Flights between Manila and Taiwan will resume starting on Monday following a breakthrough in the stalled negotiations on the air services agreement.
President Estrada welcomed this development, saying the resumption of flights will enhance trade relations.
Air links between Manila and Taipei were cut on Oct. 1 last year when the 1996 Air Services Agreement was terminated due to rampant violations by Taiwanese carriers, which are alleged to have hurt Philippine Airlines (PAL).
A month later, the Civil Aeronautics Board (CAB) lifted the suspension, restoring a 9,600-passenger a week limit for Taiwanese carriers.
The CAB, however, imposed two conditions: that China Airlines and EVA Air desist from servicing passengers to a third country destination, and that negotiations for a new pact must be completed by January 2000.
During these negotiations, Manila wanted the 9,600-passenger limit reduced to only 3,000, while Taipei insisted the carriers needed 6,500 passengers a week to avoid losses.
Foreign Affairs Undersecretary Franklin Ebdalin, a CAB board member, said earlier that EVA Air and China Airlines also told Manila that a clause on the third country destination, or the so-called "sixth freedom," is non-existent in the air agreement.
The impasse was resolved when China Airlines and EVA Air agreed to reduce the number of passengers to 4,800 a week.
"This will really be a happy Chinese New Year," the President said as he witnessed the signing of letters between Manila Economic and Cultural Office chairwoman Eva Estrada Kalaw and her Taiwanese counterpart Hsien-Ching Chan at Malacañang.
"This will again enhance our trade and labor relations with Taiwan," Mr. Estrada said.
The President said the exchange of letters between Manila and Taipei is a step towards finalizing a new agreement that would smoothen air services between the two.
Presidential Spokesman Fernando Barican clarified that the agreement does not violate the "One China" policy.
He said the pact involves "commercial relations and not political ones."