Flexible Adjustment of Tariff Rates

                                                                                                By Dept. of Tariff and Legal Affairs, CA

1. The Legal Basis for Tariff Rate Adjustment

According to Article 71 of the Customs Act, to cope with special domestic and/or international economic situations, to adjust the supply of goods, and to provide industries with appropriate operational conditions, customs duties or tariff quotas imposed on imported goods may be adjusted up or down within the range of fifty percent of the tariff rate or quota quantity prescribed in the Customs Imports Tariff Schedule. Nevertheless, in the case that the imported goods are in the category of staple commodity and the goods’ prices have fluctuated enormously, the range may be extended to one hundred percent. The time period applicable to the tariff rate or quota quantity adjustment shall not exceed one year.

2. The Method of the Adjustment

(1) When facing enormous changes in domestic or international economic situations, government authorities need to adjust the tariff rate of import goods to cope with it. The normal amendment procedure involves a review process by the Legislative Yuan, which takes a long period of time and may be too slow to cope with the rapid-changing circumstances. In response, Article 71 of the Customs Act stipulates: “To cope with special domestic and/or international economic situations, to adjust the supply of goods, and to provide industries with appropriate operational conditions, customs duties imposed on imported goods may be adjusted up or down within the range of fifty percent of the tariff rate prescribed in the Customs Imports Tariff Schedule…The categories of goods subject to the adjustment of tariff rate or quantity referred in the preceding paragraph, the range of actual adjustment, and the dates for commencing and terminating such adjustment shall be drawn up by the Ministry of Finance in consultation with other related competent authorities, and be submitted to the Executive Yuan for approval.”

(2) The above provisions offer no more than a temporary short-term expedient. The Ministry of Finance, the Ministry of Economic Affairs and the Council of Agriculture of the Executive Yuan are extremely cautious in the implementation of this measure. In addition to investigating the reasons given by businesses and analyzing the possible impacts, it is still necessary to make cautious decisions based on government policy objectives, appropriate tax rates, implementation conditions and durations. If the tariff rate adjustment is not for a special economic situation, it should be incorporated into the review of amendment to the Customs Import Tariff Schedule in principle. If during the implementation of a temporary tariff rate adjustment, there happens to be an amendment of the tariff rate to the same commodity, then the temporarily adjusted tariff rate will be automatically terminated and the amended tariff rate shall apply.