Taiwan bike industry could adopt farmer-friendly tariff reducer

On her return from last week's WTO talks in Hong Kong, Ho Mei-yueh, Taiwan's Minister of Economic Affairs, said the island's bicycle manufacturers could benefit from a tariff harmonisation strategy more normally used in the agricultural sector. The Swiss Formula - "where X = initial tariff rate; A = coefficient and maximum tariff rate; Z = resulting lower tariff rate" – can be applied by countries to offset taxes imposed on economically-challenged sectors.
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According to the Taipei Times, the Minister of Economic Affairs talked about adopting the Swiss Formula during a press conference held yesterday afternoon. The World Trade Organization trade talks were attended by trade ministers from 13 nations, including the US and many EU states.

Ho Mei-yueh said the Taiwan government was to adopt the Swiss Formula for many trade sectors, possibly including bicycle production. This would even out tariff peaks, high tariffs and tariff escalation, which she said will boost Taiwan's exports.

Taiwan exports five million bicycles a year.

According to the WTO website, the Swiss Formula is "a special kind of harmonizing method. It uses a single mathematical formula to produce: a narrow range of final tariff rates from a wide set of initial tariffs; a maximum final rate, no matter how high the original tariff was; [and] the required cuts are then divided into equal annual steps."

The formula was proposed by Switzerland in the 1973–79 Tokyo Round negotiations.

"But Switzerland opposes using this method in the current agriculture negotiations; it prefers the Uruguay Round approach, while Uruguay prefers the Swiss formula..." reports the WTO.


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