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

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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)

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.

Suggested Citation

  • Tsai-Lung Hong & Chih-Hai Yang, 2011. "The Economic Cooperation Framework Agreement between China and Taiwan: Understanding Its Economics and Politics," Asian Economic Papers, MIT Press, vol. 10(3), pages 79-96, Fall.
    • Handle: RePEc:tpr:asiaec:v:10:y:2011:i:3:p:79-96
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    Cited by:

    1. Batten, Jonathan A. & Kinateder, Harald & Szilagyi, Peter G. & Wagner, Niklas F., 2019. "Time-varying energy and stock market integration in Asia," Energy Economics, Elsevier, vol. 80(C), pages 777-792.
    2. Huang, Siyuan & Lu, Siqi, 2024. "Did the 'Early harvest list' of commodity trade under ECFA promote the development of manufacturing industry in Taiwan Province? An empirical analysis based on staggered DID model," Finance Research Letters, Elsevier, vol. 59(C).
    3. Batten, Jonathan A. & Kinateder, Harald & Szilagyi, Peter G. & Wagner, Niklas F., 2017. "Can stock market investors hedge energy risk? Evidence from Asia," Energy Economics, Elsevier, vol. 66(C), pages 559-570.
    4. Jonathan A. Batten & Peter Morgan & Peter G. Szilagyi, 2015. "Time Varying Asian Stock Market Integration," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 60(01), pages 1-24.
    5. Chang, Kuo-I & Hayakawa, Kazunobu, 2012. "Selection and utilization of the early harvest list : evidence from the Free Trade Agreement between China and Taiwan," IDE Discussion Papers 365, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Jonathan A. Batten & Peter G. Szilagyi & Wagner, 2015. "Should emerging market investors buy commodities?," Applied Economics, Taylor & Francis Journals, vol. 47(39), pages 4228-4246, August.

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