Prof. Lin Kuo-jung, director of International Trade at the Chihlee Institute of Technology that was commissioned by the Council of Labor Affairs (CLA) to conduct the study, weighed the impact on Taiwan if the economic cooperation framework agreement (ECFA) is signed and if it is not.

Adopting the global trade analysis project (GTAP) model, Lin based his research on four scenarios -- the formation of a free trade grouping among the Association of Southeast Asian Nations and China, South Korea and Japan (ASEAN +three) without the ECFA; an ASEAN + three grouping with both Taiwan and China denied access to each other's agricultural markets; an ASEAN + three grouping with China opening its agricultural market and Taiwan's remaining closed; and an ASEAN + three grouping with both Taiwan and China adopting an open market policy.

Under the third scenario, which Lin described as the most favorable to Taiwan, the island's gross domestic product (GDP) would grow by 0.754 percent and the number of job opportunities would increase by 125,000, according to the report.

Among the various sectors, the services industry and the high-tech industry will benefit most from a cross-strait ECFA, the study showed.

However, if the ECFA is not signed, Taiwan will see its GDP drop by 0.179 percent and an additional 47,000 people would become jobless, the report stated.

In this case, the most serious loss of jobs would occur in the garment, metal and sports gear, and stationery and daily necessity industries, according to the report.

Under the second and fourth senarios, Taiwan would see a GDP growth of 0.7 percent and an increase of 100,000 job opportunities, the study showed.

Taiwan and China are expected to discuss the ECFA issue in the upcoming talks between the two sides in December before they formally ink such an agreement, which aims to liberalize cross-strait trade and exchanges.

The figures forecast by the CLA, however, were conservative compared to those in a similar research report unveiled by the Ministry of Economic Affairs (MOEA) July 29.

The MOEA research, conducted by the Chung-Hua Institution for Economic Research (CIER), put Taiwan's annual GDP growth at 1.72 percent and the increase in jobs at between 257,000 and 263,000 if the ECFA is signed.

Director Huang Zhi-peng of the MOEA's Foreign Trade Bureau, attributed the differences in the forecasts to the methods used by the Chihlee Institute of Technology and CIER to gauge the ECFA's impacts on Taiwan's economy.

CIER applied a dynamic GTAP model in its research, while the Chohlee institute adopted a static one, Huang said.

"If CIER had used the static method, it would have forecast an increase in job opportunities of around 130,000, a figure not far from that projected by the Chihlee institute," Huang explained.

( By Chen Shun-hsieh, Yang Shu-min & Bear Lee)