CHONGQING: Taiwan and China signed a historic trade pact Tuesday in the boldest step yet towards reconciliation between the former archfoes, 60 years after the civil war that drove them apart.

The Economic Cooperation Framework Agreement, hailed by both sides as a milestone and a commercial imperative in an era of strong regional cooperation, was signed by senior delegates in the southwest Chinese city of Chongqing.

The signing of the agreement, by far the most sweeping ever between the two sides, marks the culmination of a Beijing-friendly policy introduced by Taiwan President Ma Ying-jeou after assuming power in 2008.

"Signing this agreement is not only an important milestone in economic ties between the two sides," said the leader of the Taiwanese delegation, Chiang Pin-kung.

"It`s also a huge step forward for the two amid the trend of regional economic integration and globalisation."

In Taipei, Ma said the pact meant peace and prosperity between China and Taiwan was no longer a distant dream but a reality "within our reach," with implications for the region as a whole.

"Everyone will be able to feel it. In particular, countries that previously had to pick sides between Taiwan and China can now simultaneously develop peaceful and prosperous relations with both," he told a group of businesspeople.

The agreement -- a "win-win" formula according to Chiang`s Chinese opposite number, Chen Yunlin -- is just about trade, according to the governments in Beijing and Taipei.

But many outside Taiwan`s Beijing-friendly government, especially members of the anti-China opposition, insist it is also a significant and potentially dangerous political step for the island, which has ruled itself since 1949.

"The Ma goverment`s pro-China platform has put Taiwan under China`s economic and political clout and this will hurt Taiwan as an independent, sovereign country," said Tsai Chi-chang, spokesman of the main opposition Democratic Progressive Party.

Millions of Taiwanese are proud of the prosperous democracy they have been able to create despite tough odds when the Nationalists arrived on the island in 1949 after losing a war on the mainland to the Communists.

They are also wary of the military menace posed by China, which has never given up on its goal of regaining Taiwan, by force if necessary. Beijing has more than 1,000 missiles aimed towards the island.

But supporters of the trade agreement say Taiwan has little choice, given the immense gravitational pull of China`s economic might.

China is Taiwan`s largest trading partner, its largest investment destination, and now also home to a growing number of Taiwanese.

It is estimated that about one million people from the island live in China, especially in the Shanghai area.

They, and thousands of short-term travellers, now have access to 370 direct flights a week, whereas only a few years back all air travel had to come via Hong Kong.

The trade pact looks set to push interaction between the two sides to a new level.
The deal will confer preferential tariffs, and in some cases zero tariffs, on 539 Taiwanese products from petrochemicals and auto parts to machinery -- representing 16 percent of the island`s total export value to China.

At the same time, only about 267 Chinese items, or 10.5 percent of China`s export value to Taiwan, will be placed on the "early harvest" list enjoying zero or falling tariffs.

China itself acknowledges that the deal is "unbalanced" in Taiwan`s favour -- which opponents on the island say is proof that Beijing is grabbing more than just trade concessions.

Ma`s administration has said the pact will create 260,000 jobs on the island and boost growth by up to 1.7 percentage points.

The two sides on Tuesday also signed an agreement on protection of intellectual property rights.

BDST:1721 HRS, June 29, 2010
NJ