EDITORIAL: China-Taiwan trade deal

China and Taiwan on Tuesday signed a landmark agreement on economic cooperation that will likely create the first free trade zone in Northeast Asia and have a significant impact on regional security.

The Economic Cooperation Framework Agreement (ECFA) is the most significant accord between the two sides since the Kuomintang, or the Nationalist Party, fled to Taiwan in 1949 after losing the civil war in China against the Communist Party and establishing its government in exile.

An ECFA works roughly the same way as a free trade agreement as its role is to reduce and eliminate trade barriers.

Under the deal, China and Taiwan will phase out tariffs on 539 and 267 items, respectively, by January 2013.

Taiwanese companies in the banking, insurance and health care industries will be allowed to enter the Chinese market.

China has agreed not to demand that Taiwan open its labor market to Chinese workers.

On the whole, China made more concessions than Taiwan to strike the trade deal.

China apparently sought to answer the expectations of the Taiwanese people and reassure them as part of Beijing's efforts to lay the groundwork for eventual unification.

In recent years, China and Taiwan have made some remarkable moves to forge closer relations.

In 2005, Chinese President Hu Jintao, general secretary of the Communist Party of China, held historic talks with Lien Chan, then the Kuomintang chairman. It was the first meeting between the leaders of the two parties in 60 years. They both voiced opposition to Taiwan's independence.

Since Ma Ying-jeou, the Kuomintang chief with a political inclination to expand cross-Strait ties, became Taiwan's president in 2008, the two sides have agreed on direct flights between key cities of China and Taiwan as well as direct shipping links between Chinese and Taiwanese ports.

These policy measures apparently reflect Beijing's strategy to promote bilateral economic integration to set the stage for future political talks on unification.

While being well aware of China's aim, Ma has promised to revitalize Taiwan by enhancing its economic relations with the mainland.

Taiwan was alarmed by the free trade agreement between China and the Association of Southeast Asian Nations that came into force this year. China absorbs 30 percent of Taiwanese exports.

China and Taiwan plan to remove barriers to bilateral trade in the service sector and investment as well through further negotiations. Establishing a free trade zone is their ultimate goal.

Japan and South Korea can't afford to sit back and relax while economic ties between China and Taiwan are expanding rapidly.

Policymakers in Tokyo and Seoul should outline and promote a viable vision of a free trade zone encompassing Asia as a whole.

There will certainly be many twists and turns before the envisioned China-Taiwan free trade zone becomes reality.

Taiwan's opposition Democratic Progressive Party and former President Lee Tenghui are opposed to the ECFA, warning that the pact will allow China to swallow up Taiwan. There is likely to be considerable resistance within the island's parliament to the ratification of the treaty.

Even if the DPP returns to power, however, there will be no way for Taiwan to keep resisting economic integration with China, now a major world market.

The era of bitter cross-Strait confrontation between China and Taiwan appears to be over. Yet, the reality remains that China deploys a large number of missiles aimed at Taiwan while the United States, in the face of strong protests by Beijing, sells weapons to the island.

China's amazing economic growth depends greatly on a peaceful international environment. Instead of simply trying to strengthen its economic links with Taiwan, Beijing should remove the missiles aimed at the island. That would contribute to creating a stable regional order.

The trade pact should be used as the launch pad for such efforts.

If mutual trust grows between China and Taiwan, easing military tension in the Taiwan Strait, Japan may find it necessary to reconsider its own national security strategy.

Tokyo needs to keep close watch on where the trade agreement leads as it tries to deepen its alliance with the United States.

--The Asahi Shimbun, July 1