The Analysis On The Effect Of ECFA: Application Based On Computable General Equilibrium Model

Ever since the beginning of cross-strait opening in 1987, especially after 2000, Taiwan's exports to mainland have grown rapidly, which amount to 40% of Taiwan's total exports. Mainland China has become Taiwan's largest export market and trade surplus resource. With the cross-strait relations becoming progressively closer, Taiwan and Mainland China have signed Economic Cooperation Framework Agreement, known as ECFA, in order to further promote cross-strait cooperation and Taiwan's participation in regional cooperation. Taiwan and Mainland China both take on positive attitude to sign ECFA, and also expect further cooperation in other important issues related to current cross-strait economic and trade interaction after ECFA.As a Taiwan student, I am most interested in ECFA and its impact on both Mainland and Taiwan. This paper uses the GTAP model to quantitatively evaluate the impact on Taiwan after signing of ECFA. The results show that Taiwan gains the most economic benefits from signing ECFA with China, especially in manufacturing sector's output and export. This effect makes the cross-strait's industry more specialized and deepens vertical integration. Therefore, in order to boost Taiwan's economic development, further economic integration with China will be necessary as soon as possible.