Taiwan and the mainland are edging closer to a trade pact that would cut tariffs and help clear the way for political dialogue. Behind layers of protective barbed wire, top negotiators from Taipei and Beijing decided yesterday to discuss the Economic Co-operation Framework Agreement in their next round of talks. '[The agreement] has been made an important agenda item for the fifth round of cross-strait talks in the second half of next year,' said Zheng Lizhong , vice-chairman of Beijing's Association for Relations across the Taiwan Strait. The two sides resumed dialogue and held their first round of talks in June last year, a month after Ma Ying-jeou of the mainland-friendly Kuomintang assumed the island's presidency. They have signed a total of 12 agreements, including three signed in the fourth round of talks yesterday. Zheng's boss, Chen Yunlin , signed agreements on industrial, fishery and agricultural co-operation with his Taiwanese counterpart Chiang Pin-kung of the Straits Exchange Foundation in the central Taiwanese city of Taichung. They cancelled at the last minute the signing of a double taxation avoidance agreement after the mainland abruptly reversed its position on how people should be taxed. 'Originally, the mainland agreed to tax a person according to his birthplace, but changed its mind on Monday to tax the person according to the place where he receives the business profits,' an official familiar with the negotiation proceedings said. The fourth round of talks was held yesterday in Taichung amid protests by anti-Beijing activists, including those from the pro-independence camp and the Falun Gong spiritual movement. Hundreds protested outside the heavily guarded Windsor Hotel where the meeting was held. While Falun Gong activists denounced Beijing for suppressing followers, pro-independence activists voiced concerns the pact would draw Taiwan closer to the mainland and lead to political integration. In the talks, Chen said the planned trade deal was not political. 'Rather, it is a trade agreement that will benefit people of the two sides economically,' he said, adding that he perfectly understood the concerns some people had about its possible negative impacts on Taiwan. His Taiwanese counterpart said the pact was necessary if the island were to avoid being marginalised after Beijing formed a trade bloc with the Association of Southeast Asian Nations as soon as next year. Dr Lai Shin-yuan, chairwoman of the Mainland Affairs Council, Taiwan's top mainland policy planning body, said at a separate media briefing the trade pact was a must, given that 40 per cent of Taiwan's exports were bound for the mainland. She brushed off allegations by the pro-independence camp that the pact was a political trap and was similar to the Closer Economic Partnership Arrangement signed by the mainland and Hong Kong. '[It] is absolutely different from Cepa, which was signed under the basis of the 'one country, two systems formula' of Hong Kong,' she said. George Tsai Wei, political science professor at Taipei-based Chinese Cultural University, said opponents were worried the pact was a political trap to lure the Taiwanese people. 'At a minimum, it would help pave the way for future political dialogue,' he said. Indications of the possible political impact of the proposed trade deal became clearer yesterday when Beijing's Zheng said there was a need for the two sides to 'positively face the future' and to 'create all the necessary conditions to prepare for the removal of political obstacles'. Tsai said President Hu Jintao would seek to hold political dialogue with Taiwan before his scheduled retirement in 2012 to ensure his legacy.