The Economic Cooperation Framework Agreement between China and Taiwan: Understanding Its Economics and Politics

Tsai-Lung Hong and Chih-Hai Yang
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Tsai-Lung Hong: Center for Contemporary China National Tsing Hua University 101, Section 2, Kuang-Fu Road Hsinchu 300, Taiwan
Chih-Hai Yang: Department of Economics National Central University 300 Jhongda Road, Jhongli 320, Taiwan

Asian Economic Papers, 2011, vol. 10, issue 3, 79-96

Abstract: World trade has become increasingly regionalized in the past decade as a result of preferential arrangements. Due to Taiwan's unique international political status, its present government believes that closer economic integration with China would enhance Taiwan's economic prosperity and prevent Taiwan from being marginalized in East Asia. Taiwan hence signed the Economic Cooperation Framework Agreement (ECFA) with China in 2010. This paper summarizes arguments opposed to the ECFA from economic and political perspectives. Despite the fact that Taiwan is expected to reap greater benefits from deeper integration with China, simulation analyses show that the welfare-enhancing effect brought about by the ECFA is quite limited, because the ECFA contains no definite content or timeline other than an early harvest list. © 2011 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Date: 2011
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