The remarks by Raymond Burghardt, chairman of the American Institute in Taiwan that handles civil contacts between the US and Taipei in the absence of official ties, come amid raised tensions on the Korean Peninsula.

"The signing of the cross-Strait Economic Cooperation Framework Agreement (ECFA) this past summer in Chongqing accelerates the positive trend of furthering regional peace," he told the American Chamber of Commerce in Taipei.

"We certainly welcome the increased trade and people-to-people ties that will necessarily result from this agreement."

Regional peace was rattled last Tuesday when North last week shelled a South Korean border island, killing four people and wounding 18 in the first bombardment of a civilian area in the South since the Korean war.

The landmark ECFA, which was signed in June, has been widely characterised as the boldest step yet towards reconciliation between the former rivals, who split at the end of a civil war in 1949.

Taiwan's ruling Kuomintang party has hailed the agreement, saying it will bolster the island's economy, but the anti-China Democratic Progressive Party (DPP) and its allies claim it will undermine its de facto independence.

Earlier Tuesday DPP chairwoman Tsai Ing-wen said she feared more Taiwan people may lose their jobs and wealth distribution could become more uneven as the ECFA leads to the lowering of tariffs between the two sides.

Taiwan and its giant neighbour are still technically at war and Beijing has refused to renounce the use of force against the island despite the fact it has governed itself for more than six decades.

But ties between Taipei and Beijing have improved markedly since Ma Ying-jeou of the Kuomintang swept to power in 2008, pledging to beef up trade links and allowing in more Chinese tourists.

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