Study On Agreement Of The Negotiable Instrument System Integration Between Mainland China And Taiwan

The economic and trade interaction between mainland China and Taiwan(hereinafter referred to as "Cross-Strait") has been transitioned from indirect to direct forms and remains relatively steady despite periodic political turbulence. Mainland China's economic reform has caused increasing Taiwan-funded enterprises to invest or establish factories in mainland China, intensifying the Cross-Strait business interaction and Taiwan's lifting of restrictions on conducting direct business, including investment, with mainland China. Because of the recognition of mainland China's development and progress, Cross-Strait economic and trade interaction has increased. To facilitate regional economic integration, mainland China and Taiwan have formed numerous agreements and drafted many memorandums. Numerous organizations worldwide are also promoting economic globalization and regional economic integration by formulating various international covenants and conventions to coordinate, converge, and integrate state or regional laws. One remarkable example is “the Principles of International Commercial Contract” adopted by the International Institute for the Unification of Private Law; the general rules for international commercial contracts provided by this classic and representative work facilitate legal unification of state and regional legal commercial contract systems. The European Union is another excellent and concrete example of integration; it has successfully transitioned from the European Economic Community and European Community to an integrated European market and stepwise legal integration among its state members. Following the European Union, African nations have also established “the Organization for the Harmonization of Business Law in Africa” and formulated several sets of uniform commercial law for unifying the legal systems among members, boosting the transparency, certainty, and predictability of commercial transactions. This has promoted trading both within and outside Africa and attracted direct investment from other countries to facilitate the economic development of member states.Negotiable instruments are a very crucial type of noncash instrument for exchange, payment, and settlement. Furthermore, they also provide credit, finance, and security functions and reduce the use of money. Integrating the negotiable instruments of mainland China and Taiwan would make negotiable instruments a critical financial instrument in Cross-Strait economic interaction; they can be used as credit and capital, facilitate business development and transformation, and enhance the liquidity and security of financial systems. Macroscopically, integrating Cross-Strait negotiable instruments would enable the Central Bank to more effectively perform macroscopic modulation, ensuring steady Cross-Strait economic development. In this thesis, “the Cross-Strait Negotiable Instrument System Integration Agreement” was explored in order to realize an integrated Cross-Strait negotiable instrument market on the basis of domestic negotiable instrument markets. First, several issues related to the circulation of “the remittance-type negotiable instruments” in the Cross-Strait negotiable instrument market were presented, and the necessity and feasibility of the Cross-Strait negotiable instrument system integration were analyzed. Because of the different substantive legal systems for the negotiable instruments of mainland China and Taiwan, problems with the application of law would arise if their negotiable instrument markets were integrated but not their negotiable instrument systems. In that case, judicial decisions may vary depending on the legal district, thus violating the principles of equity and equality. Moreover, because the law of negotiable instruments of mainland China and Taiwan is developed and designed according to different concepts, the emphasis of their negotiable instruments may differ. As a consequence, the lack of a unified Cross-Strait legal system of negotiable instruments would not only limit the use and functions of negotiable instruments, which is disadvantageous for companies that use negotiable instruments as a payment condition in trading, but also block the credit, finance, and security functions of negotiable instruments. This could hinder the circulation and use of Cross-Strait negotiable instruments, compromising not only the operation but also the movement of Cross-Strait negotiable instrument market integration. Second, the integration processes of state negotiable instrument systems from countries worldwide, especially the European integration, are adopted as references. Regional economic integration theories, legal integration theories, and transaction cost theories are applied as the foundation of the Cross-Strait negotiable instrument system integration agreement. Furthermore, the principle of effect from regulations of the European Union Law should be referred to as well because if mainland China and Taiwan were to enter an agreement on Cross-Strait negotiable instrument system integration, the agreement should be conferred with the direct applicability, direct effect, and supremacy effect. In addition, to ensure the sustainability, effectiveness, and applicability of system integration, possible system-related problems should be reviewed in Cross-Strait judicial exchange to reach a consensus and then be uniformly interpreted by the court. For challenging cases, the court should hold resolution meetings to devise a unified and applicable standard, enabling the uniformity of the judicial protection system to be realized. Third, for Cross-Strait negotiable instrument system integration, the Cross-Strait legal system as well as the finance and security systems of the negotiable instruments should be analyzed and compared according to negotiable instrument-related theories and practices. Finally, because a common negotiable instrument system is indispensable for smooth Cross-Strait negotiable instrument market integration, a solution(i.e., a draft of “the Cross-Strait Negotiable Instrument System Integration Agreement”) was proposed in this thesis for protecting the rights and interests of parties to negotiable instruments and reducing transaction costs. This agreement can serve as a foundation for Cross-Strait negotiable instrument market integration as well as a model for Cross-Strait negotiation. The major purpose of mainland China and Taiwan cosigning this “Cross-Strait Negotiable Instrument System Integration Agreement” is to resolve problems on the direct use of negotiable instruments for finance and security by Taiwanese and mainland Chinese companies and to reduce transaction costs. This key concept and relevant keynote ideas are emphasized throughout this thesis.“The Cross-Strait Negotiable Instrument System Integration Agreement” is not only a method of promoting system innovation but also a systemic arrangement according to equality, equity, and reciprocity between mainland China and Taiwan. The purpose of this systemic arrangement is to establish common ground for integrating the Cross-Strait negotiable instrument market for addressing conflicts in the substantive law of negotiable instruments and eliminating concerns regarding the application of the governing law when negotiable instrument laws conflict with one another. In other words, this arrangement can be viewed as a tradeoff alternative that creates the possibility of Cross-Strait negotiable instrument circulation and may generate the optimal marginal effect of such a systemic arrangement, resolve corporate finance problems, and minimize transaction costs. Forming “the Cross-Strait Negotiable Instrument System Integration Agreement” and conferring the agreement with the direct applicability, direct effect, and supremacy effect through an appropriate internal process would provide parties to negotiable instruments with more comprehensive protection of their rights and interests in mainland China and in Taiwan, ensure that the Cross-Strait negotiable instrument markets are integrated in an orderly manner, maximize the benefits of the Cross-Strait negotiable instruments, and propel mutual Cross-Strait economic development.