In a welcome sign of progressive action, the National Assembly of Taiwan voted this week to end an era of Cold War confrontation with China and approved a change in the constitution that would loosen the Nationalist Party's grip on power.

Indications are that the changes will move Taiwan toward constitutional democracy and also improve relations between the Nationalist and Communist governments, possibly even leading to talks on reunification with China. At the very least there is an excellent chance of official talks between Taiwan and China on matters of direct trade.The Nationalists have ruled Taiwan since 1949, when they fled mainland China after losing a civil war to communist forces. In essence, the civil war has existed in suspended form ever since.

The revisions provide a legal basis for three sets of elections for Taiwan's tri-cameral parliament by 1993, giving Taiwan its first homegrown parliament and ending the domination of octogenarian delegates elected on the China mainland in the late 1940s - before communist forces pressured Chiang Kai-shek and his Kuomintang government to flee to the island.

Taiwan, of course, continues to maintain it is the legitimate government of all China. That means that there are still a great many differences for leaders of Taiwan and China to work out.

There also remain a number of differences between the ruling party in Taiwan and the Democratic Progressive Party to be resolved - but Lee Teng-hui, elected last March by the National Assembly, is Taiwan's first native-born president - and future discussions will deal with the possibility of a directly elected presidency in Taiwan.

That eventuality will be good news indeed, to go along with these first encouraging reports of democratic reform in Taiwan.