Japan-AfCFTA Integration through Economic Impacts of Alternative EPA Scenarios -Examination of the GTAP 10A MRIO Database

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 the JapanAfrican 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, potential growth would rely on deep regulation policy through a degree of openness and initial level of trade barriers to each country.