Philippines-Japan Free Trade Agreement: Analyzing Its Potential Impact Using a Computable General Equilibrium Model

Taeko Yasutake

No DP 2004-40, Discussion Papers from Philippine Institute for Development Studies

Abstract: This study analyzes the potential impact of the Philippines-Japan Free Trade Agreement (FTA) on the Philippine economy in case of the Philippines' discriminately unilateral tariff reduction on import from Japan using a computable general equilibrium model for the Philippine economy. The result of the assessment of this study indicates that even only a reduction of tariff rates on imports from Japan would expand the Philippines' import from Japan and in total by 2.36-8.58 and 0.35-0.61 percent, respectively. Consumer welfare measured in Compensated and Equivalent Variation increase in all of 5 households classified by income level, not in a proportional way for each household however. More favorable impact on all households would be expected if not only a tariff reduction but also other factors such as liberalization of foreign investment are included in the agreement.

Keywords: computable general equilibrium (CGE); foreign investment; Philippines-Japan free trade agreement; unilateral tariff reduction; consumer welfare (search for similar items in EconPapers)
Pages: 28
Date: 2004
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