Taiwan minister backs direct China trade

Taiwan minister backs direct China trade

TAIPEI (Reuters): Taiwan Economics Minister Lin Hsin-i has recommended lifting a ban on direct trade with rival China after the sides are admitted to the World Trade Organization (WTO), media reported on Sunday.

Lin, in a written report to a presidential economic advisory panel, said Taiwan should allow direct trade with China after WTO entry expected later this year or early next year.

"Reducing the transportation time of people and goods and lowering transportation costs will have a positive effect on trade across the (Taiwan) Strait and help Taiwan become a global logistics center," the mass circulation China Times newspaper quoted Lin as saying in the report.

Lin said Taipei needed to push for talks on opening of direct Taiwan-China transport links and allow more imports from the mainland.

The United Daily News, another mass circulation Chinese- language daily, said Lin was also in favor of relaxing the policy restricting investment in China. It did not elaborate.

The report would be delivered to the 120-member Economic Development Advisory Committee under President Chen Shui-bian for discussion, the papers said.

The committee's mission is to make concrete policy proposals to jumpstart the economy, which slowed to a 26-year low of 1.06 percent year-on-year in the first quarter. A meeting is set for August 24-26.

The Taiwan government has resisted calls from the business community to relax a decades-old ban on direct commercial and transport links with China, citing national security concerns.

Due to the ban on direct contacts with China, trade, investment and travel must go through a third territory, mostly Hong Kong."

But despite the ban and simmering political tensions, Taiwan investors have poured US$60 billion into the mainland since detente began in the late 1980s, lured by low land and labor costs, a common culture and language and China's proximity.

Taiwan and China have been bitter political rivals since a 1949 civil war split. Beijing has threatened to attack if Taiwan declares independence or drags its feet on unification.