The impact of trade liberalization on Taiwan's agricultural sector has been an important issue in policy debates. In this study, a case study of cross-strait trade liberalization is conducted. With the elimination of all tariffs on bilateral trade between Chinese Mainland and Chinese Taipei, the SAM-based computable general equilibrium (CGE) model and database are applied to simulate the impacts of cross-strait trade liberalization on Taiwan's economy, agricultural output, non-agricultural

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... e, farm household income and employment. Simulation results demonstrate that Taiwan's GDP will increase by 1.78%, but total agricultural output will decrease by 0.9%. For per farm household income, although agricultural income decreases by NTD 1648, non-agricultural income will increase by NTD 10,580. In total, per farm household income increases by NTD 8,932 with cross-strait trade liberalization. With trade liberalization as the engine of growth and a trade adjustment assistance mechanism at work, economic growth in Taiwan's agriculture may be maintained and in the long run, non-agricultural income and employment are likely to increase to provide a "safety net" for farm households.