A set of Draft Amendments to the Foreign Trade Act aiming to augment sanction on fraudulent origin labeling, or what local media coined as “origin laundering,” was approved by the Executive Yuan (Taiwan’s highest body of executive power) on May 16, 2019. The Draft Amendments, initially proposed by the Ministry of Economic Affairs, is expected to be placed on the agenda of the autumn session 2019 of the Legislative Yuan (equivalent to a parliament in other democracies).
According to the news release published by the Executive Yuan, the Draft Amendments are designed to assure Taiwan businesses’ interests amidst the continuing turmoil in the world trade. The News Release explained:
The European Union and the United States have been imposing anti-dumping and countervailing duties or even additional tariffs on Chinese imports. It is discovered that some Mainland Chinese goods are imported to Taiwan only for the purpose of exportation to a third territory with the origin of production relabeled as Taiwan so as to circumvent said tariffs. This conduct has led to investigation by the EU and US into (even innocent) Taiwanese imports. It has affected the interests of Taiwan’s law-abiding manufacturers, and has harmed Taiwan’s overall economy as well as the world trade order. It is in this context that the Draft Amendments are now proposed.
The Draft Amendments contained the following three main points:
- Exporters or importers shall not apply for or use trade licenses or supporting documents in a fraudulent manner.
- Whistleblowers reporting “origin laundering” conduct will be rewarded and protected by the relevant agencies.
- The upper limits of relevant fines will be raised. For instance, businesses that illegally export strategic high-tech goods to regulated areas shall be punishable with a fine up to NT$3 million (instead of up to NT$1.5 million under the current law) and/or other non-pecuniary penalties.