Study On The Effects Of The Japan-EU FTA

In recent years Japan and the EU accelerate the process of negotiations on building free trade area for the pursuit of economic interests and political interests. The EU and Japan is Chinese first and fifth largest export market respectively,Japan and the EU establish a free trade area(FTA) will inevitably impact on the Chinese economy. In order to evaluate Japan- EU FTA’s effect especially for trade, output, wage differential, the comprehensive effects of macro economy in a more accurate and comprehensive level, this paper use the computable general equilibrium model——GTAP model for empirical simulation, then put forward policy suggestions for China.This paper put Japan-EU FTA’s effect as the research object, based on the review of background, related concepts, classification and theory of regional economic integration and literature, this paper analyze the trade situation and industry competitiveness of Japan, the EU and China. In addition, the paper prospectively implement the non-tariff barriers into GTAP model, use GTAP model to simulate the Japan-EU FTA’s effect on trade, output, the wage gap and the effects of macro economy with considering the cut of tariff barriers and non-tariff barriers at the same time, the results are as follows: ①Japan-EU FTA will expand the bilateral trade between Japan and EU, but it will cut the trade with China and other countries at the same time, and the effects of the reduction of non-tariff barriers are larger than that of the reduction of tariff barriers; ②most industries’ and factor output of Japan will be increased, while the industries’ and factor output of the EU and China will suffer a negative impact; ③trade liberalization will increase the wage skill premium of Japan and China, expand the wage gap, while the wage skill premium of EU is not affected; ④Japan’s macroeconomic are positively affected, while the GDP of China and EU will suffer a negative impact. Based on the results of the study, the article argues that China should optimize the structure of export, develop bilateral and multilateral trade partnership actively to expand overseas markets, expand domestic demand, and pay attention to negotiations progress and content of Japan-EU FTA at the same time.The research results are basically consistent with the interpretation of the theory of regional economic integration about the effect of the construction of regional economic integration to the member countries and non-member countries, so the results have the rationality to a certain extent. Meanwhile, this paper implement non-tariff barriers into GTAP model, compare and analyze the the reduction of two kinds of trade barriers’ effect of Japan-EU FTA, so the results have certain prospective and reference significance.