Analysis of the economic effects of China-Japan tariff concessions on Mechanical and electrical products under RCEP framework Based on the SMART model

Abstract

Based on the partial equilibrium model, this paper uses the SMART model to simulate the economic effects of different tariff concessions between China and Japan on both Chinese and Japanese Mechanical and electrical products under the RCEP framework. The results of the study show that China obtains larger trade effects relative to Japan after the RCEP comes into effect, because 91.3% of the Mechanical and electrical products exported from Japan to China have been liberalized before the RCEP comes into effect, and the Mechanical and electrical products exported from Japan to China are fully liberalized after the RCEP comes into effect, while China sets a transition period for tariff concessions and maintains a benchmark tariff for Mechanical and electrical products exported from Japan. China has not fully liberalized its exports of E&E products to China even after the transition period of tariff concessions. Therefore, if China fully liberalizes its E&E products to Japan based on reciprocal tariffs, China will gain more trade creation effect than trade diversion effect. Although a trade agreement would lower the tariff revenue of both countries, the economic welfare effect would be further enhanced. Finally, this paper proposes relevant policies and recommendations.

Keywords

• rcep
• china-japan
• tariff concessions
• samrt model
• mechanical and electrical products
• economic effects