Memorandum on the Unfair
Trade Practices of Taiwan
August 1, 1986
for the United States Trade Representative
Determination under Section 301 of the Trade Act of 1974
Section 301 of the Trade Act of 1974, as amended (19 U.S.C. 2411), I have
determined that use of a duty paying system to calculate customs duties by the
authorities on Taiwan violates a trade agreement and is unjustifiable and
unreasonable and a burden or restriction on U.S. commerce. Under Section 301 of
the Trade Act, I have determined to retaliate commensurately against Taiwan so long as it fails to
meet its obligations in this regard and am directing the United States Trade
Representative to propose an appropriate method for such retaliation.
1979 the United States and many trading
partners concluded a trade agreement, the Customs Valuation Code, specifying
the way in which imports are valued for purposes of calculating customs duties.
That agreement allows developing countries to delay their implementation of it
for a specified time period.
a bilateral exchange of letters, Taiwan agreed in 1979 to
observe obligations ``substantially the same'' under this agreement as those
applicable to developing countries. This means it should have implemented those
obligations effective January 1, 1986.
did not. In February it agreed to meet this obligation by July
Instead, it enacted a law effective July 1 under which its customs authorities
calculate duties upon the basis of a duty paying system (under which values of
import items are determined administratively), rather than upon ``transaction
value'' (ordinarily the invoice price). This practice is inconsistent with Taiwan's agreement to apply
``substantially the same'' obligations as set forth for developing countries in
the Customs Valuation Code.
have made these determinations and directed the United States Trade
Representative to propose appropriate retaliation to enforce U.S. trade rights and to
respond to the Taiwan practices in question.
I would strongly prefer that Taiwan adhere to its agreement
to apply the Customs Valuation Code.
determination shall be published in the Federal Register.
Note: The memorandum was
published in the ``Federal Register'' of August 6.