Intra-industry trade has become more and more important in Taiwan in the past twenty years. The USA and Japan are two key trade partners of Taiwan. Therefore, it is necessary to research intra-industry trade between Taiwan and the USA and Japan. The logistic-transfer empirical model is used to investigate the determinants of intra-industry trade. The period considered is 1986 to obtain useful Taiwan industry census data. The empirical results suggest that FDI and minimum efficient scale are the critical determinants in intra-industry trade in Taiwan. In addition, product specialty and oligopoly domestic market are important variables. The result is the interesting finding that tariff barriers (nontariff barriers) are a significant determinant to intra-industry trade between Taiwan and the USA (Japan), but not for Japan (the USA), because of the high dependence upon Japan of Taiwan’s industry and discretionary trade measures to promote industry development.
