WASHINGTON — China and Taiwan signed a trade agreement Tuesday that will reduce tariffs for dozens of textile and apparel categories, knitting and sewing machines and hundreds of other products moving between the two countries.

This story first appeared in the June 30, 2010 issue of WWD. Subscribe Today.

The Economic Cooperation Framework Agreement would tie together two nations with a long history of tensely strained political and economic relations. China’s emergence as a dominant force in global trade and its focus in recent years on creating close alliances with neighbors in the Asia-Pacific region have further complicated the relationship. Taiwanese opposition to forging closer economic ties with China sparked demonstrations in the days leading up to the signing of the agreement.

The accord also could impact trade relations on a global scale if Taiwan and China — which have fought over their sovereignty since civil war and the Communist revolution led by Mao Zedong forced then-President Chiang Kai-shek and his followers to flee to the island of Taiwan in 1949 — operate as a coordinated trading bloc. The Obama administration has indicated the Asia-Pacific region is a top trade priority, has launched negotiations for the Trans-Pacific Partnership and is laying out a timetable to complete a pending trade agreement with South Korea.

The agreement includes an “early harvest list” of products and services that will benefit from tariff and trade-barrier reductions within the first six months. Further tariff reductions on additional products and other trade and investment areas will continue to be discussed as the agreement is gradually implemented, officials told Chinese media. Discussions moving forward will include rules of origin, trade remedies and customs procedures, according to reports.

Two-way trade between Taiwan and China is estimated to be more than $100 billion. China and Taiwan are among the top 10 textile suppliers to the U.S., and China is the largest supplier of both textiles and apparel to the U.S.

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