Taiwan, China Sign Free Trade Deal

[ Video Courtesy of NTDTV ]

The Economic Cooperation Framework Agreement (ECFA) between Taiwan and China was finally signed on June 29 in Chongqing, China, after months of negotiations. Proponents of the deal see an improved economic climate, while critics fear the loss of Taiwan's sovereignty.

The free trade accord plans for 539 Taiwanese products, valued at US$13.8 billion, to obtain free entry into China, while 267 Chinese products, worth US$2.9 billion, should see their tariff rates brought down to zero upon entry into Taiwan. The deal will also open the two countries’ service sectors.

“We have completed the signing of the ECFA with mainland China today. This is very meaningful for Taiwan as the pact starts a whole new era for Taiwan,” said Taiwanese President Ma Ying-jeou, lauding the deal as an “innovation.”

ECFA is seen as a key element in Taiwan’s economic development as the island-state seeks to brand itself as a global innovation center—a springboard economy that will allow Taiwanese and foreign businesses to settle in Taiwan and have free entry into the Chinese market.

The Ma administration is betting on the opportunities offered by the huge and growing Chinese market. It also hopes this agreement will make possible other free trade agreements. China has blocked Taiwan signing free trade agreement with other countries and the administration hopes this deal will be the first step toward China removing obstacles to Taiwan making deals with other countries.

However, criticism of ECFA abounds. A Taiwan News editorial noted that while the agreement read that it was “based on the principles of the World Trade Organization (WTO),” it did not make explicit the legal basis of the agreement—which should be Article 24 of the General Agreement on Tariffs and Trade (the ancestor of the WTO). 

It also forbids China and Taiwan to use WTO “trade remedies,” thus preventing Taiwan from ensuring trade exceptions on the basis of national security or cultural protection against its giant neighbor.