Historic China-Taiwan Trade Deal Takes Effect

A historic trade deal between China and Taiwan took effect Sunday, signaling improvement in relations between the two countries after they were split by a civil war over 60 years ago.

The Economic Co-operation Framework Agreement (ECFA) removes or slashes tariffs on hundreds of goods traded between the two countries and eases financial sector restrictions. It comes into efect about a month after Taiwan's Parliament approved the deal.

Currently, Taiwan exports products worth $80 billion to mainland China, whose exports to Taiwan are $30 billion. The ECFA is aimed at boosting the $110-billion worth bilateral trade between the two countries.

The ECFA is also expected to help China and Taiwan in tackling the effects of the ongoing global financial downturn and in building a cross-Straits economic co-operation mechanism benefitting peoples of the two countries.

With the ECFA in force, 539 Taiwanese products, valued at US$13.8 billion, will have their tariffs reduced or removed in China in two years, while Taiwan reduces tariffs on 267 Chinese products worth US$2.9 billion.

The ECFA was signed June 29 at the Sofitel Forebase Hotel on the mainland city of Chongqing. While Straits Exchange Foundation (SEF) chairman P.K. Chiang signed it on behalf of Taiwan, chairman of the Association for Relations Across the Taiwan Straits Chen Yunlin signed the document for the Chinese government.

Besides the ECFA agreement, the two countries signed in June an agreement on protecting intellectual property rights.

China also agreed to open its markets to Taiwanese companies in 11 service sectors, including banking, securities, insurance, hospitals and accounting. Taiwan, in return, offered to provide wider access to Chinese firms in seven areas, including banking and movies.

Though the ECFA seems to be favoring Taiwan on the economic front, experts say that China expects the trade agreement to bring Taiwan closer to reunification. China continues to consider Taiwan to be its breakaway province.

China set up ARATS in 1991 to deal with Taiwan in the absence of formal ties with the neighboring country, prompting Taiwan reciprocate by setting up the SEF. Ever since, the two organizations have been managing ties between the two countries.

Relations between the two neighbors across the Taiwan Straits have been bitter since the Chinese civil war of 1949, after which Chiang Kai-shek's defeated Nationalist forces fled to the island from the mainland and established a self-ruled state there. China has since claimed sovereignty over Taiwan and has pledged to bring it under its rule.

The new efforts to improve relations with China came after the Nationalist Party or Kuomintang (KMT) under President Ma Ying-jeou came to power in Taiwan ousting the pro-independence Democratic Progressive Party government in the last elections.

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