The Regional Trade Agreement (RTA) is an agreement between two or more countries in which trade is facilitated by the removal of trade barriers between the countries concerned (Kahouli and Maktouf 2015; Zhou 2015; Bilas et Franc 2016; Hayakawa et al. 2016). Free trade agreements remove restrictions on trade in goods and open markets for services and investment between the parties (Zhang et al. 2007). Almost all countries now participate as partners in at least one RTA (Zhou 2015). The purpose of this paper is to establish a forecasting model using, among other things, a weighted average of disaggregated data on the tariff structure covered by the trade agreement and its changes over time, which have an impact on bilateral trade flows. This aspect of the research and its potential to systematically bridge the gap or lack of known policy assessment regarding the impact of JPEPA on the Philippine economy could be the main contribution of this study. Reyes J, Wooster R, Shirrell S (2014) Regional trade agreements and the pattern of trade: a networks approach. World Econ 37(8):1128-1151 Park I, Park S (2016) Trade facilitation commissions in regional trade agreements: discriminatory or non-discriminatory? East Asian Econ Rev 20(4):447-467 The two sides will promote bilateral cooperation to contribute to the strengthening of the economic partnership between them in nine areas, namely human resource development, financial services, information and communication technologies, energy and environment, science and technology, trade and investment promotion, small and medium-sized enterprises, tourism and transport. Japan was an active trading partner of the Philippines. In 2000, Japan accounted for 14.73% of Philippine exports. Figure 2 shows the historical value of export trade from the Philippines to Japan in logarithm form.
Although commercial value increased, commercial value declined sharply in the first quarter of 2012. This may be the effect of the ASEAN-Japan Economic Partnership (AJCEP), which spread Japan`s trade agreements to other ASEAN countries. The AJCEP may have had an impact on Japan`s imports from the Philippines. Figure 3 is Japan`s historical weighted average duty on Philippine exports. The agreement aims to promote the free cross-border movement of goods, people, services and capital between Japan and the Philippines. The agreement also aims to promote a comprehensive economic partnership including intellectual property, competition policy, improvement of the business environment and bilateral cooperation in areas such as human resources development, information and communication technologies and small and medium-sized enterprises. Once the agreement is concluded, the agreement will help to take advantage of the complementary relations between Japan and the Philippines, thus strengthening existing bilateral economic relations. The model, which uses weighted average tariff rates, can also be used by other researchers to assess the trade benefits generated by other regional trade agreements with tariff reductions. It can also serve as a basis for countries to conclude more trade agreements with other countries to increase their export potential. Rahman K, Molla R, Mourad M (2008b) The Chinese postman blunts the cut of the free trade agreement between Japan and Malaysia.
Glob Econ J 8 (4):1524-5861 Zhou M (2015) The efficacy of regional trade agreements, 1958-2006: the effect of institution creation on market expansion. Sociol Forum 30(3):721-742 The gravity model, although it has limitations, is so far the most widely used model for assessing the impact of a trade agreement. . . .