The Financial Times is reporting that for the first time, Taiwan is going to exercise its WTO options against a Chinese import:

Taiwan said on Tuesday it planned to increase tariffs on towels imported from China to protect its local industry, the first so-called safeguard measures imposed by the island against Chinese products since the two sides joined the World Trade Organisation.


The International Trade Commission, a body under the Ministry of Economic Affairs, said on Tuesday it had decided to recommend to the government that higher tariffs be imposed on certain towel products from China, but had not yet determined the exact tariff rate.

“Such import relief measures are intended to make up for damage caused by sudden import surges, therefore the tariff level has to be reasonable,” said Huang Chih-tien, an ITC member. The Commission is to determine the tariff rate in another meeting on Friday.

The safeguards move came in response to a petition filed by a local industry group, which demanded that tariffs on Chinese towels – currently at 4.5 per cent – be raised to 189 per cent for three years or that import quotas be imposed.

Last month, the ITC found that an import surge from China had indeed caused market disruption at home. This is enough to allow for safeguard measures. But the government fears that meeting the towel makers’ demands too easily would open a pandora’s box of calls from other industries for protectionist measures against China.

Taiwan opened its market to towels produced in China in February 2002. Since then, local manufacturers’ share of the domestic market has been halved from 16 per cent to 8 per cent while Chinese producers have grabbed 69 per cent, according to the Taiwanese government. Of the more than 400 Taiwanese towel manufacturers that existed a decade ago, only 78 are left, employing no more than 1,000 people.

Given the complex relations between the two economies, and the vast economic damage China can do to Taiwan, perhaps saving 1,000 towel industry jobs isn’t that good an idea. Maybe the government simply intends for the WTO to kill the suggestion, thus saving it from local opprobrium.