The effect of the Economic Cooperation Framework Agreement (ECFA), which was signed last June between the Chinese mainland and Taiwan, is not only a concern for Taiwanese businessmen, but is also being observed and evaluated by multinationals in Taipei.

Chris James, the Chairman of the European Chamber of Commerce in Taipei (ECCT), told Xinhua that the improving relationship between Taiwan and the mainland would improve the island's business environment and growth prospect. He adds that the ECFA is "good for the economy, good for jobs, and good for business."

James said that improved trade ties across the Strait would make Taiwan' s business environment "more attractive" to foreign investors. He added that the ECFA's "early harvest program" of 500-plus products for which the tariff was being reduced was "definitely a step in the right direction."

However, he also noted that it was only a small step and that the ECFA was "still at an early stage" because "there are more than 2,000 items on the list of products which are banned for import from the mainland."

"Until this list of items is significantly reduced, there will be a barrier to investing in Taiwan," said James, who is also the president of Allianz Taiwan Life Insurance Company Ltd.

Under the ECFA' s early harvest program, the mainland reduced tariffs on 539 Taiwan goods by nearly 1 billion U.S. dollars.

It was also estimated that the program would create about 260,000 new jobs on the island, which would benefit about 23,000 small and medium-sized enterprises. Taiwan also agreed to reduce duties on 267 items imported from the mainland.

Tangible benefits for Taiwan

Andrea W. Wu, the president of the American Chamber of Commerce in Taipei (AmCham Taipei), said that multinational businesses had closely watched cross-Strait negotiations and the signing of the ECFA, anticipating that the pact could open up new opportunities for foreign companies to leverage a presence in Taiwan to serve the regional market.

Currently, the mainland's Association for Relations Across the Taiwan Straits and the island's Straits Exchange Foundation, which are authorized by the two sides to handle cross-Strait issues, held talks twice a year to discuss matters concerning trade, cultural exchange and medical, education and judicial cooperation.

Wu adds that American companies, especially those in the automotive and petrochemical industries, paid greater attention to the institutionalized cross-Strait talks and expressed hope that tariff reductions would be further extended to cover their sectors.

The petrochemical sector is included in the first round of tariff reductions for 500-odd Taiwan goods, but the auto industry is not covered by the rule, which means that motor vehicles that are manufactured in Taiwan and exported to the mainland cannot enjoy tariff reductions right now.