Landmark Cross-Straits Economic Pact Takes Effect

The Economic Cooperation Framework Agreement (ECFA) the Chinese mainland and Taiwan signed in June took effect Sunday, after the two sides completed the relevant procedures, marking a new era for economic ties across the Taiwan Strait.

The ECFA aims to establish a systematic mechanism for enhancing cross-Strait economic cooperation.

Under the agreement, the two sides agreed to gradually reduce and remove trade and investment barriers, and continue discussing agreements for commodities trade, services trade and investment for six months after the ECFA takes effect.

Hsiao Han-chun, director of Taiwan's Kaohsiung County Farmers' Association, said, "The ECFA' s coming into effect is definitely a good thing. I shout 'bravo' on behalf of Taiwan farmers and fishermen."

Hsiao said the duty cuts on farm produce will benefit farmers and fishermen in central and southern Taiwan.

According to the "early harvest" program, an integral part of the ECFA, the duties on 539 Taiwan goods and 267 mainland products will be reduced to zero in three phases within two years from January 1, 2011.

The Taiwan products involved include farm produce, chemicals, machinery, textile and auto parts.

Taiwan institutions estimated the island will save nearly 30 billion New Taiwan Dollars ($943 million) from the duty cuts after the ECFA takes effect.

The Chung-hua Institution for Economic Research, a Taipei-based think tank, predicted the pact will boost local GDP growth by 1.65 to 1.72 percent and generate about 260,000 new jobs in Taiwan.

The ECFA will also help Taiwan's services industries expand their businesses.

Eyeing the ECFA taking effect, financial agencies from the mainland and Taiwan have stepped up cooperation.

Taiwan-based Taishin Financial Holdings signed on Sept. 9 a cooperation agreement with mainland-based Nanjing Zijin Investment Co. Prior to this, China Huarong Asset Management Corporation (CHAMC) and Taiwan-based SinoPac Holdings signed an agreement in Beijing on September 3 to begin new strategic cooperation.

In the mean time, the mainland-based Bank of China and Bank of Communications applied on September 7 to set up representative offices in Taiwan.

Taiwan securities analysts have said the shares of companies which will benefit from the ECFA will help push up the benchmark Taiex Index.

Lee Shr-Hau, president of Taiwan-based Hwashin Securities Investment Consulting Co., said the ECFA will have positive effects on the shares of both the island's traditional industries and financial services, especially those included in the "early harvest" program.

"The ECFA's taking effect also means the two sides will discuss cooperation between other industries across the Strait," he said.

In addition, under the agreement, the mainland and Taiwan will also set up a committee for cross-Strait economic cooperation.

Sheng Jiuyuan, a researcher with the Shanghai Pudong Institute for the Taiwan Economy, said the committee will be the first working organization jointly set up by the two sides under the framework of the mainland's Association for Relations Across the Taiwan Straits (ARATS) and Taiwan's Straits Exchange Foundation (SEF).

The ARATS and SEF handle cross-Strait issues on behalf of their respective authorities.

"The committee will guarantee the ECFA's implementation and ensuing negotiations," he said.

"Compared with the framework agreement, individual agreements on special subjects will entail more efforts in negotiation."

"The two sides should adopt a more practical attitude during negotiations, so as to enable cross-Strait cooperation to be a success," he said.

The mainland has been Taiwan's largest trading partner and export market since 2007, according to statistics released by both sides.

Taiwan is the mainland's sixth largest trading partner, with accumulated cross-Straits trade reaching $960 billion at the end of 2009.

(Xinhua News Agency September 13, 2010)