TAIWAN-CHINA TRADE MOVES STALLED

TAIWAN-CHINA TRADE MOVES STALLED

Taiwan's effort to ease the 46-year ban on direct trade with China by allowing non-locally registered vessels to operate feeder services remains stalled awaiting a concrete response from Beijing.

The Cabinet passed May 4 an "offshore transshipment center" plan that would permit such ships to operate between Kaohsiung and mainland harbors.Foreign carriers would be able to transship cargo not originating in Taiwan through Kaohsiung to China, and cargo from the mainland to third-country ports via Kaohsiung.

Cargo will not be allowed to enter Taiwan territory nor pass through its customs. Nor will cross-strait feeders be allowed to operate as "mother ships" for regional or long-distance routes.

The convenient way to mask what some see as a considerable bending of the trade ban is to designate a special area in Kaohsiung as an "offshore" center and thus not part of Taiwan.

Liu Chao-shiuan, Minister for Transportation and Communications, reckons this plan could add the equivalent of 1.5 million 20-foot containers, or TEUs, annually to transshipment volumes through Kaohsiung.

Already the world's third-busiest containerport, Kaohsiung handled 4.9 million TEUs last year, 42 percent of which was transshipment, harbor bureau figures show.

In the first five months of this year, Kaohsiung processed 2.1 million TEUs, up 3.9 percent from the year-earlier period, of which 42.5 percent was transshipped. That figure of transfer cargo was up 8.7 percent on a year earlier to 881,060 TEUs.

Mr. Liu said the offshore transshipment center rules "clearly define shipping between Taiwan and the mainland as a 'special route,' " neither domestic nor international.

Depending on the results of the experiment, more progress toward direct shipping would be possible, including opening up Taichung and Keelung for feeder services and allowing imports of semi-finished mainland goods into bonded export-processing zones - including one in Kaohsiung harbor - for assembly or processing and re-export.

Taiwan and foreign shipping representatives expressed support for the move as an initial step toward liberalization.

By September, 11 carriers had received approval and berths from the Kaohsiung Harbor Bureau for 21 containerships on various cross-strait feeder services.

Among the approved local companies are Evergreen Marine (Taiwan) and its sister Uniglory Marine Corp., state-owned Yangming Marine Transportation Co., Wan Hai Lines Ltd., Nan Tai Line Co. and Yong Lung Steamship.

Foreign lines to get the nod include Orient Overseas Container Line Ltd. of Hong Kong through its Taiwan agent, the American President Lines unit of American President Cos. of Oakland, Calif., and the Maersk Line arm of Denmark's A.P. Moller Group.

The main barrier to actually setting sail lies in China. After initial caution, Chinese transportation officials welcomed the idea, though with some caveats.

It left "some distance" from Beijing's call for direct shipping, officials said. They also expressed opposition to the restriction in what Beijing considers "domestic" shipping between the mainland and Taiwan.

Lin Sheng-san, chairman of the National Association of Chinese Shipowners and chairman of Evergreen Marine (Taiwan), and representatives of six other Taiwan lines met in Hong Kong with leaders of mainland shipping companies to discuss the plan. Further discussions took place in Dalian on the mainland. Taiwanese executives expressed optimism that the cross-strait feeder plan will be realized soon, saying the mainland authorities need time to digest it.

"As we did not notify the other side in advance and this plan is not the same as the direct shipping links they want, they need time to study, particularly as there are many agencies in the mainland government that would be involved," said Chang Hsiung, vice president of Yangming.

George Hsu, president of Evergreen Marine (Taiwan), echoed the implied criticism of local authorities.

Taiwan's plan "was drafted with consultation with shipping companies behind closed doors in six months without consulting the other side."

The mainland "feels Taiwan's offshore transshipment center plan falls short of direct shipping links. We must give them some time, especially as they are more bureaucratic," Mr. Hsu advised.

He also expressed some frustration with the restriction of cross-strait feeder services to foreign vessels and urged rapid transition to direct links.

A positive development was the reported statement by Li Jian, deputy director of the office of Taiwan affairs with China's Ministry of Transportation, that "there are points of intersection" between Taiwan's plan and the mainland's hopes.

Mr. Li said current cross-strait political differences would not influence progress on cross-strait shipping, a judgment seconded by Mr. Hsu.

Taiwan shipping industry sources say a proposed set of procedures to manage cross-strait shipping has already been submitted by Beijing's transportation ministry to the State Council for approval, which could come by year-end.