Effects of Japan’s Economic Partnership Agreements on the Extensive Margin of International Trade

Abstract

This article investigates the effects of Japan’s economic partnership agreements (EPAs) on the Japanese import variety with respect to tariff reductions and outward foreign direct investments. The study is focused on the impact of changing tariffs and investments on the range of goods that EPA partners export to Japan for the periods 2005–10 and 2007–12. By using disaggregate tariff and trade data at the nine-digit HS level and by introducing the logit estimates with goods-specific effects, the article finds that both tariff reductions and Japan’s outward foreign direct investment help increase the likeliness of a commodity in the industrial sector to be exported to Japan from its EPA partner countries in the periods 2005–10 and 2007–12.