Taiwan gets preferential treatment for chip exports to US under MOU

Taiwan Vice Premier Cheng Li-chiun said semiconductor exports to the US have preferential treatment under a recent MOU, exempting them from potential Section 232 tariffs. The deal also waives tariffs on auto parts, timber and other goods.

Taiwan Vice Premier Cheng Li-chiun, on Thursday, said that the semiconductor exports to the US enjoy preferential treatment agreed under an investment memorandum of understanding (MOU) signed in January, reported Reuters. The United States has no timetable on the Section 232 tariffs on semiconductors, she added. Under Section 232 of the U.S. Trade Expansion Act, the President has the power to impose tariffs on imports of strategic goods that can threaten national security.

Speaking in Taipei, Cheng clarified that the country got most-favoured-nation treatment for chips with the January deal, even as the US mulls tariffs on semiconductor imports. "We hope the preferential treatment can be confirmed first. The government will help businesses negotiate their individual tariff-exempt quotas and covered items," Focus Taiwan quoted Cheng as saying.

Semiconductor Deal Specifics

Taiwan is a semiconductor hub and home to the world's biggest chip contractor, TSMC. The chip giant is investing $165 billion to build factories in the US state of Arizona.

Under the terms of the agreement signed between the two sides in January, Taiwanese companies would be allowed to export up to 2.5 times of their planned production capacity that they are building in the US without paying the Section 232 tariffs, according to the Focus Taiwan report.

Those companies that have already built a chip facility in the US are allowed to import semiconductors equivalent to 1.5 times the new US production capacity without paying the Section 232 tariffs, the report mentioned.

Waivers on Other Goods

Cheng also announced that the US has waived the Section 232 tariffs on Taiwan's exports of auto parts, timber, lumber and wood derivative products as part of the January pact. These will be retroactively applied from May 1.

Accordingly, the tariffs on auto parts had been cut from 26.71 per cent to 15 per cent. Tariffs on wooden furniture have been slashed to 15 per cent from 25 per cent.

The aircraft components that use steel, aluminium and copper products, all three categories have been fully exempted from Section 232 tariffs. These have been reverted to an average MFN tariff rate of 1.12 percent. (ANI)

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