Officially, it is called the Economic Cooperation Framework Agreement (ECFA), but it is potentially much more. The trade deal signed by China and Taiwan early last week could transform the relationship between the two governments. It deepens the integration of the two economies, opening the door to closer political ties — so the mainland hopes. Cross-strait relations remain tense, however, and it will take considerable work to realize political gains from this economic agreement. In the meantime, Beijing must be patient and continue its efforts to win the "hearts and minds" of the Taiwanese people.
Since taking office in 2008, Taiwan President Ma Ying-jeou has tried to build better relations with China — unlike his predecessor, the independence-minded Mr. Chen Shui-bian. In the first two years of his administration, Mr. Ma has signed 12 economic agreements with Beijing, ranging from opening direct air and sea links to permitting direct Chinese investment in Taiwan, to thicken the weave of connections between the island and the mainland. The result has been 270 regular weekly flights between the island and the mainland and Chinese tourists spending nearly $1 billion during their visits to Taiwan.
Those developments were the prelude to the ECFA signed June 29 in Chongqing. In practical terms, the deal obligates China to cut import tariffs on more than 500 products and services worth nearly $14 billion in trade. For its part, Taiwan is obliged to make tariff cuts of just $3 billion. According to one estimate, the deal could create 260,000 jobs and add 1.7 percent to Taiwan's economic growth. Economists anticipate that the ECFA could add 5.3 percent to Taiwan's economy by 2020.