China further exempts tariffs on Taiwanese imports

HONG KONG (Yonhap) -- China has further exempted tariffs on Taiwanese imports, government officials said Monday, a move expected to hurt Korean exports to the world's No. 2 economy.

Under a trade agreement reached earlier between China and Taiwan, Beijing has started implementing the second phase of tariff reductions on goods and services from Taipei this month, the Chinese cabinet State Council said.

The latest move will allow more than 94 percent of goods and services from Taiwan listed in the bilateral Economic Cooperation Framework Agreement (ECFA) to enter China without paying any duty, including metal products, medical care and auto parts.

In 2010, China and Taiwan agreed to gradually eliminate tariffs on 539 items of Taiwanese origin. The ECFA covers services and investments as well as competition and other issues and is estimated to be worth US$13.83 billion.

The bilateral trade pact is expected to have a negative impact on South Korean exporters as many compete against Taiwanese companies.

According to the Korean International Trade Association, out of the top 20 items that Korea exports to China, 14 items overlap with exports from Taiwan.

Those items make up 60 percent of South Korea's total exports to China, according to the association.