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Print Edition> Nation
UPDATED: July 19, 2010 NO. 29, JULY 22, 2010
A Milestone in Cross-Straits Relations
Trade agreement expected to strengthen economic links between the Chinese mainland and Taiwan
By DENG YUNGUANG & DING XING
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FRUITS OF COOPERATION: Visitors show great interest in fruit produced in Taiwan at a cross-Straits agricultural fair held in Zhangzhou, Fujian Province, on November 18, 2009 (ZHANG GUOJUN) 

Fourth, the ECFA will provide a more solid basis for the peaceful development of cross-Straits relations. The ECFA is a special arrangement for normalization, institutionalization and liberalization of cross-Straits economic activities against the backdrop of economic globalization and regional economic integration. It creates favorable conditions for greater exchanges and cooperation between the mainland and Taiwan, and offers a great stimulus for both sides to advance from economic to social and political integration, thus giving rise to the prospect of a peaceful resolution of their differences on political issues. The ECFA will focus greater attention on the shores of the mainland and Taiwan to significantly boost the international competitiveness of the Chinese nation and improve the wellbeing of people on both sides of the Taiwan Straits.

Fifth, the ECFA will facilitate the prosperity and stability of East Asia. The Taiwan issue is crucial to security in East Asia. The ECFA forms the foundation for peaceful development of cross-Straits relations. This is beneficial to East Asian prosperity and stability and conforms to the interests of people on both sides of the Straits and the international community. Additionally, increasing cooperation between the two sides, including that in science, technology and energy development, will become a contributing factor in East Asian economic integration. Considering the scale and promising prospects of the mainland economy, the unprecedented economic integration across the Taiwan Straits will inject new vigor into the East Asian economy.

Challenges

As a framework agreement, the ECFA needs a long process of gradual implementation after its signing. Despite its significance, people shouldn't have too high expectations on its direct economic benefits; much less consider it a panacea to all the economic problems.

Though the document brings long-term benefits, there will also be short-term impacts. It is important both sides define vulnerable industries and people as soon as possible and work now to mitigate any possible damage.

The business opportunities and benefits created by the ECFA will keep Taiwan's public more positive about the peaceful development of cross-Straits relations and deter "Taiwan independence" activities of the Democratic Progressive Party and the Taiwan Solidarity Union, which have organized street demonstrations and taken legislative measures in attempt to block the approval of the ECFA.

Deng Yunguang is a senior research fellow with the Taiwan Studies Society of Fujian Province and Ding Xing is a council member of the Taiwan Studies Society of Xiamen City

What Is the ECFA?

The Economic Cooperation Framework Agreement (ECFA) will cut tariffs on more than 800 categories of products and open up service sectors, giving a major boost to two-way trade across the Taiwan Straits. The tariff cuts will cover about 16 percent of Taiwan's exports to the mainland and 10.5 percent of mainland exports to Taiwan.

Under the 16-article agreement, the Chinese mainland and Taiwan agree to "gradually reduce and remove trade and investment barriers and create a fair environment" in the two areas.

A list of goods and services to benefit from the trade pact, dubbed the "early harvest program," was agreed on by both sides. The "early harvest program" will be launched within six months of the ECFA taking effect, the agreement said. The two sides will reach their zero-tariff goal on goods as outlined in the program within two years after its implementation.

Under the agreement, the two sides will continue discussing agreements for trade in goods and services and investment for six months after the ECFA takes effect.

Further discussions on the trade-in-goods agreement will include: tariff reduction and removal, rules of origin, customs procedures and trade remedies.

Discussions on the trade-in-services agreement will focus on gradually cutting and removing restrictive measures, enlarging the service sectors covered and enhancing cross-Straits cooperation.

Meanwhile, discussions concerning cross-Straits investment aim to establish an investment protection mechanism, enhance transparency of relevant regulations, reduce restrictions on investment and facilitate unhindered investment.

In order to further increase the benefits of the ECFA, the two sides also agreed to enhance cooperation in intellectual property protection, finance, trade facilitation, customs and e-business.

They will also help promote cooperation between small and medium-sized enterprises across the Taiwan Straits, and help economic and trade organizations set up offices on each other's side of the Straits.

In addition, the two sides will jointly set up a committee for cross-Straits economic cooperation to ensure ECFA agreements can be reached and to supervise the implementation of the ECFA. The committee will also interpret the terms of the ECFA and publicize major information concerning cross-Straits economic and trade activities. The committee will hold routine meetings every six months and may have interim meetings upon agreement by the two sides. It will also serve as the authority to deal with ECFA-related disputes until the two sides reach a separate agreement on dispute settlement.

Negotiations for the dispute settlement agreement will start within six months of the ECFA taking effect.

Source: Xinhua News Agency

 

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