After two years of activity a bilateral agreement on cross-strait trade in services between China and Taiwan was agreed this month, signed by China’s Association of Relations Across the Taiwan Straits (ARATS) and Taiwan’s Straits Exchange Foundation (SEF), following negotiations held in Shanghai.

The two countries had started to look at developing and normalizing trade relationships back in 2008 which lead to the 2010 Economic Cooperation Framework Agreement (ECFA). This was the first major step towards trade liberalization following some 50 years of trade tensions between China and Taiwan.

The World Trade Organisation (WTO) recognises some 155 service trade sectors and China has committed to open 80 such sectors to Taiwan. This marks a key step for Taiwan businesses in addition to manufacturing, entering mainland China’s domestic market and is expected to substantially benefit the local economy. In return Taiwan has agreed to open up 64 service sectors.

The Service Trade Agreement will expand the role of the “The service trade agreement aims to lower the threshold for market access for service providers and boost cooperation in the service industry,” said Chen Deming, president of ARATS.

The agreement will reduce tariffs and lower the threshold for market access to service sector businesses in a move to increase liberalization of trade between China and Taiwan. The deal will benefit several key industries, including telecommunications, finance, health, tourism, transportation and commerce.

Lin Join-sane, Chairman of the SEF said the agreement “helps both sides open their respective markets, create a favourable foundation for their sectors, upgrade each other’s competitiveness, advance trade exchanges and cooperation, up-grade the effects of the ECFA and speed-up the signing of ECFA’s follow-up pacts.”

The SEF and ARATS also agreed to discuss possible commodity exchange programs and dispute settlement agreements. Additionally, the organisations will work on an agreement to avoid double taxation of trade between China and Taiwan.

The service sector in China has seen steady growth in recent years. It accounted for 46 per cent of the country’s GDP in 2012 and according to the National Bureau of Statistics overtook manufacturing for the first time in the first quarter of 2013. Similarly, the service sector is also the largest component of Taiwan’s economy, accounting for almost 70 per cent of its GDP.


This agreement is seen as a beginning of a new era in relations between China and Taiwan which is extremely positive for both countries and the region as a whole. Despite the tensions between the two sides in recent history common sense and the spirit of co-operation has won through and what has been achieved should prompt other nations to better deliver on their global trade agreements.

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