Japan-AfCFTA Integration Through Economic Impacts of Alternative EPA Scenarios

Abstract

This paper analyzes the impact on an economic partnership agreement (EPA) between African countries and Japan through trade liberalization and reduction in non-tariff barriers. This study aims to investigate sectoral interconnections and participation in the EPA that would facilitate further possible opportunities for Japan-African businesses. The methodology employed is the Computable General Equilibrium model integrated with the Global Trade Analysis Project version 10A Multi-Region Input-Output database. We first modified the GTAP’s structure form to develop a long-run closure under steady-state and thereafter examined the African Continental Free Trade Area-Japan Economic Partnership Agreement (AfJEPA) with several EPAs scenarios relying on the quantitative comparison of economic impacts of different technical measurements. As a result, the AfJEPA can provide new possible opportunities for Africa-Japan businesses, such as contributing to the existing African and Japanese mega-regional trade agreements. Specifically, the electronics, petroleum and coal, and chemical, rubber, and plastic industries in Africa would see the highest percent growth. Likewise, the Japanese industries would improve their productivity in the motor vehicles and transport equipment, chemical, rubber, and plastic, and textiles and apparel industries. To sum up, trade facilitation and knowledge transfer, which policymakers can improve concrete action and investment, would considerably stimulate African and Japanese real GDP. Thus, the potential for growth would rely on how deep the integration policy would be.

The Effect of Tohoku Earthquake on Japan’s Bilateral Trade Distribution: Case Study of African Markets

“…Japan has actively participated in bilateral and multilateral economic partnership agreements (EPAs) since 2002, increasing its participation to around 80% in terms of free trade agreements (FTAs) in total foreign trade (Biyik, 2021) and strengthening the links between the Japanese economy and the world economy. FTAs/EPAs boost the volume of bilateral and multilateral international trade flow and thereafter enhance sectoral interconnection between a member of trading partners (Baier & Bergstrand, 2007).…”

“…Past literature focuses on the impact of TE shock on the Japanese market (Carvalho et al, 2021) and JIBTF (Ando & Kimura, 2012). Since Japanese trade policy with JMTP, such as China and the EU, has improved by participating in EPAs (Biyik, 2021), I investigate what/how Japanese trade intentions (relationships in the production networks) with African countries has been. This is because no scholar has researched Japan's relationship in production networks with African countries regarding TE shock.…”