China has suspended tariff reductions on 12 chemical products from Taiwan under the Economic Cooperation Framework Agreement (ECFA), effective January 1. The move comes in response to Taiwan’s trade restrictions, which the Chinese mainland claims have breached the terms of the agreement.
Since the ECFA was signed in 2010, trade between the Chinese mainland and Taiwan has grown significantly, from less than $150 billion to nearly $320 billion in 2022. Taiwan has benefited from a substantial trade surplus with the mainland, amounting to $156.5 billion. By June 2023, the ECFA had saved Taiwan $8.8 billion in taxes on trade in goods.
However, before the mainland suspended tariff reductions on 12 items, Taiwan had already banned the import of 2,509 items from the Chinese mainland. According to a statement by the Taiwan Affairs Office of the State Council, Taiwan’s trade restrictions have damaged the interests of mainland industries and enterprises, constituting a breach of the ECFA.
Cheng Li-wun, a legislator from the Kuomintang (KMT), commented, “To put it bluntly, the Chinese mainland has been giving profits to Taiwan through the ECFA. The mainland helps Taiwan get more profits, yet still gets blamed by Taiwan authorities and characterized by it as offering ‘sugar-coated poison,’ while taking the ‘poison’ so happily every day! Meanwhile, it continues to vilify the mainland and exacerbate cross-strait antagonism as if there’s going to be a war at any time. The mainland is now saying, let business be business, and Taiwan needs to pay tax and tariff in accordance with the international trading rules.”
In 2011, when she was a candidate for leadership, Taiwan leader Tsai Ing-wen stated, “Trade with the mainland has to be consistent with the WTO rules. We don’t want to make exceptions in order to get privileges from the mainland.” At the time, she was clear in her opposition to the ECFA, proposing a referendum to abolish it if elected.
However, after taking office, Tsai Ing-wen and her party have continued to benefit from the agreement. Under her tenure, Taiwan’s economy has become increasingly dependent on trade with the mainland, with nearly 44 percent of Taiwan’s total exports directed to the Chinese mainland (including Hong Kong) at its peak.
Trade with the mainland remains vital for Taiwan’s economy. The recent suspension of tariff reductions highlights the complexities of cross-strait relations and the importance of adhering to mutual agreements. As both sides navigate these challenges, the economic welfare of the people stands at the forefront of considerations.
Reference(s):
cgtn.com
