China and Taiwan have signed their “most significant agreement since 1949”, said Economist.com. The Economic Co-operation Framework Agreement (ECFA) aims to give trade and investment a big boost by gradually dismantling tariff and non-tariff barriers.
What the commentators said
This is “a good bargain” for Taiwan, said Standard Chartered. China has fulfilled its earlier promise that Taiwan will gain most from the agreement. The initial phase of the ECFA will see China lower tariffs on 539 items worth $13.8bn last year. These range from petrochemicals to vehicle parts. Taiwan will lower tariffs on 267 items, including raw materials for textiles, valued at $2.9bn. According to the Peterson Institute for International Economics, the deal could add 5.3% to Taiwan’s GDP by 2020.
President Ma Ying-jeou “had to do something”, said Lex in the FT. China had secured a trade agreement with the ten countries in the Association of South-east Asian Nations (ASEAN), raising the prospect of “a seamless trading zone without Taiwan in it”. Taiwan’s own talks with Asian countries were thwarted as nobody wanted to offend China by striking a deal with “what it saw as a rebellious province”.
Enter president Ma’s policy of improving relations with China, which has produced this “triumph”, said Capital Economics. But the policy remains controversial, especially with elections coming up in November. The anti-Chinese opposition warns that the ECFA could be a first step towards Taiwan’s eventual incorporation into China, noted Economist.com. Meanwhile it hasn’t helped matters that China has so far appeared distinctly lukewarm about Taiwan securing free-trade agreements with other countries. Closer ties to China, “however vexing for nationalists”, could well bring progress on that front, said Lex. Ma should keep “emphasising the bigger picture”.