Taiwan Lifts 50 Year Trade Ban, a Little Bit

By ALEXA OLESEN

(Virtual China News -- Mar. 22) (Virtual China News, Mar. 22) Taiwan's parliament Tuesday lifted a five-decade-long ban on direct trade and transport links with China in what appears to be a good will gesture following a period of heightened tension with mainland China.

Cross-strait relations had grown sketchy last week due to bellicose statements from Beijing in the run-up to Saturday's presidential elections, which put an end to the Nationalist Party's fifty year reign.

The new legislation allows open and direct shipping between the remote islands of Quemoy, Matsu and Penghu and ports in Southeast China, but is not likely to drastically affect the volume of cross-strait trade.

Taiwanese officials in the United States described the bill as little more than a conciliatory gesture on the part of the new government.

"The law that just passed is a show of political goodwill toward our counterparts," said Henry Liu of the of the Taipei Economic and Cultural Representative Office.

Liu described the new bill as a kind of prototype for future efforts to improve commercial relations between Taiwan and the mainland.

Mainland Fears

"This is kind of laboratory test. We are expecting there will be some political issues needing to be resolved: the flag issues, document issues, different kinds of cargo," Liu said. "The new law also is an effort leading to the overall liberalization of trade between Taiwan and China."

The move comes only days after the election of a new Taiwanese president, Chen Shui-bian, who is head of the Democratic Progressive Party. Being a former pro-independence activist, Chen is seen in Beijing as a threat to the "One China" policy, and Zhu Rongji made threatening remarks last week trying to prevent voters from electing him.

The legislation, which was two years in the making and was opposed by the former leading Nationalist (Kuomintang) Party, seeks to assuage mainland fears and show that the new administration desires engagement with China.

The waters surrounding the three islands are shallow and not ideal for commercial shipping, so large shipments will still need to go through third party ports such as Hong Kong or Osaka, Japan. The islands lie closer to China than to Taiwan, and they already enjoy a thriving black market trade relationship with the mainland. The bill still does not allow direct trade between China and the main island of Taiwan.

As a gesture, however, the legislation is meaningful because it indicates to mainland China a willingness within the Taiwanese government to completely lift the 50-year-old trade ban. Such a move would be necessary if both Taiwan and China accede to the World Trade Organization (WTO) later this year.

Practical Issues

"I think Taiwan will enter very quickly after China's entry into the WTO. I think China will agree to admit Taiwan at a very early stage," said Chulsu Kim, former Deputy Director of the WTO, when speaking with Virtual China in February of this year.

Once Taiwan enters the WTO they will most likely implement a practical rather than a merely cosmetic lifting of the 50 year cross strait trade ban. Taiwan's biggest trading partner is currently the U.S., and it's second biggest trading partner is Hong Kong although trade figures for Hong Kong can be taken as an indication of Taiwan-China trade.

As soon as the trade ban is fully lifted James Liu of predicted China would quickly become Taiwan's number one trade partner. During the first two months of 2000 trade between Taiwan and the U.S. reached US$8.6 billion, and Taiwan and Hong Kong did US$4.4 billion in trade, according to the China External Trade Development Council.

Practical cross-strait shipping issues -- such as what flags will fly, and how documents must be presented -- can be addressed when preliminary shipments are made between the mainland and these small islands, officials said.

To reach Alexa Olesen: alexa@virtualchina.net