Impacts of Free Trade Agreement on Japanese Eoonomy in East Asia

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With the persistent frictions in the WTO's multilateral trade regime, the world's major trading nations have resorted to regional and bilateral trading arrangements. In the recent past, Japan initiated trade talks with a number of countries in the Asia Pacific region including, Singapore, Mexico, Korea, Thailand, Philippines, Malaysia, China, and Indonesia. Two of these have already been concluded giving rise to the Japan-Singapore FTA which was concluded in 2002, and the recently concluded Japan-Mexico FTA. Negotiations are still advancing with other countries. At the same time, negotiations are ongoing with ASEAN bloc of countries towards a regional trade agreement. This suggests that Japan's current trade strategy is double-pronged : the bilateral and the regional. This promises to create a new "Japan FTA Network" that will cumulatively have ramifications for the Japanese economy which constitutes the hub of the trade network. Various studies have been carried out under general equilibrium framework to assess the impact of individual bilateral free trade agreements on the economies of the partner countries, as well as on the impact of the proposed regional trade regime. The present paper has twofold objectives : First, to compare the individual results of the elimination of tariffs in each of the above bilateral trade agreements on Japan's economy using the GTAP model ; and secondly, to consider the difference between a bilateral trade scenario and a regional-multilateral trade scenario involving Japan and the countries involved in the new EPA.