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Taiwan parliament approves landmark China trade deal

TAIPEI (Reuters) - Taiwan’s parliament passed a trade deal with Beijing on Tuesday, the most significant agreement between the political foes of 60 years and one that binds Taiwan’s economy to China while opening doors to other countries.

Legislators approved all but one sure-to-pass piece of the economic cooperation framework agreement (ECFA) after a marathon day of debate and colorful protests, meaning the deal becomes law on January 1. Negotiators initially signed the pact in June.

The deal, which slashes tariffs on some 800 products, is considered a catalyst for similar pacts with other countries that could ease Taiwan’s diplomatic isolation imposed by China and raise its competitiveness as an export-dependent economy.

The government has said the deal would create some 260,000 jobs, while one private forecast has put the net effect of ECFA for Taiwan at a 5.3 percent improvement in GDP by 2020.

China sees the deal as a step in its long-held plan to draw Taiwan under its rule, charming the island with economic sweeteners even as it continues a military build up against a territory it has regarded as its own since the end of the Chinese civil war in 1949.

As part of that charm offensive, Beijing is unlikely to stop Taiwan from seeking deals with other trade partners to help its economy. China’s apparent blessing for a future pact with Singapore, Taiwan’s sixth largest trading partner, is a strong first sign of agreements to come.

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Approval of the trade pact following a brawl last month in the divided legislature also gives Taiwan negotiators a stronger mandate to go back to the table with China for talks on further tariff cuts and other economic cooperation deals.

Opponents in Taiwan had feared that China wanted ECFA to assert its claim of sovereignty over the self-ruled, democratic island by making the economies more interdependent.

Dozens of those opponents protested outside parliament on Tuesday, with local television showing some in their underwear, while opposition legislators yelled and displayed giant placards during the debate.

“People are clear this isn’t going to be good for Taiwan,” lawmaker Chen Ming-wen told parliament. “It’s going to steer our economy closer to China.”

Reporting by Ralph Jennings