The Economic Cooperation Framework Agreement (ECFA), signed between Taiwan and China in 2010, helps Taiwan participate in regional economic integration, according to a book published by the WTO last month.
Apart from being a free-trade agreement (FTA), ECFA “offers a framework through which China is expected no longer to object to Chinese Taipei’s negotiations of FTAs with third parties,” said Craig VanGrasstek, a professor of the political economy of trade policy at the Harvard Kennedy School, in the book The History and Future of the World Trade Organization.
In addition to reviewing the WTO’s creation, achievements and obstacles, VanGrasstek also describes and analyzes Taiwan and China’s struggles and development within multilateral trading systems.
Before 2010, the regional trade agreements (RTAs) that Taiwan and China negotiated were “caught up with questions about the two WTO members’ diplomatic recognition,” VanGrasstek said.
The issue arose when Taiwan was negotiating an FTA with Paraguay in 2004, VanGrasstek said, noting that the negotiations became complicated because Paraguay recognized Taiwan while its Mercosur partners recognized China.
Similarly, he added, China’s FTA negotiation with Costa Rica was formally initiated only a year after the Latin American country shifted its diplomatic recognition from Taiwan to China in 2007.
However, according to VanGrasstek, “the cross-straits [sic] competition over RTAs subsided with the conclusion of the Economic Cooperation Framework Agreement between Beijing and Taipei.”
Three years later, on July 10 an economic cooperation agreement was signed with New Zealand, marking the first free-trade pact that Taiwan has ever signed with a developed country with which it does not maintain diplomatic relations.
The Agreement between New Zealand and the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu on Economic Cooperation (ANZTEC) is significant for Taiwan’s integration into the regional economy and will boost Taiwan’s prospects of joining the Trans-Pacific Partnership and Regional Comprehensive Economic Partnership.