The landmark Economic Cooperation Framework Agreement (ECFA), signed in June, is the most sweeping pact ever penned by the two sides, officially still not at peace after the end of a civil war in 1949.

"With ECFA becoming effective, the cross-Strait ties marched into a new era... Taiwan should better utilise the trend," Taiwan's President Ma Ying-jeou told reporters while on a trip to the southern Tainan county.

China's commerce ministry also hailed the hard-won pact.

"We're pleased to see the agreement taking effect... We believe the implementation of the pact will further promote exchanges and cooperation in cross-strait trade and help the economies develop together," spokesman Yao Jian said in a statement on the ministry's website.

For the Beijing-friendly President Ma, who came to power in 2008 on a promise to improve the economy through a rapprochement with the mainland, the signing of the ECFA was a triumph.

Ma's administration has said the pact will create 260,000 jobs in the island's export-dependent economy and boost growth by up to 1.7 percentage points.

Fundamentally, however, the pact will only solidify a move towards closer economic interaction that has taken place despite frequent political tension between the two sides.

China is Taiwan's largest trading partner, its largest investment destination, and now also home to a growing number of Taiwanese.

It is estimated that about one million people from the island live on the mainland, many of them in the Shanghai area.

They, and thousands of short-term travellers, now have access to 370 direct flights a week, a sharp contrast with the situation a few years ago when all travel routes passed through Hong Kong.

Chiang Pin-kung, Taiwan's top China negotiator who signed the ECFA for the island, is expected to travel to Shanghai and meet with his Chinese counterpart Chen Yunlin this week, Chiang's spokesman said.

In what was painted as a boost for Ma's pro-Beijing agenda, the ECFA was passed last month by island lawmakers without a single dissenting vote.

But the formal recording of unanimous approval masked a refusal by members of the anti-China opposition, centred around the Democratic Progressive Party (DPP), to take part in the vote.

The DPP wants formal independence from China and has a significant following on the island.

China, however, says Taiwan has been part of its territory since ancient times and insists on eventual reunification, even if it means war.

"ECFA will contribute to a further widening of the wealth gap," DPP spokesman Tsai Chi-chang told AFP, adding that the people of Taiwan rather than the government should have had the chance to accept or reject the agreement.

Taiwanese media said recently that closer economic ties with China had contributed to a record income gap between rich and poor on the island.

The most prosperous 20 percent in Taiwan reported average disposable incomes of 1.79 million Taiwan dollars (56,000 US) last year, or 6.34 times more than the income of the poorest 20 percent, according to government figures.

Some economists say that the deal with China makes it possible for Taiwanese businesses to move their production to the mainland, cutting costs and increasing profits.

However, by doing so they also reduce job opportunities in Taiwan, hitting the incomes of the island's blue-collar population, economists have warned.

Despite the concerns, the trade pact looks set to push interaction between the two sides to a new level.

The deal will confer preferential tariffs, and in some cases zero tariffs, on 539 Taiwanese products from petrochemicals and auto parts to machinery -- representing 16 percent of the island's total export value to China.

At the same time, only about 267 Chinese items, or 10.5 percent of China's export value to Taiwan, will be placed on the "early harvest" list to enjoy zero or falling tariffs.

earlier related report
India says US protectionism is regressive
Bangalore (AFP) Sept 11, 2010 - India's trade minister lashed out at perceived protectionist moves by the US on Saturday, calling them "regressive" and saying they could delay economic recovery.

The statement by Trade Minister Anand Sharma came after the state of Ohio banned outsourcing back-office jobs to places such as India in an effort to boost domestic employment.

It also follows a recent US law raising visa fees for skilled workers, that will India says will hit its flagship outsourcing sector.

"We feel these are regressive measures," Sharma told reporters as he visited India's second-largest software exporter by sales, Infosys Technologies, in the southern city of Bangalore.

"The leading economy of the world -- the United State of America -- has to have more confidence to engage with the rest of the world," Sharma said in televised remarks.

Ohio state has banned sending abroad government information technology and back-office projects.

India said earlier in the week it would formally raise its concern over Ohio's ban on offshore outsourcing with the United States at a high-level trade meeting in Washington later this month.

New Delhi will also raise the issue of increased fees for skilled worker visas that will boost annual US visa costs for the outsourcing sector by 200-250 million dollars annually, according to industry estimates.

"Protectionist tendencies are unhealthy and negative, and lessons from the past make it abundantly clear they end up deepening the recession, they do not help in recovery of economies," Sharma said.

"Any mindset, which is isolationist and inward-looking ends up hurting the economies and societies," he said.

The US measures have come as the country seeks to combat unemployment, which is nearing 10 percent.

The row comes ahead of US President Barack Obama's visit to India in November.

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