The Japan-Thailand Economic Partnership Agreement (JTEPA) has had a great impacton the Thai manufacturing sector since it was put into force in late 2008. Byemploying the Multi-region General Equilibrium model, this study found that theremoval of tariffs between Thailand and Japan creates an expansion of their GrossNational product (GDP) and domestic consumption; GDP in Thailand increased by2.56% and domestic consumption rose by 3.45%. Meanwhile, Japanese GDP anddomestic consumption increased by 0.17% and 0.15%, respectively. As for tradecreation and trade diversion, following the implementation of JTEPA, an increase intrade volume seems to be found in intra-industry trade rather than inter-industry trade.This reflects the fact that the complication and sophistication of industrial productshas made specialization in these products more specific, and the specialization couldbe classified in the same industry. Regarding trade diversion, since both Thailand andJapan have engaged in many free trade agreements, the multiple agreements providethem with more choices for implementing international trade, although this willdegrade the benefits on specific bilateral agreements, such as JTEPA on tariffdeduction. This is confirmed by an interview with Japanese and Thai businesscommunities, who said that they tend to make use of privileges offered by ASEANJAPANrather than those in bilateral agreements when they export and importproducts to and from the ASEAN region. Moreover, it also needs considerable time forcompanies in both countries to understand each other and be able to establishbusiness links between them. Hence, the full benefits of JTEPA on industry via tradecreation and trade diversion might not become obvious over a short period of time.