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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008

Cross-strait dialogue between SEF and ARATS since 2008TABLE OF CONTENTSOVERVIEWThe first round of Chiang-Chen Talks, 2008 (June 1114), Beijing .............................................................................. 3 The second round of Chiang-Chen Talks, 2008 (Nov. 37), Taipei ............................................................................ 10 The third round of Chiang-Chen Talks, 2009 (April 2526), Nanjing ........................................................................ 40 The fourth round of Chiang-Chen Talks, 2009 (Dec. 2224), Taichung .................................................................... 54 The fifth round of Chiang-Chen Talks, 2010 (June 2830), Chongqing .................................................................... 66 The sixth round of Chiang-Chen Talks, 2010 (Dec. 2022), Taipei ............................................................................ 70 The seventh round of Chiang-Chen Talks, 2011 (Oct. 1921), Tianjin ...................................................................... 78 The eighth round of Chiang-Chen Talks, 2012 (Aug. 89), Taipei .............................................................................. 82

DETAILED TABLE OF CONTENTSOverview ................................................................................................................................. 2 Full texts of agreements and relevant materials ....................................................................... 3 The first round of Chiang-Chen Talks, 2008 (June 1114), Beijing ..................................... 3 SEF-ARATS Minutes of Talks on Cross-Strait Charter Flights........................................................................................... 3 Annex: Time, destinations, and flights of cross-strait weekend charter flights ................................................................. 4 ......................................................................................................... 4 .................................................................................................................. 5 Cross-Strait Agreement Signed Between SEF and ARATS Concerning Mainland Tourists Traveling to Taiwan ...... 5 Annex I: Specific Arrangements Concerning Cross-Strait Tourism .................................................................................... 7 Annex II: Rules Governing Cross-Strait Tourism Cooperation ........................................................................................... 7 ........................................................................ 8 ......................................................................................................................................... 9 ......................................................................................................................................... 9 The second round of Chiang-Chen Talks, 2008 (Nov. 37), Taipei ................................... 10 Cross-Strait Air Transport Agreement [Draft]....................................................................................................................... 10 ................................................................................................................................................................... 12 Explanation concerning the Cross-Strait Air Transport Agreement* ............................................................................... 14 * ..................................................................................................................................... 17 Cross-Strait Sea Transport Agreement [Draft] ...................................................................................................................... 20 ................................................................................................................................................................... 22 Explanation concerning the Cross-Strait Sea Transport Agreement*............................................................................... 23 * ..................................................................................................................................... 26 Cross-Strait Postal Service Agreement [Draft] ...................................................................................................................... 28 ................................................................................................................................................................... 29 Explanation concerning the Cross-Strait Postal Service Agreement*............................................................................... 31 * ..................................................................................................................................... 33 Cross-Strait Food Safety Agreement [Draft] .......................................................................................................................... 35 .......................................................................................................................................................... 36 Explanation concerning the Cross-Strait Food Safety Agreement* .................................................................................. 37 * ............................................................................................................................ 39 The third round of Chiang-Chen Talks, 2009 (April 2526), Nanjing ............................... 40 Cross-Strait Air Transport Supplementary Agreement ........................................................................................................ 40 Annex: Specific Arrangement for Cross-Strait Flight Paths and Flights .......................................................................... 42 .......................................................................................................................................................... 43 .............................................................................................................................. 44

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 Cross-Strait Financial Cooperation Agreement ..................................................................................................................... 45 .......................................................................................................................................................... 47 Items of consensus reached between the SEF and ARATS concerning mainland investment in Taiwan*............... 48 * ................................................................................................ 49 Cross-Strait Joint Crime-Fighting and Judicial Mutual Assistance Agreement ................................................................ 49 ......................................................................................................................... 52 The fourth round of Chiang-Chen Talks, 2009 (Dec. 2224), Taichung ............................ 54 Cross-Strait Agreement on Cooperation of Agricultural Product Quarantine and Inspection ................................... 54 ................................................................................................................................... 56 Cross-Strait Agreement on Cooperation in Respect of Standards, Metrology, Inspection and Accreditation .......... 57 .............................................................................................................................. 59 Cross-Strait Agreement on Cooperation in Respect of Fishing Crew Affairs................................................................. 60 Annex: Specific Arrangements for Cross-Strait Fishing Crew Cooperation .................................................................... 61 ....................................................................................................................................... 63 ................................................................................................................ 65 The fifth round of Chiang-Chen Talks, 2010 (June 2830), Chongqing ............................ 66 Cross-Strait Agreement on Intellectual Property Rights Protection and Cooperation .................................................. 66 ................................................................................................................................... 68 The sixth round of Chiang-Chen Talks, 2010 (Dec. 2022), Taipei .................................. 70 Cross-strait Cooperation Agreement on Medicine and Public Health Affairs ................................................................ 70 ................................................................................................................................................. 74 The seventh round of Chiang-Chen Talks, 2011 (Oct. 1921), Tianjin .............................. 78 Agreement on Cross-Strait Nuclear Power Safety Cooperation ......................................................................................... 78 ................................................................................................................................................. 80 The eighth round of Chiang-Chen Talks, 2012 (Aug. 89), Taipei .................................... 82 Cross-Strait Bilateral Investment Protection and Promotion Agreement ........................................................................ 82 ............................................................................................................................................ 88 Cross-Strait Customs Cooperation Agreement [no official English translation available yet!] ............................ 92 .......................................................................................................................................................... 92

OVERVIEWSince Ma Ying-jeou from the Chinese Nationalist Party (Zhongguo guomindang , abbrev. KMT) won the presidential election in the Republic of China (Zhonghua minguo , abbrev. ROC) in March 2008, the KMT-led ROC government strived to warm relations with the Peoples Republic of China (Zhonghua renmin gongheguo , abbrev. PRC). Eight rounds of cross-strait negotiations have taken place so far, conducted by the Straits Exchange Foundation (haixia jiaoliu jijinhui , abbrev. haijihui in Chinese and SEF in English) for the ROC and the Association for Relations Across the Taiwan Straits (haixia liangan guanxi xiehui , abbrev. haixiehui in Chinese and ARATS in English) for the PRC. The negotiations have been dubbed Chiang-Chen Talks (Jiang Chen huitan ), referring to SEF Chairman Chiang Pin-kung and ARATS Chairman Chen Yunlin . This file contains the complete und unabridged texts of the agreements, the English translation (if available) followed by the Chinese original. ECFA: On June 29, 2010, during the fifth round of Chiang-Chen Talks in Chongqing, SEF and ARATS signed not only the Cross-Strait Agreement on Intellectual Property Rights Protection and Cooperation (haixia liangan zhihui caichanquan baohu hezuo xieyi but also the Economic Cooperation Framework Agreement (haixia liangan jingji hezuo jiagou xieyi , abbrev. ECFA). Due to ECFAs large size, its full text in English translation and Chinese original will be posted in separate files. Note: The texts marked with a red asterisk (*) are not signed agreements but explanations provided by the Mainland Affairs Council under the ROC Executive Yuan (xingzhengyuan dalu weiyuanhui , abbrev. MAC in English and luweihui in Chinese). The English translation of four of the documents (Cross-Strait Air Transport Agreement , Cross-Strait Sea Transport Agreement , Cross-Strait Postal Service Agreement , and Cross-Strait Food Safety Agreement

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 ; all signed during the second round of SEF-ARATS negotiations in November 2008 in Taipei) is only shown as a draft because the final agreement was not posted on the MAC website.

Full texts of agreements and relevant materials

The first round of Chiang-Chen Talks, 2008 (June 11 14), Beijing

SEF-ARATS MINUTES OF TALKS ON CROSS-STRAIT CHARTER FLIGHTSJune 13, 2008 The Straits Exchange Foundation (SEF) and the Association for Relations Across the Taiwan Straits (ARATS) believe that in recent years, the implementation of various charter flightsholiday charter flights, medical emergency charter flights, humanitarian charter flights, and specialized cargo charter fightshas promoted contacts between people across the Strait and economic exchanges. In order to implement cross-strait direct flights at the soonest possible time, the SEF and the ARATS, after negotiations based on an equal footing, signed the following minutes of talks on implementing cross-strait passenger charter flights and cargo charter flights: 1. Carrier: Parties agree to designate their respective charter flight carriers and to provide each other with advance notice based on the premise that each side shall operate an equal number of flights. 2. Passengers: Parties agree that all passengers who hold valid travel documents to travel across the Strait may take passenger charter flights. 3. Flight Routes: Parties agree to negotiate on the routes of cross-strait direct flights and establish direct communication procedures concerning air traffic management systems as soon as possible. Before the routes of direct flights are finalized, charter flights may temporarily fly across Hong Kong Flight Information Region. 4. Conveniences for Custom Clearance: Parties agree to simplify entry/exit and custom clearance procedures for passengers and cargo for the convenience of passengers and crew members. 5. Bonded Measures: Parties agree to facilitate the lease of the public bonded warehouse by carriers in the airport to store aircraft maintenance-related accessories. Parties shall supervise and manage such facilities. 6. Representative Offices of Carriers: Parties agree that charter flight carriers may set up representative offices in flight destinations of the other side of the Strait. After the Minutes were signed, Mainland charter flight carriers shall be allowed to send staffs to Taiwan to handle relevant affairs and set up preparatory offices. Taiwan agrees that Mainland carriers may set up representative offices within six months. 7. Supplementary Arrangements: Parties agree to follow the holiday charter flight model to deal with various matters involving ground agents, sales channels, ticket payments, verification of aircraft and crew member certificates, maintenance and pre-flight security check, inspection, and quarantine. In case of special circumstances such as flight safety or emergency rescue, parties agree to handle related matters on a case-by-case basis through negotiations and to provide necessary assistances. 8. Application Procedures: Charter flight carriers shall apply for permission to operate flights in accordance with the regulations of each party every month. The application shall be submitted 15 days before each flight. 9. Mutatis Mutandis Application: Parties agree that holiday charter flights and medical emergency charter flights shall be implemented in accordance with the framework arrangements announced by parties for the time being. The provisions regarding passengers in the Minutes may apply mutatis mutandis to aforesaid charter flights. 10. Cargo Transportation Matters: Parties agree to negotiate on cross-strait cargo charter flights within three months after implementation of weekend passenger charter flights, and to reach consensus on implementation as soon as possible. 11. Regular Flights: Parties agree to negotiate on implementing regular cross-strait direct flights as soon as possible in order to meet the common aspiration of the people across the Strait and promote peoples well-being.

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 12. Liaison Mechanism: Communications regarding matters agreed in the Minutes shall be handled by and between the Taipei Airlines Association and the Cross-Strait Aviation Transport Exchange Council. Parties may designate other institution(s) for such communications, if necessary, upon mutual consent. 13. Effective Date: The Minutes of Talks shall become effective 7 days after signature by the Parties. The Annex to the Minutes shall have the same effect as the Minutes. The Minutes were signed on June 13 in four original copies, with each party keeping two copies. Annex: Time, destinations, and flights of cross-strait weekend charter flights Straits Exchange Foundation Chairman Chiang Pin-kung Association for Relations Across the Taiwan Straits Chairman Chen Yunlin

Annex: Time, destinations, and flights of cross-strait weekend charter flights1. 2. Time: Weekend charter flights shall fly from each Friday to the following Monday for a total of four full days. It shall be officially implemented on July 4. 3 Destinations: The Mainland side agrees to open the following five cities as destinations: Beijing, Shanghai (Pudong), Guangzhou, Xiamen and Nanjing. The Mainland side shall open Chengdu, Chongqing, Hangzhou, Dalian, Guilin, Shenzhen and other destinations later on and other cities if so demanded by the market. The Taiwan side agrees to open the following eight cities as destinations: Taoyuan, Kaohsiung (Siaogang), Taichung (Chingchunkang), Taipei (Sungshan), Penghu (Makung), Hualien, Kinmen and Taitung. Flights: Parties agree that each party may operate 18 round-trip weekend charter flights each week, reaching a total of 36 round-trip flights from both sides, in the preliminary stage. The flights may be increased if the market or circumstance so requires. Taiwan carriers shall not operate more than nine round-trip flights per week to Shanghai (Pudong), whereas Mainland carriers shall not operate more than six round-trip flights per week to the Taichung Chingchunkang Airport.

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[Note: In case of any discrepancy between the Chinese and English texts, the Chinese text shall govern.]

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CROSS-STRAIT AGREEMENT SIGNED BETWEEN SEF AND ARATS CONCERNING MAINLAND TOURISTS TRAVELING TO TAIWANJune 13, 2008

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 For the purpose of increasing contacts between people across the Strait and promoting tourism across the Strait, the Straits Exchange Foundation (SEF) and the Association for Relations Across the Taiwan Straits (ARATS), after negotiations based on an equal footing, hereby agree on the following matters relating to the visits to Taiwan by Mainland tourists:

Article 1. Liaison Bodies1. 2. Communications and implementation of matters relating to this Agreement shall be handled by and between the Taiwan Strait Tourism Association (TSTA) and the Cross-Strait Tourism Exchange Association (CTEA). Communications regarding amendments to this Agreement or other related matters shall be handled by the SEF and the ARATS.

Article 2. Travel Arrangements1. 2. Parties agree that Mainland tourists shall travel to Taiwan in groups. Tourists shall enter into, visit, and exit from Taiwan in groups. Parties agree that the negotiation and adjustment regarding the number of persons in a group, the average maximum number of tourists per day, stay period, the method of departure and return, and other related matters shall be governed by the principles of reliability, security, and gradual progress after taking into account the overall circumstances. Specific arrangements are set forth in Annex 1.

Article 3. Honest Travel

Parties shall jointly supervise travel agencies to ensure their honest operation and services, prohibiting misconducts such as below-cost operation. Parties shall also promote high-quality tourism and jointly enhance dissemination of tourism-related information to tourists.

Article 4. Protection of Rights and Interests1. 2. Parties shall take active measures to simplify entry/exit procedures, facilitate tourists visits, and protect the rights and interests as well as safety of the tourists. Parties agree to set up their respective emergency coordination and management mechanism and shall cooperate to resolve risks. Parties shall handle travel disputes, emergencies, and unexpected events, etc. promptly and properly and fulfill the notification obligation.

Article 5. Tour Operators and Tourist Reception Agencies1. Parties shall set forth their own regulations governing the tour operators and the tourist reception agencies, and qualification of tour managers and tour guides. Parties shall provide to each other the list containing the aforesaid information in writing. A business cooperation contract shall be signed by and between the tour operator and the tourist reception agency, and each of them shall respectively report to the competent authorities for file and operate business in accordance with applicable laws and regulations. The tour operators and the tourist reception agencies shall procure various types of insurance for tourists during the trip, such as medical insurance, life insurance, aviation insurance and other necessary insurance in line with the market practice. Where tourists rights and interests or safety are jeopardized or impaired, the tour operators and the tourist reception agencies shall actively deal with related issues in a timely, effective, and proper manner. Parties shall respectively deal with travel agencies that impair tourists rights. Parties shall direct and supervise the tour operators and the tourist reception agencies to ensure that they would protect tourists rights and undertake the responsibility of assuring travel safety in accordance with the contract.

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Article 6. Travel ProceduresThe tour operators and the tourist reception agencies shall respectively handle the travel-related procedures for tourists and verify such procedures each other. Tourists shall hold valid documents and enter and exit in groups.

Article 7. Overstay

Parties agree to set up mechanisms to deal with overstay issues. Parties shall notify each other promptly and assist the tourists in returning their home country after taking into account specific situations and verifying the identity of such tourists. Parties shall not refuse to send back or accept such tourists.

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Article 8. Mutual Establishment of Representative Offices

Parties agree to set up offices to deal with tourism-related matters so as to provide efficient, convenient, and effective services to tourists.

Article 9. Performance of and Amendment to the Agreement1. 2. Parties shall comply with this Agreement. The Annexes to this Agreement shall have the same effect as this Agreement. This Agreement shall be amended only with both Parties consents and shall be confirmed in writing.

Article 10. Disputes Resolution

Any disputes arising from this Agreement shall be resolved by Parties prompt negotiation.

Article 11. Matters not Mentioned in the Agreement

Matters not mentioned in this Agreement shall be separately discussed and resolved by Parties in an appropriate manner.

Article 12. Effective DateThis Agreement shall become effective 7 days after signature by the Parties. This Agreement was signed on June 13 in four original copies, with each party keeping two copies. Annex I: Specific Arrangements Concerning Cross-Strait Tourism Annex II: Rules Governing Cross-Strait Tourism Cooperation Straits Exchange Foundation Chairman Chiang Pin-kung Association for Relations Across the Taiwan Straits Chairman Chen Yunlin

Annex ISpecific Arrangements Concerning Cross-Strait Tourism Pursuant to Article 2 of this Agreement, the Parties hereby agreed on specific arrangements as follows: 1. The maximum quota of tourists received by the party responsible for tourist reception shall not exceed the average of 3,000 persons per day. The actual number of tourists that will be arranged by the tour operator will depend on market needs. Parties may adjust the aforesaid quota in the second year through negotiations if necessary. 2. Each group shall consist of a minimum of ten persons and forty persons at the maximum. 3. Each group shall stay in Taiwan for a maximum of ten days, starting from the next day of their entry into Taiwan. 4. Travel to Taiwan shall be officially implemented on July 18. The first group traveling to Taiwan shall be dispatched on July 4.

Annex IIRules Governing Cross-Strait Tourism Cooperation Pursuant to Articles 4, 5 and 7 of this Agreement, travel agents of both sides of the Strait shall comply with the following provisions: 1. The list of information about the tour operators and the tourist reception agencies provided by the TSTA and the CTEA shall include names of the travel agencies, responsible persons, addresses, telephone numbers, fax numbers, e-mail addresses, contact persons and their mobile phone numbers. If there is any change to the aforesaid information about the tour operators or the tourist reception agencies, the concerned Party shall promptly inform the other Party in writing. 2. The TSTA shall establish a consultation and complaint hotline to provide consultation to tourists and receive their complaints. 3. The TSTA and the CTEA are the liaison bodies handling travel dispute, overstay issues, emergencies and unexpected events. Both associations shall set up their respective emergency coordination and management mechanism to communicate promptly and cooperate with each other, so as to properly resolve problems arising

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 during the trip to Taiwan. The tour operators shall provide the list of tourists and other relevant information to the tourist reception agencies. The tour operators shall be responsible for assigning tour managers in each group, whereas the tourist reception agencies shall be responsible for assigning tour guides for the group. Any problem arising during the trip shall not only be properly handled by tour managers and tour guides through joint negotiations, but it shall also be reported to the tour operators and the tourist reception agencies respectively. The Party responsible for tourist reception shall provide the tour operators with the reference prices concerning travel expenses. The tourist reception agencies shall not lead or organize tourists to participate in activities involving gambling, pornography, drugs or others which would undermine cross-strait relations. Neither the tour operators nor the tourist reception agencies shall transfer tourist quotas or groups to any other third party. The tourist reception agencies shall not receive tourists who are not associated with the tour operators or who hold different documents. Violation of this provision shall be addressed by both sides of the Strait separately. Any Mainland tourist failing to return to his/her home country within the prescribed time shall be deemed as having overstayed in Taiwan. Tourists who have overstayed in Taiwan due to force majeure such as natural disasters, serious illness, emergencies, unexpected events, or social disorder shall return to their home country together with other tourist groups under arrangements made by the tourist reception agencies and the tour operators. For tourists who have overstayed in Taiwan without any justification, if their violation is minor, they shall return to their home country together with other tourist groups under arrangements made by the tourist reception agencies and the tour operators. For tourists who have intentionally overstayed in Taiwan for non-tourism purposes, if their violation is serious, the TSTA and the CTEA will contact the relevant authorities of both sides across the Strait to make arrangements to send them back to their home country through other channels. In the event that some other procedures should be fulfilled, overstayed tourists of this kind shall be sent back as soon as the required procedures are completed. Tourists who have overstayed shall be liable for their own transportation expenses and other expenses incurred during their overstay period or due to their repatriation back to their home country. If such tourists are unable to pay the aforesaid expenses, the tourist reception agencies shall pay for them first and be reimbursed by the tour operators after presenting relevant receipts and documents within 30 days after such tourists have been sent back. The tour operators may hold such overstayers liable for reimbursement.

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The second round of Chiang-Chen Talks, 2008 (Nov. 37), Taipei

CROSS-STRAIT AIR TRANSPORT AGREEMENT (DRAFT)To promote the development of cross-strait economic and trade relations, and facilitate contacts between the peoples on the two sides of the Taiwan Strait, the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits, after negotiation based on an equal footing, hereby agree on the following matters concerning direct cross-strait air transportation:

1. Flight PathsThe Parties agree to open a direct two-way flight path in a northern line across the Taiwan Strait, and to establish a procedure for direct handover between the air traffic control departments on either side of the Taiwan Strait. The Parties agree to continue discussing the opening of a direct two-way flight path in a southern line across the Taiwan Strait, as well as other more convenient flight paths.

2. Undertaking CarriersThe Parties agree that airline companies capitalized by and registered on either side of the Taiwan Strait may, with approval, undertake business transporting passengers and cargo across the Taiwan Strait.

3. Flight Points for Direct FlightsThe Parties agree to open suitable flight points for direct cross-strait passenger and cargo flights according to market demand.

4. Regular FlightsThe Parties agree to do the utmost possible to make arrangements for regular passenger and cargo flights within six months of the implementation of this agreement.

5. Cargo Charter FlightsThe Parties agree to open direct cross-strait cargo charter flights to carry cross-strait cargo.

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6. Passenger Charter FlightsThe Parties agree to increase flight points and flight schedules on the basis of cross-strait weekend charter flights, and to adjust them to regularized arrangements for passenger charter flights.

7. Business (Official) Charter FlightsThe Parties agree to the opening of non-commercial business (official) charter flights as circumstances warrant.

8. Mutatis Mutandis ApplicationThe Parties agree that the provisions of the Minutes of Talks on Cross-Strait Charter Flights shall apply mutatis mutandis to passenger and cargo charter flights and related matters.

9. Liaison Bodies(1) Communications and implementation of matters relating to this Agreement shall be handled by and between the Taipei Airlines Association and the Cross-Strait Aviation Transport Exchange Council. The Parties may designate other institution(s) for such communications, if necessary, upon mutual consent. (2) Communications regarding other matters related to this Agreement shall be handled by the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits.

10. Performance and Amendment to the Agreement(1) The Parties shall comply with the provisions of this Agreement. The Annex to the Agreement shall have the same effect as the Agreement itself. (2) This Agreement shall be amended only with both Parties consents, and shall be confirmed in writing.

11. Dispute ResolutionAny disputes arising from the application of this Agreement shall be resolved by prompt negotiation between the Parties.

12. Matters not Mentioned in this AgreementMatters not mentioned in this Agreement shall be separately discussed and resolved by the Parties in an appropriate manner.

13. Effective DateThis Agreement shall become effective within 40 days after signature by the Parties. This Agreement was signed on November 4 in four original copies, with each Party keeping two copies. Annex: Arrangements for cross-strait flight paths and passenger and cargo charter flights Straits Exchange Foundation Chairman (Signature) Association for Relations Across the Taiwan Straits Chairman (Signature)


ANNEXArrangements for Cross-Strait Flight Paths and Passenger and Cargo Charter Flights Specific arrangements under Articles 1, 3, 5 and 6 of this Agreement are as follows: 1. Direct Flight Path The Parties agree that the air traffic control departments on either side of the Taiwan Strait shall in a suitable manner conduct liaison and make concrete arrangements to establish a direct flight path in a northern line from Taipei to Shanghai Flight Information Regions, and for the air traffic control handover procedure. The northern line direct flight path shall be: From B576 point BERBA (N 2704'41" E 12300'00") to Dongshan via point A air traffic control handover point agreed by the Parties (N 2726'20" E 12225'19"), for use in both directions. 2. Cargo Charter Flights (1) Carriers: The Parties agree that each may designate two or three airline companies to operate cargo charter flight

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 business. (2) Flight points: The Taiwan side agrees to open Taoyuan and Kaohsiung (Sioagang) and the Mainland side agrees to open Shanghai (Pudong) and Guangzhou as flight points for cargo charter flights. (3) Flights: The Parties shall operate 60 round-trip flights per month, with each Party operating 30 round-trip flights. Of these, 15 return flights each to and from Shanghai (Pudong) and Guangzhou shall be made by each Party per month. In the peak cargo shipment months of October and November, each Party may operate an additional 15 return-trip flights. (4) Commercial arrangements: The Parties designated airlines shall adopt a commercial cooperation mode of operation, and implement this after filing on record with the relevant administrative authority. 3. Passenger Charter Flights (1) The Taiwan side agrees to open the eight flight points of Taoyuan, Kaohsiung (Siaogang), Taichung (Chingchunkang), Taipei (Sungshan), Penghu (Makung), Hualien, Kinmen and Taitung for passenger charter flights. The Mainland side agrees, on the basis of the five flight points of Beijing, Shanghai (Pudong), Guangzhou, Xiamen and Nanjing already opened for weekend charter flights, to open the additional 16 flight points of Chengdu, Chongqing, Hangzhou, Dalian, Guilin, Shenzhun, Wuhan, Fuzhou, Qingdao, Changsha, Haikou, Kunming, Xian, Shenyang, Tianjin and Zhengzhou for passenger charter flights. (2) The Parties will over seven days each week operate no more than 108 round-trip flights, with each Party operating no more than 54 round-trip flights. Among these, the Taiwan sides flights to Shanghai (Pudong) may not exceed 20 round-trip flights. The number of flights may hereafter be increased or decreased at appropriate times according to market demand. (3) Other matters: After normalized arrangements for passenger charter flights have been realized, the previous arrangements for holiday charter flights will no longer be implemented. Charter flights for the Lunar New Year holiday period may be temporarily increased by an appropriate number according to the circumstances. (4) Mail transport: The Parties agree to the use of passenger charter flights for delivery of mail between the two sides.

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B576 BERBA N 2704'41" E 12300'00" A N 2726'20" E 12225'19"

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EXPLANATION CONCERNING THE CROSS-STRAIT AIR TRANSPORT AGREEMENTThe Results of the Second Chiang-Chen Meeting (Air Transport) Mainland Affairs Council November 4, 2008

I. The urgency and necessity of direct air transport1. Economic urgency (1) Cross-strait economic and trade activity is frequent and intense. Mainland China is Taiwans biggest export market and the biggest recipient of foreign investment by Taiwanese businesses. There is enormous demand for the cross-strait transport of passengers and cargo. In 2007, cross-strait trade amounted to US$130.2 billion, accounting for 27.9% of Taiwans total foreign trade. Taiwans exports to mainland China amounted to US$100.4 billion, constituting 40.7% of Taiwans total exports. At the end of 2007, Taiwanese business investment in mainland China had reached a cumulative total of US$64.9 billion, accounting for 55.4% of all overseas investment by Taiwanese businesses. In 2007, there were 4.95 million journeys by passengers across the Taiwan Strait. In 2007, cross-strait import and export airfreight volume reached approximately 290,000 tonnes, accounting for 28% of all cargo airfreighted in and out of Taiwan. (2) Cross-strait trade and economic activity has already become the most important part of Taiwans economy. However, most passengers and goods still cannot be carried directly across the Taiwan Strait, but must be routed indirectly via a third territory. This not only costs time and money, increasing transport costs for businesses and individuals, but also affects the normal operation of Taiwans economy. It results in the loss of many business opportunities, and causes Taiwans economy to become increasingly marginalized. 2. Solidly based on the will of the people (1) Various public opinion polls over the years have consistently found that more than 70% of the public support direct cross-strait transport, while support for it among the business community surpasses 90%. Our society has long since formed a consensus in favor of direct cross-strait transport. (2) The former DPP administration presented its policy on direct cross-strait transport as long ago as August 2003. In the 2004 and 2008 presidential elections, the DPP candidates advocated direct transport as a major plank of their policy platforms. It is clear to see that the implementation of direct transport is a longstanding government policy goal and not the sole province of the Ma administration. 3. The step-by-step opening of direct charter flights (1) The previous administration began to implement Lunar New Year charter flights in 2003, and in 2006 expanded these to four kinds of special charter flights (institutionalized festival charters, special cargo charters, emergency medical treatment charters, and specially designated humanitarian charters). (2) After the Ma administration took office, on June 13 of this year the SEF and ARATS signed the Minutes of Talks on Cross-Strait Charter Flights, and on July 4 commenced the operation of weekend charter flights. However, due to the limitation of the flight schedule, number of flying days, and mainland airports served by the flights, the number of passengers taking the weekend charter flights in either direction across the Taiwan Strait has, according to the statistics, still not reached 10% of all cross-strait passenger traffic. On the cargo transport side, only 15 direct charter flights have been operated to date, meeting only a minute fragment of the huge demand for cross-strait air cargo transport. Moreover, currently all passenger and cargo flights must be routed via the Hong Kong Flight Information Region, wasting time and costs, and completely out of synch with market principles and economic benefit.

II. Major breakthroughs of the Cross-Strait Air Transport AgreementThe signing of the Cross-Strait Air Transport Agreement between the SEF and ARATS on November 4 has achieved the following major breakthroughs in cross-strait air transport: 1. Direct flight path in both directions (1) The two sides have agreed to open a direct two-way flight path in a northern line across the Taiwan Strait. In the future, cross-strait flights will follow the current international airway B576 from BERBA point toward the west, and after passing an air traffic control handover point agreed by both sides (N 2726'20" E 12225'19"), will

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 transition to an inland flight point at Dongshan in the mainland. This flight path involves direct handover between the air traffic control departments on either side of the Taiwan Strait, and can be used in both directions to achieve the goals of saving time and money. (2) The two sides agree to continue consultations on opening a direct two-way flight path in a southern line across the Taiwan Strait, as well as other more convenient flight paths. 2. Weekday charters, and increasing the flight schedule and flight points (1) Weekend charters will be adjusted to normalized 7-days-a-week charters. (2) Flight points a. Taiwan will continue to use 8 flight points, namely: Taoyuan, Kaohsiung (Siaogang), Taichung (Chingchunkang), Taipei (Sungshan), Penghu (Makung), Hualien, Kinmen and Taitung. b. Mainland flight points will be increased to 21, including the existing 5 flight points of Beijing, Shanghai (Pudong), Guangzhou, Xiamen and Nanjing, plus the 16 additional flight points of Chengdu, Chongqing, Hangzhou, Dalian, Guilin, Shenzhun, Wuhan, Fuzhou, Qingdao, Changsha, Haikou, Kunming, Xian, Shenyang, Tianjin and Zhengzhou. (3) Number of flights a. The two sides will operate a total of 108 round-trip flights per week, with each side operating 54 round-trip flights. (Currently, the two sides are operating a total of 36 round-trip flights per week.) b. Taiwan carriers will operate up to 20 round-trip flights per week to Shanghai (Pudong). (Currently, such flights are limited to 9 per week.) c. Flights may in the future be increased or reduced at appropriate times according to market demand. 3. Cargo charters, collaborative operation (1) The two sides agree to open regular cargo charter services, with each designating two or three air carriers to operate them. (2) Flight points a. In Taiwan: Taoyuan and Kaohsiung (Siaogang). b. In the mainland: Shanghai (Pudong) and Guangzhou (Baiyun). (3) Number of flights The two sides will operate a total of 60 round-trip flights per month, with each side operating 30 round-trip flights: a. The two sides will each month each operate 15 round-trip flights to and from Shanghai (Pudong) and 15 round-trip flights to and from Guangzhou, for a total of 30 round-trip flights each. b. Every year in the peak cargo shipment season of October and November, the two sides may each operate an additional 15 round-trip flights. (4) The two sides air carriers will adopt a commercial cooperation mode of operation. 4. Regular flights can be expected soon The two sides agree to do the utmost possible to make arrangements for regular passenger and cargo flights within six months of the implementation of this agreement. 5. Business charters, direct cross-strait flight The two sides agree to the opening of non-commercial business charter flights.

III. Northern flight path assures security and dignity1. The governments highest principle in the planning and negotiation of a new cross-strait flight path is to assure national security and dignity. Any new cross-strait flight path must meet the precondition of not affecting national defense security, and the content of any agreement must comply with the principle of parity and dignity. 2. The northern flight path follows an existing international flight path, changes direction at B576 BERBA point, passes through an air traffic control handover point agreed by both sides, turns to Dongshan in the mainland, and then transitions to an inland flight point. It may be used for flights in both directions. The reason for using BERBA as the turning point is that airway B576 enters Japans air defence identification zone (ADIZ) just to the north of this point. In consideration of the complexities involved, after discussion between the two sides it was agreed that BERBA was the most northern point acceptable to both for turning off from airway B576. 3. The northern flight path turns left from B576 BERBA toward an air traffic control handover point agreed by both sides. The adoption of this crooked flight line completely avoids our sides no-fly zone, and ensures that the military can also fully monitor the movement of charter flights throughout their journey, and can fully safeguard national

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 defense security. 4. In the negotiation of the direct cross-strait flight path, both sides acted in accordance with the spirit of putting aside disputes and not touching on sensitive issues, and were thus able to reach agreement on the northern flight path. The two sides air traffic control departments will as soon as possible conduct follow-up liaison on the direct handover of traffic control and other technical matters, and complete the requisite arrangements. Because Taiwan is not a member of the International Civil Aviation Organization (ICAO), and we also firmly oppose the mainland unilaterally submitting an application to the ICAO, until both sides have reached a consensus, each will follow its own administrative procedures in notifying airlines on the two sides of the strait to adhere to the northern flight path, and will register it in flight path rules manuals (AIP, Aeronautical Information Publication) that are in common use internationally. In regard to the technical issues of air traffic control arrangements, the naming of the flight path, and so on, the two sides also agree to discuss and arrange these in accordance with aviation conventions and customary practice, and there definitely will not be any question of downgrading on either side.

IV. Progressive buildup of economic benefits1. Direct benefits of direct air transport (1) Sharp reduction in transport time and cost a. Before July of this year, most Taiwanese who visited the mainland transited via Hong Kong. For example, someone flying from Taoyuan to Shanghai would have to spend four hours in the air and, with transit time added on, upwards of 5 to 6 hours in total to make the journey. After the launch of weekend charter flights, there was no need to land in Hong Kong, but it was still necessary to fly via the Hong Kong flight information region (FIR), and the journey from Taoyuan to Shanghai (Pudong) took approximately 2 hours and 24 minutes (calculated according to A340 and B777 operational data), already reducing the time by half. b. After the establishment of the new cross-strait flight path, it will take just one hour and 22 minutes to fly from Taoyuan to Shanghai, 62 minutes less than the weekend charter flight time. If we work out the figures for the different flight routes from Taipei, Taoyuan and Kaohsiung to Beijing and Shanghai (Pudong), compared with flying via the Hong Kong FIR, the distance of the flights is reduced by between 319 and 959 kilometers, with a time saving of approximately 13~64 minutes. Moreover, according to airline calculations, fuel cost will also be reduced by approximately 40~45% compared with flying via the current routes. Altogether, the savings of time and costs for airlines and passengers are estimated to add up to at least NT$3 billion a year. (2) Greatly raising cargo consignment efficiency Under the current cargo aircraft routing mode of stopping and transferring cargo in Hong Kong or Macau, a single consignment from Taoyuan to Shanghai takes approximately 12~16 hours (including stoppage and transfer time). If the cargo were shipped the whole way in the same aircraft, it would take approximately 5~6 hours. After the implementation of direct cargo charter flights, it will take only 1.3 hours to fly goods from Taoyuan to Shanghai, a huge saving in shipment time that can facilitate cross-strait goods consignment and reduce consignment costs. (3) Alleviating airline companies operating difficulties The sharp reduction of flying times and operating costs can lift airlines operating performance, improve the state of their operating income, and help alleviate the pressure of their current difficult operating situation. Moreover, through the market competition mechanism, the gradual reduction of costs can be reflected in lower ticket prices and shipping charges, feeding benefit back to consumers and all kinds of businesses. (4) Increasing the number of mainland tourists visiting Taiwan With the weekend charter flights changed to weekday charter flights, and the weekly number of flights increased from 36 to 108, plus the opening of 16 more flight points in the mainland, it will be much more convenient for mainland residents to take tourist trips to Taiwan. The opening of flights from Chengdu, Chongqing, Hangzhou, Dalian, Guilin, Shenzhun, Wuhan, Fuzhou, Qingdao, Changsha, Haikou, Kunming, Xian, Shenyang, Tianjin and Zhengzhou, in addition to the originally opened five airports in Beijing, Shanghai (Pudong), Guangzhou, Xiamen and Nanjing, extends the charter flight coverage to 13 of the mainlands provinces and municipalities (Beijing, Tianjin, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Hubei, Guangdong, Chongqing, Yunnan and Shanxi). These further opening measures will also help airlines to arrange more varied packages and promotions for tourist travelers, and surely will give a big boost to the number of mainland tourists visiting Taiwan. 2. Indirect benefits of direct transport

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 (1) Helping Taiwanese business people keep their roots and hearts in Taiwan According to a questionnaire survey on the effect of weekend charter flights on Taiwanese business peoples investment and living patterns, conducted by the MOTCs Civil Aeronautics Administration during September 5~8, 2008, 74.8% of business owners taking the charter flights said that the expansion of cross-strait charters could make them more willing to return to invest in Taiwan. Among the poll respondents who usually reside in Taiwan, 91.5% of business owners and 87.0% of non-business owners said that in the future they would keep their usual place of residence in Taiwan; and among poll respondents who usually reside in the mainland, 42.6% of business owners said that in the future they would move their usual place of residence back to Taiwan. This demonstrates that after the expansion of cross-strait charter flights, Taiwanese business people will be more willing to return to invest and habitually reside in Taiwan, which will help keep Taiwanese business peoples roots and hearts in Taiwan. (2) Conducive to the cross-strait division of labor in industry The implementation of cargo charter flights will greatly reduce the time and cost of shipping goods across the Taiwan Strait. In addition to improving trade conditions and enhancing the export competitiveness of Taiwans industries, it will also help businesses to establish more efficient models for division of labor across the Taiwan Strait, and enable high value-added industries to keep core competitive strengths in Taiwan. At the same time, direct air transport can strengthen Taiwans linkage with global markets, and attract transnational corporations to conduct various value-adding services and innovative R&D activities in Taiwan, and base operations headquarters in Taiwan. In particular, information, electronics and other high-tech industries that are highly reliant on air cargo transport will in the future receive the greatest benefit. (3) Helping rebuild the strategic advantages of Taiwans economy, and developing Taiwan into an Asia-Pacific regional operations center (APROC) Taiwan occupies a pivotal location in Asia, as a gateway for Asia-Pacific countries to enter the markets of mainland China and Southeast Asia. After direct cross-strait air transport is realized and shipment efficiency greatly increased, Taiwans economic strategic advantages can gradually be optimized, its overall competitiveness will greatly increase, and this will help establish Taiwan as an Asia-Pacific regional operations center.

V. Future outlookWith cross-strait air transport progressing from weekend charter flights to daily charter flights, from special-case cargo charters to regular cargo charters, and from flights detouring via the Hong Kong FIR to the establishment of a direct cross-strait flight path, cross-strait air transport has already entered a brand new stage. In the Cross-Strait Air Transport Agreement, the two sides have agreed, as far as possible within six months of the agreement taking effect, to negotiate the completion of arrangements for regular cross-strait flights. Then we can fully implement direct cross-strait air transport, and its economic benefits can be brought into optimum effect.

96 1,302 27.9 1,004 40.796 649 55.4 96 495 96 29 28 7 9 97 11 4

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 92 8 93 97 92 95 ( ) 6 13 7 4 10 15

11 4 B576 BERBA N 2726'20" E 12225'19" 7 1. 8 8 2. 21 5 16 1. 108 54 36 2. 20 ( 9 )3. 2 3 1. 2. 60 30 1. 15 30 2. 10 11 15

B576 BERBA BERBA B576 BERBA 576 BERBA

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 B576 BERBA ICAO AIP

1. 7 4 5 6 2 24 ( A340B777 ) 2. 1 22 62 319959 1364 404 30 12-16 5 6 1.3 36 108 5 16 21 13 ( 13 ) 97 9 5 9 8 74.8 91.5 87.0 42.6

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CROSS-STRAIT SEA TRANSPORT AGREEMENT (DRAFT)To implement direct cross-strait transport of passengers and cargo by sea, so as to promote economic and trade interflows and facilitate contacts between the peoples on the two sides of the Taiwan Strait, the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits, after negotiation based on an equal footing, hereby agree on the following matters concerning direct cross-strait shipping:

1. Eligibility to OperateThe Parties agree that vessels owned and registered on either side of the Taiwan Strait may, with due approval, engage in direct cross-strait carriage of passengers and cargo.

2. Direct Transport PortsThe Parties agree to mutually open main external open ports in accordance with market demand and other relevant factors.

3. Vessel IdentificationThe Parties agree that vessels registered on either side of the Taiwan Strait shall not fly their flag on the stern or mainmast of the vessel between entering and leaving the other sides ports, but shall fly their company flag for vessel identification.

4. Port ServicesThe Parties agree to provide facilitation for cross-strait goods and passengers to pass through port customs and immigration controls.

5. Transport Capacity ArrangementThe two sides will rationally arrange transport capacity according to the principles of equal participation and orderly competition, and based on market demand.

6. Mutual Tax ExemptionThe Parties agree to mutually exempt each others shipping companies from the payment of business and income tax on revenue derived from participation in cross-strait shipping.

7. Sea Disaster Rescue and AssistanceThe two sides shall actively cooperate with sea search & rescue and recovery entities, shall establish search & rescue liaison and cooperation mechanisms, and shall jointly safeguard navigation and the safety of life, property and the environment at sea. When an accident occurs at sea, the two sides shall promptly notify each other, and promptly undertake rescue and assistance in accordance with the principles of proximity and convenience.

8. Supporting MattersThe two sides shall handle matters concerning communication & navigation, license inspection, vessel inspection, crew services, navigation safeguards, pollution prevention & remediation, and maritime dispute arbitration in accordance with shipping practice and pertinent regulations, and strengthen cooperation.

9. Mutual Establishment of EntitiesThe two sides shipping companies may establish offices or business entities on each others side to carry out related

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 business operations.

10. Liaison Bodies(1) Communications regarding the matters stipulated in this agreement shall be handled by the Taiwan Cross-Strait Shipping Association and the Cross-Strait Shipping Exchange Association. The Parties may designate other institution(s) for such communications, if necessary, upon mutual consent. (2) Communications regarding other matters related to this Agreement shall be handled by the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits.

11. Performance and Amendment to the Agreement(1) The Parties shall comply with the provisions of this Agreement. The Annex to the Agreement shall have the same effect as the Agreement itself. (2) This Agreement shall be amended only with both Parties consents, and shall be confirmed in writing.



14. Effective DateThis Agreement shall become effective within 40 days after signature by the Parties. This Agreement was signed on November 4 in four original copies, with each Party keeping two copies. Annex: Vessel and port arrangements for direct cross-strait shipping. Straits Exchange Foundation Chairman (Signature) Association for Relations Across the Taiwan Straits Chairman (Signature)


ANNEXVessel and Port Arrangements for Direct Cross-Strait Shipping. Specific arrangements under Articles 1 and 2 of this Agreement are as follows: 1. Vessels owned by companies on either side of the Taiwan Strait and registered in Hong Kong may similarly engage in direct cross-strait transport of passengers and cargo, and between entering and exiting cross-strait ports, their vessel identification method shall comply with the relevant provisions for Hong Kong vessels as set out in the Minutes of Talks on Taiwan-Hong Kong Shipping Negotiations. 2. Flag-of-convenience vessels owned by shipping companies on either side of the Taiwan Strait and that are currently already engaging in offshore shipping center (test point for direct shipping) transport, cross-strait third-territory container line transport, and sand and gravel transport, having obtained special permits, may, in compliance with the provisions concerning vessel identification set out in this Agreement, undertake direct cross-strait sea transport. 3. In the present stage, the two sides shall mutually open the following ports: Eleven ports on the Taiwan side, namely: the six ports of Keelung (including Taipei), Kaohsiung (including Anping), Taichung, Hualien, Mailiao and Budai (initially to be carried out on a special case basis) and the five Mini-Three links ports of Liaoluo and Shueitou on Kinmen, Fuao and Baisha on Matsu, and Magong on Penghu. Sixty-three ports on the Mainland side, namely the 48 seaports of Dandong, Dalian, Yingkou, Tangshan, Jinzhou, Qinhuangdao, Tianjin, Huanghua, Weihai, Yantai, Longkou, Lanshan, Rizhao, Qingdao, Lianyungang, Dafeng, Shanghai, Ningpo, Danshan, Taizhou, Jiaxing, Wenzhou, Fuzhou, Songxia, Ningde, Quanzhou, Xiaocuo, Xiuyu, Zhangzhou, Xiamen, Shantou, Chaozhou, Huizhou, Shekou, Yantian, Chiwan, Mawan, Humen,

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 Guangzhou, Zhuhai, Maoming, Zhanjiang, Beihai, Fangcheng, Qinzhou, Haikou, Sanya and Yangpu, and the 15 river ports of Taicang, Nantong, Zhangjiagang, Jiangyang, Yangzhou, Changshou, Changzhou, Taizhou, Zhenjiang, Nanjing, Wuhu, Maanshan, Jiujiang, Wuhan and Chenglingji. The Parties agree to increase the opening of ports as circumstances warrant.

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EXPLANATION CONCERNING THE CROSS-STRAIT SEA TRANSPORT AGREEMENTThe Results of the Second Chiang-Chen Meeting (Sea Transport) Mainland Affairs Council November 4, 2008

I. The urgency and necessity of direct sea transport1. Economic urgency (1) Cross-strait economic and trade activity is intensifying by the day, generating enormous demand for direct sea carriage of passengers and goods: In 2007, cross-strait trade amounted to US$130.2 billion, accounting for 27.9% of Taiwans total foreign trade. Taiwans exports to mainland China amounted to US$100.4 billion, constituting 40.7% of Taiwans total exports. In 2007, cross-strait import and export sea cargo volume reached 1.37 million TEUs of container cargo and 16.62 million tonnes of bulk cargo. However, apart from the small proportion of transshipment cargo that was shipped directly via Taiwans offshore shipping centers, most of the cargo had to be carried via a third territory. (2) Currently, more than one third of Asian cargo is sourced from mainland China, but vessels sailing from mainland Chinese ports with cross-strait cargo must sail to a third territory before they can enter Taiwans ports. This wastes time and energy, and not only greatly increases the time and cost of shipping goods, with impact on the competitiveness of shipping companies, but also makes foreign shipping lines less willing to maintain operation in Taiwans ports and may even prompt them to pull out of Taiwan altogether. This has caused Taiwans ports to gradually slip down the world rankings of international container ports (Kaohsiung Ports container throughput fell from 4th highest in the world in 2003 to 7th highest in 2007), affecting the important role Taiwan can play in Asian sea transport. (3) Since domestic vessels have until now been unable to participate in the cross-strait carriage of passengers and cargo, our shipping companies have flocked to change from domestic to foreign registration. This has caused a sharp fall in the total tonnage of domestic vessels in recent years, with the proportion of flag-of-convenience ships rising to 84%, adversely affecting the overall development of Taiwans shipping industry.

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 2. Solidly based on the will of the people (1) Various public opinion polls over the years have consistently found that more than 70% of the public support direct cross-strait transport, while support for it among the business community surpasses 90%. Our society has long since formed a consensus in favor of direct cross-strait transport. (2) The former DPP administration presented its policy on direct cross-strait transport as long ago as August 2003. In the 2004 and 2008 presidential elections, the DPP candidates advocated direct transport as a major plank of their policy platforms. It is clear to see that the implementation of direct transport is a longstanding government policy goal and not the sole province of the Ma administration. 3. The step-by-step implementation of direct shipping (1) Taiwans first offshore shipping center (designated by the mainland as a test point for direct shipping) went into operation in April 1997, allowing cross-strait flag-of-convenience vessels to sail directly between Kaohsiung Port and Fuzhou and Xiamen Ports in the mainland, but limited to the carriage of transshipment cargo. In October 2001, the functions of the offshore shipping center were expanded to allow the processing of transshipment goods to be extended to all tax-free areas and to allow the conduct of sea-air intermodal transshipment. (2) In May 2004, the government announced the Measures for Sea Freight Facilitation, which added offshore shipping centers (OTCs) in Taichung and Keelung to the original OTC in Kaohsiung, and further expanded the scope and functions of the OTCs. Under these new measures, vessels could sail directly between the OTCs and any open mainland port, but could only carry international goods from the mainland or Taiwan for consignment to a third territory, or for consignment from a third territory to the mainland or Taiwan. (3) Although direct cross-strait shipping has already been partially implemented, it is still subject to many restrictions, with cross-strait imports and exports still required to be shipped via a third territory, and domestic vessels unable to participate in shipment. Hence, it is urgently necessary to open up cross-strait sea transport, to remove all kinds of unreasonable restrictions that are disadvantageous to shipping and economic development.

II. Major Breakthroughs of the Cross-Strait Sea Transport AgreementThe signing of the Cross-Strait Sea Transport Agreement between the SEF and ARATS on November 4 has achieved the following major breakthroughs in cross-strait sea transport: 1. Cross-strait vessels as the main force in direct transport (1) Vessels registered in the ownership of shipping companies on the two sides of the Taiwan Strait can engage in direct cross-strait transport of passengers and cargo. (2) Vessels owned by companies on either side of the Taiwan Strait and registered in Hong Kong can similarly engage in direct cross-strait transport of passengers and cargo. (3) Flag-of-convenience vessels owned by shipping companies on either side of the Taiwan Strait and that are currently already engaging in offshore shipping center transport, cross-strait third-territory container line transport, and sand and gravel transport, also can participate in direct cross-strait transport of passengers and cargo. 2. Broad opening of ports (1) Taiwan will open 11 ports, namely: the six ports of Keelung (including Taipei), Kaohsiung (including Anping), Taichung, Hualien, Mailiao and Budai (initially to be carried out on a special case basis) and the five Mini-Three Links ports of Liaoluo and Shueitou on Kinmen, Fuao and Baisha on Matsu, and Magong on Penghu. (2) The mainland will open 48 seaports and 15 river ports, for a total of 63 ports, listed as follows: the 48 seaports of Dandong, Dalian, Yingkou, Tangshan, Jinzhou, Qinhuangdao, Tianjin, Huanghua, Weihai, Yantai, Longkou, Lanshan, Rizhao, Qingdao, Lianyungang, Dafeng, Shanghai, Ningpo, Danshan, Taizhou, Jiaxing, Wenzhou, Fuzhou, Songxia, Ningde, Quanzhou, Xiaocuo, Xiuyu, Zhangzhou, Xiamen, Shantou, Chaozhou, Huizhou, Shekou, Yantian, Chiwan, Mawan, Humen, Guangzhou, Zhuhai, Maoming, Zhanjiang, Beihai, Fangcheng, Qinzhou, Haikou, Sanya and Yangpu, and the 15 river ports of Taicang, Nantong, Zhangjiagang, Jiangyang, Yangzhou, Changshou, Changzhou, Taizhou, Zhenjiang, Nanjing, Wuhu, Maanshan, Jiujiang, Wuhan and Chenglingji. 3. Putting aside disputes, temporarily not displaying flags Having discussed the problem of flag display by vessels registered on either side of the Taiwan Strait in the spirit of putting aside disputes, the two sides have agreed to observe the relevant arrangements made in the Taiwan-Hong Kong Shipping Negotiations in 1997, with vessels registered on either side abstaining from flying their flag on the

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 stern or mainmast of the vessel between entering and leaving the other sides ports, but flying additional company flags for vessel identification. 4. Transport capacity arrangements, equal participation The two sides operation of direct cross-strait passenger and cargo transport will be based on the principles of equal participation and orderly competition, with rational arrangement of transport capacity. 5. Mutual tax exemption, to lower costs The two sides will mutually exempt each others shipping companies from the payment of business and income tax on revenue derived from participation in cross-strait shipping. 6. Mutual establishment of entities to facilitate operations The two sides shipping companies may establish offices or business entities on each others side of the strait to facilitate the development of transport service related business. 7. Cooperation in disaster rescue for safety protection The establishment of a sea disaster search and rescue liaison and cooperation mechanism, to jointly protect the safety of life, property and the environment at sea. When an accident occurs at sea, the two sides, in addition to promptly notifying each other, will promptly undertake rescue and assistance in accordance with the principles of proximity and convenience.

III. Economic advantages greatly enhanced by direct cross-strait sea transport1. Considerable shipment time and cost savings (1) In the past, without direct shipping, vessels going to sea from Taiwans ports en route to the mainland must detour via Japans Ishigaki Island before sailing on to their mainland destination, wasting both time and fuel. But after the reaching of agreement on direct sea transport at the 2nd Chiang-Chen talks, there is no longer any need to sail via Ishigaki, saving on average approximately 16~27 hours per voyage, and reducing shipping costs by 15~30%. Including third-territory visa costs, the cost saving per voyage amounts to NT$300,000, which for 4,000 voyages per year adds up to a yearly saving of NT$1.2 billion. (2) Also, a study has found that a 10,000-ton container ship can save approximately NT$600,000 per voyage, and a regular container line can save from NT$620 million to NT$1.3 billion per year (depending on the port of detour). A bulk carrier operating under a nonscheduled service can save one to two days per voyage, reducing ore and coal shipment costs by roughly 18.7%, and reducing the shipment cost of other trade goods and materials by roughly 33.8%, with annual cost savings estimated at up to NT$1 billion. 2. Greatly enhancing the efficiency of goods distribution Direct sea transport not only can greatly reduce cargo shipment time and costs, but also can induce firms to use ports or their surrounding areas to develop logistics operations, and they can even link up with airports to create sea-air multimodal distribution and other high value-added activities, and develop ports into international distribution hubs. 3. Opening new opportunities for exporting farm products to the mainland (1) Direct cross-strait sea transport can shorten the consignment time for exporting Taiwans farm products to the mainland. To take the export of fruit from Taiwan to Shanghai as an example, without the need to sail via a third territory, the shipment time can be reduced from eight days to four, preserving the freshness and quality of the fruit. Wastage during consignment can be reduced from 15% to 5%, and the fruits shelf life can be extended by four days, generating even greater cost savings. (2) According to Council of Agriculture statistics, direct cross-strait sea transport could increase Taiwans fruit exports to the mainland by approximately 20%. Moreover, continuous and stable export sales will have substantive benefit for establishing stable marketing channels and promoting balance in domestic fruit production and marketing, helping to stabilize domestic market prices and safeguarding farmers incomes. It has been estimated that direct shipping could reduce shipment costs by 15~30% and increase fruit farmers incomes by approximately 10~15%. Furthermore, sea transport can be used to send flowers to Shanghai and other mainland markets, or for transshipment to Russia; in Taiwans winter season, vegetables can also be marketed in Chinas northeast region and transshipped to Russia; and farmed live fish (such as ornamental fish and grouper) can be shipped for sale in mainland markets all opening up new opportunities for the sale of Taiwans farm products in the mainland. 4. Developing Taiwan into a sea and air logistics hub

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 (1) Taiwan occupies a prime geographic location at the center of the Asia-Pacific region. Direct cross-strait sea transport can help its ports step up their role in forwarding mainland exports to America and Europe. It can also reduce Taiwans manufacturing and export costs, strengthen the competitiveness of Taiwan-based enterprises, and induce Taiwanese businesses to use Taiwan as an operations headquarters and global logistics hub. (2) Direct cross-strait sea transport will also help reduce the operating costs of foreign enterprises that are positioned on both sides of the Taiwan Strait. This can increase the number of foreign firms that are attracted to set up operations headquarters in Taiwan, while also inducing foreign firms to form strategic alliances with Taiwanese businesses, both to enter the mainland and to tap into Taiwans strategic advantages as a gateway to Asia.

IV. ConclusionWith the signing of the Cross-Strait Sea Transport Agreement, direct cross-strait sea transport has basically been realized. It means that vessels crossing between the two sides of the Taiwan Strait will no longer need to detour via a third territory, greatly reducing shipping times and costs. At the same time, the elimination of obstacles to domestic vessels participating in cross-strait shipping will also be helpful to strengthening the competitiveness of the domestic shipping fleet. Thanks to the benefits delivered by this agreement, Taiwans ports will be able to fully capitalize on their geographic advantage and, with the realization of direct cross-strait shipping and flights, develop into sea and air logistics hubs. Taiwans industrial development will also gain from the expansion of exports to the mainland facilitated by direct shipping, which will be especially beneficial to the export of Taiwans farm products. And last but not least, it will enable businesses to set up a more efficient division of labor between the two sides of the strait, inducing industries to deeply cultivate Taiwan and leave their roots in this land.

96 1,302 27.9 1,004 40.7 96 137 20 TEU 1,662 2003 42007 7 84 7 9 92 8 93 97 86 4 90 10 93 5 97 11 4

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11 4 11 6 5 48 15 63 48 15 1997

16 27 15 30 30 4,000 12 60 6.2 13 () 1-2 18.7 33.8

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 8 4 15% 5% 4 15-30 10-15

CROSS-STRAIT POSTAL SERVICE AGREEMENT (DRAFT)To expand cross-strait postal service cooperation, so as to facilitate communication and exchanges between the peoples on the two sides of the Taiwan Strait, the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits, after negotiation based on an equal footing, hereby agree on the following matters concerning direct cross-strait postal cooperation:

1. Scope of ServicesThe Parties agree to open cross-strait services for direct delivery of ordinary and registered mail (including letters, postcards, aerogrammes, printed matter, newspapers, magazines, and mail for the blind), small packages, parcels, express delivery mail, and postal remittances, and to strengthen cooperation in other areas of postal operations.

2. Dispatch OfficesThe mail dispatch offices on the Taiwan side will be in Taipei, Kaohsiung, Keelung, Kinmen and Matsu; the mail dispatch offices on the Mainland side will be in Beijing, Shanghai, Guangzhou, Xiamen, Fuzhou, Xian, Nanjing and Chengdu. The Parties may increase or adjust the mail dispatch offices according to need, and shall inform each other of such increase or adjustment.

3. Transmission of MailThe Parties agree to transmit mail in general bags by direct air or sea transport for delivery to each others postal sorting centers.

4. Specifications and RestrictionsThe Parties agree to discuss and decide specifications for the size and weight of postal items, and to comply with each others regulations concerning items not permitted for mailing.

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5. Terminal DuesThe Parties agree to establish a system for handling the direct settlement of terminal dues.

6. Document FormatSigns, lists, mail bags, inquiry forms, etc. used in handling mail shall be in the form approved by the Parties.

7. Mail InquiriesThe two sides mail processing centers shall liaise with each other to deal with inquiries concerning registered mail, small packages, parcels, and express delivery mail, and shall provide fast and convenient operations liaison channels.

8. Inquiry DeadlinesInquiries concerning registered mail and parcels shall be submitted within six months of the day after posting by the original poster; and inquiries concerning express mail shall be submitted within three months of the day after posting.

9. Compensation LiabilityIn the event that a registered letter or parcel sent from either side to the other is lost and its content is completely or partially lost, stolen or destroyed, the party responsible shall be liable for compensation, and mutual settlement shall be made. If an express letter is lost or its content stolen or damaged, the side from which it was sent shall assume liability for compensation, and no mutual settlement shall be made.

10. Liaison Bodies(1) Communications regarding the matters stipulated in this agreement shall be handled by the Taiwan Postal Association and the Cross-Strait Postal Exchange Association. Communications and implementation of concrete postal operations shall be handled by mail processing centers on both sides. (2) Communications regarding other matters related to this Agreement shall be handled by the Straits Exchange Foundation and the Association for Relations Across the Taiwan Straits.

11. Performance and Amendment to the Agreement(1) The Parties shall comply with the provisions of this Agreement. (2) This Agreement shall be amended only with both Parties consents, and shall be confirmed in writing.



14. Effective DateThis Agreement shall become effective within 40 days after signature by the Parties. This Agreement was signed on November 4 in four original copies, with each Party keeping two copies. Straits Exchange Foundation Chairman (Signature) Association for Relations Across the Taiwan Straits Chairman (Signature)


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EXPLANATION CONCERNING THE CROSS-STRAIT POSTAL SERVICE AGREEMENTThe Results of the Second Chiang-Chen Meeting (Postal Service) Mainland Affairs Council November 4, 2008

I. The necessity of expanding cross-strait postal service cooperation1. Direct mail links are a universal demand (1) The government began to conduct indirect cross-strait postal service on April 18, 1988.On April 29, 1993, the SEF and ARATS signed the Cross-Strait Agreement on Inquiries about and Compensation for Registered Mail, to provide the public on both sides of the Taiwan Strait with a basis for making inquiries about and seeking compensation for lost or damaged cross-strait registered mail, conducted through the SEF and its mainland counterpart. As of the end of September 2008, more than 300 million items of mail had been delivered across the Taiwan Strait, of which roughly 130 million were sent from Taiwan to the mainland and roughly 170 million from the mainland to Taiwan. These are very substantial figures. (2) In recent years, owing to the development of e-mail and the Internet, the volume of cross-strait mail has no longer been growing, but still there are more than 10 million items of mail passing between the two sides of the Taiwan Strait each year, including around 700,000 items of registered mail, so demand for cross-strait postal services is still very large. 2. Cross-strait direct postal service when water flows, a channel is formed (1) Though indirect cross-strait postal service has been implemented for many years, there are still some problems: a. Mail must be routed via Hong Kong, Japan or another third territory, a time-consuming delivery process. b. Mail from Taiwan to the mainland must be centrally collected for dispatch from just two post offices in Shanghai and Beijing, which affects the time efficiency of delivery to other parts of the mainland, and also heightens the possibility of mail being lost. c. The impossibility of sending time-sensitive business letters or goods makes it unable to meet business needs. d. The inability to mutually settle terminal dues stemming from cross-strait mail deliveries puts it out of synch with general postal practice, and impacts mail company operations. (2) Time efficiency is the key to cross-strait postal service. In the past, the necessity of routing cross-strait mail via a third territory created an innate limitation for mail delivery. With the 2nd Chiang-Chen talks achieving agreement on direct cross-strait air and sea transport, direct postal delivery follows as naturally as flowing water forming a channel. Hence, the two sides have matched the opening of direct transport links by further expanding cross-strait postal cooperation on its existing basis, to provide the public on both sides of the Strait with faster and more convenient postal services.

II. Major progress under the Cross-Strait Postal Service AgreementThe Cross-Strait Postal Service Agreement signed between the SEF and ARATS on November 4 has achieved the following major progress on issues of cross-strait postal service cooperation: 1. Expansion of scope and greater convenience for the public In addition to the service already in operation for registered mail (including letters, postcards, aerogrammes, printed matter, newspapers, magazines, and mail for the blind), service in the future will be extended to include small packages, parcels, express mail, and postal remittances. 2. Direct transmission and delivery, with addition of dispatch points (1) In line with direct cross-strait sea and air transport, the transmission of cross-strait mail via a third territory will be changed to direct transmission. (2) Increasing the number of cross-strait mail dispatch offices: a. In Taiwan: Three new dispatch offices in Kaohsiung, Kinmen and Matsu will be added to the original two dispatch offices in Taipei and Keelung. b. The mainland: Three new dispatch offices in Nanjing, Xian and Chengdu will be added to the original five dispatch offices in Beijing, Shanghai, Guangzhou, Xiamen and Fuzhou. c. Mail dispatch offices may in the future be augmented or adjusted in accordance with actual need.

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TILMAN ARETZS BLOG [http://taretz.blogspot.com]Cross-strait dialogue between SEF and ARATS since 2008 3. Inquiry services, quality enhancement (1) The two sides mail processing centers will establish fast and convenient channels for mail inquiries, to conduct direct two-way liaison (currently all undertaken by the SEF). (2) In accordance with the Universal Postal Convention and commercial practice, registered mail and parcel inquiries shall be submitted within six months of the day after posting by the original poster; and express mail inquiries within three months. 4. Direct two-way normal operation (1) In accordance with the Universal Postal Convention and international practice, the two sides post companies will establish a system for the direct settlement of terminal dues. (2) Responsibility for compensation will also be clearly stipulated: When registered letters or parcels sent across the Taiwan Strait are lost, stolen or damaged, the party responsible shall be liable for compensation, and settlement shall be reciprocal; when the same situation happens to express mail, the side from which it was sent shall assume responsibility for compensation.

III. The benefits of expanding cross-strait postal service cooperation1. Expanding the scope of postal services to satisfy public demand Cross-strait trade and economic activities and social contacts have been growing more intensive by the day. But for a long time past, because cross-strait postal service was limited in scope to just ordinary and registered mail, it meant that businesses and members of the public could not simply go to the nearest post office to send time-sensitive documents, information, samples, goods, and so on, which detracted from the convenience and time-efficiency of postal services, and was also a hindrance to grasping business opportunities. After the signing of the Cross-Strait Postal Services Agreement, cross-strait postal services are expanded to include small packets, parcels and express delivery mail, which not only meets the goal of providing greater convenience to the general public, but also is helpful to enhancing the benefits of cross-strait economic and trade connections. According to estimation by Chunghwa Post Co., cross-strait parcel post volume will grow markedly in the future, and in the initial phase could increase by 8%. 2. Enhancing mail time-efficiency and security (1) In the past, cross-strait mail had to be routed via a third territory, and it also had to be first collected together and sent to dispatch offices in Beijing and Shanghai (three other dispatch offices in Guangzhou, Xiamen and Fuzhou could send mail directly to Taiwan, but could not directly receive mail from Taiwan) to be redirected to other parts of the mainland. The mainlands vast size and the several stages of transmission and redirection meant that postal dispatch lost its time-efficiency and mail was also at heightened risk of being lost or damaged. In the future, cross-strait mail can be transported directly by air and sea, greatly saving transport time and cost. Moreover, the two sides will also increase their numbers of dispatch offices, increasing the convenience of collection and dispatch operations, and enabling even more conspicuous savings of time and cost. According to estimation by the MOTC, mail to large cities such as Beijing and Shanghai that used to take 7~8 days for delivery is expected to take just 5~6 days for delivery in the future, while delivery time to other regions is expected to be reduced by an average of one day. (2) According to data provided by Chunghwa Post Co., the state of losses of registered mail sent from Taiwan to the mainland has already greatly improved, totaling just ten in the past three years. Since registered mail sent from Taiwan to the mainland often contains important documents, such as mainl

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