Wellington, April 1 NZPA - Taiwan will have to sign a trade agreement such as the Economic Cooperation Framework Agreement (ECFA) with China if it wants to stay competitive in global markets, says a former New Zealand trade official.

Signing the ECFA and negotiating trade with the mainland will bring Taiwan will be one step closer to the goal of free trade, Charles Finny said yesterday at a presentation organised by Taiwan's Ministry of Economic Affairs (MOEA), the China Post reported.

Some Taiwanese have described the proposed free trade deal as a "humiliating pact", especially as Chinese reports suggest the mainland will get four times the benefit gained by Taiwan.

But Mr Finny, chief executive of the Wellington regional Chamber of Commerce -- and a former head of the New Zealand Commerce and Industry Office in Taipei -- said the ECFA was going to have enormous implications for Taiwan's wider trade policy.

He cited New Zealand's experiences with its bigger and more powerful neighbour, Australia, as a parallel for Taiwan's current trade situation, and said: "Protectionism doesn't work."

In New Zealand, heavy-handed government control of supplies and huge border protectionism caused the nation to sink from one of the world's wealthiest per capita to a "broken system" within two decades, and its salvation was Closer Economic Relations Agreement (CER) with Australia.

"Many feared that when CER was signed Australia would do better from the agreement, because Australia was the larger economy," Mr Finny said. "The reality was ... within a couple of years the Australians were complaining that we were doing disproportionately well under CER".

And he said New Zealand's principle interest in signing a free trade deal with Taiwan would be strategic.

Taiwan had slipped from New Zealand's seventh largest market to its twelfth within six years, causing it to lose "relativity and importance in the minds of [New Zealand] decision-makers as a result".

In the meantime China has overtaken the USA as New Zealand's second largest export market, and New Zealand exports to China have grown rapidly since the two nations signed their own free trade deal.

Mr Finny said the New Zealand China FTA was New Zealand's most important negotiated free trade agreement since CER with Australia, and "I am sure that ECFA will be equally successful for Taiwan".