Potential Economic Gains for Major Powers Through Mega Trade Deals: Gains for China, India and Japan

Abstract

The Regional Comprehensive Economic Partnership (RCEP) is a mega-regional trade deal initiated by ASEAN member countries. It has six Free Trade Agreements (FTAs) with India, Japan, China, South Korea, Australia and New Zealand and has been signed by 15 countries without India. India has decided to withdraw from the RCEP negotiation. The RCEP agreement faced many challenges. There are many studies about the RCEP potential economic gain, but few analyzes about the comparison of potential economic gain between Japan, India and China. Japan has signed an FTA with India, while India and Japan have no FTA with China before signing the RCEP trade deal. The objective of this chapter is to explore the potential economic gain of the FTA between Japan, China and India. The potential economic gain will be analyzed by comparing the saving potential of FTA between the three countries. Japan has a lower tariff barrier than India and China, while India has a higher tariff barrier than China and Japan. Currently, China is one of its biggest trading partners for Japan. Among the three countries, the results show that the RCEP agreement will have significant advantages for Japan’s exporters because China is one of the biggest export markets for Japan. India has maintained its protectionism policy and has a high tariff barrier compared to Japan and China. India has low potential saving FTA benefit export to Japan due to Japan's low tariff barriers and India’s low export value to Japan. India's export value to China is higher than India's export value to Japan. The reason is that China is India's second biggest export partner after the USA.