Impacts of the Japan-Mexico EPA on Bilateral Trade

This paper examines the impacts of the Japan-Mexico EPA on bilateral trade by using two different types of information, trade statistics and the EPA utilization rate. Using trade data, we found that Japan's exports of built-up cars, auto parts, base metals, electrical machinery, precision machinery, and ballpoint pens to Mexico increased sharply. We also found that Japan's imports of live animals and products, leather, and footwear with leather from Mexico increased significantly. These are some of the products that are protected by the respective governments. Using the results of a questionnaire survey of Japanese firms on their utilization of the Japan-Mexico EPA, the overall utilization rate was found to be rather low. However, the utilization rate for Japanese exports to Mexico was found to be high for iron and steel and transport machinery, which are the products most protected by the Mexican government. These findings indicate that the EPA has contributed to the opening up of Japan's and Mexico's protected markets. The questionnaire survey identified two problem areas for the EPA: one is the difficulty in getting information on the use of the EPA, and the other is the high cost of obtaining the certificate of origin for utilizing the EPA. These findings indicate the need for the government to provide information on the use of EPAs and to simplify the application procedures for obtaining the certificate of origin.