CPTPP: The Challenges for Taiwan

Following the U.S. withdrawal from the embryonic Trans-Pacific Partnership (TPP) soon after Donald Trump’s inauguration as President, the other 11 TPP countries decided to maintain the multilateral trade agreement under the revised name of the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).

As a major trading economy, Taiwan hopes to be able to join the CPTPP when the pact is formally established and opens membership to more countries in a second round. Currently the CPTPP signatories are still in the process of seeking ratification from their various parliaments.

Da-Nien Liu, research fellow at the Regional Development Study Center of the Chung-Hua Institution for Economic Research (CIER) and an expert on regional trade agreements, shared his insights on “The CPTPP: The Challenges for Taiwan” with AmCham Taipei members and guests on May 24 at the  Chamber’s Lincoln Room.  Liu is also a former Deputy Secretary General of the National Security Council during the Ma Ying-jeou administration.

Liu noted that Taiwan will feel an economic impact from CPTPP whether or not it is able to participate in the agreement. If allowed to secure membership, Taiwan will need to liberalize its import regime, which would likely affect the domestic agricultural sector and certain industries. If Taiwan is excluded from CPTPP, the impact would be even greater, affecting the country’s markets in such sectors as plastics, iron and steel (and their products), electrochemical equipment, and auto parts.

The “China Factor” will be a major challenge for Taiwan, Liu said, as Beijing may try to pressure CPTPP members not to admit Taiwan or to block Taiwan’s accession until after China joins the group. Another prospective challenge might be the “down-payment” problem, as CPTPP member countries would likely expect Taiwan to resolve any outstanding trade disputes with them during bilateral talks preceding Taiwan’s entry into the agreement.

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Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

我國移轉訂價三層文據架構及應用

AmCham Taipei Tax Committee held a seminar on May 29 at The Sherwood Taipei, featuring Deputy Director-General Hsiu-Ling Sung of the Taxation Administration of the Ministry of Finance, as the speaker.

我國移轉訂價三層文據架構及應用 – this event was conducted in Mandarin.

In response to the international transfer pricing trends of enhancing transparency of tax information and preventing cross-border tax avoidance as well as in line with review standards of international organizations, Taiwan amended its “Regulations Governing Assessment of Profit-Seeking Enterprise Income Tax on Non-Arm’s-Length Transfer Pricing” on November 13, 2017 to incorporate the preparation of Master File and Country-by-Country Report by MNEs with reference to the final reports and recommendations of BEPS Action Plan 13 to accomplish the international requirements for three-tiered transfer pricing documentation.

Furthermore, in order to reduce the compliance cost of multinational enterprise groups in the preparation of transfer pricing documentation, we released the standards of safe harbor for exemption from the submission of a master file and country-by-country report on December 13, 2017, taking into account international practices, our situations, and public views. In the case of a profit-seeking enterprise that does not meet the relevant safe harbor standards, it shall disclose the information of related party transactions and multinational enterprise group as well as prepare local file and transfer pricing report when filing income tax returns, and then submit a country-by-country report before the end of 2018.

When: May 29, 2017 (12 PM – 2 PM)

Where: The Sherwood Taipei

Speaker: 宋秀玲 財政部賦稅署副署長
Hsiu-Ling Sung, Deputy Director-General, Taxation Administration, Ministry of Finance

From left to right: AmCham Tax Committee Co-Chair Cheli Liaw, Partner, Deloitte & Touche; Deputy Director-General, Hsiu-Ling Sung Taxation Administration, Ministry of Finance; AmCham Tax Committee Co-Chair Josephine Peng, Senior Counselor, Lee and Li, Attorneys-at-Law; AmCham Tax Committee Co-Chair Stella Lai, Public Affairs Consultant, Government Affairs Consultant, Dell (Taiwan) B.V. Taiwan Branch

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Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Cross-border Ecommerce: A Growing Market for Taiwan

Big data has become an essential component for giant e-tailers such as eBay and Amazon. As the consumption of data continues to grow rapidly, companies are investing heavily in big data to provide a new level of strategic marketing and offer better customer experiences.

On May 23, AmCham Taipei’s Innovation Council and Sustainable Development Committee jointly invited Robert Gou, CEO of Viewider, and Ming-Ji Wu, Director-General of the Small and Medium Enterprise Administration (SMEA) of the Ministry of Economic Affairs, to provide insight to global ecommerce trends at a Chinese-language luncheon program entitled, “從eBay與Amazon看電商全球化趨勢及大數據平台” held at the Shangri-La’s Far Eastern Plaza Hotel.

According to Gou, worldwide retail sales are predicted to reach US$4.4 trillion by 2021, indicating tremendous opportunities for online retailers, especially those ready to invest in big data analytics. Big data can help online retailers achieve their goals by identifying markets, recommending pricing strategies, and improving business processes.

Gou highlighted some of the challenges small to medium-sized enterprises (SMEs) in Taiwan face in entering the online retail industry:

  • Language barriers: difficulties to train and recruit talent for handling cross-border trading and dealing with foreign customers due to communications problems.
  • Poor marketing strategies: lack of information and understanding about foreign markets to identify selling strategies, leading to poorly targeted marketing.
  • Shipping and logistics: insufficient understanding of import regulations and delivery methods, and the high cost of outsourcing fulfillment.
  • Payment methods: having a reliable payment processing system that is accepted by customers from different regions.

Director-General Wu discussed the growth of Taiwan’s SMEs – which numbered 1.4 million companies as of 2016 – and addressed challenges they face. In line with the government’s efforts to promote the New Southbound policy and to develop Taiwan as Asia’s Silicon Valley, the government offers various programs to assist entrepreneurs in expanding into global markets. These programs include 1) training, 2) funding, 3) industry promotion 4) market intelligence, and 5) technical expertise and support.

From left to right: Robert Gou, CEO of Viewider; Ming-Ji Wu, Director-General of the Small and Medium Enterprise Administration of the Ministry of Economic Affairs; AmCham Capital Market Committee Co-Chair Nadia Chen, Country Executive, The Bank of New York Mellon Taipei Branch; AmCham Sustainable Development Committee Co-Chair Cosmas Lu, Strategy Adviser, Super Dragon Technology Co., LTD

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Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Meeting with U.S.-China Economic and Security Review Commission

Members of the U.S.-China Economic and Security Review Commission visited AmCham Taipei on May 21 to learn more about how Taiwan was faring amidst the recent flurry of news surrounding U.S.-China relations. The delegation exchanged views with AmCham representatives in an hour-long meeting in AmCham’s Lincoln Room as part of the Commission’s annual visit to Taiwan, during which it also met with many high-profile government offices, NGOs, and think tanks.

Created by the U.S. Congress in 2000, the bipartisan Commission’s mandate is to monitor and investigate national security and trade issues between the United States and the PRC.

This year’s group was led by Vice Chairperson Carolyn Bartholomew and also included  Commission delegation also included  commissioners Roy Kamphausen, Jonathan Stivers, Larry Wortzel, and  Katherine Tobin, as well as Michelle Ker, policy analyst in economics and trade, and Jacob Stokes, policy analyst in security and foreign affairs.

Former AmCham Chairman Thomas McGowan, of the law firm Russin & Vecchi, led the conversation, and was joined by AmCham President William Foreman, Senior Director of Government Affairs Amy Chang, and Taiwan Business TOPICS Associate Editor Tim Ferry.

American Institute in Taiwan (AIT) representatives Jeff Horwitz, Phill Loosli, and Toy Reid joined the wide-ranging discussion, which touched on a number of topics including the consequences of China’s pressure on the Tsai administration and trade relations between Taiwan and the United States.

Navigating Trade in the Time of Trump

The United States under the Trump administration has dramatically stepped up its use of economic sanctions against nations, firms, and even individuals that it accuses of a wide range of violations of international law. Given Taiwan’s dependency on trade and its close ties with U.S. suppliers and customers, Taiwanese firms are on the frontlines of sanctions risks, and at least nine Taiwanese entities have found themselves on the U.S. “blacklist” of sanctions violators.

Adam Smith, a former U.S. senior sanctions official during the Obama administration, recently visited Taiwan to offer his views on how Taiwan’s businesses can navigate these treacherous waters. At a presentation on “Understanding and Navigating the Risk of Economic Sanctions in the Trump Era,” held at AmCham Taipei’s Lincoln Room on May 17, Smith offered his perspective on why trade sanctions are being deployed so frequently. He noted that sanctions can be wielded under the sole authority of the president, are highly flexible and effective, and “they cost the government nothing,” in contrast to other measures such as military interventions that put people and materiel at risk.

The impact of sanctions by the U.S. can be huge, forcing rogue nations such as Iran and North Korea to the negotiating table and impacting some of the world’s largest companies, such as China tech-behemoth ZTE Co., which found itself on the U.S. “blacklist” by dint of its continued trading with sanctioned nations. Sanctions cut off ZTE from its supply chain of U.S. components and within days of being singled out by Trump, ZTE declared that it could no longer operate.

Only U.S. persons or entities are directly required to act in accordance with U.S. issued sanctions. However, any transaction involving U.S. financial institutions must also comply with such sanctions, and as 87% of global trade occurs in US dollars, this means that the vast majority of global businesses are required to comply. Refusing to comply, or inadvertently violating sanctions, could result in being placed on the blacklist and banned from participating in most global trade. Further, products that contain a minimum of 10% components produced in the United States are also considered to be U.S. goods and their makers are likewise expected to comply.

To avoid falling afoul of U.S. sanctions regime, Smith advises companies to develop “a compliance system, policies, and processes internally, but also figuring out what your exposure looks like.” Smith says that companies need to ask take thorough inventory of their own and their trade partners’ activities. “The more you know… the more you can explain it, if need be,” says Smith.

 Listen to audio clips to learn more: 

From left to right: Adam Smith, former senior sanctions official in the U.S. Government and Partner of Gibson Dunn; AmCham Taipei President William Foreman

 

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Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Digitalization in the Global Economy

Digitalization and automation are already impacting how the world works with even bigger changes to come. Market analytics firm Bain & Company forecasts that 25% of current jobs will disappear altogether by 2030, and many more jobs will undergo dramatic shifts and require new and different skill sets. To get more insight into how digitalization is reverberating through the employment sphere in Greater China, AmCham Taipei invited Christine Raynaud, CEO of Human Resources firm Morgan Philips Greater China, to speak at a luncheon entitled “Digitalization in Greater China” on May 9 at the Sherwood Taipei Hotel. Last December, Morgan Philips completed a wide-ranging survey of professionals working in Taiwan, China, and Hong Kong, querying them on their experiences of digitilization today and going forward, and the results were suprising.

While more than 60% of survey respondents are already experiencing the impact of digitilization on their jobs, and an even higher number –- over 70% — feel that digitilization will affect their careers, most consider themselves unprepared for these changes. Yet this isn’t a cause for worry for most, as two-thirds of respondents in all age groups consider digitilization an opportunity for career development, higher earnings, and better work-life balance. Interestingly, the same number of respondents –- only 6% — across all age groups see digitilization as a threat.

The crucial point that Raynaud made to guests was that while skilled workers in Greater China consider themselves unprepared, over 60% of Taiwanese and Chinese professionals and 49% of Hong Kong professionals expect to learn how to navigate the digital era through on-the-job training. Opportunities for learning and career advancement play a critical role in employees’ job decision-making, but less than 20% of respondents across all age groups consider that their jobs are actually preparing them adequately. 37% of respondents in Taiwan said that they are not being prepared at all, while 45% said that at least their companies are trying to prepare them.

According to Raynaud, opportunities for digital skills acquisition will likely lead to winners and losers in the hunt for talent in Greater China. Already nearly 20% are planning on changing jobs in 2018 in Taiwan, and 55% are open to new opportunities, and that older workers were as open to new opportunities as younger ones.

In this new digital landscape, good leadership will retain its importance, but will likely be deemphasized as agility, fast decision-making processes, and a more customer-centric approach to business rise in significance.

Raynaud concluded that digital skills are a mindset, and that embracing change and opportunity is the only way to stay ahead of the curve.

From left to right: AmCham Supervisor & Public Health Committee Co-Chair, Joyce Lee, General Manager, Bristol-Myers Squibb (Taiwan) Ltd.; AmCham Taipei President, William Foreman; Speaker Christine Raynaud, CEO, Morgan Philips Greater China; and AmCham Advisor of Advanced Learning Lab, William Zyzo, Managing Director of Z&A Knowledge Solutions

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Note: AmCham events are intended primarily for AmCham members and their guests. Many events are open to members’ guests and other non-members, but the attendance of any non-member must be approved in advance. AmCham reserves the right not to admit a non-member to any event without explanation.

Join AIT Director Moy for His Final U.S. Citizen Town Hall   

AIT Director Kin Moy would like to invite you to a U.S. citizen town hall on Tuesday, May 15th from 7 – 8 pm at The Taipei American School (TAS).  This will be Director Moy’s final U.S. citizen town hall before completing his tenure as AIT Director.  Director Moy will answer your questions and share his reflections on U.S.-Taiwan relations.  We’ll tell you more about the services we provide for U.S. citizens, and consular officers will be on hand to provide off-site notarial services, accept passport renewal applications, and assist with absentee voting registration after the town hall meeting.*

When: Tuesday, May 15th at 7 pm (please plan to arrive at TAS at 6:30pm as you will have to pass through security before entering the school grounds).  Light refreshments will be served.

Where: The Taipei American School Harmony (Small) Theater (2nd floor– follow the signs from the main entrance)
No. 800, Section 6, Zhongshan N Rd, Shilin District, Taipei
There is no campus parking available, but there are several public lots in the vicinity.  Please consider taking public transportation.

Who:  All U.S. citizen travelers/residents are invited, so tell your friends!
This event will be off the record.  No filming or recording, please.

How: Please RSVP by Wednesday, May 9th to [email protected]A U.S. passport will be required for entry.

*Services the AIT will provide:

  • Notary Services
  • Passport Renewals
  • Absentee Voter Assistance

Note: Payment for Services by Local Bank Draft in USD Only, No Cash Payment will be accepted

The AIT can only provide the services listed above.

For all other services, please come visit us: https://www.ait.org.tw/u-s-citizen-services/scheduling-appointments/

Payment for services must be made by local bank draft (Cashier’s Check) in U.S. Dollars (本地銀行的美金匯票) payable to “American Institute in Taiwan” with no other amendments or notations (such as “Not Negotiable”).  We regret that we will be unable to provide services without payment by local bank draft at the time of the visit.  Please ensure that your bank draft is for the exact cost of your services.  Minor child passport renewals cost $115; adult passport renewals cost $110; first-time or lost adult passport replacements cost $145; all notary services are $50 per notary signature. More details of the fee schedules can be found here.

For passport renewal information and required documents for adults and children under 16 years of age, please refer to AIT’s website.  To renew a child’s passport, the child and both parents must be present.

All applicants must prepare A-4 sized photocopies of all required documents before submitting the passport application.

For passport renewals, the passport will be ready in about three weeks and will be sent to the applicant by courier.  The previous passport will be cancelled and returned to the applicant on-site.