Impacts of the ECFA on seaborne trade volume and policy development for shipping and port industry in Taiwan

Abstract

This paper uses a global computable general equilibrium model, global trade analysis project and a value-to-volume conversion to arrive at quantitative estimates of the new seaborne cargo volumes resulting from a free trade agreement between Taiwan and China, namely, the Economic Cooperation Framework Agreement (ECFA). The approach is designed to model asymmetric impacts of tariff removal and economy-wide interactions caused by the ECFA arriving at estimation in cargo value flows. Then a scientific approach is developed to convert the estimated cargo value flows into volume flows. The analysis concludes that in terms of total trade value, the ECFA liberalisation would induce a trade creation effect across the Strait of more than US$ 30 billions. There is an increase of US$ 26.04 billions in exports to China, which is much higher than imports from China (US$ 4.67 billions). Regarding the converted trade volume, the exports of uncontainerisable and containerisable cargo to China increase by 0.37 and 5.12 million tons (0.43 million TEUs), respectively. The increases in imports from China are relatively minor at 0.19 and 0.75 million tons (0.06 million TEUs) of uncontainerisable and containerisable cargo. Policy implications and suggestions for shipping and port industry are provided accordingly.