Taiwan's Fastener and Textile Industry Impacts under RCEP

Taiwan Industrial Fastener Institute (TIFI) Chairman Tsai Tu-Chin named exchange loss among the two factors at play hindering the fasteners industry competitiveness on Sunday.

Tsai's remarks came on Nov. 22 as the Economic Ministry invited industry leaders to discuss their respective sectors' impacts on RCEP.

Exchange loss continues to be a familiar tune, as Taiwan's industry relies heavily on exports. Tsai said under a strong New Taiwan Dollar; the fasteners industry had experienced exchange loss up to NTD$5 billion this year. Tsai also implored government intervention and assistance as tariffs placed by the RCEP in the future would be high as 5% and 30%.

In the past two years, Tsai said the fasteners industry value reached NTD$1760 billion in 2018 and NTD$143 billion in 2019, yet in 2020, it would be hard-pressed to hit NTD$100 billion, citing exchange loss as the main culprit.

The second factor contributing to the sector's challenges is tariffs. Taiwan's fasteners maintain a strong competition as it produces products for aviation, aerospace, automotive, and electronics. Taiwanese firms traditionally are equipped with better smart manufacturing and automation capabilities. Tsai pointed out that these advantages are a moot point with tariffs added on exchange loss.

TIFI Vice-Chairman and Chairman of Jinn Her Enterprise Tsai Yuang-yu, offering a different perspective, pointed out Taiwan's fasteners traditionally were exported to European and American markets. Yet, these two markets have stalled due to the COVID-19 outbreak. Vice-Chairman Tsai said despite Taiwan's competitiveness, without its main outbound markets, it would face challenges against Chinese and Southeast Asian products in the RCEP region, despite having directing resources to follow the government's "New Southbound Policy" initiative.

Taiwan Textile Federation (TTF) President Justin Huang said the textile industries must observe the "production origin" specifications closely with RCEP the future signing of CPTPP.

Huang pointed out that under the 15-member RCEP, seven countries are also part of the CPTTP. However, RCEP has less stringent specifications regarding production origin classification. CPTPP has stricter regulations; the entire production chain must be focused on one manufacturing place for it to consider as the country of origin.

For RCEP, the country of origin depends on where the clothing is cut and made. How both agreements decide the country of origin specification will impact Taiwan's yarn and fabric exports.

Huang said at present, more observation is required before making further comments, yet he said the RCEP is unlikely to impact Taiwan's textiles too much at the moment.

Taiwanese firms are competitive in producing high-valued textile materials with technical know-how, which European and American markets favor. Huang said Southeast Asian and Chinese firms are unlikely to pose a challenge despite being Taiwan's main competitors.

Industry representatives include those from sectors like petrochemical, plastics, textile, metals, machine tools, machinery, fasteners, automotive, motorcycles, and panels.