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In early 2009, the Ma administration in Taipei and the Chinese government in Beijing began seriously discussing the possibility of signing a free trade agreement between the two. The stakes are quite large and so is the controversy around any such deal. Ever since 1949, when nationalists fled the mainland, China considers Taiwan a breakaway province that should fall under Beijing’s rule. Taiwan, on the other hand, has been trying to build and maintain its autonomy as a sovereign democratic state. Military tensions have surrounded this antagonistic relationship for 60 years, while China has been quite successful in asserting its "one China" policy among the world’s governments and alienating Taiwan diplomatically.

The new urge to sign an FTA comes after the nationalists lost power in Taiwan’s 2008 elections. China is, in fact, Taiwan’s top trading partner. Taiwanese businesses have built up strong investments in the mainland and the island’s political leadership is particularly concerned about losing economic strength in Asia once the China-ASEAN FTA starts coming into force in 2010.

The big question is whether a China-Taiwan FTA would trigger the start of Taiwan’s transition toward effective economic and political control by Beijing ("reunification"). In this regard, people have even been fighting over the possible name of the FTA. Taiwanese opposition forces insist that it should not be called a Comprehensive Economic Partnership Agreement, as originally proposed, because that is what China’s FTAs with Macao and Hong Kong are called. (Therefore, calling it a CEPA would insinuate that Taiwan has the same political status as these two special administrative regions of China.)

In June 2010, the governments of China and Taiwan signed an Economic Cooperation Framework Agreement (ECFA) which took effect in September 2010. The two governments intend to complete negotiations under this agreement by 2014. There have been major protests and much criticism of the deal in Taiwan.

last update: May 2012
Photo: WaDaNaBe / CC BY-NC-SA 2.0

Taiwan-China: No such thing as a free trade
Economic success has not trickled down to many Taiwanese, and for them the ECFA is an abstract idea of frighteningly radical engagement with China, writes The Economist
Tens of thousands rally in Taiwan against China pact
Tens of thousands of protesters took to the streets of Taipei on Saturday as Taiwan prepares to seal a major trade deal with Beijing that opponents fear is a step towards Chinese control.
ECFA to be signed amid optimism, concerns
Taiwan and China finalized details of a key trade pact Thursday to cut export tariffs and allow more market access to each other, but Taiwan’s opposition is planning a massive rally Saturday to protest the deal.
Taiwan, China finishing important trade pact
The deal, which is expected to be signed next week in Chongqing, ultimately ties Taiwan’s high-tech economy to China’s lucrative markets and paves the way for much closer political relations between the sides.
Econometric unreality and Taiwan-PRC trade
A new econometric forecast by two US-based economists of the benefits that could accrue to Taiwan in the wake of the signing of the proposed China-Taiwan FTA ironically highlights the lack of utility of such findings in persuading Taiwan’s people to accept the touted pact.
Talk of the day — New model for cross-strait negotiations
A new model patterned after the Taiwan-US Trade and Investment Framework Agreement (TIFA) will be introduced in negotiations across the Taiwan Strait
Opposition party to rally 100,000 against ECFA on June 26
Taiwan’s opposition Democratic Progressive Party will invite former President Lee Teng-hui to join 100,000 protesters at a June 26 rally against the Economic Cooperation Framework Agreement with China, reports said yesterday.
ECFA cheers, but also worries, foreign investors
Foreign investors will be able to invest in mainland China via Taiwan under the protection of the economic cooperation framework agreement, well ahead of any deal with South Korea, the Taiwanese argue.
Taiwan says as WTO member, it has FTA rights
Taiwan’s economics minister said on Saturday that as a World Trade Organization member, Taiwan has the right to seek free trade deals with many partners, a move China opposes as the two work on a trade pact.
Taiwan president faces hurdles in key China deal
Taiwanese President Ma Ying-jeou is facing domestic and Chinese hurdles in his pursuit of a key China trade pact that could bring about the closest relations between the longtime rivals since their split amid civil war in 1949.