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(Nov 19, 2009) It was announced on November 16, 2009, that mainland China and Taiwan (the terms of address used in the documents) have signed three memoranda of understanding (MOUs) on banking, insurance, and securities. The MOUs, to take effect within 60 days, will allow each side more access to the other's markets in these sectors. The new agreements cover such matters as financial supervision, information sharing and confidentiality, risk management, and constant communication between the two sides' financial regulatory agencies. Under them, the eight Taiwanese banks that already have liaison offices in mainland China will be able to upgrade to branches or subsidiaries. (Taipei, Beijing Sign Financial MOUs, TAIWAN TODAY, Nov. 17, 2009, available at http://taiwantoday.tw/ct.asp?xItem=78329&ctNode=452&mp=9.)
Relevant laws and regulations will have to be amended to accord with the terms of the new MOUs. For example, Taiwan financial institutions with headquarters on the mainland are not covered under the Act Governing Relations Between Peoples of the Taiwan Area and the Mainland Area; therefore, in the next two months, the Financial Supervisory Commission plans to push for the Act's amendment. (Id.)
The specific categories of access to each side's markets are to be determined on the basis of the "early harvest" list set forth in the proposed cross-strait Economic Cooperation Framework Agreement (ECFA). According to Sean Chen, Minister of Taiwan's Financial Supervisory Commission, "[t]he signing of the cross-strait MOUs is like obtaining a ticket to watch a ball game, but the seat is not too good. That's why we have to work on sealing an ECFA, a way of securing a better seat to enjoy the match." (Id.)
An "early harvest" list comprises the industries or services for which immediate tariff concessions or liberalized trade terms will be allowed by one party to the other. Taiwan's list, for example, reportedly includes almost 500 items, among sectors deemed most vulnerable to competition from mainland China, such as textiles, petrochemicals, automobiles, and machine tools. (Taiwan, China to Exchange 'Early Harvest' Lists for Pact, CHINA POST, Oct. 27, 2009, available at http://www.chinapost.com.tw/taiwan/china-taiwan-relations/2009/10/27/230
238/Taiwan-China.htm; 500 Items on ECFA "Early Harvest" List, RADIO TAIWAN INTERNATIONAL Nov. 18, 2009, available at http://english.rti.org.tw/Content/GetSingleNews.aspx?ContentID=90547.)
The two sides were to exchange their respective early harvest lists at the fourth round of informal ECFA talks, scheduled for November 3-4, but the meeting was postponed by mutual agreement at the last minute after the mainland indicated that further discussion of the details of the consultations was necessary in order to insure progress. Discussion on the framework agreement began in late February 2009. (Fourth Round of Informal Talks on ECFA Postponed, Kuomintang official website, Nov. 1, 2009, available at http://www.kmt.org.tw/english/page.aspx?type=article&mnum=112&an
um=7119; Terry Cooke, Cross-Strait Matrix: The Economic Cooperation Framework Agreement, 9:11 CHINA BRIEF, May 27, 2009, available at http://www.jamestown.org/single/?no_cache=1&tx_ttnews%5Btt_news%5D=35041
|Author:||Wendy Zeldin More by this author|
|Topic:||Banks and financial institutions More on this topic|
|Jurisdiction:||China More about this jurisdiction|
|Taiwan More about this jurisdiction|
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Last updated: 11/19/2009