Mega FTA as a Signal Against Trade Protectionism Focused on the EU and Japan FTA

Abstract

The research questions of the paper are whether the EU Japan FTA can be a win-win approach or win-lose approach? Moreover what are reasons for the two parties to complete the FTA and which industrial sectors can be mostly profited in both parties? Last, but not least how to estimate impacts on the global economy? The hypotheses are FTA can reduce trade protectionism, and the former can generate more economic benefits to the participating countries than latter in the long term based on the trade dynamic group. The research methodology is to use cross sectional analysis based on statistic data and information collection as well as trade policy analysis. Additionally, critical analysis of literature and inference analysis are employed. The conclusion of the research is that the EU Japan FTA can generate about 0.76 percent GDP growth to the EU and about 0.29 percent GDP growth to Japan additionally per year next ten years long. Furthermore, it also creates new employment in both parties. Although the EU Japan FTA can create some looser particularly in East Asian economies such as South Korea, China, and Taiwan, their total amount is estimated as very low. In the global economy, the EU Japan FTA can generate much larger gains than lost. As a result, it is not only a win-win approach for the EU and Japan, but also for the whole global economy if it enters into force.