China and Taiwan Relations Update

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40% of Taiwan’s exports go to Hong Kong and China. A new Trade deal between China and Taiwan will lead to tighter relations between China and Taiwan and China will then allow Taiwan to remove economic barriers with the rest of Asia, the EU, and the USA

1. Focus Taiwan – the proposed economic cooperation framework agreement (ECFA) between Taiwan and China is a “lean and necessary” trade deal for Taiwan rather than a fully fledged free trade agreement said Mainland Affairs Council (MAC) Chairwoman Lai Shin-yuan.

President Ma Ying-jeou’s administration hopes that the ECFA can be signed in June as a means of sharpening Taiwan’s international competitiveness, but has met strong opposition from the DPP, which is concerned that it will make Taiwan over-dependent on China.

2. Wall Street Journal – Taiwan President Ma Ying-jeou played down fears that a planned free-trade pact with China would leave Taipei over-reliant on its former rival, saying the deal could lead to similar ones with other countries that would help diversify the island’s economy

3. Protesters marked President Ma Ying-jeou’s second anniversary in power Thursday with the start of a three-day sit-in calling for a referendum about his plans for an Economic Cooperation Framework Agreement with China.

The small opposition Taiwan Solidarity Union has filed the required more than 86,000 signatures for a referendum with the Central Election Commission, which has passed it on to the Executive Yuan’s Referendum Review Committee. The latter is expected to pass judgment on the validity of the referendum proposal early next month. If the ruling is positive, the TSU will have to collect more than 860,000 signatures before the vote can be held.

* Ma has described ECFA as essential to maintain Taiwan’s economic competitiveness as China and other Asian nations cut tariffs.
* Opponents say the deal is the first step toward unification with China and will harm Taiwan’s sovereignty as well as its economy.
* Ma wants ECFA signed next month, even though a third round of negotiations has not started yet.

4. Minister of Economic Affairs Shih Yen-shiang (施顏祥) said yesterday there would be more than 300 items on the proposed economic cooperation framework agreement (ECFA) “early harvest” list, but was unable to confirm when the next round of cross-strait negotiations would take place, other than to say the schedule remains on track.

The “early harvest” list proposed by Taiwan will list which products are to enjoy reduced or zero duties for imports and exports when the pact is signed.

The ministry previously said the list would include about 500 items, but Shih confirmed at the legislature that the list would be now be limited to “more than 300 items.” Shih also confirmed the inclusion of the machinery sector on the list.

5. NY Times goes over the expected impact of the Taiwan/China Trade deal

* The Taiwan government contends that the benefits would far outweigh the costs, and Taiwan’s president, Ma Ying-jeou, hopes to use the agreement to fully normalize economic relations with Beijing while expanding the island’s access to other markets.
* The trade deal would be a prelude to similar deals with Malaysia, Singapore and, eventually, Japan or the United States. Taiwan will try to use mainland China to link with international markets.
* Taiwan has watched as rivals like South Korea have signed free-trade deals throughout Asia, becoming more competitive in industries like machinery making and pushing their per capita gross domestic product ahead of the island’s
* The deal will lower tariffs on handmade shoes and hundreds of other products from the mainland, fears are mounting that the island’s traditional industries — like shoemaking — may suffer, even as high-tech, financial services and other sectors gain from freer access to the giant market across the strait.
* The government has promoted a study that it sponsored that found that cross-strait trade liberalization could create 260,000 jobs and add 1.65 to 1.72 percent to Taiwan’s G.D.P., depending on the scope of changes

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