Taiwan, China to Begin Trade Accord Talks at December Meeting

By Janet Ong

Nov. 3 (Bloomberg) -- Taiwan and China will begin talks on a trade agreement in December as the island seeks to revive its economy and the government in Beijing aims for extra leverage over its counterpart in Taipei.

The accord will be discussed at cross-strait negotiations on cooperation in the fishing industry, certification of agricultural and industrial goods and double taxation, said Ma Shao-chang, deputy secretary-general of Taiwan’s Straits Exchange Foundation.

“We will be signing agreements on the four items and will exchange views on the trade agreement at the talks in Taichung, central Taiwan,” Ma said by telephone today. “But there won’t be any signing of a trade accord at this stage.”

Cross-strait dialogue resumed last year, following a nine- year hiatus, when President Ma Ying-jeou was elected and abandoned his predecessor’s pro-independence stance. The island is seeking closer ties with the mainland to support an economy that may contract at a record pace this year on declining exports and investment.

Zheng Lizhong, deputy head of the Beijing-based Association for Relations Across the Taiwan Strait, unexpectedly flew into Taipei today for talks with his Taiwanese counterpart Kao Koong- lian to complete details of the meeting, due to be held in the second-half of December, Ma said. Officials met in Hangzhou in eastern China last month to arrange the talks.

Taiwan and China eased curbs on investment and lifted a six-decade ban on direct transportation links in December under the cross-strait dialogue.

Jobs, Exports

The trade accord, known as the Economic Cooperation Framework Agreement, will create as many as 263,000 jobs in Taiwan and bolster exports, the Ministry of Economic Affairs in Taipei said last month.

The agencies are semi-official bodies set up for cross- strait discussions that allowed the two sides to broker the so- called 1992 consensus in which they agreed to disagree on the definition of what constitutes “one China.”

Talks broke down in 1999 when Taiwan’s then-President Lee Teng-hui referred to the two sides as “state-to-state,” a characterization unacceptable to China, which regards Taiwan as a breakaway province.

Closer ties with China, the world’s third-largest economy and Taiwan’s biggest trading partner, may help President Ma speed the island’s recovery from its first recession since the technology bubble burst in 2001.

Export Concerns

“Taiwan is keen to sign a trade agreement with China on concerns its exports may suffer after the free-trade agreement China has with Asean takes effect next year,” said Cheng Cheng- mount, an economist at Citigroup Inc.’s Taiwan unit. Exports to China and Hong Kong combined account for about 40 percent of Taiwan’s overseas shipments.

Huang Hsien-lin, a spokesman for Taiwan’s Ministry of Economic Affairs, declined today to comment on details of the trade agreement.

Taiwan’s gross domestic product may shrink 4.04 percent in 2009, its biggest contraction since the government began keeping records in 1952, the island’s statistics bureau said on Aug. 21.

China and Taiwan have been ruled separately since Chiang Kai-shek’s Nationalists fled to the island after losing the civil war to Mao Zedong’s Communists in 1949. China is aiming to cement economic ties with Taiwan to gain leverage and ensure the island’s leaders don’t seek independence.

To contact the reporter on this story: Janet Ong in Taipei at jong3@bloomberg.net