Taiwan and China see substantial progress in landmark trade deal talks

By Debby Wu, AP
Monday, June 14, 2010

Taiwan and China make progress in trade pact talks

TAIPEI, Taiwan — Taiwan and China have agreed on the structure and content for a landmark trade deal that could bring about the closest relations between the longtime rivals since their split amid civil war in 1949.

The Economic Cooperation Framework Agreement — ECFA — is the centerpiece of Taiwanese President Ma Ying-jeou’s ambitious mainland engagement program, which has already reduced tensions across the 100-mile- (160-kilometer-) wide Taiwan Strait to their lowest level since the sides split amid civil war in 1949.

In his two years in office, Ma has turned the corner on his predecessor’s pro-independence policies, amid a welter of commercial accords, including the resumption of regular air and maritime service and the liberalization of cross-strait investment protocols.

Taiwanese and Chinese negotiators meeting for a third round of ECFA negotiations in Beijing made “substantial progress,” Taiwan’s semiofficial Straits Exchange Foundation said in a statement late Sunday, without indicating whether a June signing target would still be met.

The statement said an agreement had been reached on tariff reductions for an unspecified number of goods, and the two sides decided to step up financial cooperation and move to provide intellectual property protection for both countries.

The SEF is responsible for conducting negotiations with China.

Taiwan’s United Daily News and China Times newspapers reported Monday that Taiwan will allow some 200 Chinese items to enjoy tariff reduction benefits on the island, while China will return the favor for about 500 Taiwanese products.

Tariff reduction is seen as a big incentive to support ECFA for many in Taiwan — notably the petrochemical and machinery industries — though others, including farmers in the southern part of the island and producers of light industrial goods fear it could ruin them by permitting a flood of cheap Chinese imports.

For its part, the Ma administration argues that ECFA is necessary to help Taiwan maintain its economic competitiveness in the face of a new Chinese trade agreement with countries in Southeast Asia, and it could open the way to free trade agreements between Taiwan and other countries.

Countering this argument, the opposition charges the pact will hurt the island’s economy by making it overly dependent on China, and ultimately pave the way for political unification, its greatest fear. It also points out China’s Foreign Ministry recently indicated Beijing may oppose third country FTAs with Taiwan.

Opposition leaders are planning to hold a mass rally in Taipei in late June to protest the agreement.

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