Taiwan, China sign landmark trade deal

China and Taiwan signed a landmark trade deal that could boost trade already worth $100 billion and ease political ties.

Taiwan, China sign landmark trade deal

China and Taiwan signed a landmark trade deal on Tuesday that could boost trade already worth $100 billion and ease political ties between the export-reliant island and the world's third-largest economy.

The Economic Cooperation Framework Agreement (ECFA), which has triggered protests by the opposition in Taiwan fearful of Chinese moves to unify with the self-ruled island, cuts tariffs on 800 products and opens up service industries, giving a major boost to around $100 billion in annual two-way trade.

Taiwan believes the ECFA will open the door to free trade agreements with major economies like Japan and the United States. Beijing had encouraged that hope before saying last month it would try to block FTAs because Taiwan lacks sovereignty.

The biggest deal in 60 years between the political rivals was signed in Chongqing, the hilly, foggy wartime capital of China for the Kuomintang (KMT) party, which now rules Taiwan after losing a civil war to Mao Zedong's Communists in 1949.

"This agreement not only influences the development of the economies on both sides of the Straits, it is also a new milestone for them," said Chiang Pin-kung, the chairman of Taiwan's Straits Exchange Foundation.

Tuesday's signing stems from 2008 talks launched by Taiwan President Ma Ying-jeou, reversing 60 years of antagonism. China has considered Taiwan a renegade province since the end of the Chinese civil war in 1949 and inists on unification, by force if necessary.

Bringing the two sides closer together would be a major achievement for Chinese President Hu Jintao, who is due to step down after the Communist Party selects a new top leader in 2012.

The Taiwanese "have very limited expectations over ECFA, but keeping the process going is important for them ... Ultimately the Chinese have a political agenda behind which is not shared by the Ma administration," said Steve Tsang, a China-Taiwan relations expert at St Anthony's College, Oxford University.

"As part of a long-term strategy it is part of the process of embracing Taiwan and making Taiwan closer within the orbit of China, and therefore reducing the scope of pro-independence people in Taiwan to push for an independence agenda."

The pact will cut tariffs to zero within two years on 539 Taiwanese export items, worth $13.84 billion, versus only 267 valued at $2.86 billion headed from China to Taiwan.

That could help lift Taiwan 2010 GDP growth past 6 percent, private forecasts show. The official target is 4.72 percent.

Exports from Taiwan's top industries, such as PVC plastics and high-tech goods, compete closely with industries China wants to develop, making those negotiations much more difficult.

A second agreement would increase intellectual property right protection, which Chiang said was important for Taiwanese high-tech investment in China.

On Saturday, thousands of Taiwanese rallied against the deal in Taipei, but their opposition is not expected to prevent it.

Opposition could get louder if the ECFA fails to create the promised 260,000 jobs in Taiwan or bring an economic payoff.


Güncelleme Tarihi: 29 Haziran 2010, 15:11