1. Progress of the "Three Direct Links"

Under strong demand from compatriots, and due to negotiations and efforts by business circles, on both sides of the Straits, the "three direct links" have started from scratch and progressed to varying degrees.

(1) Postal Link Mail Service

The mainland formally launched ordinary and registered mail services with Taiwan in 1979. In 1989 inter-Straits direct postal parcel delivery was established via Hong Kong. In April 1993, the mainland-based Association for Relations Across the Taiwan Straits(ARATS) and the Taiwan-based Straits Exchange Foundation (SEF) signed the Agreement on Inquisition and Compensation of Registered Letters Across the Straits. Registered letter service hence went into formal operation across the Straits.

Telecommunication Service

In 1979, the mainland started telegraph and telephone services with Taiwan. In 1989, Taiwan opened telegraph and telephone services with the mainland via a third place. In 1996, China Telecom and the Taiwan-based Chunghwa Telecom set up direct telecom business ties. And direct telecommunication channels across the Straits were set up through Sino-American, Eurasian and Asia-Pacific seabed optical cables constructed in 1999 and 2000. The telecommunication departments of both sides have launched mutual telephone, data communication, mobile phone roaming and videophone services. Cross-Straits telecom business has been booming, accounting for the largest and second-largest shares of the overseas telecom business of Taiwan and the mainland, respectively.

(2) Transport Link Shipping Service

In August 1979, the mainland proposed for negotiations on sea transportation across the Straits with the shipping community in Taiwan, and declared that Taiwan ships would have access to all its open ports. In order to ensure navigation security across the Straits, the mainland offered the services of mainland lighthouses to ships from Taiwan, and fully opened offshore radio service to Taiwan ships to provide them with communication and navigation services. In addition, the two sides co-founded a search and rescue hotline. Relevant regulations, such as Measures for Shipping Management Across the Taiwan Straits, promulgated in August 1996, standardize essential matters concerning direct shipping across the Straits. So far, seven business offices and 37shipping agencies for Taiwan-based shipping companies have been given approval to be set up at key ports on the mainland's coastal areas.

In April 1997, direct shipping between Fuzhou and Xiamen, and Kaohsiung entered trial operation. Mainland- and Taiwan-invested shipping companies can use vessels with a flag of convenience to transport foreign transshipment trade cargos of both sides via Kaohsiung Port. In March 1998, a regular container shipping route was inaugurated across the Straits, whereby cargo ships calling at ports across the Straits require change of documents rather than vessels at a third place.

In consideration of the demand of the people in Jinmen and Mazu,in early 2001 the mainland provided every possible assistance for shipping between the two islands and the coastal areas of Fujian Province. Vessels funded by and registered on either side of the Straits can conduct passenger and cargo transport across the Straits by flying only company flags.

Air Service

In October 1981, the mainland's civil aviation administration expressed readiness to negotiate at any time with its Taiwan counterpart on an air link across the Straits. In March 1990, the mainland released the Provisional Regulations on Application and Approval Procedures for Nonscheduled Flights of Civil Aviation Transport Between the China Mainland and Taiwan. From 1989 to 1996,the civil aviation sectors of both sides each served as sales agencies in passenger and cargo transport for the other, and commenced one-ticket and through baggage services between them. They signed several agreements on cooperation in the aspects of ticket-booking, commerce, plane maintenance, aviation and services. In December 1995 and August 1996, Air Macao and Dragon air opened Macao-Taiwan and Hong Kong-Taiwan air routes, respectively, realizing indirect air links between the mainland and Taiwan via Macao and Hong Kong. Since 1997, four Taiwan airlines have been given approval to set up their representative offices in Beijing.

In 2003, the mainland adopted flexible and practical measures aimed at handling special cases with special methods, to facilitate Taiwan business people's return to the island for the Spring Festival: Six Taiwan airlines were given approval to operate charter planes 16 times to carry Taiwan business people to commute between Taipei and Kaohsiung and Shanghai via Hong Kong and Macao. This was the first time in 50-plus years that Taiwan-operated planes had landed at a mainland airport by a normal approach.

(3) Business Link (Trade, Investment and Finance)Trade

Since 1979, the mainland has opened its market to Taiwan products, offering them preferential treatment such as tax exemption or reduction. In December 2000, the Ministry of Foreign Trade and Economic Cooperation of the PRC released Measures for the Administration of Trade with the Taiwan Area. The cross-Straits trade volume was a mere US $46 million-worth in 1978, but it shot up to US $44.66 billion-worth in 2002, approximately 971 times as much as the 1978 figure. By the end of September 2003, the accumulated volume of cross-Straits trade had totaled US $309.18 billion-worth, of which US $48.89 billion-worth came from mainland's exports to Taiwan, and US $260.29 billion-worth from Taiwan's imports, the mainland's trade deficit with Taiwan amounting to an accumulative total of US $211.4 billion. Since 1991 the mainland has become Taiwan's No.1 source of trade surplus. According to statistics, in 2002 the mainland had become the largest export market for Taiwan, and the island was the mainland's second-largest import market.

Investment

In July 1988, the State Council of the PRC issued the Regulations for Encouraging Investment by Taiwan Compatriots. In 1992 the Taiwan authorities permitted Taiwan compatriots to make indirect investment in, and carry out technical cooperation with, the mainland via a third place. In March 1994, the Standing Committee of the NPC adopted the Law on the Protection of Investment by Taiwan Compatriots. In December 1999, the State Council formulated the Detailed Rules for the Implementation of the Law on the Protection of Investment by Taiwan Compatriots, and local people's congresses and governments accordingly worked out corresponding local regulations and administrative rules in light of local conditions. A legal system was therefore formed or improved to protect the legal rights and interests of Taiwan compatriots in the mainland. Relevant departments and local governments in the mainland have made continuous efforts to improve investment environment and provide good service for Taiwan compatriots, thereby promoting their investments. By the end of September 2003, a total of 59,458 Taiwan-invested projects had been approved on the mainland, with the contractual value of Taiwan investment totaling US $67.98 billion, and the actually utilized Taiwan investment totaling US $35.71 billion. According to statistics from Taiwan, Taiwan business people have since 1993 taken the mainland as their first choice for outside-the-island investment.

Financial Exchanges and Cooperation

In 2002, mainland-based commercial banks officially started remittance and letter of credit business with the offshore bank units (OBU) of Taiwan-based banks. In 2003, they further opened this businesses with the domestic bank units (DBU) in Taiwan. By October 2003, the mainland had approved the establishment of 2 Taiwan-invested banks, representative offices of 7 Taiwan-based banks, 12 representative offices of 9 Taiwan-based insurance companies and 1 Taiwan-based insurance brokerage company, and 17 representative offices of 12 Taiwan-based securities companies.

In the process of promoting the "three direct links," non-governmental trade organizations across the Straits have carried out in-depth discussions time and again on relevant technical and professional issues involved in the "three direct links," and reached consensus in many aspects. Negotiations on inter-Straits communication have been going on successfully. Trial direct navigation across the Straits is operating smoothly. Delicate issues concerning two-way direct shipping between coastal areas of Fujian Province and Jinmen and Mazu have been properly resolved. Meanwhile, Taiwan-operated charter planes for the first time transported Taiwan's businesspeople across the Straits during the 2003 Spring Festival. All these facts show that businesspeople on both sides can undoubtedly find methods acceptable to both sides. As a matter of fact, both the technical and professional issues involved in the "three direct links" have been settled.

2. The Current Indirect, Two-way and Partial State of the "Three Direct Links" Has Impeded the Exchanges and Contacts Between Compatriots and the Development of Economic and Trade Cooperation Across the Straits.

Mail

Cross-Straits postal parcels have to be delivered via Hong Kong or Macao. Postal business is of a limited scope, and parcel post, small parcel post, remittance and express delivery services still remain unopened.

Transport

Direct shipping and flight are still unavailable. Cross-Straits travelers therefore have to transit via a third place such as Macao or Hong Kong. Cross-Straits cargos are ineligible for trial direct shipping, and have to be transshipped via a third place such as Hong Kong or Japan. Here arises the curious phenomenon of "cross-Straits cargo ships bringing in no cargos and arriving cargos not being brought by cargo ships."

Trade

The mainland market has been completely opened to Taiwan enterprises and commodities, while the mainland's exported commodities are subject to many discriminatory restrictions in Taiwan. Many of the mainland's advantageous commodities that are in high demand in Taiwan can find no access to the island. Mainland enterprises are not allowed to invest in Taiwan, or to set up their necessary business agencies there. It is difficult for mainland enterprises to hold or attend economic and trade exhibitions and business talks in Taiwan. And the mainland's businesspeople face many restrictions on investigation tours of or visits to Taiwan.

3. The Failure to Realize Direct, Two-way and Complete "Three Links" Is Mainly Attributed to Obstruction by the Taiwan Authorities.

For a long time in the past, the Taiwan authorities have set up numerous barriers to inter-Straits "three direct links," in disregard of the eager desire of compatriots across the Straits and the demands of Taiwan's economic growth. Lee Teng-hui and the current leader of the Taiwan authorities have both tried to stall and obstruct the "three direct links" on the pretext of seeking "equality, security and dignity." The Taiwan authorities have willfully added stringent restrictive clauses to regulations concerning the "three direct links," attaching to them various political prerequisites in an attempt to hamper cross-Straits negotiation on the "three direct links." On the one hand, the current leader of the Taiwan authorities refuses to accept the one-China principle or acknowledge the "1992 common understanding." As a result, cross-Straits dialogue and negotiation cannot be resumed. On the other hand, he refuses to accept the simple and facile method of having non-governmental trade organizations negotiate "three direct links" matters, causing protracted delay in the opening of the "three direct links" negotiation. Facts have spoken volumes that, although the current leader of the Taiwan authorities has indicated that the "three direct links" should not be a problem and is "an inevitable way to go," in essence he is unwilling at all to see the cross-Straits exchanges and the normal development of inter-Straits relations. He has broken his promise, gone back on his word, and done everything in his power to postpone the opening of the "three direct links." What's more, he has tried every possible means to politicize and complicate the "three direct links" issue, even to try to incorporate it in his framework of separatist proposition of "one country on each side. "The stand and policies of the current leader of the Taiwan authorities aimed at disrupting the development of cross-Straits relations and splitting the motherland are the root cause of the failure so far to realize the direct, two-way and complete "three links."