Japan's Regional Strategy in Asia: Evaluation by the CGE Model

This paper evaluates nine scenarios of Japan’s regional preferential trade agreements (PTAs) by the computable general equilibrium model. This analysis considers recent arguments on PTAs so that exogenous labor migration and FDI-led technological convergence among countries in PTAs are implemented in addition to conventional trade liberalization measures. The analysis presents several domestic and international implications for Japan and other Asian countries on how to understand Japan’s shift to regional PTAs, and which forms are favorable or harmful. It also provides the possibility that overall liberalization is not always welfare enhancing in Japan.