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Reference Materials on the Signing of the Cross-Strait Customs Cooperation Agreement

• Source:Mainland Affairs Council
• Date:2012-06-14

Mainland Affairs Council, Executive Yuan
June 14, 2012

The signing of the Cross-Strait Customs Cooperation Agreement will improve the efficiency of cross-strait customs clearance, reduce the cost of doing business, combat smuggling, and increase the benefits of the Cross-Strait Economic Cooperation Framework Agreement (ECFA). ECFA follow-up agreements include those on trade in goods, trade in services and others. If the Cross-Strait Investment Protection Agreement and Customs Cooperation Agreement can be smoothly signed at the Eighth Chiang-Chen Talks, they will be the first two of these follow-up agreements to be realized. As such, they can set a good example and have a motivating effect for cross-strait talks on other ECFA follow-up agreements.

1. Background:

(1) Cross-strait economic and trade relations are rapidly developing. Mainland China is now Taiwan's largest trading partner, export market, and source of trade surplus. It is also our second-largest source of imports and the biggest destination for overseas investment. In order to resolve problems related to cross-strait customs clearance procedures and efficiency, as well as to prevent smuggling, there is a definite need to sign the Cross-Strait Customs Cooperation Agreement in reference to international customs cooperation practice and in consideration of the special requirements of cross-strait trade.

(2) The ECFA Early Harvest Program for trade in goods came into effect on January 1, 2011. As of this year (2012), tariffs have been eliminated on as high as 94.5% of the early harvest goods. In order to further facilitate progress in cross-strait trade in goods, as well as to expand the benefits of the ECFA early harvest plan and the follow-up agreement on trade in goods, the two sides are actively promoting the signing of a customs cooperation agreement according to the provisions of Article 6 in the ECFA.

2. Progress of Consultations

(1) At the seventh SEF-ARATS talks in October last year (2011), the two sides agreed to focus on ECFA follow-up consultations in the future and agreements can be signed on any issues of consensus. For example, "customs cooperation" can be listed as a priority negotiation issue. On October 26 last year, the MAC authorized the Straits Exchange Foundation (SEF) to proceed with arrangements and discussions related to this Agreement with the Mainland's Association for Relations Across the Taiwan Straits (ARATS).

(2) The competent authorities of the two sides have held talks and made good progress on operational issues related to the Agreement. They have also discussed the draft text of the Agreement line-by-line and reached consensus on major contents of the Agreement concerning customs procedures, customs cooperation, and request procedures. The two sides expect to complete discussions and confirmation on the few unresolved issues and agreement texts to finish preparations for the signing of the Agreement before the eighth SEF-ARATS talks.

3. Main Contents of the Agreement

(1) The Cross-Strait Customs Cooperation Agreement is drafted in reference to customs mutual assistance agreements signed between Taiwan and the United States, the Philippines, Israel, India and Vietnam, as well as between mainland China and other countries. It also considers the relevant customs regulations on the two sides and the circumstances of cross-strait economic and trade exchanges. Under the Agreement, the two sides will promote mutual recognition of authorized economic operators (AEOs) and the use of radio-frequency identification (RFID) technology for customs control. They will also strengthen exchanges and cooperation on customs management in bonded areas and include ATA Carnet in the fields of cooperation.

(2) The two sides will carry out exchanges and cooperation in the three major areas of customs procedures, customs cooperation, and request procedures. The Agreement stipulates that the customs procedures on the two sides should follow international norms, accord with the principle of transparency, and apply risk management in order to increase cross-strait cargo clearance efficiency, combat illicit trade, and achieve the objective of facilitating and improving the safety of cross-strait trade.

4. Benefits

(1) Helping companies resolve customs clearance problems and reduce operating costs

After the Cross-Strait Customs Cooperation Agreement is signed, the customs authorities of the two sides will be able to promptly and effectively communicate and coordinate on problems arising in the customs clearance process and take necessary measures to resolve these matters. They will also establish a contact mechanism to assist companies in resolving issues on tariff classification, customs valuation and issuance of certificates of origin, thereby helping businesses reduce operating costs.

(2) Streamlining cross-strait cargo clearance procedures and establishing a convenient customs clearance environment

After the Cross-Strait Customs Cooperation Agreement is signed, the customs authorities of the two sides will actively promote and implement mutual recognition of AEOs, apply RFID technology for customs control, strengthen exchanges and cooperation on customs management in bonded areas, and establish an environment for fast and convenient cross-strait cargo clearance.

(3) Stamping out cross-strait smuggling of illegal goods and maintaining tax revenues and border security

After the Cross-Strait Customs Cooperation Agreement is signed, the customs authorities of the two sides will carry out cooperation and engage in technical exchanges on the investigation and handling of smuggling, with an aim to eradicate the illicit trade of goods, maintain tax revenues, and safeguard border security.

(4) Expanding the benefits of the ECFA

From the aforementioned three benefits, it is apparent that the Agreement will increase the transparency and convenience of cross-strait customs clearance. This, along with the promotion of AEO mutual recognition, will effectively enhance the speed and operational efficiency of cargo clearance, help companies reduce the cost of customs clearance, improve the market competitiveness of the products, and increase the benefits of the goods in the ECFA early harvest list. Relevant benefits will be even greater after the two sides sign the agreement on trade in goods.

(5) Laying a foundation for the successful completion of ECFA follow-up negotiations

The Cross-Strait Customs Cooperation Agreement has been negotiated and will be signed in accordance with the "economic cooperation" stipulations in Article 6 of the ECFA. ECFA follow-up issues to be discussed between the two sides include four cross-strait agreements on investment protection, trade in goods, trade in services, and dispute settlement. The issues also include cooperation on customs affairs, trade promotion and facilitation, finance, e-commerce, and among SMEs. If the Cross-Strait Investment Protection Agreement and the Customs Cooperation Agreement can be signed at the Eighth Chiang-Chen Talks, the latter in particular will have positive effects in promoting cross-strait trade, trade facilitation, and the agreement on trade in goods. The signing of these agreements will lay a foundation for cross-strait negotiations on ECFA follow-up agreements and various economic cooperation affairs, as well as create a favorable environment for the two sides to promptly sign other agreements.

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