Customs officials in Fujian check Pacific saury from Taiwan. The fish is one of the items with reduced tariffs under the ECFA. (Photo/CNS)
Issues related to exchanges between Taiwan and China were, for the first time, included in the major objectives and tasks for the 12th five-year plan from 2011-2015 announced by China's Ministry of Commerce, with the aim of fulfilling the cross-strait economic cooperation framework agreement (ECFA).
These aims include pushing for the further liberalization of trade in products and services, promoting bilateral investment, strengthening cooperation between emerging industries and the modern services industry between both sides, and supporting the transformation and upgrade of Taiwanese businesses in China.
Since the ECFA is closely related to the long-term development of Taiwan's economy, speeding up the pact's implementation to promote cross-strait free trade and creating new momentum for the economies of Taiwan and China is a key subject under the plan.
In fact, since the ECFA was implemented about 15 months ago, further progress has been limited. Only the follow-up investment protection agreement is near completion and even that has been stalled for some time.
Overall, the pact has only benefited a few government agencies. Therefore, Taiwan's Mainland Affairs Council, the Ministry of Economic Affairs and the Council of Agriculture have been aggressively promoting the agreement.
On the other hand, the ECFA is expected to cause a large capital inflow into Taiwan, to increase speculation in Taiwan's currency and housing markets, hurting its industries and public, and creating political complications in follow-up negotiations.
In addition, the number of Taiwanese products and services that enjoy preferential tariffs under the ECFA's early harvest list is double the number allocated to China, while Taiwan's exports to China are five times those of China's to Taiwan. Therefore, China is expected to ask Taiwan to quicken its pace of opening up its market to mainland investors, while Taiwan will probably be unable to ask China for further benefits.
In light of this, the two sides of the Taiwan Strait have to establish a basic consensus on promoting follow-up negotiations on free trade. The negotiations should focus on an efficient system for industry collaboration between the two sides, which will help expand the global market share of both.
Another key point is that the two sides should integrate the ECFA with their strategies for regional economic development. If Taiwan wants to compete with regional rivals South Korea and Japan economically, it should actively contribute to regional economic integration to improve its global competitiveness, in addition to establishing free trade relations with China.
Though Taiwan is interested in joining the US-led Trans-Pacific Partnership (TPP) agreement, it may be unable to do so without support. The possibility of China joining the TPP is ruled out due to the definition of the TPP as a "high-quality" trade agreement.
Yet Beijing is leading economic integration in East Asia. It has tried to expand the ASEAN Plus One (China) into ASEAN Plus Three (China, Japan, South Korea) and ASEAN Plus Six (China, Japan, South Korea, India, Australia and New Zealand), while considering a free trade zone with Japan and Korea.
Therefore, Taiwan and China should collaborate on a strategy to jointly promote regional economic integration through the ECFA, and establish a greater China free trade zone, which would include Taiwan, China, Hong Kong, Macau and Singapore.
To sum up, embarking on ECFA follow-up negotiations should be a core task for Taiwan's government in promoting cross-strait relations in 2012.
Ji Xiaohui is chairman of 2oth Shanghai Pudong Development Bank and Shanghai International Group. Born: 1955 Country of Citizenship: China Education: MBA, Fudan University, ...