This paper studies the effect of FTA between a country and a region. The paper focuses on the economic effects of Korean-Japan FTA on automobiles and parts industry in the Busan region. Even though the Busan region is in valance of trade for automobi ...

This paper studies the effect of FTA between a country and a region. The paper focuses on the economic effects of Korean-Japan FTA on automobiles and parts industry in the Busan region. Even though the Busan region is in valance of trade for automobile with the Japan, the Busan resion is showing trade deficit for the automobile parts. Most of Busan's exported automobiles to Japan are buses and the region mainly imports specific vehicles. Due to the increasing imports of parts needed from Japan, the Busan region's dependency to Japan has become even stronger.
When the FTA is signed and the tariffs is eliminated, Busan region's automobile imports from Japan will increase by about 79% annually and the region's parts import from Japan will grow by about 15% annually. And it seems that passenger car imports from Japan contribute to provide employment in the allied fields.