China – Taiwan Free Trade Deal on Track for Signing This Month

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On June 13, China and Taiwan successfully wrapped up a fourth round of negotiations in Beijing on the Economic Cooperation Framework Agreement, aimed at lifting tariffs on either side of the Taiwan Strait. The deal, which Taiwanese President Ma’s administration has said may be signed this month, would lower tariffs on more than 200 items, including car parts, petrochemicals, and machinery heading from China to Taiwan—and on about 500 items going the opposite way.

There are moves to slightly expand the items included in the trade deal.

When the trade deal is signed, some believe there could be a rally in Taiwan and China stocks.

Taipei was keen to reach the trade and investment deal with China in order to get its companies the same preferential treatment the mainland now offers 10 Southeast Asian countries. In January a separate free trade pact took effect between China and the Association of Southeast Asian Nations (which excludes Taiwan), lowering tariffs on two-way trade. Beijing is seeking similar trade arrangements with Japan and South Korea. China is Taiwan’s largest investment destination and trading partner, accounting for 40% of its exports.

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