'The Bush administration is in favour of FTAs in general,' said US Senator John D. Rockefeller, an honorary chairman of the US-Taiwan Business Council and a member of the Senate's finance and intelligence committees.

'That may be the problem, that there are so many FTAs on the Senate committee's agenda.'

According to Taiwan's Chunghwa Institute for Economic Research, an FTA with the US would yield an immediate windfall of US$1 billion and boost Taiwan's gross domestic product by 0.5 per cent.

However, to get there, Taiwan needed to make progress through the preliminary Trade and Investment Framework Agreement under which Taipei and Washington restarted talks in November last year, Mr Rockefeller told a Taipei audience yesterday.

Taiwan has been pushing for an FTA with the US for nearly 10 years, hoping such a move will give it greater access to the US market and enhance its prestige in the international community.

Among the concerns for the US were Taiwan's trade barriers on telecommunications, pharmaceuticals, financial services, agriculture and electronics, Mr Rockefeller said.

Moving the dialogue away from politics and back to economics is seen as being a great benefit to Taiwan-US relations.

'The talk is always political, but the talk also needs to be economic,' Mr Rockefeller said.

Also of concern is Beijing, which views the bilateral talks on an FTA with suspicion.

'China must be convinced that any Taiwan-US FTA would be an economic arrangement, not a political statement,' he said, adding that if those concerns could be overcome, then cross-strait relations may improve.

'In this era of globalisation, Taiwan's economic integration would be a net plus, not only to Taiwan-US relations, but also to cross-strait stability,' he said.

Taiwan is excluded from regional trade pacts, including Asean + 3, of which China is a member.

'If we can conclude an agreement with the US, then people will realise that it really is economic, and then China will be more comfortable with Taiwan signing FTAs with others,' said Douglas Hung, chief executive of the Cross-Straits Common Market Foundation.

'They are suspicious of anything that might increase Taiwan's visibility and would try to stop that,' Mr Hung said. 'It's a psychological barrier within China, and [an FTA] would be a really big test for the government there.'

Observers believe that despite the political and trade tensions between Taiwan and the US over recent years, the time is ripe for FTA talks.

'Now is the best time for both sides to consider a Taiwan-US FTA,' said Vincent Siew, former Taiwan premier and chairman of the Chunghwa Institute. 'If Taiwan is excluded [from the global trend towards elimination of trade barriers], the political and economic cost will be tremendous.'