Taiwan (through the Straits Exchange Foundation) and China (through the Association for Relations Across the Taiwan Straits) signed the “Cross-Strait Agreement on Trade in Services” (the Agreement) on June 21, 2013, in which the parties made certain commitments to opening their respective markets in both the non-financial and financial sectors. The Agreement will become effective when the parties each complete relevant procedures. Major points of the commitments are:
- China agreed to liberalize 80 items, which can be divided into three categories: (1) based on China’s commitments to the WTO, the shareholding percentage of Taiwanese investors in joint venture investments will be raised; Taiwanese investors will be allowed to make sole investment; or criteria for investment from Taiwan will be lowered (for instance, the maximum allowable shareholding percentage of Taiwanese investors in a joint venture securities investment and consulting firm will be increased to 49%, and the shareholding percentage of Taiwanese investors in a securities investment and consulting firm which falls within the financial reform pilot area will be further increased to over 50%; shareholding percentage by a Taiwan investor in a joint venture fund management company will be increased to 50%, etc.); (2) permitted business scope or geographical area will be expanded (for instance, a Taiwanese financial institution will be allowed to invest in China’s capital markets as an RMB qualified foreign institutional investor (RQFII); Taiwanese investors will be permitted to invest up to 51% in one joint venture securities firm licensed to provide full services in Shanghai, Fujian Province, and Shenzhen, but if such joint venture firm is established in the financial reform pilot area, the shareholding percentage of Taiwanese investors shall not exceed 49%); and (3) measures to facilitate trade in services willbe undertaken (such as simplifying review procedures, relaxing review requirements, and reducing review time, etc.).
- Taiwan agreed to liberalize 64 items, including the following that are either liberalized for the first time or the scope of liberalization is being broadened: (1) Financial services: For instance, a UnionPay Company may apply to set up branches in Taiwan; shareholding percentage by a single mainland China bank in Taiwan-listed banks or financial holding companies will be incrased to 10%; investment amount by a China Qualified Domestic Institutional Investor in Taiwan-listed companies will be raised to US$ 1 billion, etc.; (2) Non-financial services: for instance, Chinese investors will be permitted to participate in joint ventures to help establish non-profit hospitals, and to participate in joint ventures in construction and related engineering businesses.