Taiwanese firms gain legal umbrella

Taiwan and the mainland have signed a highly anticipated investment-protection pact that is widely viewed as a major step in deepening cross-strait economic ties. At yesterday's signing ceremony in Taipei, top negotiators from both sides also inked a co-operation agreement aimed at accelerating customs-clearance procedures that will boost two-way trade. The two agreements were finalised during the previously delayed eighth round of high-level talks. They are among follow-up accords that are intended to bolster the landmark Economic Co-operation Framework Agreement (ECFA) in 2010. Chiang Pin-kung, chairman of Taipei's Straits Exchange Foundation (SEF), and his mainland counterpart, Chen Yunlin of the Association for Relations Across the Taiwan Straits, represented their respective governments in signing the agreements after several hours of negotiations. SEF negotiators said the talks mainly focused on how the cross-strait investment-protection pact would provide a legal umbrella for Taiwanese businesses and their operations on the mainland. The pact will be applied retroactively to ongoing trade disputes and other commercial rights cases. And it is expected to further decrease the number of Taiwanese businesses that use external bases, including Hong Kong, to channel their investments to the mainland. Taiwan previously banned Taiwanese firms and residents from investing directly on the mainland when the two sides were more hostile to each other. Relations have, however, gradually improved, and direct investments have been allowed since Ma Ying-jeou of the mainland-friendly Kuomintang became president in 2008 and adopted a policy of engaging the mainland. 'The [investment] agreement will have a beneficial impact on all businesses and will improve the investment environment,' SEF's Chiang said after the signing ceremony. Chen's deputy Zheng Lizhong said the signing of this pact, which took two years to achieve, was an 'important step in deepening economic co-operation'. He said the negotiations were very difficult, as the two sides had different legal systems and views. The talks on the pact started shortly after the ECFA was signed in 2010. According to mainland negotiators, Taiwan's repeated demands for the protection of its businesses operating on the mainland and the need to settle trade disputes through international arbitration were seen as major reasons behind the stalling of the talks. The eighth round of talks was originally slated for June, but it was delayed as both sides disagreed on the terms. For instance, Beijing refused to agree on the settlement of private business disputes by using international arbitration. It said that would create the impression that Taiwan was a sovereign state. Beijing still views Taiwan as a breakaway province that is subject to eventual union with the mainland. Both sides subsequently agreed to use only mainland or Taiwanese arbitrators, but the location of the negotiations could be anywhere that the disputing parties agree on. The mainland also previously did not have a law requiring police to notify family members of Taiwanese investors in cases where they are detained. Zheng said Beijing finally agreed to grant that notification right to Taiwanese investors, except in terrorism or security-related cases. As such, family members of Taiwanese businesspeople would be notified within 24 hours of their detention. On the question of whether the new personal-safety-related rights applied to all Taiwanese visitors even if they are not businesspeople, Taiwanese negotiator Fan Liang-tung said only businesspeople, their dependents and employees fell under the legal protection umbrella. But Fan said that in future negotiations the SEF would seek to extend those protections to all Taiwanese residents on the mainland. During yesterday's talks, the two sides also agreed that follow-up issues such as trade co-operation in goods and services industries, as well as a mechanism for dispute settlements, would be given priority in the next round of talks, which take place about every six months. Since the two sides held their first landmark talks in June 2008, they have signed 18 agreements, including the two signed yesterday. Taiwanese businessmen and scholars hailed the signing of the investment pact as important, but they also called for a strong enactment of the agreement. Meanwhile, Taiwan's pro-independence groups continued their protests yesterday against Chen Yunlin. They view him as a mainland proxy who is trying to woo the Taiwanese and pave the way for future cross-strait unification. Chen and his delegation will leave Taiwan today after a three-day stay. 80,000 There are reportedly this many Taiwanese firms operating on the mainland, where they have invested more than US$100 billion