The Economic Co-operation Framework Agreement (ECFA) between China and Taiwan has been the most significant treaty since the end of Chinese Civil War, signed in Chongqing. In the last sixty-five years the two neighbors have strengthened their ties, leading to important economic developments. Beijing will reduce its import tariffs – a significant 539 product varieties worth roughly US$14 billion – on goods from Taiwan. Inversely, Taiwan also will lower its import tax rates on 267 types of goods valued at around US$3 billion. In the future, these changes will thus allow for greater trade between the two. Taiwan has already a leading position as the third largest supplier of China (where 40 percent of its export goes).
Improved economic ties will eventually affect political ones as well, especially when the term ‘diplomacy‘ is involved. Direct flights between the two countries – as opposed to the unnecessary layover in Hong Kong – is a first step in bringing them closer, enabling among other things larger touristic flows. Aperture will also ease the lives of the more than one million Taiwanese currently living on the Mainland. Not surprisingly, these policies have been agreed upon by the Taiwanese National government, despite the historical differences with its Communist rival.
After decades of tension between Beijing and the island’s historical dominating party, the Kuomintang, the current Taiwanese government is not caving into the separatist movement brought by the Democratic Progressive Party. Taiwan is aware that without friendly relations with China, it would be economically and politically isolated from the global market. Further changes towards the countries’ openness will be effective in the next few months through better investment openings in banking and insurance services. It’s in Taiwan’s best interest to continue these close ties with the Mainland, especially after Beijing’s agreement with the Association of Southeast Asian Nations (ASEAN), which are slowly creating a free economic flow area of 1,900 million people.
Yet political unease is still present. The opposition in Taiwan claims the island appeased to Mainland. ECFA might be a great step towards economic progress between the two, but it also presents an obstacle to Taiwan SMEs’ by “favoring large cooperation instead” of “organic self-development”. On a socio-political level, many Taiwanese fear a domination from- and eventual return to- China and the Taiwan government is also struggling in the local parliament for Chinese relations to develop further. With a sense of nationalistic pride, the treaty was signed in Chongqing, host to 30million people in central China, as well as the country’s former capital for seven years during the anti-Japanese resistance.
At that time, political forces split between nationalists and communists, actually united to defeat Japan as their foreign enemy. Today, traces of these political differences are still present, but because of both parties’ interests they will be put aside, allowing for them to negotiate for greater economic development. Ironically, both Taiwan and China are uniting in the same way as sixty years ago, only not to fight a war but to win a mutual success.
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