items will be included on the early harvest list, mostly involving the petrochemical, textile, machinery and auto parts industries.
