Abstract The Economic Cooperation Framework Agreement (abbreviated ECFA) has been signed on June 29, 2010 smoothly. ECFA will bring Taiwan manufacturers the advantage of earlier entrance to China market than other opponents, but for some sensitive industries with more focus on inner demand and weaker competiveness, there will also be negative influence because of the competitive threats at the market which is open to the low-priced products flooding from China. Adopting the COMPAS model, this research chose the hosiery industry, one of the industries facing difficulties defined in ‘Implement Projects to Support Industries’ Adjustment to Trade Liberalization’ as the major subject, interviewed the manufacturers and the trade union, and confirmed the setting of flexible variables and the results of simulation in details. This research simulated the effects on general industries and hosiery industry in Taiwan if Taiwan reduced the import tariff for China hosiery industry to zero. The result of the research found that when Taiwan opened the hosiery industry market entirely to China, the unit price and production would reduce by 0.16% and 0.08% respectively. As for the income of domestic manufacturers, the reduction would be 0.24%. In import, the imported price would decrease by 3.43% while the import volumeincreased by 9.93%, and the income of traders consequently increased by 6.16%. Regarding the social welfare situation, after the tariffs were reduced, the surplus of manufacturers would decrease by 980,000 dollars, and the tax revenue would lose 1.2 million dollars, but the surplus of consumers would increase by 2.24 million dollars. Manufacturers said that if the tariff for Chinese hosiery industry was reduced, there would be no profits for low profit industries. Moreover, with the high production cost in Taiwan, the tariff reduction might affect business of local manufacturers and cause the replacement of local products by cheap products from China. However, the slight decrease in production would make the business of manufacturers with orders of only several hundred dozens of units worse. The competition between manufacturers would get worse, and the cut throat price competition would be inevitable.