Taiwan’s trade with Eastern Asia has been getting closed recently, with the proportion of exports accounted for by China, Japan, South Korea and ASEAN exceeding that of U.S. The economic integration within that area has accelerated. ASEAN had signed free trade agreements with China, South Korea and Japan, which have come into effect subsequently. ASEAN free trade agreements with Australia, New Zealand, and India will be effective in 2010. On the other hand, South Korea and Japan signed free trade agreement with their major trade partners aggressively. All of these actions by other countries have been affected our trade development. If Taiwan can not be involved, there will be a crowding-out effect as a result of the regional economic integration. As for Taiwan, is ECFA a risk or an opportunity? With division of domestic opinions, through domestic and foreign theories and experiences, this study conducts two-way analysis by using GTAP model of Chinese Economic Research Institute, and explores the effect of ECFA on Taiwan’s economy. The results indicate that after the agreement is signed, GDP, international trade, terms of trade, and social welfare will grow. The overall growth will increase. This study, also analyzes, along with the related regulations of WTO and the implementation, the motivation and structure of the economic changes in the region under ECFA. The aim is to accomplish the innovation of region economic theory, to provide thoughts about promoting Taiwan’s entry into the development of regional economy, and to further understand the meaning and the value of ECFA. Because ECFA is similar to the economic cooperation framework agreement between ASEAN and China, which is overall economic cooperation framework, its content includes major economic activities between China and Taiwan, ensuring the basic structure and development plan of future economic cooperation. The effect of ECFA on the development cross-strait relations is worth being noted.