The Chinese Ministry of Commerce (“MOFCOM“) announced on April 12, 2023 that it has initiated a trade barrier investigation involving 2,455 categories of Chinese products that may be subject to import restrictions or prohibition in Taiwan, including agriculture, mineral, chemical, and textile products. The outcome is expected to be announced by October 12,2023, or January 12,2024 if the investigation is extended. Due to the current geopolitical tension between Taiwan and China, it is possible that the investigation may be expedited.
As background, a trade barrier investigation, authorized by China’s Foreign Trade Law, is designed to determine whether any restrictive measures, also referred to as “trade barriers,” adopted by the trade partner under investigation, contravene applicable treaties, or adversely affect the market access or competitiveness of Chinese products or services.
If MOFCOM concludes there are trade barriers present, it has the authority to either (i) request consultation or negotiation or use dispute resolution mechanisms under the applicable bilateral or multilateral agreements, such as the WTO treaties. or, (ii) take any other necessary remedial measures it deems “appropriate”.
Due to the infrequent use of this regime by China to address foreign trade barrier issues, there is no comparable precedent for predicting the measures China may take against Taiwan, if MOFCOM ultimately finds the presence of trade barriers. Historically, China has typically limited itself to filing complaints with WTO regarding the foreign trade barriers it has identified through its own investigations. In addition, while current regulations do not clarify what constitute “appropriate” actions to take against foreign trade barriers, it is generally presumed that such measures should be in line with the applicable bilateral or multilateral agreements. However, the ongoing geopolitical tension could potentially call this assumption into question.
Frank Pan is a partner of FenXun Partners who is a premier Chinese law firm. FenXun established a Joint Operation Office with Baker McKenzie in China as Baker McKenzie FenXun which was approved by the Shanghai Justice Bureau in 2015.
