Dec 22, 2009
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Taiwan, China to negotiate trade pact in 2010

Dec 22, 2009

By Ralph Jennings

TAICHUNG, Taiwan (Reuters) - Economic powerhouse China and export-reliant Taiwan, political rivals for six decades, agreed on Tuesday 22 December to negotiate a trade deal that would cut tariffs and bring the two sides closer.

An economic cooperation framework agreement (ECFA) to be worked out in early 2010 would fuse Taiwan's high-tech development with China's burgeoning infrastructure such as its huge ports, No. 2 Chinese negotiator Zheng Lizhong said.

"ECFA is necessary for jointly taking on the global economic crisis and the challenges of globalisation," Zheng told a news conference, citing lead envoy Chen Yunlin.

"This is a simple economic topic and does not touch on sensitive political issues."

The two sides did not agree on when to sign the pact, which Taiwan officials say needs more public support at home.

Thousands have protested near the central Taiwan negotiation venue since Sunday, many saying they fear ECFA would allow an unwelcome flood of products from China into Taiwan's relatively small market.

Several hundred protesters drummed, blasted horns and waved banners outside the heavily policed venue on Tuesday. They have pledged to dog the Chinese negotiators as they stay in Taiwan until Friday for visits and travel.

China has claimed sovereignty over self-ruled Taiwan since 1949, when Mao Zedong's forces won the Chinese civil war and Chiang Kai-shek's Nationalists fled to the island. Beijing has vowed to bring Taiwan under its rule, by force if necessary.

Ties have warmed since China-friendly Taiwan President Ma Ying-jeou took office last year, allowing three previous rounds of talks that help build mutual trust that could eventually lead to discussion of knotty political issues.

Taiwan officials say the ECFA would drop tariffs to varying degrees, keeping them highest for Taiwan sectors that might lose ground to a greater flow of goods from China.

"China's tariffs are pretty high now," said Antony Lo, chief executive officer of Giant Manufacturing, a Taiwan-based bicycle maker that gets 30 percent of revenues from China. "It would be a big help to us if they fell."

Taiwan has floated to China a confidential list of 700 to 1,000 items for tariff revisions, analysts say. Taiwan media say island officials have aggressively sought tariff cuts for textiles, machinery and petrochemical products.

Financial services and institutional investors should also gain from the ECFA, the island government says. Investment could cover financial markets, real estate or venture capital.

About 800,000 Taiwan business people are stationed in China, where the island's investment has totalled $80.5 billion over the past 18 years, the island government says.

(Editing by Sugita Katyal)

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