Taiwan’s legislature has approved a landmark China trade pact, bringing the economies of the once bitter foes to their closest point in more than 60 years.
The legislative vote late Tuesday came seven weeks after the signing of the Economic Cooperation Framework Agreement by the two governments. The pact slashes tariffs on hundreds of Chinese and Taiwanese products and provides Taiwanese firms with access to banking and insurance markets in China.
The strong legislative majority enjoyed by President Ma Ying-jeou’s Nationalist Party made approval a foregone conclusion. ECFA is set to go into effect in early 2011.
Ma argued that ECFA was necessary to prevent Taiwan’s economic marginalization amid growing commercial ties between Beijing and its Asian neighbors. He said it would increase prosperity for the island’s 23 million people by closely linking their high-tech economy to the mainland’s lucrative marketplace.
Opponents said the deal would make Taiwan too dependent on the mainland and undermine its sovereignty – a charge Ma denies.
China and Taiwan split amid civil war in 1949. Beijing continues to claim the island as its own.
For decades, relations have been strained and the 100-mile-(160-kilometer-) wide Taiwan Strait remains a potential military flash point. China has 1,300 missiles aimed at Taiwanese targets and, while Taiwan has cut its defense budget as a proportion of GDP in the last two years, it retains a relatively well-equipped air force.
But in the last two years, the sides have tried to build trust by resuming regular air and sea links after a hiatus of 60 years and ending across-the-board restrictions on Chinese investment in Taiwan.
Bilateral trade already totals $110 billion annually, and the pact aims to boost it further by slashing many tariffs. Taiwanese businesses are among the most eager to invest on the mainland, which the pact will promote by formalizing mechanisms for dispute mediation and promising access to new sectors such as banking and insurance.
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