China, Taiwan sign historic economic pact

BEIJING/TAIPEI - Building upon two years of cross-strait thaw, China and Taiwan Tuesday signed a historic Economic Cooperation Framework Agreement (ECFA) that is expected to boost trade and investment between the former political rivals.

Top negotiators Chiang Pin-kung, the chairman of the Taiwan-based Straits Exchange Foundation, and Chen Yunlin, head of the Beijing-based Association of Relations Across Taiwan Straits, inked the agreement in the southern Chinese city of Chongqing.

The ECFA will formally take effect one day after both sides “complete due procedures and notify each other”, the agreement said.

The agreement aims to slash or eliminate tariffs on hundreds of export products and several types of services.

Aiming to establish a systematic mechanism for enhancing cross-Strait economic cooperation, the ECFA was agreed upon by the mainland’s Association for Relations Across the Taiwan Straits (ARATS) and Taiwan’s Straits Exchange Foundation (SEF).

Under the 16-article agreement, the two sides agreed to “gradually reduce and remove trade and investment barriers and create a fair environment”, Xinhua news agency reported.

The agreement also provides protection for cross-Strait investments to boost two-way capital flows.

The two sides agreed on the items to be included in the “early harvest programme” to benefit from the pact first with preferential duty cuts and treatment.

The “early harvest programme” will launch within six months of the ECFA taking effect, the agreement said.

The two countries will continue discussing agreements for commodity trade, service trade and investment for six months after the ECFA takes effect.

China and Taiwan will jointly set up a committee for cross-Strait economic cooperation to ensure ECFA agreements can be reached and to supervise the implementation of the ECFA.

The pact caps two years of steady expansion of trade and investment between mainland China and Taiwan since President Ma Ying-Jeou announced a diplomatic truce in May 2008. Building on the thaw, the two sides have scaled up bilateral trade to $110 billion, making China the biggest investor in Taiwan.

Recently, Ma said the easing of tensions across the 100-mile wide Taiwan Strait, symbolised by the pact, could compel Beijing to dismantle over 1,000 missiles it has pointed at the self-ruled island.

In Taipei, Premier Wu Den-yih said the ECFA will be reviewed by Taiwan’s legislature early next month in an extra legislative session. The meeting is likely to be held July 5.

The economic pact has faced hostility from chief opposition Democratic Progressive Party (DPP), which has argued that it could undermine sovereignty of the self-ruled island.

After the agreement was inked, the DPP said that it will back a new referendum proposal put forward by its ally against the trade pact.

“The DPP will give its full assistance and backing to the Taiwan Solidarity Union’s (TSU) new referendum initiative,” DPP spokesman Lin Yu-chang told a press conference.