Mainland, Taiwan weigh up benefits of economic pact

After almost two decades on the Chinese mainland, Taiwan businessman Lee Rie-ho owns a well-known tea group that runs more than 1,000 outlets across the country.

However, his Ten Fu Group still only holds around 3 percent of the total mainland market. "The market here is amazingly large," says Lee, 75.

"Five cups of tea for each of the 1.3 billion population (on the mainland) could consume a whole year's production in Taiwan."

Before the Chinese New Year on February 14, 2010, Lee was among a group of Taiwan business people who met with President Hu Jintao on his inspection tour of Fujian Province, a major destination of Taiwan investments.

Besides conveying festival greetings, President Hu called the Economic Cooperation Framework Agreement (ECFA), an economic pact under negotiation between the mainland and Taiwan, a "good deal" to promote cross-Strait economic cooperation and achieve mutual benefits.

Hu promised the mainland would take into full consideration the interests of people in Taiwan, especially farmers, during the meeting.

The ECFA, a priority in cross-Strait relations, is aimed at institutionalizing economic cooperation between the mainland and Taiwan and facilitating and regularizing economic and trade exchanges.

In December, leaders of the mainland-based Association for Relations Across the Taiwan Straits (ARATS) and the island's Straits Exchange Foundation (SEF) exchanged opinions on negotiating and signing the ECFA during their fourth round of talks in Taichung of Taiwan. They agreed to focus on the topic in their fifth round of talks this year.

On January 26, experts from the two sides held the first round of talks on the ECFA in Beijing. They agreed that the basic content of the agreement would cover major economic activities across the Strait, including market access for commodities and services.

Zhang Guanhua, deputy director of the Institute of Taiwan Studies under the Chinese Academy of Social Sciences, told Xinhua that signing the ECFA would help promote structural adjustment of economies across the Strait and lay more solid foundations for the peaceful development of relations.

On Sunday, Premier Wen Jiabao said at a press conference that the mainland would take into account Taiwan's different market conditions and size of economy when negotiating the ECFA.

Wen also reaffirmed a promise that the mainland would let Taiwan "benefit more" from the agreement, through tariff reductions or early harvest programs.

Negotiating and signing the agreement is a complex process, but problems could always be solved as "we are brothers," Wen said.

Wen's remarks were headline news in many newspapers in Taiwan, which focused on the "benefit more" promise and the "we are brothers" sentiment.

On the island, authorities have intensified promotion of the ECFA.

Taiwan leader Ma Ying-jeou has said on several occasions that signing the ECFA was "absolutely necessary."

Ma said signing the agreement would help Taiwan people do business and boost the island's competitiveness. "The mainland is Taiwan's biggest trade partner, and that is why we must sign the ECFA," he said in Taipei early last month.

He admitted that the agreement would affect Taiwan's uncompetitive industries, but it would push Taiwan to structurally adjust its economy.

Taiwan's economic authorities have decided to allocate 95 billion New Taiwan dollars ($3 billion) over 10 years to help those businesses hurt by the agreement.

Zhang said Taiwan authorities were active in promoting the ECFA mainly because they did not want to be marginalized in Asia's regional economic cooperation and integration.

Another reason was that Taiwan hoped to get a lift from the mainland's fast-growing economy to overcome its own difficulties, Zhang said.

But there were also voices on the island against the ECFA, said Cao Xiaoheng, director of the Taiwan Economic Research Institute in Nankai University.

Cao said the voices mainly came from the opposition Democratic Progressive Party and those employed in weak industries, such as agriculture.

Lee Rie-ho said doubts do exist among some employed in Taiwan's agriculture, but the benefits of the ECFA outweighed the harm. "People in Taiwan cannot limit themselves to the island anymore."

Wang Jing, president of the Newland Group, the first mainland company allowed to invest in Taiwan in late 2009, said economic complementation across the Strait was "very necessary."

Taiwan's experiences in industrialization could help mainland companies more efficiently market their products in the global business arena, Wang said.

(Source: China Daily)