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

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 Peoples

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 Taiwans 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).