Taiwan and the P.R.C. signed the Economic Cooperation Framework Agreement (ECFA), similar to a free trade agreement, in Chongqing on June 29. The choice of Chongqing as the location of the signing is symbolic, as Chongqing was the KMT (Nationalist) capital through the war against Japan. The Nationalists fled to Taiwan in 1949, and we all know what’s taken place since. 

Well, free trade, taxwise, means a cut in taxes, and that cut is transpiring as I write this piece. China will cut tariffs on 539 industrial items, worth US $13.8 billion to Taiwan. Taiwan, in return, will cut 267 tariffs, worth US $2.86 billion to China. 

Over the next two years, China will reduce tariffs in three stages: from approximately 15 percent to 5 percent to 0 percent. Effective June 29, Taiwan now enjoys a 0 percent tariff on a substantial number of goods previously taxed at higher rates.