Customs Tariff Schedules, also known as Tariff Nomenclatures or Tariff Rates Schedules, are a classification table of regulations and tariff rates based on which a country collects import duties. According to Article 3 of the Customs Act of Taiwan, imposition of customs duty and tariff classification of imported and exported goods shall be accorded with the Customs Import Tariff unless otherwise prescribed in this Act. The Customs Import Tariff shall be enacted and promulgated through legislative procedure.
A customs tariff schedule contains information on a detailed description of goods, tariff rates, taxation standards, etc. With the development of international trade, goods are classified in more detail, and the tariff rates are amended from time to time so as to use tariffs as a protection for domestic industries and a bargaining chip for trade negotiations.
In a customs tariff schedule, a tariff rate is one of the most important items. In the early days, our customs tariff schedule contained only single-tariff rates; that is, the same kind of goods, regardless which country or region it was imported from, was subject to the same tariff rate. From 1948 to 1950, due to our accession to the General Agreement on Tariffs and Trade (GATT), double-tariff rates were temporarily adopted, but the single-tariff rates were resumed after 1950.
As a result of Taiwan’s withdrawal from the GATT in 1950, we frequently suffered from differential treatment in trade. In addition, we had a long-term tariff concession agreement with the United States. If we maintained the single-tariff rates, that meant all the concessional treatments for items from the United States also had to be applied to goods from all the other countries or regions who were trading with us. Thus, these countries or regions benefited from the same preferential treatments as the U.S., while they did not need to provide any preferential treatment to our products necessarily, which was obviously unfair.
In September 1979, we made an amendment to our customs import tariff schedule, changing the import tariff rates to a two-columned double-tariff rate, in order to increase our trade negotiation chips.
In the two-columned customs tariff schedule adopted from 1980 to 2003, we imposed two sets of tariff rates on the same kind of product imported from countries with reciprocal treatment with us and those without, respectively. The first column was for the normal tariff rates, which were higher and applicable to imported goods from countries or regions without reciprocal treatment with us; the second column was for the reciprocal tariff rates, which were lower and applicable to imported goods from those with reciprocal treatment with us.
Aiming to expand foreign trade, our government identified the reciprocal treatment in a lenient way. As long as a country or region did not have differential or discriminatory treatments against our exported goods, the goods from that country or region were allowed to enjoy the reciprocal treatment listed in Column II. Country of origin was determined based on the place of production of the goods.
Take a fruit, such as an orange, as an example. In the two-columned customs tariff schedule, the tariff rate in the first column was 40%, and 20% in the second column, showing a difference of exactly two times. When the new version of the customs tariff schedule was promulgated in 1980, the Column II tariff rates were applicable to a total of 113 countries or regions announced by the Executive Yuan.
On New Year's Day of 2002, we became the 144th member state of the World Trade Organization (WTO) in the name of "The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu.” In order to fulfill our pledge to offer tariff-free treatment to specific products from Least Developed Countries (LDCs), and considering the increasing trend of many countries trying to conclude bilateral free trade agreements (FTA) with others, the two-columned tariff schedule seemed obviously insufficient. On December 19, 2003, a new triple-column customs tariff schedule was adopted.
In the three-columned schedule, Column I rates are those shifted from the second column of the old two-columned customs tariff schedule, applying to imported goods from member states of the WTO, countries and territories in a reciprocal relationship with our country. The rates in the newly inserted Column II apply to certain import goods from certain LDCs and those having concluded an FTA or an economic cooperation agreement (ECA) with us. The tariff rates in Column III are those shifted from the first column of the old version, applying to imported goods from countries or territories other than those included in Column I and II. Taking imported bovine horns as an example, in the three-columned customs tariff schedule, both Column I and Column II rates are duty free, while the tariff rate in Column III is 2.5%.
The evolution of our customs tariff schedule from single-column to double-column and then to triple-column demonstrated our active participation in international customs and economic and trade organizations, and our endeavor to conclude more bilateral FTAs and ECAs with other countries under the background of foreign trade development.