INTRODUCTORY NOTE TO THE ECONOMIC COOPERATION FRAMEWORK AGREEMENT BETWEEN

THE STRAITS EXCHANGE FOUNDATION AND THE ASSOCIATION FOR RELATIONS ACROSS THE
TAIWAN STRAIT
Author(s): ELIZABETH CHIEN-HALE
Source: International Legal Materials, Vol. 50, No. 3 (2011), pp. 440-446
Published by: American Society of International Law
Stable URL: http://www.jstor.org/stable/10.5305/intelegamate.50.3.0440
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INTRODUCTORY NOTE TO THE ECONOMIC COOPERATION FRAMEWORK

AGREEMENT BETWEEN THE STRAITS EXCHANGE FOUNDATION AND THE
ASSOCIATION FOR RELATIONS ACROSS THE TAIWAN STRAIT
BY ELIZABETH CHIEN-HALE*
[June 29, 2010]
+Cite as 50 ILM 440 (2011)+
Introduction
The Economic Cooperation Framework Agreement (ECFA) was signed on June 29, 2010, and went into effect
on September 12 of that year.1 Although preparation and informal talks were in progress long before, the first
official negotiation session leading to the agreement took place in Beijing on January 26, 2010, and both sides
worked swiftly to establish the framework agreement to reduce tariffs and commercial barriers between the Peoples
Republic of China (mainland China) and the Republic of China (Taiwan).
The parties skillfully avoided longstanding political and sovereignty issues by appointing two quasi-government
entitiesthe Association for Relations Across the Taiwan Strait representing China and the Straits Exchange
Foundation representing Taiwanto conclude the agreement. Hailed as a major achievement by both sides,2 the
ECFA is undoubtedly the first of many steps meant to normalize and improve trade relationship in goods and
services and the investment opportunities between mainland China and Taiwan.
Background
Taiwans rapid growth led by an export-oriented economy has been the envy of the world since the 1980s. After
turning a first trade surplus in 1971, Taiwans foreign trade value climbed to US$100 billion in 1988; the climb
continued well into the 1990s, and peaking in 2008 at US$496 billion, making Taiwan the 18th leading exporter
in the world. Unfortunately, the recent global economic downturn took a heavy toll on Taiwan.
In addition to a slowdown caused by the global financial crisis, Taiwan noticed that its major export destination
has shifted from the United States in the 1980s, to mainland China and Hong Kong in the new century. Furthermore,
Taiwan is increasingly being marginalized economically for its uncertain political status; in the age of flourishing
bilateral or regional trade agreements (FTA and RTA respectively) through which trade blocs are being
formed, Taiwan feels very much an outsider because it has had a very difficult time concluding FTAs of its own.
Under this broader economic context, the ECFA was seen as a tool for Taiwan to send a message that it is again
ready to be a major trade player in the world.
Implications
While China may or may not share similar future visions,3 Taiwan is expecting that this framework agreement
will not only reduce trade and investment barriers between the two sides of the Taiwan Strait, but that it will also
enable Taiwan to serve as a gateway to China for other multinational companies through the tariff provisions in
the agreement.4
It is further hoped that the framework agreement will help Taiwan form other similar FTAs with countries in
Asia.5 The most likely first candidate for such an agreement has emerged, and it is likely to be India.6 The Joint
Secretary (East Asia) of Indias Ministry of External Affairs, Gautam Bambawale, was quoted as saying that a
free trade agreement between India and Taiwan is a possibility.7 The governments have appointed their respective
research institutes to conduct a feasibility study.
Other major trading partners of Taiwan have previously expressed similar wishes. For example, the Japanese
Chamber of Commerce and Industry in its 2009 Taiwan White Paper expressed that [i]f the ECFA comes into
being, it should form a great opportunity for Taiwan and Japan to discuss signing an FTA.8
Such optimistic views on the beneficial effects of the ECFA were not shared by all in Taiwan. Prior to its passage
in Taiwan, President Ying-Jeou Ma of Taiwan participated in a televised public debate with opposition leader Ms.
Ying-Wen Tsai to convince the public of the merits of the ECFA.9 Even today, nearly a year after the passage
of the ECFA, many continue to express their doubts as to the real economic benefits of this Agreement.
*
Elizabeth Chien-Hale is the co-chair of the Law in the Pacific Rim Region Interest Group of the American Society
of International Law.
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2011]

INTRODUCTORY NOTE TO THE CROSS-STRAITS ECONOMIC COOPERATION FRAMEWORK AGREEMENT

441

The Agreement at a Glance

The ECFA has sixteen articles, grouped in five chapters, covering mostly principles of economic cooperation and
reductions or removal of trade barriers. The general outline is as follows:
Chapter 1 contains general provisions outlining the goals of the agreement and the cooperation measures.
Chapter 2 covers provisions relating to liberalization of trade and investment, setting out a timetable for
future negotiations over agreements on trade in goods, services, and investment.
Chapter 3 covers the scope of economic cooperation, including intellectual property protection, financial
cooperation, trade facilitation, and other topics.
Chapter 4 contains the harvest provisions that identify goods and services eligible for early tariff reductions
and early market access.
Overall, the ECFA is designed as a beginning rather than an end; therefore, the two sides are continuously
conducting additional meetings to give substance to the principles of the framework agreement.
Conclusion
In the short term, it is expected that the ECFA will bring economic benefits to Taiwan and reduce political tensions
across the Taiwan Strait. Whether the long-term goals of enabling Taiwan to be the gateway to China, or
whether the ECFA will foster a series of other FTAs between Taiwan and its other trading partners, are achievable
remains to be seen.

ENDNOTES
1

See Historic Taiwan-China Trade Deal Takes Effect, BBC

News, Sept. 12, 2010, http://www.bbc.co.uk/news/worldasia-pacific-11275274; see also Taiwan and China Sign Landmark Trade Agreement, BBC News, June 29, 2010, http://
www.bbc.co.uk/news/world-asia-pacific-11275274.

Chinese Mainland, Taiwan Sign Landmark Economic Pact,

Xinhuanet, June 29, 2010, http://news.xinhuanet.com/
english2010/china/2010-06/29/c_13375203.htm.

See, e.g., Ko Shu-ling, China Denies Supporting Taiwanese

FTAs, Taipei Times, Jan. 21, 2010, http://www.taipeitimes.
com/News/taiwan/archives/2010/01/21/2003464038.

See Elizabeth Tchii, ECFA to Boost GDP, Create Jobs: CIER,

Taipei Times, July 30, 2009, http://www.taipeitimes.com/
News/front/archives/2009/07/30/2003449939; see also Taiwan, Singapore Set for Formal Talks on Trade Deal, China
Post, Dec. 16, 2010, http://www.chinapost.com.tw/taiwanbusiness/2010/12/16/283854/Taiwan-Singapore.htm; but see
Tung Chen-Yuan, Taiwan May be Left out in the Cold, Taipei
Times, Feb. 26, 2010, http://www.taipeitimes.com/News/editorials/archives/2009/02/26/2003437076.

While there are currently about forty FTAs and RTS signed
among Asian countries, Taiwan has only signed four FTAs
with five countries. See Kristy Hsu, Taiwan-ASEAN Partnership in Economic Integration: Looking Ahead (Taiwan
ASEAN Studies Center), http://www.aseancenter.org.tw/
upload/files/OUTLOOK002_01.pdf; see also Jaume Gine
Dav, Dialogue Between China and Taiwan and its Geopolitical Impact in North-East Asia (ESADEgeo Position Paper
2) (Sept. 2010), http://itemsweb.esade.edu/research/esadegeo/
DIALOGUE%20CHINA%20TAIWAN_GINE_EN.pdf.

See Ko Shu-ling, Indian Officials Optimistic on FTA Deal,

Taipei Times, Mar. 9, 2011, http://www.taipeitimes.com/
News/taiwan/archives/2011/03/09/2003497745.

Id.

Challenge vs Opportunity Tasks and Prospects in Signing

ECFA (Bureau of Foreign Trade, MOEA Mar.16, 2010),
http://www.ecfa.org.tw/EcfaAttachment/ECFADoc/990316%
E7%BE%8E%E6%9E%97%E8%8B%B1%E6%96%87%E6
%BC%94%E8%AC%9B.pdf; see also Joyce Huang, Japanese
Chamber of Commerce Hands White Paper to Ma, Taipei
Times, Oct. 24, 2010, http://www.taipeitimes.com/News/biz/
archives/2009/10/24/2003456755.

See High-profile Taiwans ECFA Debate in Spotlight, Taiwan News, Apr. 25, 2010, http://www.etaiwannews.com/etn/
news_content.php?id=1236972&lang=eng_news&cate_img=
83.jpg&cate_rss=news_Politics_TAIWAN. See also ECFA
Debate, http://en.wikipedia.org/wiki/ECFA_Debate.

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CROSS-STRAITS ECONOMIC COOPERATION FRAMEWORK AGREEMENT*

[June 29, 2010]
+Cite as 50 ILM 442 (2011)+

[This translation is for reference only. The interpretation of the Cross-Straits Economic Cooperation Framework
Agreement shall be based solely on the authentic copy in the Chinese language.]
Cross-Straits Economic Cooperation Framework Agreement
Preamble
The Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits, adhering to
the principles of equality, reciprocity and progressiveness and with a view to strengthening cross-Straits trade and
economic relations,
Have agreed, in line with the basic principles of the World Trade Organization (WTO) and in consideration
of the economic conditions of the two Parties, to gradually reduce or eliminate barriers to trade and investment
for each other, create a fair trade and investment environment, further advance cross-Straits trade and investment
relations by signing the Cross-Straits Economic Cooperation Framework Agreement (hereinafter referred to as
this Agreement), and establish a cooperation mechanism beneficial to economic prosperity and development across
the Straits.
The two Parties have agreed through consultations to the following:
Chapter 1
Article 1

General Principles

Objectives

The objectives of this Agreement are:

1.

To strengthen and advance the economic, trade and investment cooperation between the two Parties;

2.
To promote further liberalization of trade in goods and services between the two Parties and gradually
establish fair, transparent and facilitative investment and investment protection mechanisms;
3.

To expand areas of economic cooperation and establish a cooperation mechanism.

Article 2

Cooperation Measures

The two Parties have agreed, in consideration of their economic conditions, to take measures including but
not limited to the following, in order to strengthen cross-Straits economic exchange and cooperation:
1.
Gradually reducing or eliminating tariff and non-tariff barriers to trade in a substantial majority of goods
between the two Parties;
2.
Gradually reducing or eliminating restrictions on a large number of sectors in trade in services between the
two Parties;
3.

Providing investment protection and promoting two-way investment;

4.

Promoting trade and investment facilitation and industry exchanges and cooperation.
Chapter 2

Article 3

Trade and Investment

Trade in Goods

1.
The two Parties have agreed, on the basis of the Early Harvest for Trade in Goods as stipulated in Article
7 of this Agreement, to conduct consultations on an agreement on trade in goods no later than six months after
the entry into force of this Agreement, and expeditiously conclude such consultations.
*
This text was reproduced and reformatted from the text available at the Evangelical Council for Financial Accountability
website (visited Apr. 15, 2011) http://www.ecfa.org.tw/EcfaAttachment/ECFADoc/ECFA.pdf.
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2011]

2.

CROSS-STRAITS ECONOMIC COOPERATION FRAMEWORK AGREEMENT

443

The consultations on the agreement on trade in goods shall include, but not be limited to:
(1)

modalities for tariff reduction or elimination;

(2)

rules of origin;

(3)

customs procedures;

(4)

non-tariff measures, including but not limited to technical barriers to trade (TBT) and sanitary
and phytosanitary (SPS) measures;

(5)

trade remedy measures, including measures set forth in the Agreement on Implementation of
Article VI of the General Agreement on Tariffs and Trade 1994, the Agreement on Subsidies and
Countervailing Measures and the Agreement on Safeguards of the World Trade Organization,
and the safeguard measures between the two Parties applicable to the trade in goods between the
two Parties.

3.
Goods included in the agreement on trade in goods pursuant to this Article shall be divided into three
categories: goods subject to immediate tariff elimination, goods subject to phased tariff reduction, and exceptions
or others.
4.
Either Party may accelerate the implementation of tariff reduction at its discretion on the basis of the
commitments to tariff concessions in the agreement on trade in goods.
Article 4

Trade in Services

1.
The two Parties have agreed, on the basis of the Early Harvest for Trade in Services as stipulated in Article
8, to conduct consultations on an agreement on trade in services no later than six months after the entry into force
of this Agreement, and expeditiously conclude such consultations.
2.

The consultations on the agreement on trade in services shall seek to:

(1)

gradually reduce or eliminate restrictions on a large number of sectors in trade in services between
the two Parties;

(2)

further increase the breadth and depth of trade in services;

(3)

enhance cooperation in trade in services between the two Parties.

3.
Either Party may accelerate the liberalization or elimination of restrictive measures at its discretion on the
basis of the commitments to liberalization in the agreement on trade in services.
Article 5

Investment

1.
The two Parties have agreed to conduct consultations on the matters referred to in paragraph 2 of this Article
within six months after the entry into force of this Agreement, and expeditiously reach an agreement.
2.

Such an agreement shall include, but not be limited to, the following:
(1)

establishing an investment protection mechanism;

(2)

increasing transparency on investment-related regulations;

(3)

gradually reducing restrictions on mutual investments between the two Parties;

(4)

promoting investment facilitation.

Chapter 3
Article 6

Economic Cooperation

Economic Cooperation

1.
To enhance and expand the benefits of this Agreement, the two Parties have agreed to strengthen cooperation
in areas including, but not limited to, the following:
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444

INTERNATIONAL LEGAL MATERIALS

[VOL. 50:

(1)

intellectual property rights protection and cooperation;

(2)

financial cooperation;

(3)

trade promotion and facilitation;

(4)

customs cooperation;

(5)

e-commerce cooperation;

(6)

discussion on the overall arrangements and key areas for industrial cooperation, promotion of
cooperation in major projects, and coordination of the resolution of issues that may arise in the
course of industrial cooperation between the two Parties;

(7)

promotion of small and medium-sized enterprises cooperation between the two Parties, and
enhancement of the competitiveness of these enterprises;

(8)

promotion of the mutual establishment of offices by economic and trade bodies of the two Parties.

2.
The two Parties shall expeditiously conduct consultations on the specific programs and contents of the
cooperation matters listed in this Article.
Chapter 4
Article 7

Early Harvest

Early Harvest for Trade in Goods

1.
To accelerate the realization of the objectives of this Agreement, the two Parties have agreed to implement
the Early Harvest Program with respect to the goods listed in Annex I. The Early Harvest Program shall start to
be implemented within six months after the entry into force of this Agreement.
2.

The Early Harvest Program for trade in goods shall be implemented in accordance with the following rules:
(1)

the two Parties shall implement the tariff reductions in accordance with the product list and tariff
reduction arrangements under the Early Harvest stipulated in Annex I, unless their respective
non-interim tariff rates generally applied on imports from all other WTO members are lower, in
which case such rates shall apply;

(2)

the products listed in Annex I of this Agreement shall be subject to the Provisional Rules of
Origin stipulated in Annex II. Each Party shall accord preferential tariff treatment to the abovementioned products that are determined, pursuant to such Rules, as originating in the other Party
upon importation;

(3)

the provisional trade remedy measures applicable to the products listed in Annex I of this Agreement
refer to measures provided for in subparagraph (5) of paragraph 2 of Article 3 of this Agreement.
The safeguard measures between the two Parties are specified in Annex III of this Agreement.

3.
As of the date of the entry into force of the agreement on trade in goods to be reached by the two Parties
pursuant to Article 3 of this Agreement, the Provisional Rules of Origin stipulated in Annex II and the provisional
trade remedy measures provided for in subparagraph (3) of paragraph 2 of this Article shall cease to apply.
Article 8

Early Harvest for Trade in Services

1.
To accelerate the realization of the objectives of this Agreement, the two Parties have agreed to implement
the Early Harvest Program on the sectors and liberalization measures listed in Annex IV. The Early Harvest
Program shall be implemented expeditiously after the entry into force of this Agreement.
2.
The Early Harvest Program for Trade in Services shall be implemented in accordance with the following
rules:
(1)

each Party shall, in accordance with the Sectors and Liberalization Measures Under the Early
Harvest for Trade in Services in Annex IV, reduce or eliminate the restrictive measures in force
affecting the services and service suppliers of the other Party;
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2011]

CROSS-STRAITS ECONOMIC COOPERATION FRAMEWORK AGREEMENT

445

(2)

the definition of service suppliers stipulated in Annex V applies to the sectors and liberalization
measures with respect to trade in services in Annex IV of this Agreement;

(3)

as of the date of the entry into force of the agreement on trade in services to be reached by the
two Parties pursuant to Article 4 of this Agreement, the definitions of service suppliers stipulated
in Annex V of this Agreement shall cease to apply;

(4)

in the event that the implementation of the Early Harvest Program for Trade in Services has
caused a material adverse impact on the services sectors of one Party, the affected Party may
request consultations with the other Party to seek a solution.
Chapter 5

Article 9

Other Provisions

Exceptions

No provision in this Agreement shall be interpreted to prevent either Party from adopting or maintaining
exception measures consistent with the rules of the World Trade Organization.
Article 10

Dispute Settlement

1.
The two Parties shall engage in consultations on the establishment of appropriate dispute settlement procedures
no later than six months after the entry into force of this Agreement, and expeditiously reach an agreement in
order to settle any dispute arising from the interpretation, implementation and application of this Agreement.
2.
Any dispute over the interpretation, implementation and application of this Agreement prior to the date the
dispute settlement agreement mentioned in paragraph 1 of this Article enters into force shall be resolved through
consultations by the two Parties or in an appropriate manner by the Cross-Straits Economic Cooperation Committee
to be established in accordance with Article 11 of this Agreement.
Article 11

Institutional Arrangements

1.
The two Parties shall establish a Cross-Straits Economic Cooperation Committee (hereinafter referred to as
the Committee), which consists of representatives designated by the two Parties. The Committee shall be responsible
for handling matters relating to this Agreement, including but not limited to:
(1)

concluding consultations necessary for the attainment of the objectives of this Agreement;

(2)

monitoring and evaluating the implementation of this Agreement;

(3)

interpreting the provisions of this Agreement;

(4)

notifying important economic and trade information;

(5)

settling any dispute over the interpretation, implementation and application of this Agreement in
accordance with Article 10 of this Agreement.

2.
The Committee may set up working group(s) as needed to handle matters in specific areas pertaining to this
Agreement, under the supervision of the Committee.
3.
The Committee will convene a regular meeting on a semi-annual basis and may call ad hoc meeting(s) when
necessary with consent of the two Parties.
4.
Matters related to this Agreement shall be communicated through contact persons designated by the competent
authorities of the two Parties.
Article 12

Documentation Formats

The two Parties shall use the agreed documentation formats for communication of matters arising from this
Agreement.
Article 13

Annexes and Subsequent Agreements

All annexes to this Agreement and subsequent agreements signed in accordance with this Agreement shall be
parts of this Agreement.
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446

Article 14

INTERNATIONAL LEGAL MATERIALS

[VOL. 50:

Amendments

Amendments to this Agreement shall be subject to consent through consultations between, and confirmation
in writing by, the two Parties.
Article 15

Entry into Force

After the signing of this Agreement, the two Parties shall complete the relevant procedures respectively and
notify each other in writing. This Agreement shall enter into force as of the day following the date that both
Parties have received such notification from each other.
Article 16

Termination

1.
The Party terminating this Agreement shall notify the other Party in writing. The two Parties shall start
consultations within 30 days from the date the termination notice is issued. In case the consultations fail to reach
a consensus, this Agreement shall be terminated on the 180th day from the date the termination notice is issued
by the notifying Party.
2.
Within 30 days from the date of termination of this Agreement, the two Parties shall engage in consultations
on issues arising from the termination.
This Agreement is signed in quadruplicate on this 29th day of June [2010] with each Party retaining two
copies. The different wording of the corresponding text of this Agreement shall carry the same meaning, and all
four copies are equally authentic.
Annex I:
Annex II:
Annex III:
Annex IV:
Annex V:

Product List and Tariff Reduction Arrangements Under the Early Harvest for
Trade in Goods
Provisional Rules of Origin Applicable to Products Under the Early Harvest for
Trade in Goods
Safeguard Measures Between the Two Parties Applicable to Products Under the
Early Harvest for Trade in Goods
Sectors and Liberalization Measures Under the Early Harvest for Trade in Services
Definitions of Service Suppliers Applicable to Sectors and Liberalization Measures
Under the Early Harvest for Trade in Services

Chairman
Straits Exchange Foundation

President
Association for Relations
Across the Taiwan Straits

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