Nila Kartika Wati
The Retail Committee has formally expressed its appreciation for the Taiwan government’s persistent efforts in advancing public health and fostering economic development, while simultaneously issuing a comprehensive set of recommendations aimed at modernizing the nation’s business environment. Building on the foundational success of the Agreement on Reciprocal Trade (ART) between the United States and Taiwan—a key component of the U.S.-Taiwan Initiative on 21st-Century Trade—the Committee is urging the administration to prioritize efficient governance, regulatory transparency, and the acceleration of digital transformation. These proposals are framed as essential steps to benefit both domestic consumers and the broader retail industry, ensuring high levels of investor confidence in the Taiwan market during a period of shifting global supply chains.
Chronology of Trade Relations and Policy Foundations
The current advocacy by the Retail Committee follows a significant period of bilateral cooperation between Taipei and Washington. In June 2022, the U.S.-Taiwan Initiative on 21st-Century Trade was launched, leading to the signing of the first agreement under the initiative in June 2023. This framework covers a wide range of issues, including customs administration, trade facilitation, and regulatory practices.
In February 2024, Vice Premier Cheng Li-chiun successfully oversaw the conclusion of specific provisions within the ART that established reduced tariff rates of 10% for dietary supplements. This move was widely viewed as a victory for consumer choice and affordability. Simultaneously, President Lai Ching-te has championed the "Healthy Taiwan" and "888 Health Program" initiatives, which seek to improve the long-term health outcomes of the population through better nutrition and preventative care. The Retail Committee’s latest suggestions are designed to align the practicalities of the retail and import sectors with these high-level political objectives.
Fulfilling Commitments in the Dietary Supplement and Food Sectors
A primary concern for the Committee is the concrete implementation of trade-related commitments. While the reduction of tariffs on dietary supplements to 10% was a landmark achievement, the Committee notes that administrative hurdles remain. Specifically, there is a pressing need for a clear timeline regarding these reductions and a standardized regulatory definition for the products themselves.
The Committee recommends that the Taiwan government establish a dietary supplement category that aligns strictly with the World Customs Organization’s (WCO) Harmonized System (HS). Without a precise HS code alignment, the Customs Administration may face difficulties in applying the correct tariff rates, leading to delays and inconsistent costs for importers. A clearly defined category would provide the predictability necessary for businesses to plan long-term investments in Taiwan’s health and wellness sector.
Furthermore, the Committee has raised concerns regarding the balance between food safety and the diversity of imported goods. A specific point of contention is the Maximum Residue Limit (MRL) for pesticides, such as glyphosate. In 2019, Taiwan announced MRL standards for glyphosate but subsequently rescinded them for certain applications. Under Taiwan’s "positive list" system, the absence of a specific MRL effectively defaults to a non-detective standard. The Committee argues that this creates a technical barrier to trade, particularly for U.S.-produced crops where glyphosate is a standard agricultural tool. They urge the Taiwan Food and Drug Administration (TFDA) to conduct a fresh, science-based risk assessment to re-introduce MRLs, potentially drawing on standards from countries with similar dietary habits, such as Japan, to prevent unnecessary trade interruptions and food waste.
Leveraging Artificial Intelligence for Border Efficiency
In an era of rapid technological advancement, the Retail Committee suggests that the TFDA should adopt modern tools to resolve long-standing administrative bottlenecks. One such issue involves the declaration of company names during border inspections. Due to variations in trade usage and language—such as the difference between "Limited," "Ltd.," "Corp.," or the Japanese "株式会社"—shipments are frequently delayed. Inspectors often require manual explanations for these minor nomenclature variations, a process that can take a week or more.
The Committee proposes the integration of Large Language Models (LLMs) and other Artificial Intelligence (AI) tools to automate the recognition of these variations. By using AI to verify that "Company A Ltd." and "Company A Limited" are the same entity, the government could significantly reduce the administrative burden on both inspectors and importers. Additionally, the Committee suggests that for companies operating multiple factories within the same country, the TFDA should allow the use of the corporate name as the "manufacturer" rather than requiring specific production premises for every individual line item, further streamlining the application process.
Scientific Modernization of Natural Substance Management
The Committee also addressed the inspection of naturally occurring substances in food products, such as benzoic and salicylic acids, which are often part of a plant’s natural defense mechanisms. Currently, border inspections often rely on literature-based background values that may not reflect the reality of modern agricultural production.
The recommendation is to transition to a "multi-evidence, science-based approach." This would involve combining existing literature with manufacturing data and laboratory testing to create a more accurate profile of what constitutes a naturally occurring level versus an added preservative. By harmonizing these review standards with international norms and historical inspection data, the Committee believes Taiwan can eliminate non-tariff trade barriers while maintaining rigorous safety standards.
Transparency in Traditional Chinese Medicine and Food Additives
The traditional Chinese medicine (TCM) sector and the "medicine-food homology" industry are also areas identified for reform. Despite the implementation of the Customs-Port-Trade (CPT) Single Window, importers still face redundant, batch-by-batch notifications that create administrative duplication between the Ministry of Health and Welfare’s Department of Chinese Medicine and Pharmacy (DCMP) and other agencies.
The Committee suggests that Taiwan’s regulatory framework for TCM is lagging behind regional competitors like Singapore and Hong Kong. To rectify this, they recommend updating the medicine-food homology list to align with global scientific trends, allowing for more therapeutic food products to enter the market. Additionally, they pointed out inconsistencies in the "Standards for Specification, Scope, Application, and Limitation of Food Additives." Currently, usage limits for nutritional additives often differ from those for food raw materials providing the same nutrients (such as zinc or magnesium), creating ambiguity for manufacturers and importers.
Accelerating Digital Governance and Electronic Signatures
A significant portion of the Committee’s proposal focuses on digitalization. While the Ministry of Digital Affairs (MODA) has been active in promoting electronic signatures, many customs-related processes still rely on physical paper documents. The Committee noted that even where online procedures exist, they are often cumbersome, requiring the use of the Citizen Digital Certificate, which is not always practical for international business operations.
The Committee is calling for the prioritization of digitalization in several key areas:
- Long-term customs-clearance authorization through the Customs Administration.
- Self-use declarations for high-dosage dietary supplements under the TFDA.
- Bluetooth device declarations through the National Communications Commission (NCC).
By applying electronic signatures consistently across all agencies, the government could enhance trade facilitation and significantly improve the digital experience for both businesses and consumers.
Safeguarding Consumers through Alcohol Traceability
On the issue of consumer safety, the Committee has taken a firm stance against the removal or alteration of original manufacturing lot codes on imported alcoholic beverages. Under Article 32 of the Tobacco and Alcohol Administration Act (TAAA), packaged alcoholic products must bear a lot code to ensure traceability. However, some parallel importers remove these codes and replace them with serial numbers that do not allow for effective tracing or recalls.
The Committee argues that prohibiting the removal of these codes is not a violation of free trade, as parallel importers can still operate as long as they maintain the original markings. This practice is already mandated in major markets including the United Kingdom, France, Italy, Canada, and the European Union. The Committee urges the Ministry of Finance to conduct systematic inspections and establish a robust reporting mechanism to replace the current voluntary system, ensuring that any product suspected of being unsafe can be quickly identified and removed from shelves.
Modernizing Age-Verification for Restricted Products
Perhaps the most forward-looking suggestion involves the use of technology to manage the sale of age-restricted products like alcohol and tobacco in online markets. Currently, Article 30 of the TAAA prohibits the online sale of these items due to concerns over age verification. The Committee argues that this "analog-era" restriction is no longer necessary given the advancement of digital identity infrastructure.
Drawing on the experience of Japan, the Committee suggests that Taiwan could implement a licensing framework for online sales that requires multi-step digital verification. This would include document authentication at the point of purchase and in-person ID confirmation at the point of delivery. Such a system, the Committee contends, would actually be more secure than traditional retail environments where age verification relies solely on the judgment of a store clerk. They urge the government to launch pilot programs to test these digital safeguards, allowing the retail sector to evolve while maintaining a strict commitment to protecting minors.
Removing Redundant Quarantine Requirements for Pet Food
Finally, the Committee addressed the importation of dry pet food. Currently, Taiwan imposes strict quarantine requirements on certain extruded dry pet foods, citing risks associated with Avian Influenza. However, the Committee points out that the extrusion process involves high-heat treatment that effectively neutralizes such viruses, a fact recognized by the World Organization for Animal Health (WOAH).
As a member of WOAH, Taiwan has pledged to avoid unreasonable trade barriers. The Committee recommends that the Ministry of Agriculture (MOA) follow through on previous commitments to revise these regulations, removing quarantine requirements for processed dog and cat food that international standards deem safe.
Impact and Implications for the Taiwan Market
The recommendations provided by the Retail Committee represent a roadmap for a more integrated, efficient, and technologically advanced Taiwanese economy. By addressing these technical and regulatory hurdles, the government can fulfill the spirit of the U.S.-Taiwan ART while providing tangible benefits to its citizens.
Analysts suggest that if these reforms are implemented, Taiwan could see a significant increase in the variety of health and food products available to consumers, lower administrative costs for businesses, and a more robust digital economy. Furthermore, by aligning more closely with international standards and utilizing AI and digital signatures, Taiwan reinforces its position as a transparent and reliable partner in the global trade community. The Committee’s proposals underscore the belief that regulatory modernization is not just a matter of convenience for businesses, but a fundamental requirement for national competitiveness in the 21st century.
Basiran
Evan Lee Salim
