Purpose - Due to the UK’s Brexit, the UK and Korea established the UK-Korea FTA in 2019. However, the UK and Japan are still having ongoing negotiations for a UK-FTAFTA as of July 2020. If the UK establishes these two bilateral FTAs, it is of interest what effects these will have. This study analyzes the economic effects of the removal of import tariffs with both the UK-Korea FTAand UK-Japan FTA. Design/Methodology/Approach - The multi-region, multi-sector standard CGE models were used as one of the main tools for assessing the economy-wide impact of trade policy changes. The model includes six (6) regions and 12 sectors, based on data from the Global TradeAnalysis Project (GTAP) database version 10, which wasreleased in September 2019. Findings - With the removal of import tariffs between UK and Korea and between UK and Japan, while the GDPs of UK and Japan will rise, it is expected that the GDP of Korea may slightly decline since the benefit of the UK-Korea FTA will be partially offset by the UK-Japan FTA. The total welfare will increase in the UK, Korea, and Japan, and there will be very large trade creation effectsin most manufactured good sectors. Research Implications - The UK-Korea FTAand UK-Japan FTAcan affect GDPs of the participating countries, as well as the welfare levels of not only the UK, Korea, and Japan but also those of the non-participating countries of China, the EU, and ROW. The UK-Korea FTA and UK-Japan FTA will also have trade creation effectsin the UK, Korea, and Japan, but will have trade diversion effectsin China, the EU, and ROW.
I. Introduction
II. Literature Review
III. Trade between UK-Korea and UK-Japan
IV. CGE Framework and Data
V. Simulation Results of the UK-Korea FTA and UK-Japan FTA
VI. Conclusions and Implications Recommendations
References
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