The impact of the Japan-European Union Economic Partnership Agreement on the trade and income of Japan, the European Union, and South Korea

Abstract

This study analyses the effects of the Japan-EU Economic Partnership Agreement (EPA) on Japan and the EU’s 28 countries since it was enforced in 2019. The Japan-EU EPA has positive beneficial effects on the two participating economies, Japan and the EU. The removal of trade barriers and NTMs leads to more competition, more trade efficiency improvements, and ultimately more benefits to the participating countries/regions. Japan and the EU can benefit from the Japan-EU EPA by removing tariffs as a part of a trade liberalisation policy. The reduction of NTMs is important to liberalise international trade and get more benefits from the Japan-EU EPA. The Japan-EU EPA and trade liberalisation deal can contribute to not only Japan and the EU’s bilateral trade but also mutual GDPs and welfare levels. However, while non-participating countries, such as South Korea, may be negatively affected by the Japan-EU EPA, it produces positive overall welfare effects for the rest of the world.