The other trade war: Quantifying the Korea–Japan trade dispute

Sangho Shin and Edward Balistreri

Journal of Asian Economics, 2022, vol. 79, issue C

Abstract: In mid-2019 a new trade war between Korea and Japan started heating up, while the U.S.–China trade war held the spotlight. This paper documents the recent Korea–Japan trade dispute and quantifies its economic impacts. We consider a set of non-tariff distortions—Japanese export controls combined with Korean boycotts of Japanese goods. We simulate the impact of these actions using a multi-region general equilibrium model calibrated to the GTAP version 10 accounts and observed trade responses in the Korea Customs Service data. We find a welfare loss of 0.144% ($1.0 billion) for Korea and 0.013% ($346 million) for Japan. Sectoral impacts include a 0.25% reduction in chemical production in Japan. In Korea the reduction in imports from Japan is offset by increases in domestic production and imports from other countries.

Keywords: Non-tariff distortions; Computable General Equilibrium (CGE); Trade dispute (search for similar items in EconPapers)
JEL-codes: C68 F11 F13 F17 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:79:y:2022:i:c:s1049007822000021

DOI: 10.1016/j.asieco.2022.101442

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