Analysis of Japan's CPTPP Trade Effect Using Gravity Model and Machine Learning Approach

Abstract

In 2022, the Korean government announced its intention to join the CPTPP, led by Japan and launched in 2018, which aims to achieve comprehensive tariff abolition and establish new trade norms. According to our analysis, as with traditional gravity model outcomes, it appears that the greater the per capita GDP and the shorter the distance between countries, the greater the effect on promoting trade. However, the trade-enhancing effect after the enforcement of the CPTPP has not yet been clearly confirmed. Nevertheless, if tariff abolition and reduction proceed as planned, the trade-enhancing effect of the CPTPP is expected to gradually expand. On the other hand, an increase in trade between Japan and CPTPP member countries may suggest a potential contraction in trade with non-member countries. This could pose a threat to Korean industries that need to establish a stable supply chain within the Asia-Pacific region. As Japan is South Korea's fourth largest trading partner, a detailed review of the impact of the CPTPP on future trade between Japan and its member countries should form the basis for discussions on Korea's possible participation in the CPTPP and the content of negotiations.