An Empirical Research On The Cross-strait Static Trade Effect Based On Ecfa

Objectively speaking, since world war II, regional economic integration undoubtedly hasten the development of economic globalization and the world economic integration process. However, in recent years, the multilateral trade negotiations within WTO under the stagnant and for the development of bilateral trade liberalization has created favourable conditions. The Cross-Strait Economic Cooperation Framework Agreement (referred to as "ECFA") was signed on June29,2010, in the common aspiration of people on both sides. ECFA referred to the main economic activities between the mainland and Taiwan, including opening markets for goods and services trade, rules of origin, early harvest program, trade remedies, dispute settlement, investment and economic cooperation and so on. ECFA will help to further promote cross-strait import and export and generate new trade effects. It will also be beneficial to accelerate industrial upgrading and integration of both sides and promote cross-strait science and technology innovation. In this paper, the theoretical analysis and empirical research on the cross-strait trade effects were conducted based on ECFA. This research has some practical significance and some suggestions for the development of the strait economy and trade in the post ECFA age were proposed.This paper focused on the cross-strait economic and trade exchanges and was based on the regional economic integration theory. An empirical study was conducted on the static cross-strait trade effects from the perspective of ECFA, which is the key point of this paper.The trade creation effect, trade diversion effect and dynamic trade effect caused by ECFA were stated at first by means of partial equilibrium about tariff trade creation and trade diversion based on the theory of customs union. Specifically speaking, the volume of trade creation and trade diversion from Taiwan in the mainland market would be16.832billion US dollars and704million US dollars respectively; and the volume of trade creation and trade diversion from the mainland in the Taiwan market would be1.735billion US dollars and3.107billion US dollars respectively. Then based on trade gravity model, the influencing factors of the cross-strait trade flows and their affection degree were studied. On the basis of it, the cross-strait trade expansion effect brought about by performing ECFA according to tariff reduction arrangements of the early harvest scheme. Through the quantitative analysis on cross-strait trade association based on the gravity model, we knew that Taiwan's export to the mainland would vary about2%for every1%variation of the mainland tariff. We also could estimate that the expansion effect of Taiwan's export to the mainland brought ab6ut by ECFA is about30%according to the tariff reduction arrangements of early harvest program. The last part was about the summary suggestions for the development of cross-strait economic and trade relations were put forward.