Taipei and Beijing wrapped up the final round of negotiations on an economic cooperation framework agreement (ECFA) yesterday, with Taiwan including more than 500 items on its “early harvest” list and China about 250.
The early harvest list refers to goods and services that will be subject to immediate tariff concessions or exemptions, which are expected to form the backbone of the proposed deal.
The pact constitutes an early harvest list in traded goods and another in trade in services. Detailed items were not released yesterday, but both sides promised to make them public as soon as the trade pact is signed next week.
On traded goods, there are 539 items in Taiwan’s early harvest list, with an estimated value of US$13.8 billion. They take up 16 percent of the China-bound export volume and cover six categories.
China will have 267 items in its early harvest list, accounting for US$2.86 billion, or 10.5 percent, of its Taiwan-bound exports. It covers five categories including upstream raw materials such as petrochemicals and synthetics.
China agreed not to export more agricultural products or workers to Taiwan. It also agreed to do its best to spare 17 Taiwanese businesses categories listed as “disadvantaged.”
While some were concerned the promise would be short-lived, Deputy Chairman of China’s Association for Relations Across the Taiwan Strait (ARATS) Zheng Lizhong (鄭立中) said “Taiwanese compatriots” should rest assured that they would keep their promise.
He also dismissed speculation that Chinese businesses complained about the “unbalanced” early harvest program, saying they were willing to do so because both sides are “a family.”
Some petrochemical products Taiwan wished to place on the list, such as PE and PVC, did not make it to the list, but both sides agreed to resume negotiations within six months after the trade pact takes effect so each side can open their individual market “as soon as possible.”
However, the pact did not specify when or how much both sides should open their markets. Nevertheless, the trade pact would specify “substantial trade” liberalization, Taiwan’s Bureau of Foreign Trade Director-General Huang Chih-peng (黃志鵬) said.
Early harvest items that will enjoy immediate zero tariffs are those with 5 percent tariffs and less. Products with tariffs between 5 percent and 15 percent will have the rate reduced to 5 percent the first year and zero the next year. Those with tariffs higher than 15 percent will see it decreased to 10 percent the first year, 5 percent the second year and zero the following year.
On trade in services, there are 11 business categories on Taiwan’s early harvest list, including financial industry and non-financial services.
On the financial industries, Taiwanese banks that have set up branches in China for a year and made profit for one year will be allowed to provide services in the yuan. Taiwanese banks will enjoy speedy approval of their applications if they opt to upgrade their representative offices into branches in western and eastern China.
Taiwanese insurance companies can establish insurance firms in China if the group or joint venture has capital of more than US$5 billion, operate for 30 years and establish an office in China for two years.
Asked by media whether China would ask Taiwan to pay back its “economic favor,” Zheng said they never thought about it and that it was not an issue.