US-AEP ASSESSMENT:
Taiwan

• Economic Profile
• Environmental Profile
• Government
• Policies and Laws
• Urban Environment and Infrastructure
• Private Sector and Academia
• Environmental Awareness and Public Involvement
• U.S. Government Activities
• Other Bilateral and Multilateral Organization Activities
• Opportunities to Support Clean Production and Environmental Management
• References
• Endnotes

1. ECONOMIC PROFILE

Demographic Conditions and Trends

With a population of more than 21 million on an island of 36,000 square kilometers, Taiwan has the second highest population density in the world. As has been the case with the other high-performing economies of East Asia, Taiwan's political leaders have pursued economic policies based on the principle of shared growth, promising that all groups in the country would benefit as the economy expanded. Taiwan now has one of the highest rates of income equality in Asia.¹ This is reflected in the well-being of its citizens; infant mortality rates are among the lowest in Asia, on a par with Japan, and adult illiteracy has been reduced to 7 percent.

Economic Conditions and Trends

Taiwan has experienced tremendous economic development during the past twenty years; gross domestic product has risen from $49 billion in 1975 to $241 billion in 1995. During this period annual per capita income rose from $964 to $12,490. The composition of economic sectors has followed the traditional development path; agricultural production value has dropped from 13 percent of gross domestic product in 1975 to 4 percent in 1995, whereas the production value of services rose from 47 percent to 60 percent during the same period. Industrial production is still a major driver of the economy, although production value dropped from 40 percent to 36 percent from 1975 to 1995. Today, Taiwan exports about $93 billion of goods annually, about $4,400 per capita.²

2. ENVIRONMENTAL PROFILE

Industrial and Environmental Development Background

The majority of Taiwan industries are small and medium sized; however, many of these industries, including food processing, textiles and garments, leatherware, and wood products, which once dominated Taiwan's exports, have lost their dominant position to capital- and technology-intensive industries. These include chemicals, petrochemicals, information, electrical equipment, and electronics. Appreciation of the exchange rate, rising wage rates, and emerging labor shortages, combined with increased demands

ACRONYMS

1. BOO: Build-own-operate
2. BOT: Build-own-transfer
3. CEPD: Council on Economic Planning and Development
4. CNS: Chinese National Standards
5. EIA: Environmental impact assessment
6. GDP: Gross domestic product
7. IDB: Industrial Development Board
8. ISO: International Organization for Standardization
9. ITRI: Industrial Technology Research Institute
10. MOE: A Ministry of Economic Affairs
11. NGO: Nongovernmental organization
12. NIMBY: "Not in my backyard"
13. R&D: Research and development
14. ROC: Republic of China
15. TEPA: Taiwan Environmental Protection Administration
16. US-AEP: United States-Asia Environmental Partnership
17. USEPA: United States Environmental Protection Agency

for a cleaner environment have contributed to the export of many of the more labor- and pollution-intensive industries to other countries in the region.³

Environmental Conditions

The Taiwan Environmental Protection Administration (TEPA) has an extensive network of stations for monitoring air and water quality. A total of sixty-six automated air quality_monitoring stations are now in operation. According to analysis of TEPA's monitoring data, the number of days on which TEPA's Pollutant Standard Index exceeded the "unhealthy" threshold for respirable particulate matter consistently rose every year from 1988 through 1992 but showed a sharp decline for 1993 and 1994. The number of days when the index's threshold for SO₂ was exceeded fell precipitously from 1991 to 1994, following implementation of a new policy in 1993 that required significant reductions in the sulfur content of fuels.⁴

Surface waters are a major source of Taiwan's water supply (rivers provide about 59 percent of the country's water supply, whereas reservoirs provide 19 percent). A 1991 TEPA survey of water quality in fifty major rivers yielded the following results. Three-quarters of the total length of the rivers measured was found to be unpolluted or slightly polluted, whereas the rest was found to be polluted and badly polluted. An assessment of the water quality of twenty reservoirs for nutrient-based pollutants indicated that water quality in twelve was excellent or acceptable but poor in the rest.⁵

Groundwater is an important water supply source, accounting for about 22 percent of total water consumption. Industrial users account for 19 percent of total groundwater use. Although groundwater pumping is regulated, demand has far outstripped the ability of regulatory authorities to manage aquifer use effectively. Because groundwater is basically a "free" resource, overpumping is a serious problem in Taiwan and has resulted in serious land subsidence (e.g., 68 percent of the area of the Taiwan Basin subsided more than 0.5 meters during the 1980s). In addition, lack of effective groundwater protection measures has allowed significant contamination of groundwater. A 1991 survey of groundwater sources found 34.5 percent of the samples used for drinking water unacceptable for drinking due to total bacteria content and 15.6 percent unacceptable due to coliform bacteria.⁶

Environmental Trends

TEPA has developed an impressive data base on the pollutant discharge and waste generation of eleven industry groups and three specific state-owned enterprises. The system can produce pollutant discharge projections comparing a natural growth scenario with the current regime of environmental regulation. For example, TEPA estimated the growth of total particulates in 1991 to be 11.4 percent less than would have been the case without regulation.⁷

In 1991, four years after the formation of TEPA, private sector investment in pollution control equaled almost 6 percent of total private sector manufacturing investment. In 1992 it equaled 4.3 percent of total investment. Pollution control for state-owned industries rose from almost nothing in 1988 to 18.9 percent of fixed investment in 1990 and to 30 percent in 1992. When investments by state-owned industries are included, it would appear that Taiwanese industry in 1992 expended a larger share of its investment budget in pollution controls than Japanese firms did at the height of Japan's pollution control effort.⁸

3. GOVERNMENT

Key Ministries for Industrial and Environmental Matters

Because the Taiwan government has integrated environmental policies and programs into its core industrial and economic agencies and ministries, a number of government institutions have important roles to play in industrial environmental matters, including the following:

Economic and Financial Special Group. Industrial policy is led by a small number of agencies and individuals in the central government. The president and the Economic and Financial Special Group are at the top of the system. The latter is an informal inner group of the cabinet consists of the ministers of economic affairs and finance; several other ministers without portfolio; the governor of the central bank; and the director general of the budget. The group is advised by the Council for Economic Planning and Development, Industrial Development Bureau, and the Council for Agricultural Planning and Development.⁹

The Council for Economic Planning and Development (CEPD), within the Executive Yuan, provides policy support to the ministries and the president. The council formulates short- and medium-term development plans, but implementation responsibility resides with the Industrial Development Bureau (see below). CEPD's latest development plan promotes the "ten emerging industries" (see section 4).¹⁰

The Science and Technology Group is an independent body that reports to the Executive Yuan and oversees the budgets, plans, and programs of science and technology agencies. The group draws on distinguished scholars from around the globe, including the United States, in evaluating Taiwan's science and technology priorities and needs.¹¹

The Ministry of Economic Affairs (MOEA) is the central agency for economic and industrial planning and program implementation. The ministry has a wide array of agencies under its jurisdiction and is involved in essentially all government activities affecting Taiwanese industry.¹² MOEA agencies that are most directly engaged in industrial environmental matters include the following:

� The Industrial Development Bureau (IDB) is responsible for implementing a large array of industrial development incentives, including incentives for waste minimization and pollution control. It plays a leading role in public sector research and development (R&D) policy, has strong ties to the Industrial Technology Research Institute (see below), and has a role in allocating subsidized credit from state-owned banks to particular industries and firms.¹³

� Bureau of Commodity Inspection and Quarantine has the lead role for promoting and implementing ISO (International Organization for Standardization) 9000 and ISO 14000, including certification. From April 1989 to June 1996, it provided ISO 9000 registration to more than 800 Taiwanese businesses free of charge.¹⁴

� National Bureau of Standards. This bureau has lead responsibility for developing ISO 9000 and CNS (Chinese National Standards) 14000 standards (equivalent to ISO 14000) and has established a committee to draft the former.¹⁵

Industrial Technology Research Institute (ITRI). ITRI is the premier industrial R&D institution in Taiwan, established in 1973. Although the majority of ITRI's funds come from MOEA, the institute is working to become more self-supporting by providing consulting services to industry. ITRI performs a wide range of technology research activities. In addition to pollution control, waste treatment, and waste minimization research and development, the institute has an aggressive program to support industry in implementing environmental management systems. The government established the National Center for Cleaner Production within ITRI in November 1995 to provide a catalytic and coordinating role for cleaner production, including international cooperation in cleaner production, coordination of cleaner production information and resources within Taiwan, technical assistance, consultation to industry and regulatory authorities, and education and promotion.¹⁶

Taiwan Environmental Protection Administration. Originally established as the Environmental Protection Bureau under the National Health Administration in July 1982, the bureau was later upgraded to the current independent and ministry-level body in August 1987. TEPA is Taiwan's main environmental administrative unit; it is organized under the Executive Yuan into seven bureaus, based on environmental media, and an Office of Science and Technology Advisers. TEPA had a budget of more than $280 million in fiscal 1995, whereas the total government budget for environmental protection amounted to $492 million.¹⁷

The Ministry of the Interior oversees the Department of Public Works responsible for construction and management of sewage systems.

Other Key Institutions on Industrial and Environmental Matters

TEPA operates and supports various institutions engaged in environmental research and institution strengthening, including the National Institute of Environmental Analysis (laboratory analysis and test methods), the Environmental Research and Development Institute, and the Environmental Personnel Training Institute.

The cities of Taipei and Kaoshiung and the Taiwan provincial government have key roles in implementing environmental standards established by the central TEPA. Although TEPA sets standards, much of the inspection and oversight activities required to assure compliance reside within the Taiwan Provincial Environmental Department and the Taiwan and Kaoshiung environmental agencies.¹⁸

4. POLICIES AND LAWS

The Taiwan government has pursued a highly focused policy of economic development that includes close integration of industrial and environmental policies. Government and business leaders recognize that environment is rapidly becoming a major factor in competitiveness in the global marketplace. Taiwan's legal and policy framework for promoting clean technology and environmental management consists of an arsenal of tools, including command and control policies, market-based instruments, promotion and support of voluntary standards, and public information (through Taiwan's Green Mark program).

Environmental Policies and Laws¹⁹

Taiwan's first environmental laws date from the mid-1970s, although they were substantially strengthened in the 1980s.²⁰ The laws are media specific (air, water, solid, and hazardous waste); ambient air and water quality standards generally follow U.S. standards. Implementation of these laws has sparked an outpouring of regulations in recent years�from 668 pages of standards in 1989 to 1,562 at the end of 1994.²¹ TEPA implements a rigorous emissions and effluent standard-setting process and an equally rigorous monitoring and enforcement program. The agency initiated an air and water discharge permits system in 1993. A two-phase system exists for water; more rigorous standards (still under development) will become effective in 1998. Standards for conventional water pollutants are industry specific, whereas toxic pollutant standards are generic for all industries.

Taiwan's hazardous waste regulations are similar to those of the United States in the way that wastes are classified and in the management standards that have been issued. Companies assume liability for wastes they generate; however, this requirement has not been rigorously enforced because no treatment facilities currently exist. (Unlike the United States, Taiwan is opting for government-sponsored central treatment facilities).

Manufacturers or importers of toxic substances, as defined by TEPA, are required to obtain permits under Taiwan's Toxic Chemical Substances Control Act. To deal with chemical accidents, TEPA in conjunction with municipal authorities has established a comprehensive emergency response network. TEPA has developed a data base of chemical substances to assist government and industrial facility managers in identifying hazards and implementing appropriate responses.

Industrial Policies and Laws

The central government has launched an ambitious campaign to establish an Asia-Pacific Operations Center, intended to make Taiwan a global trading center for the region. As part of this initiative, the government is aggressively promoting twenty-four key, high-technology, high-value-added economic activities in the "ten emerging industries."²² These industries, which include environmental goods and services, were selected because they cause little pollution, are not energy intensive, have strong market potential, are technologically demanding, and have high value added. Firms in all of the "ten emerging industries" are favored by tax policies, eligible for loans from commercial banks and the Executive Yuan's Development Fund at preferential rates, and given priority consideration in land acquisition. Firms are organized by law into industry-specific associations.²³

In implementing this policy, MOEA has organized committees, consisting of representatives of CEPD, the National Science Council, TEPA, and IDB, for each of the "ten emerging industries." These committees are directed to establish a manufacturing center in conjunction with the government's plans to establish the Asia-Pacific Operations Center. Environmental considerations, including clean production design, are integral to the committees' activities.²⁴

The government of Taiwan is keenly aware of the crucial role that environmental performance plays in today's marketplace. The U.S.-Asia Environmental Partnership's (US-AEP's) industrial policy assessment team found that Taiwan has embedded an environmental ethic in its industrial policy and regime. Industrial development officials consistently cite international competitiveness, corporate profitability, and reductions in the cost of command and control as reasons for the government's national strategy of implementing an array of "carrot and stick" policies to foster investment in clean technology and improved industrial environmental improvement. The government's melding of industrial and environmental regimes is exemplified by establishment in 1989 of the MOEA/TEPA Integrated Task Force for Industrial Waste Reduction, charged with promoting pollution prevention and providing technical assistance to industries.²⁵

Although much of the pollution control and prevention efforts for industry are made by MOEA through ITRI, IDB, and the MOEA/TEPA Integrated Task Force for Industrial Waste Reduction, TEPA has primary responsibility and oversight for administering environmental regulatory programs.

Public Information Policies and Laws

The government does not have a "Freedom of Information" kind of law. Although a public disclosure bill has been drafted, it is thought to be several years away from enactment by the Executive Yuan. In principle, TEPA has an agency policy to provide access to the public on information concerning industrial environmental performance; however, in practice the information is difficult to obtain and the public is not generally aware of what is available or how to interpret it. TEPA does not provide opportunities for public comment on its proposed regulations and typically does not conduct public hearings until its packages have been submitted to the Executive Yuan.²⁶

Under Taiwan's Green Mark program, initiated in February 1993, more than 200 products have qualified for ecolabeling. To qualify, a firm must meet the following requirements: (a) no environmental protection agency has taken any measure against the firm within one year prior to application for Green Mark status, (b) the applicant has achieved "remarkable results" in reducing wastes, and (c) the applicant meets the standard specifications stipulated by TEPA.²⁷

Legal and Policy Developments of Particular Relevance to Industrial and Urban Environmental Management

As mentioned above, the Taiwan government has closely integrated industrial and environmental policies. CEPD, MOEA, ITRI, and TEPA are the major government players in a concerted effort to encourage improved environmental performance and pollution prevention among existing industries and to stimulate investment in cleaner production technologies in new plants. Some of the most interesting policy developments with respect to US-AEP are described in this section.

As part of the central government's policy of creating the Asia-Pacific Operations Center, IDB and CEPD have established a policy to encourage further development of the newly emerged pollution-control industry. This policy includes (a) commissioning advanced R&D work, (b) establishing a testing center for pollution control equipment, (c) raising the effectiveness of end-of-pipe treatment technologies by developing incineration systems featuring energy recovery and environmental protection, (d) strengthening technology related to waste treatment and resource recycling, including expanded use of recycled materials, (e) prioritizing the use of cleaner production technology for the electronics, computer, steel, automotive, petrochemical, textile, dyeing, metal surface treatment, electroplating, and leather industries, and (f) assisting businesses in obtaining ISO 14000 certification and continued development of environmental strategies.²⁸

The new National Cleaner Production Center at ITRI is conducting extensive research on pollution intensities of industrial processes. ITRI is doing this to find ways to redesign production processes to reduce their pollution intensity, assess industry-specific performance in Taiwan against international best practices, and track industry-specific performance over time.²⁹

Industrial parks play a major role in Taiwan's industrial policy; thirty-nine parks currently operate. The government is actively pursuing a policy of developing "intelligent industrial parks," which are linked together by international telecommunications systems. Two such parks�in Hsinchu and Tainan�currently exist. TEPA has recently initiated an enforcement policy that requires industrial parks to have service centers in place that are responsible for meeting water standards and for implementing pretreatment standards for industrial users of central wastewater treatment facilities.³⁰

The government has established an interministerial committee to prepare a coordinated central government response to ISO 14000. Under the scheme prepared by the committee, the National Bureau of Standards is responsible for developing CNS standards, the Bureau of Commodity Inspection and Quarantine is responsible for building accreditation and certification systems, IDB provides technical assistance and leads a coordinating committee of industries, TEPA promotes the Green Mark (ecolabeling) system, and the Bureau of Foreign Trade collects information to track implementation of ISO 14000.³¹

Taiwan has implemented a range of market-based instruments to encourage investment in clean technology and pollution control. Most of these are subsidies, although some recent but imperfect policies are based on user and discharge fees.³²

The permit system implemented by TEPA includes requirements for self-monitoring and -reporting by industry. TEPA has recently required the sixty largest industrial boilers to implement continuous emission-monitoring systems, although this requirement is not strictly enforced. TEPA is contemplating continuous monitoring requirements for water discharges in the future.³³

TEPA has implemented an air pollution charge scheme for fuel-burning sources. The legislature nearly abolished the system in its first year of operation, because it was viewed as unfair (it is actually a fee on fuels rather than on emissions, based on sulfur and lead content); however, the charge is still in place and last year provided NT$3.6 billion^* in revenue, compared with the planned NT$6.9 billion per year originally projected by TEPA.³⁴

Air and water permitting is a major new challenge for TEPA and Taiwan's industries. Air permits are applicable to about 4,800 facilities. As of June 1996 only about 700 facilities had applied for permits. Of the roughly 90,000 industrial facilities in Taiwan, only about half have applied for water permits, although the deadline for application was May 1995.³⁵

New emission standards will significantly affect a major segment of Taiwan's industry. In early 1996 TEPA issued standards for volatile organic compound air emissions from surface-coating operations. The agency plans to issue these standards for the petrochemicals industry in 1997.³⁶

Environmental impact assessment (EIA) is a relatively new tool in Taiwan; the EIA Act was only enacted in December 1994. Although an EIA process existed in Taiwan prior to this act, it was not backed by enforcement authority or weight of law. Under the act, which is implemented by TEPA, EIAs are now required for all major projects, including industrial parks and proposed industrial facilities that exceed specified size thresholds identified in TEPA's guidelines.

TEPA has recently put a groundwater-monitoring system into place. Because the system provides data on the extent of groundwater contamination in Taiwan, greater attention is likely to be given to this issue. A Soil Protection Act to require cleanup of contaminated sites has been pending in the Legislative Yuan for the past four years. Outlook for enactment remains uncertain, although some possibility exists that it may pass in 1996 or 1997.³⁷

5. THE URBAN ENVIRONMENT AND INFRASTRUCTURE

The most pressing environmental concerns in Taiwan continue to be the need for environmental infrastructure. To meet this need, the government is experiencing tremendous pressure to privatize via the build-own-operate/build-own-transfer (BOO/BOT) route, but overall prospects for privatization are bleak due to the government's unwillingness to commit funds for providing guarantees. The legal framework for establishing project structures is still immature. In addition, no legal framework exists for project financing that provides for tax rules and contract laws. TEPA has assigned Sinotech the role of planning the BOO/BOT process for Taiwan.³⁸ The following summarizes the current status of environmental infrastructure and plans for the future:

Water Supply

A 1991 survey of all counties and cities in Taiwan Province found that 30 percent of the tap water was unacceptable for drinking due to the total bacteria content.³⁹ The poor have 10,000 to 20,000 illegal wells, most of which are contaminated. Nevertheless, clean tap water is not the highest priority in Taiwan.⁴⁰

Wastewater

Sewage connections for domestic wastewater account for only 3 percent of households, mostly in the Taipei area. In this regard, it is worth noting that the Tanshui River Project, scheduled to be completed in 1996, involves primary treatment only, combined with an ocean outfall.⁴¹ The government has allocated $30 billion over fourteen years for wastewater treatment. Construction of urban sewerage systems worth about $3 billion when completed in 2001 is the single largest undertaking. The central government is implementing local wastewater plants in four major cities.⁴²

Solid Waste

More than 75 percent of Taiwan's landfills are at or near capacity, and land is scarce. TEPA had planned for development of twenty-two municipal solid-waste-to-energy incineration facilities to handle 75 percent of Taiwan's municipal solid waste by the end of the decade. Frustrated by delays due to NIMBY ("not in my backyard") issues and convoluted public contracting procedures, TEPA drafted plans for future incineration projects with private sector participation; all incineration projects that had not moved forward by June 1, 1996, are now eligible for BOO/BOT participation. TEPA estimates that between thirteen and twenty-one incineration plants will be built under this plan. The new plan calls for incineration plants not included in the original plan, about eight county facilities projected thus far. A city/county authority will be established to oversee the projects under the new plan.

Recycling efforts of TEPA include creation of a subsidized foundation that operates twenty recycling centers around the island. In April 1996 the Taipei Department of Environmental Protection launched a comprehensive recycling program combining source separation, collection, and recycling.⁴³

Hazardous Waste

Even though TEPA has hazardous waste regulations similar to the United States, currently no central facilities exist in Taiwan for treating and disposing of hazardous wastes.

6. PRIVATE SECTOR AND ACADEMIA

Industry

Almost 2,000 industries have received ISO 9000 certification. Taiwan industry is also readying itself for introduction of ISO 14000 standards. Five companies are working with ITRI to conduct a pilot environmental management system program.

The China Productivity Center provides government-subsidized (IDB) management consulting to Taiwan industry. The center is a significant provider of assistance to Taiwan industry in developing quality management systems under ISO 9000. The center is preparing to assist industries in establishing environmental management systems under ISO 14000.

The American Chamber of Commerce in Taipei is one of the most active groups in Taiwan's business community engaged in environmental affairs. The chamber's basic position is twofold:

� U.S. corporations in Taiwan have considerable experience in handling hazardous and organic wastes under the U.S. regulatory framework and can share their knowledge with TEPA on such things as which regulations work and do not work, which are too stringent, and how the introduction of new regulations should be timed.

� Pollution standards in Taiwan should ultimately be as stringent as they are in the United States and Europe but should be phased in over time.⁴⁴

In a highly publicized court case, General Electric has agreed to clean up an industrial site that was contaminated by the previous owner. General Electric will use the U.S. Superfund characterization framework for determining the remediation strategy.⁴⁵

Academic and Research Institutions

Universities provide extensive support to the central government in areas such as clean technology and environmental monitoring. National Taiwan University's Graduate Institute of Environmental Engineering and ITRI's new National Cleaner Production Center are actively engaged in characterizing the relative environmental risks of alternative production technologies.⁴⁶

Taiwan Institute of Economic Research plays a major research role on industrial economic policies and does extensive work for MOEA and other ministries. Recent research on environmental policies has been limited but includes a current study of market-based instruments for environmental protection. The institute plays a leading role in Taiwan's representation on the Pacific Basin Economic Council and publishes an annual report on the council's activities.⁴⁷

Academia Sinica is the highest ranking academic institution in Taiwan. Headquartered in Taipei, this group operates eighteen institutes on topics that include the physical, life, and social sciences. The Institute of Ethnology published Taiwan 2000: Balancing Economic Growth and Environmental Protection, a widely cited publication.⁴⁸

Financial and Insurance Institutions

The Central Bank of China is responsible for managing the monetary supply and controlling foreign exchange. Local banks in 1991 included 16 local commercial banks, 8 small- and medium-sized business banks, 1 post office savings bank, 74 local cooperative banks, and 308 farmers' and fishermen's financial institutions. Foreign banks operated 35 branches throughout Taiwan.⁴⁹

The US-AEP assessment team's information on bank policies with respect to environmental matters is limited; more research is needed. The team found, however, from its assessment visit that the banking association in Taiwan has not addressed environmental matters to date. Because EIAs are required by law for new industrial facilities, submittal of EIAs is typically a bank requirement for loan applications. Banks may review EIAs, but more research is needed to determine the extent to which EIA findings are incorporated into lending decisions.

As a condition for approval of government-subsidized loans for pollution control equipment, one commercial bank contacted during this assessment requires certification of the equipment by an independent environmental organization.⁵⁰

7. ENVIRONMENTAL AWARENESS AND PUBLIC INVOLVEMENT

General Public Awareness of Environmental Issues

Recent public opinion polls have cited industrial pollution as one of the top three problems facing the country.⁵¹ The reaction of Taiwan's people to environmental degradation around them has mostly taken two forms in the past decade: (a) a NIMBY syndrome, mentioned above, marked by protests generally involving working-class villages and/or farming and fishing communities that have suffered directly from the effects of pollution and (b) formation of urban environmental groups, which owe their existence to the lifting of martial law in 1987 and gradual liberalization of the political sphere, the burgeoning middle class in the late 1980s and its growing concern for the quality of life, and easing of restrictions on the media.⁵²

Public nuisance complaints are a major mode of public "participation" in environmental matters. In 1991 more than 61,000 complaints were filed in Taiwan Province, of which industrial and commercial complaints accounted for 53 percent of the total. In response to the large number of public nuisance cases, the Legislative Yuan passed the Public Nuisance Disputes Resolution Act in 1992. The act employs a three-tier system of mediation-remediation-adjudication to resolve public nuisance disputes. Mediation is conducted by committees modeled after U.S. independent regulatory commissions. Public nuisance dispute resolution committees exist in every county.⁵³

Nongovernmental Organizations

The establishment of environmental nongovernmental organizations (NGOs) is a fairly recent development, because they could only be legally established within the last seven years. Now a number of influential NGOs exist, most centered around biodiversity and animal protection. NGOs engaged in environmental matters may be categorized into the following four categories⁵⁴:

General. The Green Consumer Foundation is a major player in the Taipei Department of Environmental Protection's recycling program. The foundation is also a major organizer of Taiwan Earthday. The Taiwan Environment Protection Union, formed in November 1987, is one of the more political groups in that it takes a strong and public stand on issues. The union campaigns on pollution issues, whereas the Homemaker's Union Foundation works on issues that affect the household, including pollution. The Beautiful Taiwan Foundation seeks to fulfill its name.

Profession based. The New Environmental Foundation is largely academic in focus. The Institute of Environmental Resources Research Center offers environmental resource research, engineering planning, and environmental impact assessment. The Health, Welfare, and Environmental Foundation focuses on medical, social welfare, and environmental protection research and activities. The Pro Green Foundation of the Republic of China, the Resource Recovery Foundation of the Republic of China, and the Taiwan Aluminum Can Recycling Foundation focus on recycling.

The Air and Waste Management Association and Water Environment Federation each have active chapters in Taiwan. The Air and Waste Management Association held its second International Comparative Risk Analysis Symposium in Taipei in November 1994. In November 1995 the Water Environment Federation cosponsored MOEA/TEPA's International Conference on Waste Minimization in Taipei, an annual event.

Regional and community based. The Hsinchu Anti-Pollution Association focuses on environmental concerns around the greater Hsinchu area. The Womens' Association for the Environment works closely with the Taipei Department of Environmental Protection in conducting public forums on environmental issues.

Business NGOs. The Green Business Forum was recently formed by businesses (with participation by the Green Consumer Foundation) to provide a forum for dialogue between businesses and environmentalists. The forum is conducting an industry survey of environmental management systems and is interested in sharing its results with the media and other countries. The Business Council on Sustainable Development was launched in December 1995 to promote sustainable development concepts with Taiwanese businesses in conjunction with the World Business Council for Sustainable Development. As of June 1996, the council had twelve corporate members. Although the council is still in its infancy, it is considering a number of projects to implement in 1996.⁵⁵

8. U.S. GOVERNMENT ACTIVITIES

U.S. Environmental Protection Agency

Under bilateral agreements signed in 1993 and 1994, the U.S. Environmental Protection Agency (USEPA) is providing extensive assistance and cooperating with TEPA. In addition to these activities, USEPA is supporting the proposal by the Government of Taiwan to establish a pollution prevention clearinghouse sponsored by TEPA, ITRI, and IDB. Taiwan is working under the Asia-Pacific Economic Cooperation forum to implement a Cleaner Production Center jointly with the Oregon Center; USEPA and TEPA will be major cosponsors.⁵⁶

US-AEP Activities in Taiwan

US-AEP has supported 161 environmental exchanges, has processed 258 trade leads, and sponsored 27 technology grants through the National Association of State Development Agencies, in addition to initiatives through the Council of State Governments. With USEPA, US-AEP has supported environmental action teams, short-term technical assistance, and training modules.

9. OTHER BILATERAL AND MULTILATERAL ORGANIZATION ACTIVITIES

Bilateral

During the literature review conducted under this US-AEP country assessment, Sweden was the only other country in the world besides the United States found to have a bilateral agreement with Taiwan involving environmental protection.

World Bank

Taiwan was disengaged from the World Bank in 1990.

Asian Development Bank

Taiwan is a member of the Asian Development Bank, with a 0.655 percent share.⁵⁷

United Nations

Taiwan has not been a member of the U.N. General Assembly and Security Council since 1971. In spite of this, Taiwan has stated its acceptance of and commitment to Agenda 21 and the Rio Summit. TEPA has announced that Taiwan would complete a National Environmental Action Plan, as fifty U.N. members now have.⁵⁸

10. OPPORTUNITIES TO SUPPORT A CLEAN REVOLUTION

Policy Framework

Pollution intensity. Taiwan is already pursuing cutting-edge policies and programs to promote clean production and environmental management, but one particularly promising area of engagement is ITRI's research program to characterize the pollution intensity of industrial processes. This activity could provide a springboard to involving other countries in the region to pursue similar endeavors. Also, a joint effort to explore the linking of pollution intensity to rewards, such as fiscal and financial incentives, could spur firms to search for ways to reduce the pollution intensity of their output.⁵⁹ Taiwan chapters of the Air and Waste Management Association and Water Environment Federation may provide important venues for reaching environmental professionals in addressing issues such as pollution intensity measurement and risk assessment.

Public access to information. Although TEPA appears to have a wealth of information on industrial environmental performance, especially compared to other countries in the region, public access to this information is extremely limited. Information disclosure may be one area in which US-AEP could effectively engage TEPA. The two new business NGOs in Taiwan, Green Business Forum and Business Council for Sustainable Development, offer valuable venues to promote "clean revolution" ideas. Both organizations require member companies to pledge disclosure of their environmental performance to the public (for the Green Business Forum, companies pledge to report annually). US-AEP should collaborate with these groups in pursuing its information disclosure initiative

Industrial Environmental Management

Industrial estates. Other opportunities for clean production and environmental management may involve joint U.S.-Taiwan efforts centered around the continued development and enhancement of Taiwan's industrial estates. The Taiwan government has already realized the importance and implications of these estates; Taiwan may prove a willing partner in examining policies for improved environmental management of industrial estates.

Banking community. Opportunities directed at the banking community should be explored. Engaging the banking association and providing articles on relevant environmental issues for publication in major banking trade publications (e.g., the Economic Review of the International Commercial Bank of China) may be productive ways to promote environmental policies.

Groundwater management and remediation. Groundwater management is one area in which Taiwan's policies appear to be in dire need of improvement. Engagement with MOEA, TEPA, and the academic community on water resource pricing could yield substantial results. Improved techniques for aquifer management and groundwater protection are also needed. Although Taiwan has many highly qualified environmental engineering companies that have a competitive edge over U.S. companies, groundwater/ soils remediation may be a promising new market for many U.S. firms. Inclusion of environmental goods and services as one of Taiwan's "ten emerging industries" combined with Taiwan's concerted drive to establish an Asia-Pacific Operations Center offers tremendous opportunities for U.S. companies willing to commit to long-term business growth in the region and to partner with Taiwanese companies. Legislation establishing a remediation program in Taiwan still appears to be a few years away, but, when it comes, it will offer new business opportunities for U.S. and Taiwanese firms.

Environmental Infrastructure

Wastewater and solid waste. Taiwan's environmental infrastructure efforts for the next three years focus on wastewater treatment, solid waste management and air pollution control. Municipal solid waste and wastewater treatment projects account for approximately 60_70 percent of the total investment. A strong trend toward localization is also characterized by lack of clarity regarding the devolution of environmental project management and enforcement authority to city and county governments. CEPD coordinates Taiwan's infrastructure efforts.⁶⁰

Privatization. The pressure on the government to privatize via the BOO/BOT route is strong, but overall prospects for privatization are bleak due to the government's unwillingness to commit funds.⁶¹ The BOT activity for water supply appears to be five years away. The immediate opportunities for BOT projects are in solid waste incineration under the new TEPA plan, which may have limited potential for U.S. firms, because much of the construction and design will be done by local firms.

REFERENCES

Business International Asia/Pacific. 1992. Asia-Pacific and the Environment. Hong Kong.

Center for International Environmental Law (CIEL). 1995. Final Feasibility Report. Washington, D.C. (January).

Chinese (ROC) News Agency. 1996. Welcome to CNA Information Home Page. Taipei (Internet: www.cna.com.tw/).

Cylke, Owen, Deanna Richards, Michael Rock, Richard Stevenson, and Dennis Zvinakis. 1995. "Environmental Indicators: In the Right Direction? Trip Report: Taiwan and Philippines, October 30_November 9, 1995." Washington, D.C.: US-AEP (November).

Price Waterhouse. 1991. Doing Business in Taiwan. Taipei.

Republic of China. 1993. 1993 State of the Environment, Taiwan, R.O.C. Taiwan Environmental Protection Administration. Taipei.

���. 1995. Standards & Metrology Yearbook. National Bureau of Standards, Ministry of Economic Affairs. Taipei.

���. 1996a. A Cleaner Home and a Better Image Abroad: Taiwan's Environmental Efforts. Office of Science and Technology Advisers, Taiwan Environmental Protection Administration. Taipei.

���. 1996b. The Economic Instruments for Environmental Protection of Chinese Taipei. Taiwan Institute of Economic Research. Taipei (June).

���. 1996c. The Energy Situation in Taiwan, Republic of Taiwan. Energy Commission, Ministry of Economic Affairs. Taipei (March).

���. 1996d. Taiwan Asia-Pacific Regional Operations Center. Executive Yuan Information. Taipei (February 7).

���. 1996e. "Taiwan Yearbook." The Government Information Office, R.O.C. Taipei (Internet: http://www.gio.gov.tw.).

���. N.d. Environmental Regulations (I). Environmental Protection Administration. Taipei.

���. N.d. Industrial Waste Minimization in Taiwan, R.O.C. Brochure. Industrial Development Bureau, Ministry of Economic Affairs. Taipei.

"The Republic of China on Taiwan: Partner for Technology and Investment." N.d. Scientific American. Special report.

Rock, Michael T. 1996. Mainstreaming the Environment in Industrial Policy in Taiwan. Arlington, Va.: Winrock International, Institute for Agricultural Development (January 18).

Su, Tsung-Tsan. N.d. Cleaner Production in Taiwan. Hsinchu, Taiwan: Union Chemical Laboratories, Industrial Technology Research Institute.

United States-Asia Environmental Partnership (US-AEP). 1996a. 1996 Business Plan (Draft). Taiwan Technology Cooperation Office. Taipei.

���. 1996b. "US-AEP/USCS Environmental Infrastructure Strategy: Taiwan." Draft. Washington, D.C. (August).

United States Environmental Protection Agency (USEPA). 1996. U.S.-Taiwan Environmental Cooperation, 1996 Program Review. Office of International Activities. Washington, D.C. (May).

World Bank. 1993. The East Asian Miracle: Economic Growth and Public Policy. New York: Oxford University Press.

Wu, Chian Min, chairman, Water Resources Planning Commission. 1990. Management of Water Resources in an Island Nation: The Taiwan Experience. Taipei: Ministry of Economic Affairs, Republic of China (June).

ENDNOTES

^* Unless otherwise noted, all dollar amounts are U.S. dollars.

1. World Bank (1993, 13, 31).

2. Republic of China (1996c, 5).

3. Rock (1996); Republic of China (1996e).

4. Rock (1996, 30); Republic of China (1996a).

5. Republic of China (1993, 112_16). Note that the terms "unpolluted," "slightly polluted," and "badly polluted" are based on TEPA's definition, which combines dissolved oxygen, biological oxygen demand, total suspended solids, and ammonia nitrogen values into a scoring system. For reservoirs, pollution ratings were based on indicators of eutrophication.

6. Republic of China (1993, 119_128); Wu (1990, 27_28).

7. Rock (1996, 20).

8. Rock (1996, 26_27).

9. Rock (1996, 9).

10. Rock (1996, 9, 35).

11. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

12. Administrative authorities within MOEA include:

� Industrial Development Bureau

� Board of Foreign Trade

� National Bureau of Standards

� Bureau of Commodity Inspection and Quarantine

� Investment Commission

� Medium and Small Business Administration

� Energy Commission

� Export Processing Zone Administration

� Central Geological Survey

� Water Resources Planning Commission

� Commission of National Corporations (state-owned enterprises)

13. Rock (1996, 9_10).

14. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

15. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

16. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

17. The following lists the bureaus within TEPA and some of their major areas of responsibility and focus (information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes [June 10_14, 1996]; Su [N.d.]).

� Bureau of Comprehensive Planning. EIA program, national and regional planning, public participation, risk communication, and environmental education.

� Bureau of Air Quality Protection and Noise Control. Air pollution control plans, emission standards, air pollution fees, and noise reduction.

� Bureau of Water Quality Protection. Point and nonpoint source controls; groundwater program planning, standards development, monitoring, and remediation; marine and coastal water protection; pollution prevention; sludge management; watershed planning.

� Bureau of Solid Waste Control. Solid waste management, hazardous waste management, privatization of municipal solid waste incinerators, and recycling programs.

� Bureau of Environmental Sanitation and Toxic Chemicals Control. Chemical substance risk evaluation and data base, licensing and assistance for toxic chemical operations, drinking water protection, pesticide management, and toxic chemical release reporting and management.

� Bureau of Performance Evaluation and Dispute Settlement. Evaluation of Public Nuisance Dispute Settlement Act implementation.

� Bureau of Environmental Monitoring and Data Processing. Air and water quality monitoring, geographic information system and remote sensing, and Nationwide Environmental Protection Information Network.

� Office of Science and Technology Advisers. Research and development agenda, international agreements and partnerships, and international cooperation.

18. CIEL (1995).

19. Unless otherwise noted, information for this section was obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

20. The following summarizes the major environmental statutes applicable to the industrial sector that have been recently enacted or amended (Republic of China 1996b, 1_3):

� Water Pollution Control Act. Amended in 1991.

� Air Pollution Control Act. Amended in 1992.

� Waste Disposal Act. Amended in 1988.

� Noise Control Act. Amended in 1992.

� Toxic Chemical Substances Control Act. Amended in 1988.

� Public Nuisance Disputes Resolution Act. Enacted in 1992.

� Environmental Impact Assessment Act. Enacted in 1994.

21. Republic of China (1996a, 37).

22. The "ten emerging industries" are:

� Telecommunications

� Information

� Consumer electronics

� Semiconductors

� Precision machinery and automation

� Aerospace

� Advanced materials

� Specialty chemicals and pharmaceuticals

� Medical devices

� Environmental technology.

23. Rock (1996, 21_22).

24. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

25. Cylke, Richards, Rock, and others (1995, 8_9).

26. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

27. Rock (1996, 33).

28. Republic of China (1996d); Chinese (ROC) News Agency (1996).

29. ITRI is evaluating the pollution intensity of industrial processes using three broad indexes (Rock [1996, 25_26]; Su, [N.d.]): (a) waste generation index (volume of wastes per unit output or unit of value added), (b) toxicity index, and (c) energy consumption index.

30. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes (June 10_14, 1996); "The Republic of China on Taiwan" (N.d.).

31. Rock (1996, 33); information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes (June 10_14, 1996).

32. The major market-based instruments currently in effect relevant to industrial environmental management are (Republic of China 1996b):

1. Subsidies

� Tariff exemption for imported pollution control equipment

� Low-interest loans for purchase of pollution control equipment

� Investment offset in corporate income tax for purchase of pollution control equipment

� Accelerated depreciation for air and water pollution controls

� Tax-exemption for retained profits used for purchased pollution control equipment

� Reduction in land appreciation tax for firms moving for environmental reasons.

2. Discharge fees

� Effluent charges for firms in industrial parks, based on volume of water use and pollutant loadings to central treatment plants

� Air pollution fee for fuel burners (actually a surcharge on fuels based on lead content for gasoline and sulfur content for fuel oil)

� Air pollution fee for ozone-depleting substances (Montreal Protocol).

3. Deposit-refund

� PET bottle deposit system.

33. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes (June 10_14, 1996); US-AEP (1996a, 4).

^* As of January 1997, NT$1 equaled approximately US$.036.

34. Republic of China (1996b).

35. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

36. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

37. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

38. US-AEP (1996b).

39. Republic of China (1993, 128).

40. US-AEP (1996b).

41. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes (June 10_14, 1996); US-AEP (1996a, 4).

42. US-AEP (1996b).

43. Republic of China (1996e; 1996a, 6).

44. Business International Asia/Pacific (1992).

45. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

46. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

47. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

48. See "The Republic of China on Taiwan" N.d., T8_T9.

49. Price Waterhouse (1991).

50. Information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes, June 10_14, 1996.

51. Rock (1996, 31).

52. During the 1980s environmental disputes frequently led to confrontation and violence. Some of the most prominent examples include the following:

In 1985 protests mushroomed against a proposal from Taiwan Power Company to build a fourth nuclear power plant at Kung Liao on the northeast coast. It had been revealed that radiation leaks had occurred on several occasions at the other three plants. Construction was delayed until funding for the project was restored in June 1992.

In 1985 Du Pont ran into trouble for siting a pigment plant in Lukang in Changhua County, central Taiwan. This was not the corporation's first plant on the island and, although foreign investment approval had been given and the project was under way, vigorous local opposition to the plan began in early 1986. The project was abandoned in 1988; Du Pont chose another location in Tao-yuan County next to Taipei County. Du Pont, having learned its lesson, adopted a bottom-up approach: it worked at winning over the local people through community outreach campaigns and face-to-face discussions with local leaders. It has since established a community committee of local scientists, environmentalists, and businessmen; the EIA for the plant is a now a public document.

In 1988 violence erupted when 2,000 villagers forced their way into Linyuan Industrial Park near Kaohsiung in protest against untreated wastewater discharge from eighteen factories in the park. The protesters took over the centralized wastewater treatment plant and forced the factories to close down. The companies later paid NT$1.2 billion in compensation to residents.

53. Republic of China (1993, 438_43).

54. Information in this section is drawn from information obtained during US-AEP country assessment visit by John W. Butler and John J. Mapes (June 10_14, 1996) and Business International Asia/Pacific (1992).

55. Projects under consideration by the Business Council for Sustainable Development include:

� Policy assistance on the designation of nature preserves and wildlife sanctuaries

� Policy initiatives with TEPA on watershed management, groundwater management, and coastal planning

� Policy development with TEPA to modify and expand procedures for public comment and input on proposed regulations and dispute resolution

� Business management issues on eco-efficiency

� Business management practices focusing on environmental cost accounting

� Heritage preservation

� Preparation of Chinese translations of important international materials on sustainable development and environment

� Collecting and disseminating information on recycling programs in Taipei and Taiwan in general

� Policy development on business issues associated with waste disposal.

56. Marianne Bailey, Asia Program Manager, Office of International Activities, USEPA (August 22, 1996).

57. Chinese (ROC) News Agency (1996).

58. Chinese (ROC) News Agency (1996).

59. This recommendation is taken from Rock (1996, 26).

60. Although the government provides funding for projects, the legal structure for establishing the project structure is still immature. In addition, no legal infrastructure exists that provides for tax rules and contract laws with respect to project financing. CEPD is also the key agency that performs the function of a "Ministry of Finance." CEPD is looking for ways to improve the legal structure and is asking the Ministry of Justice to work jointly with them.

61. The key issue for the government is that they will need to stay involved by taking on risks and providing guarantees. TEPA has assigned Sinotech the role of planning the BOO/BOT process for Taiwan. Sinotech is producing the BOO/BOT criteria for bid evaluations, which are stringent. Companies must demonstrate a proven track record in Taiwan. Projects are disqualified if 10 percent of the project is delayed.

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