Interpreting the ECFA: A New Common Market for Taiwan and Mainland China?

Author:Yen-Hsueh Lai
Position:Adjunct Lecturer of Law at Soochow University. LL.B./LL.M. (Soochow), Ph.D. (Xiamen).
Pages:173-191
SUMMARY

The ECFA was signed by Taiwan and Mainland China on June 29, 2010. It is Taiwan’s new overall national economic policy calling for rapproachment with Mainland China. A primary purpose of this Agreement is to establish a quasi national cross-strait common market within the framework of the WTO as well as to design the legal framework of bilateral economic cooperation. It is a course for the... (see full summary)

 
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Interpreting the ECFA:
A New Common Market
for Taiwan and Mainland
China?
Yen-Hsueh Lai
The ECFA was signed by Taiwan and Mainland China on June 29, 2010. It is
Taiwan
s new overall national economic policy calling for rapproachment with
Mainland China. A primary purpose of this Agreement is to establish a quasi
national cross-strait common market within the framework of the WTO as well as to
design the legal framework of bilateral economic cooperation. It is a course for the
Chinese common market as the final economic integration. By its nature the current
ECFA lies somewhat between a free trade agreement and a bilateral trade agreement
within the framework of the WTO in the sector of trade in goods. Two parties have
agreed on a new model of preferential treatment for goods exported from Taiwan to
Mainland China. An agreed Early Harvest for Trade in Goods list is favourable for
Taiwan, while an Early Harvest for Trade in Services list is balanced one for both
parties. Other principles formulated by the ECFA are related to intellectual property
rights and mutual investment. The success and failure of the ECFA will depend
largely on the future cross-strait political atmosphere.
Keywords
ECFA, WTO, Early Harvest for Trade, Mutual Investment, Chinese
Common Market
KFBJM2)3122*  173
* Adjunct Lecturer of Law at Soochow University. LL.B./LL.M. (Soochow), Ph.D. (Xiamen). The author may be
contacted at: yhlai31746242@yahoo.com.cn / Address: School of Law, Soochow University, 56, Kuei-yang St., Sec. 1,
Taipei, Taiwan 100 R.O.C.
1. Introduction
Scholars from Taiwan, Hong Kong and Mainland China have seen the need for a
Chinese economic community or Chinese common market more than twenty years.
1
While justifying intellectually and applauding the merits of the idea, however,
government officials in Taiwan and Mainland China were grappling with political
turbulence in Taiwan between 2000 and 2008, associated with the pro-independent
Democratic Progressive Party (DPP)s years in power. That anomaly ended when Dr.
Ma Ying-jeou was elected President of the Republic of China (ROC), Taiwan, on
March 25, 2008, returning Taiwan to the Kuomintang (KMT) fold and opening a new
era between the government of the ROC of Taiwan and the government of the Peoples
Republic of China (PRC).
However, the timing of his taking oath as President of the ROC was not favorable for
Dr. Ma. He was immediately challenged by a global financial crisis, mainly originating
in the United States. Moreover, he had to solve a series of problems remaining from the
former DPP government, including a continually worsening macro and micro island
economy combined with a huge foreign debt, a relatively high rate of unemployment
for the young generation and middle aged workers, inflation, stagnant investment and
industrial output, and frozen salaries. To overcome such political, economic, and social
obstacles the Ma Ying-jeou administration formulated a fresh overall national economic
policy calling for cooperation with Mainland China in order to establish a quasi cross-
Strait common market within the framework of the World Trade Organization
(WTO) system. The new administration also designed a legal framework for bilateral
economic cooperation for a Chinese common market.
That blueprint has not proved easy to follow, mainly because of resistance from the
opposing party and pro-independence elements in Taiwan, which do not accept
political and economic change bringing the island closer to Mainland China. Even
though some may recognize that cross-Strait economic cooperation would benefit the
long term development of Taiwans economy, it might further endanger their political
stances in future general elections of Taiwan. Even after all these hardship, the new
administration had no alternative but to implement the open-door policy toward
Mainland China.
The Ma Young-jeou administration has explained reasons for economic cooperation
with the Mainland China as follows. First, normalization of economic relations between
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1
See Scholar Calls for a Mainland-HK-Taiwan Common Market, available at
http://china.org.cn/English/2001/Feb/
7845.htm (last visited on Mar. 16, 2011).

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