Cross-strait relations have been shifting through varying states of limbo since the Kuomintang (KMT) took to the island in 1949. Now we have the signing of the Economic Cooperation Framework Agreement (ECFA), touted as the start of a new chapter of détente between China and Taiwan. In reality it throws the "One China" question back into that state of abeyance that has existed for so long, and both sides should be happy to leave it there.
Vocal elements in Taiwan – largely emanating from the opposition Democratic Progressive Party (DPP) – see the ECFA as a stepping stone to absorption into the mainland. It is and it isn’t.
Apart from one or two omissions, gains to be made from the pact lean heavily in the island territory’s favor: a tariff cut on 539 Taiwan products valued at US$13.8 billion, with Taipei lowering tariffs on 267 Chinese goods valued at a significantly lower US$2.86 billion.
On the surface, this will help to boost economic integration and trade with China, which already rose 68% in the first four months of this year as investment in the mainland increased 44.7%. In addition to paving the way for greater access to China’s markets, the ECFA will hopefully allow Taiwan to sign trade pacts with other economies in the region that have been wary of dealing with the island for fear of Beijing’s disapproval.
This last point is a clever concession on Beijing’s part. The CCP doesn’t want Taiwan to be backed into a corner, to the point where Taipei would have little to lose by formally declaring independence.
But such concessions on the part of the mainland are nothing new. Over the last few decades, it has been Taipei, not Beijing, that has resisted integration, such as the ban on Taiwan companies investing in mainland LCD and semiconductor factories. From Beijing’s point of view, creating incentives for ever-closer integration of Taiwan’s economy with the mainland is a strategy with few downsides.
Taiwan’s signing of the agreement is more than it appears: The ECFA is not in essence a free-trade agreement but as official a recognition as we’ll ever see that some version of the status quo is in the best interest of both sides. It has enhanced the level of cross-strait economic integration without resorting to political threats. This is not quite détente, but could be something better.