In a growing trade dispute, China’s government announced last week that it will suspend tariff concessions on imports of 134 categories of products from Taiwan, including lubricating base oils.
Taiwan is annually regularly one of the largest sources of base oil imports to China, which is one of the world’s largest base oil importers.
Tariffs on base oils and numerous other types of products have been reduced since 2010 under the Cross-Straight Economic Cooperation Framework Agreement, which was implemented to help put Taiwan on an equal footing in foreign trade and to promote economic exchanges between the countries.
But China’s Tariff Commission of the State Council declared that Taiwan adopted discriminatory prohibitions and restrictions on China exports to the island nation – restrictions that violate the cooperation agreement, according to the Tariff Commission. As a result, it announced an end to concessions for 134 products, effective June 15.
On Dec. 21 last year, the tariff commission issued an announcement suspending tariff concessions for a dozen products in the Cross-Strait Economic Cooperation Framework Agreement. Last week the commission said Taiwan still had not lifted its restrictions and added a second batch of products.
“The Mainland Affairs Council expressed strong protest and dissatisfaction regarding mainland China’s unliteral cancellation of preferential tariff treatment for 134 products on the Economic Cooperation Framework Agreement Early Harvest List,” Taiwan’s Mainland Affairs Council said in a May 31 press release. “The unilateral, economically coercive measures taken by the mainland Chinese side do not conform with World Trade Organization and ECFA regulations, are detrimental to mutually beneficial economies and trade relations across the Taiwan Strait and are not conducive to creating peace and mutual prosperity.”
The council noted that both sides of the Taiwan Strait are members of the WTO, and that WTO and framework agreements include provisions for settling disputes. “Disagreement over trade between the two sides should be dealt with responsibly by choosing dialogue over confrontation and by engaging in pragmatic communication to resolve disputes,” the council stated.
According to data compiled by China’s General Administration of Customs, the country imported about 190,000 metric tons of base oil from Taiwan in 2023, an 8% decrease from 207,000 metric tons in 2022. The reported value was ¥1.2 billion (U.S. $166 million) in 2023, down slightly from ¥1.3 billion.
After reaching 438,234 tons of base oil imports from Taiwan in 2019, valued at ¥1.9 billion, it fell 32% to 296,000 tons and ¥1.1 billion in 2020. In 2021, the base oil import volume from Taiwan again decreased, by 19%, but the reported value increased to ¥1.4 billion.
In 2022, the base oil imports from Taiwan declined 14%, and the value went down slightly to ¥1.3 billion.
Taiwan’s lone base oil plant is Formosa Petrochemical’s API Group II plant in Mai-Liao, with 600,000 metric tons per year production capacity.