Taiwan export control regulatory reform: China is no longer a "restricted area" under the strategic high-tech commodity ("SHTC") regime

The Bureau of Foreign Trade ("BOFT") promulgated on 18 June, 2012 the removal of China from the list of restricted areas, except when exports are associated with semiconductor foundry equipments. This significant reform on export control regulations reflects a pragmatic approach taken by the BOFT and paves the way for further reform on international trade regulations.

Until the BOFT's said promulgation, China has been one of the seven countries which fall within the "restricted areas" under the SHTC control regime. By reference to the export control regulations in countries including the US, the European Union and Japan and to reflect the trend on normalizing trades between Taiwan and China, BOFT promulgated on 18 June 2012 the amendment to the list of restricted areas for SHTC control purposes with respect to exportation to China.

According to BOFT's proposal, effective immediately, China is not a restricted area for exportation of the SHTC commodities, unless the exported goods fall into one of the 12 types of semiconductor foundry equipments, including chemical mechanical polisher, the photo-resist stripper, photo-resist developer, rapid thermal processor, deposition apparatus, cleaning equipment, dryer, electron microscopes, etcher, ion implanter, photo-resist coater, and lithography equipment.

The removal of China from the list of restricted areas shall give substantial benefits to those whose trade activities involve exporting SHTCs to China from Taiwan. One of the benefits for exporters of SHTCs to China is that they can now be relieved of potential criminal liabilities under the new regulation. While the administrative fines may still be triggered by noncompliance to SHTC export permit requirements, criminal liabilities that might result from exporting SHTC commodities to restricted areas without obtaining a SHTC export permit will no longer apply to the exports to China, unless the export commodity is one of the 12 types of semiconductor foundry equipment mentioned above.

Another benefit is that those exporters can now be entitled to the exemption of SHTC export permit when transiting or transshipping certain SHTC commodities to China. Under current SHTC regulations, an SHTC export permit is required when transshipping SHTC commodities to restricted areas. With the new amendment to the list of restricted areas, transshipping any SHTC commodities other than the 12 types of semiconductor equipments to China, as a non-restricted area, will no longer require an SHTC export permit.