The ECFA, Its Impact on Cross-Strait Relations, and Implications for the United States
Trade and investment between two rival political regimes involves not only on economic interests but also on political relations. This chapter utilizes political economy to analyze the paradox that a trade pact with China could simultaneously provide economic benefits incurring politi- cal costs for Taiwan. It also analyzes the contradiction that reducing political tensions through economic integration across the Taiwan Strait could limit the ultimate political choices for Taiwan. Given the overlapping claims on Taiwan’s sovereignty, there is a trade-off between Taiwan’s economic interests and its political sovereignty, and there is a dilemma that economic integra- tion could result in less political autonomy. This chapter assesses the possible impacts of a fully fledged Free Trade Agreement (FTA) between it and China on its economy based on the simulation results from a computed general equi- librium (CGE) model. It especially focuses on the sociopolitical consequences, such as changes in the “status quo” in the Taiwan Strait, of economic integra- tion between these two economies. Finally, it looks at the implications of such shifts for American interests in the region.
KeywordsTrade Liberalization Economic Integration Free Trade Agreement Democratic Progressive Party Global Trade Analysis Project
Unable to display preview. Download preview PDF.
- Buchanan, James, M. 2003. “Politics as Public Choice”, in The Collective Works of James M. Buchanan, Vol. 13 (Indianpolis, IN: Liberty Fund).Google Scholar
- Chen, Kung Ming, Ji Chou, and Chia-Ching Lin. 2011. “The Impact of Trade Liberalization across the Taiwan Strait: Empirical Evidence and Policy Implications”, in Cal Clark, ed., The Changing Dynamics of the Relations Among China, Taiwan and the U.S. (Cambridge: Cambridge Scholars)Google Scholar
- Chou, Ji, Shiu-Tung Wang, Kun-Ming Chen, and Nai-Fong Kuo. 2003. “Taiwan’s Accession into the WTO and Trade in Services: A Computable General Equilibrium Analysis”, in Takatoshi Ito and Anne O. Krueger, eds., Services Trade in the AsiaPacific Region (Chicago: University of Chicago Press), pp. 99–136.Google Scholar
- Chow, Peter C. Y. 2011a. “The Emerging Trade Bloc across the Taiwan Strait: ECFA and Its Aftermath on Implications to the U.S. Economic and Strategic Interests in East Asia”, in Cal Clark, ed., The Changing Dynamics of the Relations among China, Taiwan and the U.S. (Cambridge: Cambridge Scholars).Google Scholar
- Chow, Peter C. Y. 2011b. “Globalization, Dynamic Comparative Advantage and Taiwan’s Drive for Sustainable Development”, in Robert Ash, John Garver, and Penny Prime, eds., Taiwan’s Democracy: Economic and Political Challenges London and New York (London and New York: Routledge).Google Scholar
- Chow, Peter C. Y., and Dan Ciuriak. 2012. “The FTA Music Is Playing in Asia: After ECFA, Is Taiwan Joining the Dance”, Journal of International Trade, February.Google Scholar
- Friedman, Edward. 2007. “China’s Incorporation of Taiwan: The Manipulation of Community Tensions”, in Peter Chow, ed., Economic Integration, Democraticization and National Security in East Asia (Northampton, MA: Edward Elgar), pp. 29–55.Google Scholar
- Hertel, Thomas W. 1997. Global Trade Analysis: Modeling and Applications (Cambridge: Cambridge University Press).Google Scholar
- Hirschman, Albert O. 1980. National Power and the Structure of Foreign Trade (Berkeley, CA: University of California Press).Google Scholar
- Kawai, Masahiro, and Ganeshan Wignaraja, 2009. “Asian FTA Trends and Challenges”, ADB working Paper No. 144 at the website: http://www.adb.org.
- Ma, Jun, and Zhi Wang. 2002. “Options and Implications of Free Trade Arrangements in East Asia”, paper presented at the Fifth Annual Conference on Global Economic Analysis, Taipei.Google Scholar
- Romberg, Alan. 2010. “All Economics Is Political: ECFA Front and Center”, China Leadership Monitor, No. 32 (Spring).Google Scholar
- Wallace, William. 1982. “Economic Divergence in European Community”, in John M. Letiche, ed., International Economic Policies and Their Theoretical Foundation (New York: Academic Press), pp. 183–223.Google Scholar
- World Bank. 2005. Global Economic Prospects (New York: Oxford University Press).Google Scholar