Beijing, Taipei ink trade pact

TAIPEI, Taiwan

Taiwan and China set aside decades of hostilities Tuesday and agreed to drastically expand flights and allow shipping links across the Taiwan Strait, a potential hot spot that has long threatened to become a war zone.

The historic deal highlighted the dramatic improvement in relations in the past half year between the rivals that split amid a civil war in 1949, but Taiwan and China appeared to still be a long way from resolving the root causes of their conflict.

After signing the pact Tuesday, Chinese envoy Chen Yunlin smiled and shook hands with his Taiwanese counterpart, Chiang Pin-kung. They sipped champagne and held up two lines of framed calligraphy that said: “Peaceful negotiation creates a win-win situation.”

The envoys agreed to hold high-level talks every six months and focus on building closer financial ties in the next round of meetings.

Mr. Chen was the highest-ranking Communist Chinese official ever to visit Taiwan. Since arriving Monday, he has been greeted by scattered anti-China demonstrations. Protesters lit fireworks outside his hotel Tuesday, and a small crowd scuffled with police outside the venue where Mr. Chen attended a dinner banquet.

For nearly six decades, Taiwan banned direct flights and shipping with China, fearing Beijing might attack with bombers and warships disguised as civilian vessels.

But the rivals began relaxing restrictions on flights in July when their envoys met in Beijing. They signed a confidence-building deal then that allowed 36 weekly flights from five mainland cities.

Tuesday’s agreement - which becomes effective in 40 days - more than tripled the number of weekly flights to 108. It also allowed planes to take off from a total of 21 cities. Under the deal, cargo planes can also begin flying the route, with 60 allowed each month.

In the past, cargo ships had to sail to the Japanese island of Okinawa before going to the other side. Tuesday’s agreement allows them to sail directly across the 100-mile-wide Taiwan Strait.

“The direct shipping will finally help Taiwan become a transport hub in Asia and better explore the mainland market,” Mr. Chiang told reporters after the meeting. “With each cruise, they won’t have to go to Okinawa, and they save about 16 hours and cut costs by between 15 [percent] and 30 percent.”

A Chinese official, Zheng Lizhong, said the air links will save the airlines about $60 million a year. He said the direct shipping links will trim costs by $30 million annually.

Mr. Chiang said the two sides would seek an agreement that allows banks to set up branches on each side. The agreement also includes measures for greater cooperation on food safety.

The drastic warming in relations began after Taiwanese President Ma Ying-jeou was elected in March, pledging to ease military tensions and forge closer economic ties with China.

Mr. Ma’s predecessor, Chen Shui-bian, was vilified and shunned by Beijing because he leaned toward independence.