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The Retail Committee has formally expressed its appreciation for the Taiwan government’s ongoing efforts to bolster public health and economic resilience while advocating for a more streamlined, transparent, and digitalized business environment. Building on the momentum of the Agreement on Reciprocal Trade (ART) between the United States and Taiwan, the Committee has released a comprehensive set of recommendations aimed at improving the island’s investment climate. These proposals, which range from the implementation of tariff reductions to the deployment of artificial intelligence in border inspections, are designed to benefit both consumers and the retail industry while fostering high levels of investor confidence in the Taiwan market.
Strengthening Trade Commitments Under the Reciprocal Trade Framework
The conclusion of the U.S.-Taiwan Agreement on Reciprocal Trade (ART) represents a milestone in bilateral economic relations. However, the Retail Committee emphasizes that the full benefits of this agreement can only be realized through meticulous implementation and the fulfillment of specific trade-related commitments. Central to this is the dietary supplement industry, which is viewed as a cornerstone of President Lai Ching-te’s "Healthy Taiwan" and "888 Health Program" initiatives.
In February 2024, Vice Premier Cheng Li-chiun successfully oversaw the conclusion of the ART, which established a reduced tariff rate of 10% for dietary supplements. While this reduction is a significant victory for consumer affordability, the Committee notes that administrative hurdles remain. Specifically, there is an urgent need for a clearly defined dietary supplement category that aligns with the World Customs Organization’s (WCO) Harmonized System (HS). Without this alignment, the Customs Administration faces difficulties in efficiently applying the new tariff rates. The Committee urges the government to provide a definitive timeline for these regulatory definitions to ensure that the cost savings promised by the ART are passed on to Taiwanese consumers without delay.
Furthermore, the Committee has raised concerns regarding the balance between food safety and the diversity of imported goods. A particular point of contention is the management of maximum residue limits (MRLs) for pesticides. Under the current "positive list" system, if an MRL has not been specifically established for a crop, a "non-detectable" standard is applied. This has led to the restriction of various U.S.-produced crops, particularly following the 2019 decision to remove previously established MRLs for the herbicide glyphosate in certain applications. The Committee recommends that the Taiwan Food and Drug Administration (TFDA) utilize Article 19 of the Act Governing Food Safety and Sanitation to assign temporary MRLs based on risk assessments from regions with similar diets, such as Japan, to prevent unnecessary trade interruptions and food waste.
Enhancing Border Efficiency Through AI and Scientific Standards
Efficiency at the border is a critical factor in maintaining a robust retail supply chain. The Retail Committee has identified several areas where administrative processes can be modernized using emerging technologies. One of the most frequent causes of delay in food inspections is the inconsistency in manufacturing facility declarations. Minor variations in company names—such as "Ltd." versus "Limited" or the use of Japanese Kanji versus traditional Chinese characters—can trigger red flags for inspectors, often resulting in delays of a week or more while clarifications are sought.
To resolve this, the Committee proposes that the TFDA integrate Large Language Models (LLMs) and artificial intelligence into their inspection protocols. These tools can automatically recognize and reconcile common variations in corporate nomenclature, significantly reducing the administrative burden on both importers and government officials. Additionally, the Committee suggests that for companies operating multiple factories within a single country, the TFDA should allow the use of the parent company name for identification purposes rather than requiring the specific production premises for every individual entry.
Beyond digitalization, the Committee advocates for a more science-based approach to "naturally occurring substances." Currently, border inspections often rely on literature-based background values to determine if substances like benzoic or salicylic acid—which plants produce naturally as a defense mechanism—are present in excess. The Committee recommends transitioning to a "multi-evidence" approach that combines manufacturing data, laboratory testing, and historical inspection data. This would align Taiwan’s standards with international norms and prevent the rejection of safe products based on outdated or incomplete reference materials.
Modernizing the Traditional Chinese Medicine and Food Additive Sectors
The Traditional Chinese Medicine (TCM) sector and the therapeutic food industry are also in need of regulatory updates to keep pace with global trends. Despite the integration of the Customs-Port-Trade (CPT) Single Window, the Committee reports that redundant batch-by-batch notifications continue to create administrative duplication for dual-use Chinese herbal ingredients. Streamlining these clearance processes and updating the "medicine-food homology" list—a list of ingredients that can be used in both food and medicine—is essential for Taiwan to remain competitive in the regional therapeutic food market.
In the realm of food additives, the Committee has pointed out inconsistencies in the "Standards for Specification, Scope, Application, and Limitation of Food Additives." Specifically, Category 8 (Nutritional Additives) contains wording that creates ambiguity regarding usage limits. There are also discrepancies between the limits set for nutritional additives and those set for raw materials that provide the same nutrients, such as zinc, selenium, and magnesium. Harmonizing these definitions is seen as a necessary step to safeguard consumer interests and ensure regulatory clarity for manufacturers.
Advancing Digital Governance and Electronic Signatures
As the Ministry of Digital Affairs (MODA) continues to promote the use of electronic signatures, the Retail Committee is calling for a more aggressive shift away from paper-based requirements. While the Ministry of Agriculture (MOA) has made progress in planning online applications for organic agricultural product import permits, many other customs-related processes remain tethered to physical documentation.
The Committee highlights that existing online procedures, such as the use of the Citizen Digital Certificate, are often burdensome and increase processing times. They recommend that the government prioritize the digitalization of key processes, including long-term customs-clearance authorizations and self-use declarations for high-dosage dietary supplements. By applying electronic signatures consistently across all agencies, the government can enhance trade facilitation and provide a more seamless digital experience for the retail sector.
Ensuring Traceability in the Alcohol Market
A longstanding concern for the Retail Committee is the sale of imported alcoholic beverages with altered or removed manufacturing lot codes. Under Article 32 of the Tobacco and Alcohol Administration Act (TAAA), packaged alcoholic products must bear a lot code to ensure traceability in the event of a safety recall. However, some parallel importers have been observed removing original codes and replacing them with serial numbers that lack the necessary production data.
The Committee notes that major jurisdictions, including the European Union, the United Kingdom, and Canada, mandate the use of lot codes. They argue that prohibiting the removal of these codes does not contradict the principles of free trade, as parallel importers can continue their operations as long as they maintain the original labeling. The Committee urges the Ministry of Finance to conduct systematic inspections and establish a robust reporting mechanism to replace the current voluntary system, thereby protecting consumers from untraceable and potentially unsafe products.
Unlocking New Markets Through Age-Verification Technology
Perhaps the most forward-looking suggestion from the Committee involves the use of AI and digital identity infrastructure to permit the online sale of age-restricted products, such as alcohol and tobacco. Currently, Article 30 of the TAAA prohibits the online sale of these items due to the perceived difficulty of verifying the age of the buyer. The Committee argues that this "analog-era" restriction is no longer necessary given the advancements in digital verification.
Since the establishment of MODA in 2022, Taiwan has developed the infrastructure for secure, auditable remote verification. The Committee points to Japan’s successful model, where online alcohol sales are permitted under a framework that requires multi-step digital verification at the point of purchase, often supplemented by in-person checks upon delivery. By updating the regulatory framework to allow for these digital safeguards, Taiwan could support the growth of its e-commerce sector while maintaining—and perhaps even strengthening—protections for minors.
Removing Unnecessary Quarantine Requirements for Pet Food
Finally, the Committee has addressed the importation of dry pet food. Currently, Taiwan imposes restrictions on certain extruded dry pet foods based on concerns over Avian Influenza. However, international standards from the World Organization for Animal Health (WOAH) suggest that dry pet food and coated ingredients are safe commodities that do not require such restrictions, regardless of the disease status of the exporting country. The Committee recommends that the MOA fulfill its commitment to revise these regulations, removing what they describe as "unreasonable trade barriers" to ensure a steady supply of high-quality pet nutrition for Taiwanese households.
Analysis of Implications and Future Outlook
The recommendations put forth by the Retail Committee reflect a broader trend toward the "21st-Century Trade" model, which prioritizes digital integration, regulatory transparency, and science-based standards. If adopted, these measures could significantly reduce the cost of doing business in Taiwan, potentially leading to lower prices for consumers and a wider variety of imported goods.
From a diplomatic perspective, aligning Taiwan’s regulatory environment with international standards and U.S. trade expectations strengthens the island’s bid for deeper economic integration with Western markets. As Taiwan seeks to diversify its trade partnerships and reduce its economic reliance on any single market, the implementation of the ART and the modernization of its customs processes are vital steps.
The emphasis on AI and digital governance also aligns with the government’s own goals of making Taiwan a "Silicon Island." By applying these technologies to "traditional" sectors like retail and food inspection, the government can demonstrate the practical benefits of its digital transformation agenda. The Retail Committee’s proposals serve as a roadmap for a more agile, technologically advanced, and consumer-friendly economy, positioning Taiwan as a leader in the global retail landscape.
Lina Irawan
Layla Zulfa
