On January 1, 2002, Taiwan became a member of WTO. With current WTO agreements, trade barriers and other domestic support policies have being reduced gradually. Obviously the impact of joining WTO on Taiwan agricultural economy is inevitable. It is vital to do agricultural policy reform to accommodate entering WTO, and to reduce farmers’ loss and improve the competitiveness. This paper aims to simulate the impact of joining WTO on agricultural economy based on current policy instruments. Some policy implications to Taiwan COA for future policy reform would be provided by the simulation results. The simulation system employed in this paper is called TWAPS (Taiwan Agricultural Policy System), which adopts the idea of production activity-based approach from SPEL/EU and combines with Taiwan agricultural production structure to develop a policy-oriented system. This system covers the agricultural production activities related to all Taiwan agricultural products, the foreign trade, and the domestic demand for agricultural products. Simulation results could represent the quantitative, price, and monetary impacts of policy changes via the alternate use of policy instruments. Based upon simulation results, in three years after Taiwan enters WTO, the production value of agricultural sector that includes crop and livestock will reduce by 11.40% as compared to the figure before entering (base-period, 2000), and the agricultural income will reduce by 10.21%, moreover, the labor demand will reduce by 15.81%. Keywords: Policy Simulation, TWAPS, Agricultural policy, WTO