Electromobility, robots, computers – in many areas Japan is regarded as one of the most innovative countries in the world. At the same time its economy is facing significant challenges: an aging society, high government debt and stagnating growth. The Japanese government's reform program (known as "Abenomics") wants to inject new impetus into the economy by negotiating free trade agreements, among other things.
The EU and Japan, two of the world’s leading trade powers, are negotiating such a free trade agreement at the moment. The negotiations may even be concluded before the end of 2017. Japan is the EU's sixth-largest trade partner in the world. For Japan, the EU occupies third place. The volume of trade between the two countries amounted to around EUR 125 billion in 2016. However, the full potential is yet to be realized, given that trade barriers continue to exist on both sides. A free trade agreement could lower duties and non-tariff barriers.
Against this background, our study analyzes the effects that a free trade agreement between the EU and Japan could have on economic welfare, trade and selected sectors of the economies involved.