Lina Hope
The Retail Committee has formally expressed its appreciation for the Taiwan government’s persistent efforts to bolster public health and stimulate economic development, while simultaneously issuing a comprehensive set of recommendations aimed at refining the nation’s business climate. Following the momentum generated by the Agreement on Reciprocal Trade (ART) between the United States and Taiwan, the Committee is calling for a strategic shift toward more efficient governance, heightened regulatory transparency, and a robust embrace of digitalization. These proposals, the Committee asserts, are essential for fostering consumer confidence and ensuring that the Taiwan market remains a competitive and attractive destination for international retail investment.
The U.S.-Taiwan Trade Context and the ART Framework
The recent recommendations emerge at a pivotal moment in U.S.-Taiwan economic relations. Since the launch of the U.S.-Taiwan Initiative on 21st-Century Trade in June 2022, both nations have worked toward streamlining customs procedures, improving regulatory practices, and combating corruption. The first agreement under this initiative, signed in June 2023, laid the groundwork for deeper economic integration. The subsequent Agreement on Reciprocal Trade (ART), which saw significant progress in early 2024, specifically targeted tariff reductions and trade facilitation measures.
The Retail Committee’s current advocacy focuses on the practical implementation of these high-level agreements. With Taiwan serving as the United States’ eighth-largest trading partner as of 2023, the stakes for regulatory alignment are high. The Committee emphasizes that for the benefits of the ART to reach the average consumer, the Taiwan government must move beyond broad policy statements and address specific technical barriers that currently hinder the flow of goods.
Fulfilling Commitments: Dietary Supplements and Tariff Reductions
A primary focus of the Committee’s proposal is the dietary supplement industry, which is viewed as a cornerstone of President Lai Ching-te’s "Healthy Taiwan" and "888 Health Program" initiatives. These public health programs aim to reduce the prevalence of chronic diseases and improve the overall well-being of the citizenry. The Committee notes that dietary supplements play a proactive role in preventative healthcare, potentially reducing the long-term burden on the national healthcare system.
In February 2024, Vice Premier Cheng Li-chiun successfully concluded negotiations that established a reduced tariff rate of 10% for dietary supplements. However, the Committee points out that the realization of these benefits is currently stalled by administrative hurdles. Specifically, there is a lack of a clearly defined dietary supplement category within Taiwan’s customs framework.
To resolve this, the Committee urges the government to establish a timeline for implementing these reductions and to align regulatory definitions with the World Customs Organization’s (WCO) Harmonized System (HS). Without a precise HS code classification for dietary supplements, the Customs Administration faces difficulties in applying the correct tariff rates, leading to inconsistent costs for importers and higher prices for consumers.
Balancing Food Safety and Trade Diversity: The Glyphosate Challenge
The Committee has also raised concerns regarding the Taiwan Food and Drug Administration’s (TFDA) approach to Maximum Residue Limits (MRLs) for pesticides. A significant point of contention involves the herbicide glyphosate. While Taiwan announced MRL standards for glyphosate in 2019, these were subsequently removed for certain applications.
Under Taiwan’s current "positive list" system, if a specific MRL has not been established for a crop-pesticide combination, a "non-detectable" standard is applied. The Committee argues that this zero-tolerance approach functions as a technical barrier to trade, particularly for U.S.-produced crops where glyphosate is a standard agricultural tool.
The recommendation calls for the TFDA to implement Article 19 of the Act Governing Food Safety and Sanitation more rigorously. This would involve assigning temporary MRL standards based on risk assessments or by referencing standards from regions with similar diets, such as Japan. By re-introducing scientifically backed MRLs for glyphosate and other substances, Taiwan could ensure food safety while maintaining a diverse supply of imported food products, thereby avoiding unnecessary trade interruptions and food waste.
Modernizing Border Inspections Through AI and Digitalization
Efficiency at the border is another critical area identified for reform. The Committee highlights a recurring administrative bottleneck: the declaration of manufacturing facility names. Currently, minor variations in company suffixes—such as "Co." versus "Company," or "Ltd." versus "Limited"—can trigger flags during food inspections. These discrepancies often require a week or more of manual clarification, delaying the entry of perishable goods.
To modernize this process, the Committee suggests that the TFDA utilize Large Language Models (LLMs) and Artificial Intelligence to recognize and reconcile these common linguistic variations. Furthermore, the Committee proposes that for companies operating multiple factories within the same country, the TFDA should allow the use of the parent company name as the "manufacturer" rather than requiring specific production premises for every single entry, which would significantly reduce the paperwork burden.
Scientific Realism in Managing Naturally Occurring Substances
The Committee has called for a transition in how Taiwan handles naturally occurring substances, such as benzoic and salicylic acids. These compounds are often part of a plant’s natural defense mechanism and can be found in various fruits and vegetables. Currently, border inspections often rely on "literature-based background values," which may not account for natural variability.
The proposed solution is a "multi-evidence, science-based approach." This would combine historical literature with specific manufacturing data and contemporary laboratory testing. By harmonizing these review standards with international norms and utilizing historical inspection data, the government can eliminate non-tariff trade barriers and provide a more predictable environment for food importers.
Traditional Chinese Medicine and Regulatory Alignment
The traditional Chinese medicine (TCM) sector and the therapeutic food market are also in need of regulatory updates. Despite the integration of the Customs-Port-Trade (CPT) Single Window, the Committee notes that redundant "batch-by-batch" notifications continue to create administrative duplication.
Recommendations in this sector include:
- Streamlining Clearance: Ending the requirement for redundant notifications for dual-use Chinese herbal ingredients that have already been cleared through the single window.
- Medicine-Food Homology: Updating the list of ingredients that can be used in both medicine and food to align with global scientific trends. The Committee warns that Taiwan’s therapeutic food sector risks lagging behind regional competitors if the regulatory framework remains stagnant due to internal divergent opinions.
Digital Governance: Moving Beyond Paperwork
While the Ministry of Digital Affairs (MODA) has been active in promoting electronic signatures, the Retail Committee points out that many customs-related processes remain tethered to physical paper. The requirement for the Citizen Digital Certificate for online procedures is cited as a significant hurdle that increases processing time and complexity for businesses.
The Committee advocates for the full digitalization of:
- Long-term customs-clearance authorizations.
- Self-use declarations for high-dosage dietary supplements.
- Bluetooth device declarations through the National Communications Commission (NCC).
By applying electronic signatures consistently across all agencies, Taiwan can improve the digital experience for both businesses and consumers, aligning its trade infrastructure with its reputation as a global technology hub.
Consumer Safety and Alcohol Traceability
A longstanding concern for the Retail Committee involves the sale of imported alcoholic beverages with altered or removed manufacturing lot codes. Under Article 32 of the Tobacco and Alcohol Administration Act (TAAA), lot codes are mandatory as they allow for product tracing and recalls in the event of safety issues.
However, some parallel importers have been removing these original codes and replacing them with serial numbers that lack traceability data. The Committee emphasizes that major jurisdictions, including the EU, UK, and Canada, mandate these codes for safety reasons. They urge the Ministry of Finance to conduct systematic inspections and enforce the prohibition of products with tampered codes, arguing that this does not contradict free trade principles but rather ensures a level playing field and consumer protection.
Unlocking Online Markets: Age-Verification Technology
As Taiwan aligns with global AI trends, the Committee suggests that laws governing the sale of age-restricted products, such as alcohol and tobacco, need to evolve. Currently, Article 30 of the TAAA prohibits the online sale of these products due to concerns over age verification.
The Committee argues that "analog-era constraints" are no longer applicable given the development of secure, auditable remote verification technologies. They point to Japan’s model, which allows online alcohol sales through a licensing framework that includes multi-step digital verification and in-person checks at the time of delivery. The Committee recommends that Taiwan launch a pilot program for online alcohol sales using advanced age-verification technology, shifting from a policy of blanket exclusion to one of "responsible partnership" with the industry.
Pet Food Quarantine: Aligning with International Standards
Finally, the Committee has addressed what it deems "unnecessary quarantine requirements" for dry pet food. Currently, Taiwan imposes restrictions on extruded dry pet food based on concerns over Avian Influenza. However, the Committee notes that international practice—supported by the World Organization for Animal Health (WOAH)—considers extruded dry pet food to be a safe commodity regardless of the disease status of the exporting country. The Committee calls on the Ministry of Agriculture (MOA) to fulfill its commitment to revise these regulations and remove barriers that do not align with global animal health standards.
Implications for the Future of Taiwan’s Retail Sector
The recommendations put forth by the Retail Committee represent a roadmap for a more modern, transparent, and digitally integrated Taiwan. Analysts suggest that if these reforms are implemented, Taiwan could see a significant uptick in foreign direct investment in the retail and food sectors. By reducing technical barriers to trade and embracing AI-driven governance, the government can lower costs for businesses, which typically translates to more variety and better pricing for consumers.
Furthermore, the focus on digital signatures and online age verification reflects a broader global trend toward the "digital economy." As Taiwan seeks to solidify its role in the U.S.-Taiwan Initiative on 21st-Century Trade, these practical adjustments at the regulatory level will be seen as a litmus test for the nation’s readiness to participate in high-standard international trade agreements. The Committee concludes that these steps are not merely about administrative convenience, but about building a foundation for long-term economic resilience and consumer trust in the Taiwan market.
Evan Lee Salim
Muslim
