Nov. 23 – China and Taiwan are set to sign a cross-strait Economic Cooperation Framework Agreement (ECFA) in 2010 that would allow more Taiwanese business to enter the mainland and vice-versa as well as secure cross-strait peace.

Despite decades of political friction, Taiwan will need to actively engage China if it is to remain competitive since Japan, Korea and ASEAN are all pursuing increased bilateral trade with the mainland. When the ECFA is implemented, Taiwanese exports to the mainland may be taxed lower with Taiwan signing the agreement using its World Trade Organization title, “Taiwan, Penghu, Kinmen and Matsu Independent Territories.”

Taiwan President Ma Ying-jeou said closer cross-strait business ties would reduce the possibility of conflict between the two. “We must sign FTAs with our major trading partners,” he was quoted by The Taipei Times as saying during a meeting with the leaders of the Taiwan Federation of Industry, Taiwan Provincial Industrial Association and regional industrial associations at the Presidential Office.

He went on to say: “They are, in order of trade volume, the mainland, Japan, the US, Southeast Asian countries, the European Union, New Zealand and Australia. That is why we want to sign an ECFA with the mainland.”

“It will reduce the chance of seeing Taiwan marginalized if we sign an ECFA with the mainland,” he said. “I cannot guarantee that other countries will want to sing FTAs with us if we sign an ECFA with Beijing, but I believe we will see the abatement of obstructions and a boost to the chances of peace.”

China is Taiwan’s largest bilateral trade partner at US$130 billion last year.