IDEAS home Printed from https://ideas.repec.org/a/kap/empiri/v48y2021i3d10.1007_s10663-021-09506-9.html
   My bibliography  Save this article

On the new gold standard in EU trade integration: reviewing the EU-Japan EPA

Author

Listed:
  • Julia Grübler

    (The Vienna Institute for International Economic Studies (wiiw))

  • Oliver Reiter

    (The Vienna Institute for International Economic Studies (wiiw))

  • Robert Stehrer

    (The Vienna Institute for International Economic Studies (wiiw))

Abstract

In 2011 the European Union’s free trade agreement with South Korea was considered its most ambitious agreement with any Asian economy. In 2019, however, this distinction was handed over to the EU’s Economic Partnership Agreement (EPA) with Japan. With Japan being a top-ten trading partner of the EU, the EPA is of economic and political importance in times of rising protectionism to support rule-based trading principles as well as international standards and sustainability goals. The paper reviews EU-Japan trade structures and the components of the EPA accompanied by a structural gravity estimation that builds on the experiences of the EU-South Korea agreement. Manufacturing industries benefit from reduced duties and application of the same international standards, facilitating approval. The greatest potential for cost reduction through tariff cuts remains in the strongly protected agri-food sector. Given the importance of non-tariff measures in negotiations of the EPA, we consider a counterfactual ‘gold-standard’ scenario, in which the regulatory gap for standard-like non-tariff measures between the EU and Japan closes. General equilibrium results suggest welfare effects for Japan of up to 0.05% of real GDP. Estimated GDP effects for the EU are in the magnitude of 0.01%, however, with marked differences across EU Member States.

Suggested Citation

  • Julia Grübler & Oliver Reiter & Robert Stehrer, 2021. "On the new gold standard in EU trade integration: reviewing the EU-Japan EPA," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 611-644, August.
    • Handle: RePEc:kap:empiri:v:48:y:2021:i:3:d:10.1007_s10663-021-09506-9
    DOI: 10.1007/s10663-021-09506-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10663-021-09506-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10663-021-09506-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hiau LooiKee & Alessandro Nicita & Marcelo Olarreaga, 2009. "Estimating Trade Restrictiveness Indices," Economic Journal, Royal Economic Society, vol. 119(534), pages 172-199, January.
    2. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    3. Judith Cherry, 2018. "The Hydra revisited: expectations and perceptions of the impact of the EU-Korea free trade agreement," Asia Europe Journal, Springer, vol. 16(1), pages 19-35, March.
    4. Head, Keith & Mayer, Thierry, 2014. "Gravity Equations: Workhorse,Toolkit, and Cookbook," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 131-195, Elsevier.
    5. Mahdi Ghodsi & Julia Grübler & Oliver Reiter & Robert Stehrer, 2017. "The Evolution of Non-Tariff Measures and their Diverse Effects on Trade," wiiw Research Reports 419, The Vienna Institute for International Economic Studies, wiiw.
    6. Anderson, James E. & Yotov, Yoto V., 2016. "Terms of trade and global efficiency effects of free trade agreements, 1990–2002," Journal of International Economics, Elsevier, vol. 99(C), pages 279-298.
    7. Mahdi Ghodsi & Julia Grübler & Robert Stehrer, 2016. "Estimating Importer-Specific Ad Valorem Equivalents of Non-Tariff Measures," wiiw Working Papers 129, The Vienna Institute for International Economic Studies, wiiw.
    8. Grübler, Julia & Reiter, Oliver, 2021. "Characterising non-tariff trade policy," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 138-163.
    9. Benedikt Heid & Mario Larch & Yoto V. Yotov, 2021. "Estimating the effects of non‐discriminatory trade policies within structural gravity models," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 376-409, February.
    10. Mario Larch & Joschka Wanner & Yoto V. Yotov & Thomas Zylkin, 2019. "Currency Unions and Trade: A PPML Re‐assessment with High‐dimensional Fixed Effects," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 81(3), pages 487-510, June.
    11. Felbermayr, Gabriel & Kimura, Fukunari & Okubo, Toshihiro & Steininger, Marina, 2019. "Quantifying the EU-Japan Economic Partnership Agreement," Journal of the Japanese and International Economies, Elsevier, vol. 51(C), pages 110-128.
    12. Egger, Peter & Larch, Mario, 2008. "Interdependent preferential trade agreement memberships: An empirical analysis," Journal of International Economics, Elsevier, vol. 76(2), pages 384-399, December.
    13. Dür, Andreas & Baccini, Leonardo & Elsig, Manfred, 2014. "The design of international trade agreements: introducing a new dataset," LSE Research Online Documents on Economics 59179, London School of Economics and Political Science, LSE Library.
    14. Michael Frenkel & Benedikt Walter, 2017. "The EU-Japan Economic Partnership Agreement: Relevance, Content and Policy Implications," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 52(6), pages 358-363, November.
    15. María Pía Olivero & Yoto V. Yotov, 2012. "Dynamic gravity: endogenous country size and asset accumulation," Canadian Journal of Economics, Canadian Economics Association, vol. 45(1), pages 64-92, February.
    16. Julia Grübler & Oliver Reiter & Robert Stehrer, 2018. "The EU-Japan Economic Partnership Agreement and its relevance for the Austrian Economy," FIW Research Reports series VII-001, FIW.
    17. Timmer, Marcel P. & Los, Bart & Stehrer, Robert & de Vries, Gaaitzen J., 2016. "An Anatomy of the Global Trade Slowdown based on the WIOD 2016 Release," GGDC Research Memorandum GD-162, Groningen Growth and Development Centre, University of Groningen.
    18. Baier, Scott L. & Bergstrand, Jeffrey H., 2007. "Do free trade agreements actually increase members' international trade?," Journal of International Economics, Elsevier, vol. 71(1), pages 72-95, March.
    19. J. M. C. Santos Silva & Silvana Tenreyro, 2006. "The Log of Gravity," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 641-658, November.
    20. James E. Anderson & Mario Larch & Yoto V. Yotov, 2015. "Estimating General Equilibrium Trade Policy Effects: GE PPML," CESifo Working Paper Series 5592, CESifo.
    21. Sergio Correia & Paulo Guimarães & Tom Zylkin, 2020. "Fast Poisson estimation with high-dimensional fixed effects," Stata Journal, StataCorp LP, vol. 20(1), pages 95-115, March.
    22. Andreas Dür & Leonardo Baccini & Manfred Elsig, 2014. "The design of international trade agreements: Introducing a new dataset," The Review of International Organizations, Springer, vol. 9(3), pages 353-375, September.
    23. Csilla Lakatos & Lars Nilsson, 2017. "The EU-Korea FTA: anticipation, trade policy uncertainty and impact," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(1), pages 179-198, February.
    24. Egger, Peter & Larch, Mario & Yotov, Yoto, 2020. "Gravity-model Estimation with Time-interval Data: Revisiting the Impact of Free Trade Agreements," School of Economics Working Paper Series 2020-11, LeBow College of Business, Drexel University.
    25. Tristan Kohl & Steven Brakman & Harry Garretsen, 2016. "Do Trade Agreements Stimulate International Trade Differently? Evidence from 296 Trade Agreements," The World Economy, Wiley Blackwell, vol. 39(1), pages 97-131, January.
    26. Gabriel Felbermayr & Fukunari Kimura & Toshihiro Okubo & Marina Steininger & Erdal Yalcin, 2017. "On the economics of an EU-Japan Free Trade Agreement," ifo Forschungsberichte, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 86.
    27. Decreux, Yvan & Milner, Chris, 2010. "Some New Insights into the Effects of the EU-South Korea Free Trade Area: The Role of Non Tariff Barriers," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 783-817.
    28. Michael Bratt, 2017. "Estimating the bilateral impact of nontariff measures on trade," Review of International Economics, Wiley Blackwell, vol. 25(5), pages 1105-1129, November.
    29. Oliver Reiter & Robert Stehrer, 2018. "Trade Policies and Integration of the Western Balkans," wiiw Working Papers 148, The Vienna Institute for International Economic Studies, wiiw.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jesus Crespo Cuaresma & Harald Oberhofer & Rupert Sausgruber, 2021. "Special issue: Evidence based policy making—selected papers of the 2020 Annual Meeting of the Austrian Economic Association," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 48(3), pages 589-591, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Julia Grübler & Oliver Reiter, 2020. "Non-tariff Trade Policy Analysis: An Ex-post Assessment of the EU-Korea Agreement," wiiw Working Papers 182, The Vienna Institute for International Economic Studies, wiiw.
    2. Silviano Esteve-Pérez & Salvador Gil-Pareja & Rafael Llorca-Vivero & Jordi Paniagua, 2021. "Has the Euro paid off? A study of the trade-induced welfare effects of the EMU," Working Papers 2103, Department of Applied Economics II, Universidad de Valencia.
    3. Luisa Kinzius & Alexander Sandkamp & Erdal Yalcin, 2019. "Trade protection and the role of non-tariff barriers," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 155(4), pages 603-643, November.
    4. Julia Grübler & Oliver Reiter & Robert Stehrer, 2019. "The EU-Japan EPA: A Case for Non-tariff Measures," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(02), pages 17-25, July.
    5. Julia Grübler & Oliver Reiter & Robert Stehrer, 2018. "The EU-Japan Economic Partnership Agreement and its relevance for the Austrian Economy," FIW Research Reports series VII-001, FIW.
    6. Milena Kern & Jörg Paetzold & Hannes Winner, 2021. "Cutting red tape for trade in services," The World Economy, Wiley Blackwell, vol. 44(10), pages 2858-2886, October.
    7. Baier, Scott L. & Yotov, Yoto V. & Zylkin, Thomas, 2019. "On the widely differing effects of free trade agreements: Lessons from twenty years of trade integration," Journal of International Economics, Elsevier, vol. 116(C), pages 206-226.
    8. Zongo, Amara, 2021. "The impact of services trade restrictiveness on food trade," International Economics, Elsevier, vol. 166(C), pages 71-94.
    9. Julia Grübler & Oliver Reiter, 2020. "Greater than the sum of its parts? Does Austria profit from a widening network of EU free trade agreements?," FIW Research Reports series VII-004, FIW.
    10. Kox, Henk L.M. & Rojas Romasgosa, Hugo, 2019. "Gravity estimations with FDI bilateral data: Potential FDI effects of deep preferential trade agreements," MPRA Paper 96318, University Library of Munich, Germany.
    11. Harald Oberhofer & Michael Pfaffermayr & Yvonne Wolfmayr, 2021. "Die Auswirkungen des Brexit auf Österreichs Wirtschaft," WIFO Studies, WIFO, number 66782, Juni.
    12. Mulabdic, Alen & Rotunno, Lorenzo, 2022. "Trade barriers in government procurement," European Economic Review, Elsevier, vol. 148(C).
    13. Duc Bao Nguyen & Anne‐Gaël Vaubourg, 2021. "Financial intermediation, trade agreements and international trade," The World Economy, Wiley Blackwell, vol. 44(3), pages 788-817, March.
    14. Fabien Candau & Geoffroy Guepie & Reine Kouakou, 2018. "In Gravity no Veritas: Dubious Trade Elasticiy and Weak Effects of Regional Trade Agreements in Africa," Working Papers hal-02625930, HAL.
    15. Julia Grübler & Oliver Reiter, 2020. "Greater than the sum of its parts? Does Austria profit from a widening network of EU free trade agreements?," FIW Research Reports series VII-004, FIW.
    16. Scott L. Baier & Amanda Kerr & Yoto V. Yotov, 2018. "Gravity, distance, and international trade," Chapters, in: Bruce A. Blonigen & Wesley W. Wilson (ed.), Handbook of International Trade and Transportation, chapter 2, pages 15-78, Edward Elgar Publishing.
    17. Mario Larch & Aiko F. Schmeißer & Joschka Wanner, 2021. "A Tale of (almost) 1001 Coefficients: The Deep and Heterogeneous Effects of the EU‐Turkey Customs Union," Journal of Common Market Studies, Wiley Blackwell, vol. 59(2), pages 242-260, March.
    18. Julia Grübler & Oliver Reiter, 2020. "Greater than the Sum of its Parts? How does Austria Profit from a Widening Network of EU Free Trade Agreements?," wiiw Working Papers 186, The Vienna Institute for International Economic Studies, wiiw.
    19. Leudjou, Roland, 2021. "Assessing the impacts of eliminating Non-Tariff Barriers in the framework of the African Continental Free Trade Area on Cameroons economy," Conference papers 330231, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    20. Zouheir El-Sahli, 2023. "The Partial and General Equilibrium Effects of the Greater Arab Free Trade Agreement," The International Trade Journal, Taylor & Francis Journals, vol. 37(2), pages 185-199, March.

    More about this item

    Keywords

    EU-Japan economic partnership; Free trade agreement; Trade policy; Non-tariff measures; Structural gravity model;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:empiri:v:48:y:2021:i:3:d:10.1007_s10663-021-09506-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.