2010-09-13 10:40

Banking service among the first to benefit

BEIJING - A landmark economic pact between the Chinese mainland and Taiwan took effect on Sunday following approval by the island's authorities, as part of efforts from the two sides to establish a systematic mechanism to enhance cross-Straits economic cooperation.

The Economic Cooperation Framework Agreement (ECFA), signed in late June, is seen as the most sweeping agreement between the mainland and the island to deepen cooperation between financial organizations and to reduce tariffs and commercial barriers. The pact also calls for the protection of intellectual property rights by legislation and enforcement.

"We believe the implementation of the pact will further promote exchanges and cooperation in cross-Straits trade and help cross-Straits economies develop together," the Ministry of Commerce spokesperson Yao Jian said in a statement on the ministry's website.

Taiwan leader Ma Ying-jeou also hailed the pact as necessary to prevent Taiwan's economic marginalization as the Chinese mainland strengthens commercial ties with Asian neighbors and has said the pact would help ease tensions across the Straits.

"Apart from economic benefits, the pact also paved the way for both sides to reach out to political cooperation in the future," said Li Jiaquan, a senior researcher of the institute of Taiwan studies at the Chinese Academy of Social Sciences.

The banking service sector might be among the first to make breakthroughs in cross-Straits financial cooperation, as the mainland-based Bank of China and Bank of Communications applied to the Taiwan economic department on Sept 7 to set up representative offices on the island.

According to the ECFA, mainland banks can set up offices in Taiwan upon approval by the Taiwan authority and can then apply to set up a branch bank one year later.

Wang Jianmin, a researcher of the institute of Taiwan studies at the Chinese Academy of Social Sciences, said substantial financial cooperation between the two sides has lagged behind trade cooperation for a long time.

"The ECFA, however, will have a positive impact," he said.

The agreement also aims to reduce the mainland's tariffs on 539 Taiwan products with a total value of 93.4 billion yuan ($13.8 billion), about 16 percent of the mainland's imports from the island in 2009. In return, Taiwan will slash duties on 267 mainland items totaling $2.86 billion, about 10.5 percent of the mainland exports to the island last year, The Associated Press reported.

The tariffs are to be eliminated in three stages over the next two years, under the bilateral pact.

The cross-Straits trade volume exceeded $81.9 billion in the first seven months this year, up 56 percent year-on-year, according to the Ministry of Commerce.

The chairman of the Taiwan-based Straits Exchange Foundation Chiang Pin-kung is scheduled to start a four-day visit to the mainland on Thursday to meet his mainland counterpart Chen Yunlin, China News Service reported.

During his stay, the foundation and the mainland-based Association for Relations Across the Taiwan Straits will negotiate the establishment of a cross-Straits economic cooperation committee, which will work on follow-up issues after the pact was enacted.

China Daily - Xinhua