ABSTRACT On Nov.11, 2001, Taiwan obtained the accession of World Trade Organization and became a formal member of WTO on Jan 1st of 2002. As a member of WTO, Taiwan has equal rights to participate in the setting of global trade rules as well as sharing the benefits of liberalization. In the meantime, Taiwan must fulfill its WTO commitments completely, whether resulting from its bilateral and multilateral negotiations or from its standard WTO obligations. The accession to WTO means to Taiwan a big impact on all aspects of its general economics, people¡¦s everyday living as well as industrial policies. After 35 years of development, Export Processing Zone (EPZ) has emerged from focusing on traditional labor-intensive industry to capital and technical intensive industry then to global logistic type of industry. Facing the impact of WTO, the need to make next transition is becoming even more urgent now. In an effort to upgrade the industry and strengthen the competence of the country, the government has assigned another responsibility on EPZ by expanding its range of function from pure manufacturing to high value-added economics activities like Off-Territory Shipment Center, Logistics Center, Software Design Center, etc. Mainland China obtained its WTO membership same time as Taiwan. They are leveraging their fast economic development and huge market potential to attract foreign and Taiwanese investments. Hence we can not exclude the influence of Mainland China while trying to discuss the WTO impacts on EPZ and how EPZ can face the big change of economic environment. This study has set following three topics: 1. The impact on EPZ as a result of Taiwan¡¦s accession to WTO. 2. What is the outlook of EPZ¡¦s new positioning. 3. Suggestions to the government, EPZ Administrations and Companies inside and outside of EPZ. This study will firstly make a brief review on both WTO and EPZ. Then explore the impacts, as well as the opportunities and threats, of WTO on both the industries in Taiwan and in EPZ. Then we will study the two major directions of EPZ¡¦s new positioning: (1) New developments as a result of new economic relationship between Taiwan and Mainland China, this includes Off-Territory Shipment Center, a base for China¡¦s companies to enter Taiwan, and the ¡§deep processing¡¨ that utilizes the advantage of integrating operations across the Taiwan Strait, and (2) New developments as a result of the expanding of EPZ¡¦s new service function, that includes R&D center, headquarter for off-shore Taiwanese companies, International Trade Companies, center for specific industry cluster and logistic center, etc. Based on the results of this study, we have made suggestions to the government, the EPZ Administration and companies inside and outside EPZ. The suggestions to the Government are: Try to form Free Trade Zone with Asia-Pacific countries and also form a ¡§Greater China Free Trade Zone¡¨ with Mainland China and Hong Kong under the condition that the political disputes are settled. Also to promote business opportunities in the developing countries by utilizing Taiwan¡¦s strengths of manufacturing and technology. Regarding the suggestions to the EPZ Administration and companies inside and outside EPZ, the suggestions are all regarding how EPZ can strengthen their service and improve the investment environment, and how companies are to fully utilize these EPZ improvements. The conclusion of this study shows following four items: 1. The accession of Taiwan to WTO is not only a crisis for EPZ, but also an opportunity. 2. EPZ has built up sound infrastructure and set the direction for its new positioning to face this challenge. 3. Whether the new positioning is fulfilled and new investment poured in will decide if the next phase transition of EPZ is successful or not. 4. EPZ acted as the pilot model for Taiwan¡¦s economic success 35 years ago, we are hoping it acts one more time the same model for Taiwan¡¦s next economic re-form.