Study On The Trade Effect Of Economic Cooperation Framework Agreement

Based on the increasingly close trade relations and the trends of regional economic integration, Taiwan and Mainland signed the "Economic Cooperation Framework Agreement"(ECFA) in2010, which is aimed at reducing a variety of tariff and non-tariff barriers, reducing institutional barriers in investment and trade and facilitating trade in goods, trade in services and investment.With the implementation of ECFA, we concerned about not only the change of trade and employment brought by ECFA, but also the specific impact companies and products experienced. New-new trade theory provides a new research method and research directions for the in-depth study of trade effect of ECFA from the enterprise perspective This paper is based on this theory, exploring the intensive margin and extensive margin of cross-strait trade through the method of Amurgo-Pacheco and Martha Denisse Pierola (2008), studying the formation mechanism of intensive and extensive margins in cross-strait trade through heterogeneous enterprise theory of Chaney(2008), analyzing factors influencing the intensive margin and extensive margin of cross-strait trade growth, discussing the effect of "Economic Cooperation Framework Agreement", grasping the inherent structural characteristics of cross-strait economic development and cross-strait trade.The main conclusions are:Firstly, the trade scale between Taiwan and Mainland is growing rapidly. Taiwan and Mainland are experiencing a high level of intra-industry trade in intermediate technology products. Secondly, the implementation of the "Economic Cooperation Framework Agreement" will promote the role of SMEs in cross-strait trade. Thirdly, most of the products under the ECFA Early Harvest List have emerged falling prices. Fourthly, the cross-strait trade growth mainly depends on the intensive margin, with the promotion role of the extensive margin. Fifthly, compared with other studies, enterprises in the cross-strait trade have low level heterogeneity. The implementation of the "Economic Cooperation Framework Agreement" will further enhance the role of extensive margin. Sixthly, different factors almost played the same role in the intensive and extensive margin. The relative economic size, multilateral trade resistance and free trade agreements have positive impact on intensive and extensive margins; while labor productivity, distance and fixed cost produce negative impact on the intensive and extensive margins.