Effects of EU-Japan economic partnership agreement for selected EU countries

The Economic Partnership Agreements (EPAs) negotiated between countries are economic arrangements that eliminate barriers to the free movement of goods, services, and investment between these countries. The aim of this paper is to assess the economic impact of EU-Japan EPA on European Union member states and additionally, on Japan. EU countries are not a homogeneous group, they have a different structure of production and level of economic development. The research question of the study is how the elimination of tariff barriers in line with EU-Japan EPA will change the structure of production and will it alter significantly the competitiveness of the economies of the countries involved. This impact is investigated using the Computable General Equilibrium (CGE) framework. Calculations revealed that economic returns from the EU-Japan EPA vary among the EU countries. Some of highly developed EU countries will experience beneficial effects from tariff reductions to a greater extent than others, while some of the less developed “new” EU members will experience losses. This is caused by the lower competitiveness of these countries. In the EU countries beneficial effects are expected mainly in the primary sector industries, like Meat and Animal Products, Leather, Grains and Crops, while in Japan economic gains are expected in Motor Vehicles and Transport Equipment industries.