This study aims to evaluate the impact from China's dropping Taiwan fruit tariffs and Direct Cross-Strait Transportation on agricultural sector of Taiwan and provides some policy suggestions as well based upon the simulation results. The simulation employed Taiwan Agricultural Policy Simulation System (TWAPS) with changing export cost as an exogenous variable. TWAPS is an activity-based and policy-orientated system, which is established based upon the concept of agricultural production activities and their input-output flows in Taiwan agricultural sector. This simulation system is thus used to do the simulation analysis for various agricultural policies. Simulation results from two scenarios show that the China's preferential trade measures and Direct Cross-Strait Transportation have positive influences on economic side of Taiwan fruit industry. The impacts are small in short term. The simulation results show that only guavas, wax apples, betel nuts would be significant impacted. In long term, it is noticed that the impact effects could be enlarged under the Direct Cross-Strait Transportation.
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