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On the Use of FTAs by Japanese Firms


  • TAKAHASHI Katsuhide
  • URATA Shujiro


The paper examines the use of free trade agreements (FTAs) by Japanese firms. The analysis utilizes information collected by way of a questionnaire survey. The analysis finds that the use of FTAs by Japanese firms is very limited. Many Japanese firms do not take advantage of free trade via FTAs as they think that benefits are small because their trade volume with FTA partner countries is small and because the tariff differentials between most favored nation (MFN) rates and FTA rates are rather small for many products. Probit analysis of the determinants of the use of FTAs reveals that large rather than small firms do use FTAs, reflecting the high cost of such practice. In addition, firms with close trade and FDI relationships with FTA partner countries are found to use FTAs. Our findings indicate the need to reduce costs of using FTAs in order to expand their use by simplifying application procedures and by providing assistance through public and semi-public institutions such as the Ministry of Industry, Trade and Economy (METI); the Japan External Trade Organization (JETRO); and the Japan Chamber of Commerce and Industry. The paper also argues that the Japanese government should establish FTAs with Japan's large trading partners, including the United States and China.

Suggested Citation

  • TAKAHASHI Katsuhide & URATA Shujiro, 2008. "On the Use of FTAs by Japanese Firms," Discussion papers 08002, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:08002

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    References listed on IDEAS

    1. Blomstrom, Magnus & Fors, Gunnar & Lipsey, Robert E, 1997. "Foreign Direct Investment and Employment: Home Country Experience in the United States and Sweden," Economic Journal, Royal Economic Society, vol. 107(445), pages 1787-1797, November.
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    4. Ando, Mitsuyo, 2006. "Fragmentation and vertical intra-industry trade in East Asia," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 257-281, December.
    5. Alexander Hijzen & Holger Görg & Robert C. Hine, 2005. "International Outsourcing and the Skill Structure of Labour Demand in the United Kingdom," Economic Journal, Royal Economic Society, vol. 115(506), pages 860-878, October.
    6. repec:hhs:iuiwop:490 is not listed on IDEAS
    7. Takatoshi Ito & Andrew K. Rose, 2005. "International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14," NBER Books, National Bureau of Economic Research, Inc, number ito_05-1, January.
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    Cited by:

    1. Prema-chandra Athukorala & Archanun Kohpaiboon, 2010. "East Asia in World Trade: The Decoupling Fallacy, Crisis, and Policy Challenges," FIW Working Paper series 052, FIW.
    2. Ganeshan Wignaraja, 2013. "Regional Trade Agreements and Enterprises in Southeast Asia," Trade Working Papers 23718, East Asian Bureau of Economic Research.
    3. Masahiro Kawai & Ganeshan Wignaraja, 2010. "Regional Trade Agreements in Integrating Asia," Chapters,in: Asian Regionalism in the World Economy, chapter 5 Edward Elgar Publishing.
    4. Prema-chandra Athukorala & Archanun Kophaiboon, 2013. "Trade and Investment Patterns in Asia: Implications for Multilateralizing Regionalism," Departmental Working Papers 2013-16, The Australian National University, Arndt-Corden Department of Economics.
    5. Takahashi, Katsuhide & Urata, Shujiro, 2010. "On the Use of FTAs by Japanese Firms: Further Evidence," Business and Politics, Cambridge University Press, vol. 12(01), pages 1-15, April.
    6. Hayakawa, Kazunobu & Hiratsuka, Daisuke & Shiino, Kohei & Sukegawa, Seiya, 2009. "Who Uses FTAs?," IDE Discussion Papers 207, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    7. Arudchelvan, Menaka & Wignaraja, Ganeshan, 2015. "SME Internationalization through Global Value Chains and Free Trade Agreements: Malaysian Evidence," ADBI Working Papers 515, Asian Development Bank Institute.
    8. Kawai, Masahiro & Wignaraja, Ganeshan, 2011. "Asian FTAs: Trends, prospects and challenges," Journal of Asian Economics, Elsevier, vol. 22(1), pages 1-22, February.
    9. Archanun KOHPAIBOON & Juthathip JONGWANICH, 2015. "Use of FTAs from Thai Experience," Working Papers DP-2015-02, Economic Research Institute for ASEAN and East Asia (ERIA).
    10. Alfie Ulloa & Rodrigo Wagner, 2012. "Why don't All Exporters Benefit from Free Trade Agreements?: Estimating Utilization Costs," IDB Publications (Working Papers) 4635, Inter-American Development Bank.
    11. ANDO Mitsuyo & URATA Shujiro, 2011. "Impacts of the Japan-Mexico EPA on Bilateral Trade," Discussion papers 11020, Research Institute of Economy, Trade and Industry (RIETI).
    12. Siow Yue Chia, 2010. "Trade and Investment Policies and Regional Economic Integration in East Asia," Trade Working Papers 21878, East Asian Bureau of Economic Research.
    13. Siow Yue Chia, 2010. "Trade and Investment Policies and Regional Economic Integration in East Asia," Working Papers id:2993, eSocialSciences.
    14. Hayakawa, Kazunobu & Yamashita, Nobuaki, 2011. "The role of Preferential Trade Agreements (PTAs) in facilitating global production networks," IDE Discussion Papers 280, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Masahiro Kawai & Ganeshan Wignaraja, 2009. "The Asian “Noodle Bowl†:Is It Serious for Business?," Working Papers id:1936, eSocialSciences.
    16. Lili Yan Ing & Shujiro Urata & Yoshifumi Fukunaga, . "How Do Exports and Imports Affect the Use of Free Trade Agreements? Firm-level Survey Evidence from Southeast Asia," Chapters, Economic Research Institute for ASEAN and East Asia (ERIA).
    17. Wignaraja, Ganeshan, 2014. "The determinants of FTA use in Southeast Asia: A firm-level analysis," Journal of Asian Economics, Elsevier, vol. 35(C), pages 32-45.

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