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Article
2022
Trade and welfare effects of a potential free trade agreement between Japan and the United States
Trade and welfare effects of a potential free trade agreement between Japan and the United States
Abstract (English)
This paper addresses the trade and welfare implications of a bilateral trade agreement between the U.S. and Japan. In 2019, the two countries signed a “stage one” trade agreement, with the U.S.-Japan Trade Agreement (USJTA) and the U.S.-Japan Digital Trade Agreement as two small trade agreements. A comprehensive bilateral free trade agreement (FTA) is currently under discussion between Washington and Tokyo, with the U.S. government alternatively joining the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP). Based on the theoretical model of Caliendo and Parro (Rev Econ Stud, 82(1):1–44, 2015) , I analyze the welfare gains of such a bilateral FTA in the style of Aichele et al. (Where is the value added? China’s WTO entry, trade and value chains, ZBW-Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz, 2014). I simulate trade and welfare impacts for the USJTA and the U.S.-Japan Digital Trade Agreement, as well as for a deep bilateral FTA. In addition, I examine and compare the welfare implications of the established CPTPP with the scenario of the U.S. or China joining CPTPP. My findings show that Japan’s welfare increases by 0.3% and U.S. welfare increases by 0.14% as a result of the FTA. Welfare of both countries would increase if the U.S. entered CPTPP, with Japanese welfare being even higher if China acceded to CPTPP.
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Review of world economics, 158 (2022), 4, 1199-1230.
https://doi.org/10.1007/s10290-022-00459-0.
ISSN: 1610-2886
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Walter, T. (2022). Trade and welfare effects of a potential free trade agreement between Japan and the United States. Review of world economics, 158(4). https://doi.org/10.1007/s10290-022-00459-0
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English
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380 Commerce, communications and transportation
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Sustainable Development Goals
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@article{Walter2022,
doi = {10.1007/s10290-022-00459-0},
author = {Walter, Timo},
title = {Trade and welfare effects of a potential free trade agreement between Japan and the United States},
journal = {Review of World Economics},
year = {2022},
volume = {158},
number = {4},
pages = {1199--1230},
}