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Quantifying the EU-Japan Economic Partnership Agreement

In: Globalization and Welfare Impacts of International Trade

Author

Listed:
  • Gabriel Felbermayr
  • Fukunari Kimura
  • Toshihiro Okubo
  • Marina Steininger

Abstract

This paper provides a quantitative analysis of the new EU-Japan Economic Partnership Agreement (EPA), the biggest bilateral deal that both the EU and Japan have concluded so far. It employs a generalized variant of the Eaton-Kortum (2002) model, featuring multiple sectors, input-output linkages, services trade, and non-tariff barriers (NTBs). It uses the results of an econometric ex post analysis of a related existing FTA, the one between the EU and Korea, to approximate the expected reductions in the costs of NTBs. This approach yields long-run welfare effects for Japan of about 18 bn USD per year (0.31% of GDP) and of about 15 bn USD (0.10%) for the EU. On average, the agreement does not appear to harm third countries. 14% of the welfare gains inside the EPA stem from tariffs, the remaining 86% from NTB reform, and the services sector account for more than half. In the EU, value added in the agri-food sector goes up most, while in Japan the manufacturing and services sectors gain.
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Suggested Citation

  • Gabriel Felbermayr & Fukunari Kimura & Toshihiro Okubo & Marina Steininger, 2018. "Quantifying the EU-Japan Economic Partnership Agreement," NBER Chapters, in: Globalization and Welfare Impacts of International Trade, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14333
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    Cited by:

    1. Hosoe, Nobuhiro & Akune, Yuko, 2020. "Can the Japanese agri-food producers survive under freer trade? A general equilibrium analysis with farm heterogeneity and product differentiation," Japan and the World Economy, Elsevier, vol. 55(C).
    2. Gabriel Felbermayr & Toshihiro Okubo, 2022. "Individual preferences on trade liberalization: evidence from a Japanese household survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(1), pages 305-330, February.
    3. Dawid Jabkowski, 2024. "Development Prospects for EU Trade in Agri-food Products with Japan and Vietnam," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 288-302.
    4. 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 y:2020:m:09, FIW.
    5. Nobuhiro Hosoe & Yuko Akune, 2019. "Can the Japanese Agri-food Sectors Survive by Promoting their Exports?:A General Equilibrium Analysis with Farm Heterogeneity and Product Differentiation," GRIPS Discussion Papers 19-06, National Graduate Institute for Policy Studies.
    6. Okubo, Toshihiro, 2021. "Public preferences on immigration in Japan," Japan and the World Economy, Elsevier, vol. 58(C).
    7. Berndt, Marvin & Hess, Sebastian, 2022. "Predicting Agricultural Trade Flows under the EU-Japan Free Trade Agreement: A Comparison of CGE Simulations and Gravity Regressions," 62nd Annual Conference, Stuttgart, Germany, September 7-9, 2022 329591, German Association of Agricultural Economists (GEWISOLA).
    8. Ito, Keiko & Endoh, Masahiro & Jinji, Naoto & Matsuura, Toshiyuki & Okubo, Toshihiro & Sasahara, Akira, 2025. "Margins, concentration, and the performance of firms in international trade: Evidence from Japanese customs data," Journal of the Japanese and International Economies, Elsevier, vol. 75(C).
    9. Yi, Chae-Deug, 2020. "The computable general equilibrium analysis of the reduction in tariffs and non-tariff measures within the Korea-Japan-European Union free trade agreement," Japan and the World Economy, Elsevier, vol. 56(C).
    10. Elisabeth Christen & Hendrik Mahlkow, 2024. "Analyse der Effekte der EU-Handelsabkommen mit Australien und Neuseeland," WIFO Studies, WIFO, number 52930808, August.
    11. 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.
    12. Rodolfo Campos & Marta Suárez-Varela & Jacopo Timini, 2022. "The EU-MERCOSUR trade agreement and its impact on CO2 emissions," Economic Bulletin, Banco de España, issue 1/2022.
    13. Biyik, Onur, 2020. "Winner and Loser in Terms of the FTAs and the Trade War: Case Study of the Japanese Market. Examination of the GTAP10 Database," Conference papers 333233, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    14. 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.
    15. Hosoe, Nobuhiro & Akune, Yuko, 2019. "Impact of Trade Liberalization on the Japanese Agri-food Sectors: A General Equilibrium Analysis with Farm Heterogeneity and Product Differentiation," Conference papers 333025, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Chae-Deug Yi, 2025. "The United Kingdom-Korea-Japan free trade agreement with the reduction in tariffs and non-tariff measures on trade and welfare," Asia Europe Journal, Springer, vol. 23(1), pages 117-150, March.
    17. 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.
    18. Timo Walter, 2022. "Trade and welfare effects of a potential free trade agreement between Japan and the United States," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(4), pages 1199-1230, November.
    19. Marina Steininger, 2019. "Quantifcation of the EU-Japan Economic Partnership Agreement," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(02), pages 26-28, July.
    20. Berndt, Marvin & Hess, Sebastian, . "Extensive margin effects following the Japan-EU free trade agreement: analysing future developments in the agri-food sector," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 10(4).

    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F17 - International Economics - - Trade - - - Trade Forecasting and Simulation
    • N74 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: 1913-

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