The Japan-Philippines Economic Partnership Agreement, a Decade after : Evaluating the Impact on Philippine Trade 6

ABSTRACT : Free trade agreements (FTAs) and regional trade agreements have proliferated in recent decades as countries perceived them to effectively reduce trade barriers, thus helping nations expand market access, protect local markets, and enhacne efficiency and productivity of domestic industries. Such preferential trade agreements, however, can have both advantages and disadvantages. The Japan-Philippines Economic Partnership Agreement (JEPA), the bilateral FTA that the Philippines entered into, aims to facilitate and promote free transborder flow of goods, services, capital, and people between the two countries. Whether the JPEPA has been able to deliver its deliver its intended benefits for both countries and what determines its success are two focal national interests. Evaluating such an agreement can be done through detailed examinations of the countries economic conditions before and after its implementation. It requires a comparison group whose outcomes are analyzed in contrast with a reference group of factors. This paper explores the use of synthetic control method to understand the effects of JPEPA on Philippine exports without being hampered by the limitations in its existing approaches. The results reveal that the Philippines benefited from the JPEPA as determined by the difference in the actual exports and the counterfactual exports to Japan grew by about 26 percent after the agreement was signed. Investigating the effects of JPEPA at the sectoral level, however, yields varying results. 56

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