Evan Lee Salim
The Retail Committee has issued a comprehensive set of recommendations to the Taiwan government, emphasizing the need for enhanced regulatory transparency, efficient governance, and a modernized digital infrastructure to capitalize on the momentum of the U.S.-Taiwan Agreement on Reciprocal Trade (ART). While the Committee expressed appreciation for the government’s ongoing efforts to bolster public health and economic development, it stressed that improving the business climate is essential for maintaining high levels of investor confidence. These proposals, aimed at benefiting both the retail industry and Taiwanese consumers, come at a pivotal moment as Taiwan seeks to align its domestic regulations with international standards and the specific commitments made under recent bilateral trade initiatives.
Strengthening Trade Commitments and Dietary Supplement Governance
A primary focus of the Committee’s recommendations involves the fulfillment of trade-related commitments established under the ART. Following the successful conclusion of negotiations in February 2024, led by Vice Premier Cheng Li-chiun, the U.S. and Taiwan agreed to reduce tariff rates on dietary supplements to 10%. This reduction was intended to provide direct cost benefits to consumers and support the broader "Healthy Taiwan" and "888 Health Program" initiatives championed by President Lai Ching-te and the Executive Yuan. However, the Committee notes that the lack of a clear timeline and precise regulatory definitions has hindered the effective implementation of these tariff cuts.
To resolve this, the Committee urges the government to establish a clearly defined category for dietary supplements that aligns with the World Customs Organization’s (WCO) Harmonized System (HS). Without a standardized classification, the Taiwan Customs Administration faces difficulties in applying the reduced rates consistently. Providing a definitive timeline for these regulatory updates is seen as a crucial step in achieving the public health goals of the current administration while fostering a predictable environment for the dietary supplement industry.
Balancing Food Safety with Import Diversity and Pesticide Standards
The Retail Committee also highlighted the need for a more balanced approach to food safety and sustainability, particularly concerning imported crops from the United States. A point of contention remains the Maximum Residue Limit (MRL) standards for pesticides, specifically the herbicide glyphosate. In 2019, Taiwan announced MRL standards for glyphosate but subsequently removed them for certain applications. Under Taiwan’s "positive list" system, the absence of an established MRL effectively functions as a non-detective standard, which significantly restricts the import of various U.S.-produced commodities.
The Committee argues that banning products solely based on the use of specific pesticides, without a nuanced risk assessment, creates unnecessary technical barriers to trade and limits food diversity for Taiwanese consumers. To address this, the Committee recommends that the Taiwan Food and Drug Administration (TFDA) rigorously implement Article 19 of the Act Governing Food Safety and Sanitation. This would involve assigning temporary MRL standards based on risk assessments from countries with similar dietary patterns, such as Japan, when local standards have not yet been established. Re-introducing a science-based MRL for glyphosate is presented as a necessary step to prevent recurring trade interruptions and ensure a stable supply of high-quality imported food products.
Leveraging Artificial Intelligence for Administrative Efficiency
In a push for modernization, the Committee is advocating for the integration of Artificial Intelligence (AI) to streamline border inspection procedures. Currently, food importers are required to provide the exact name of manufacturing facilities. However, minor variations in company suffixes—such as "Limited" versus "Ltd." or "Corporation" versus "Corp."—often trigger administrative flags during inspections. These inconsistencies can lead to delays of a week or more as importers are forced to provide manual clarifications to the TFDA.
The Committee proposes that the TFDA utilize Large Language Models (LLMs) to automatically recognize and reconcile these common variations in company names. Furthermore, the Committee suggests a policy shift to allow the use of a company’s primary name for identification purposes when a single entity operates multiple factories within the same country, rather than requiring specific production premises for every application. Such a move would significantly reduce the administrative burden on both the government and the private sector, enhancing the overall efficiency of the food supply chain.
Harmonizing Standards for Naturally Occurring Substances and Additives
The Committee’s report also addresses the management of naturally occurring substances, such as benzoic and salicylic acids, which are often found in plants as part of their natural defense mechanisms. Current border inspections frequently rely on literature-based background values, which can lead to inconsistencies if a product’s natural chemical makeup fluctuates. The Committee recommends transitioning to a multi-evidence, science-based approach that combines manufacturing data, laboratory testing, and historical inspection data. This would ensure that review standards are harmonized with international norms and eliminate non-tariff barriers that arise from outdated or rigid protocols.
Similarly, the Committee pointed out inconsistencies in the wording and usage limits for food additives and nutrient sources, such as zinc, selenium, and magnesium. Discrepancies between the standards for "Nutritional Additives" and those for raw materials providing the same nutrients create ambiguity for manufacturers and regulators alike. The Committee calls for a unified regulatory framework to enhance clarity, protect consumer interests, and ensure that Taiwan’s food safety standards remain consistent across all categories.
Advancing Digital Governance and the Traditional Chinese Medicine Sector
The digitalization of government processes remains a top priority for the Retail Committee. While acknowledging the Ministry of Agriculture’s (MOA) progress in developing an online application system for organic product import permits, the Committee noted that many other customs-related processes still rely heavily on paper documentation. The Ministry of Digital Affairs (MODA) has been active in promoting electronic signatures, yet their application in cross-border retail remains limited.
The Committee encourages a cross-agency adoption of electronic signatures to facilitate long-term customs-clearance authorizations and self-use declarations for high-dosage dietary supplements. Moving away from the burdensome "Citizen Digital Certificate" requirement in favor of more flexible, secure digital signatures would improve the consumer experience and modernize Taiwan’s supply chain operations.
In the realm of Traditional Chinese Medicine (TCM) and "dual-use" herbal ingredients, the Committee identified significant administrative duplication despite the integration of the Customs-Port-Trade (CPT) Single Window. Redundant batch-by-batch notifications continue to plague the industry. The Committee recommends streamlining these clearance processes and updating the "medicine-food homology" list to align with global scientific trends. Failure to do so, the Committee warns, could cause Taiwan’s therapeutic food sector to lag behind regional competitors who have already modernized their regulatory frameworks for TCM.
Ensuring Transparency in Novel Ingredient Reviews and Alcohol Safety
Transparency in the review of novel food ingredients is another area identified for improvement. The current process is described as lengthy and lacking specific timelines for data assessment and advisory committee reviews. This unpredictability discourages investment and delays the market entry of innovative food technologies. The Committee suggests establishing a clear procedural roadmap with defined stages and a mechanism for applicants to provide timely clarifications during the evaluation process.
Regarding consumer safety in the alcohol sector, the Committee expressed concern over parallel importers removing original manufacturing lot codes. These codes are essential for traceability and recalls in the event of safety issues. While some argue that prohibiting the removal of these codes restricts free trade, the Committee maintains that traceability is a standard requirement in the UK, EU, and Canada. They urge the Ministry of Finance to enforce Article 32 of the Tobacco and Alcohol Administration Act (TAAA) and implement systematic inspections to ensure all products on the market remain traceable.
Modernizing Age Verification for Online Retail
One of the more forward-looking suggestions involves the use of age-verification technology to unlock restricted products, such as alcohol and tobacco, in online markets. Currently, Taiwan’s laws prohibit the online sale of these items due to concerns over minor protection. However, the Committee argues that these "analog-era" constraints are no longer necessary given the advancements in digital identity infrastructure since the establishment of MODA in 2022.
The Committee points to Japan’s model, where multi-step digital verification and in-person confirmation at delivery have successfully enabled online alcohol sales while safeguarding minors. By leveraging document authentication and AI-driven verification, the retail industry can serve as a partner in minor protection. The Committee urges the government to move away from a blanket prohibition and instead develop a licensing framework for regulated digital channels.
Removing Quarantine Barriers for Pet Food
Finally, the Committee addressed the importation of dry pet food, which is currently subject to restrictive quarantine requirements due to concerns over Avian Influenza. According to the World Organization for Animal Health (WOAH), extruded dry pet food is considered a safe commodity regardless of the avian influenza status of the exporting country. The Committee recommends that the Ministry of Agriculture fulfill its commitment to international standards by removing these unnecessary quarantine requirements, thereby avoiding unreasonable trade barriers and ensuring a steady supply of pet food products for the domestic market.
Analysis of Implications and Future Outlook
The Retail Committee’s extensive list of recommendations reflects a broader push for Taiwan to transition from a traditional regulatory mindset to one that is data-driven, digital-first, and internationally aligned. The successful implementation of these reforms would likely have several key impacts:
- Economic Growth: By reducing non-tariff barriers and streamlining customs, Taiwan can lower the cost of doing business, potentially leading to lower prices for consumers and increased variety in the retail market.
- Investment Attraction: Greater transparency in the review of novel ingredients and dietary supplements will likely encourage foreign food-tech companies to choose Taiwan as a launchpad for new products.
- Digital Leadership: Adopting AI for border inspections and electronic signatures for customs would solidify Taiwan’s reputation as a high-tech economy, moving beyond hardware manufacturing into sophisticated digital governance.
- Strengthened U.S.-Taiwan Relations: Fulfilling the spirit of the ART and the 21st-Century Trade Initiative demonstrates Taiwan’s commitment to being a reliable and modern trading partner, which is essential for future high-level trade agreements.
As the government evaluates these proposals, the focus will likely remain on balancing the speed of innovation with the necessity of public safety. However, the Committee’s message is clear: the tools for a more efficient and transparent market already exist, and the time for regulatory adaptation is now.
Siti Muinah
