International Trade in Taiwan
A very noticeable trend in current Taiwan’s trade is that Chinese mainland plays a larger and larger role. Similar trends probably are also present in other economies, but for Taiwan the mainland factor casts especially great influence. This year, Taiwan’s economy has experienced double-digit growth during the first and second quarters. Astonishingly high figures, ranging from 8.24% to 10.08%, have been predicted for Taiwan’s GDP for the whole year, by various institutions including Barclays[1], Cathay Financial Holding[2] and Taiwan’s own statistic agency, the DGBAS[3]. Such an increase is in a large part contributable to the strong exports to Chinese mainland in the midst of a global economic recovery. Empirical analysis of the economic data during 1988 to 2008 shows a stable long-term positive relationship between the amount of cross-strait trade and economic growth of Taiwan. The export to Chinese mainland, which accounts for about half of all the export, is a strong impetus to Taiwan’s economic growth.
Now a new agreement may encourage this trend even more. On June 29th, 2010, representatives from Chinese mainland and Taiwan signed ECFA, which stands for Economic Cooperation Framework Agreement. It aims to significantly enhance the economic exchange across the strait by removing trade barriers including both tariffs and the restrictive regulations in service area. Referred to as the “the most important cross-strait pact ever signed”[4] by President of Taiwan, Ma Ying-jeou, ECFA took effect only days ago on Sep 13th. As one of the direct fruits of the ECFA’s “early harvest” program, the tariffs on 539 Taiwanese goods and 267 Chinese products will be reduced to zero in three phases within a period of two years starting from Jan 1st, 2011[5]. In light of history of the last decade, it is reasonable to believe that by providing a freer environment for cross-strait trade, this pact would further facilitate Taiwan to share the...