Is the growth of regionalism as significant as the headlines suggest? Lessons from agricultural trade

Abstract

The proliferation of regional trade agreements (RTAs) has motivated a significant number of ex post econometric studies investigating their agricultural trade impacts. The general conclusion is that RTAs increase members' trade by as much as 150 percent, on average. In this article, we demonstrate that previous empirical work likely misrepresents the impact of RTAs because of considerable heterogeneity in the depth of economic integration pursued by these agreements. Contrary to previous studies, the results reveal that RTAs are not universally trade creating, and some agreements appear to provide very little benefit. "Deep integration agreements", on the other hand, are largely responsible for the impressive agricultural trade flow increases reported in the literature. Testing the hierarchy of RTAs largely confirms the theory: the benefits of regionalism are an increasing function of the depth of economic integration.

Disaggregated trade and disaggregated currency unions: a ranking of common currency effects

“…Nonetheless, applications of Anderson and van Wincoop () in the second, empirical strand often replace aggregate trade as the dependent variable with a “finer classification” of trade. This “finer classification” has often been agricultural trade (e.g., see Lambert and McKoy, ; Vollrath and Hallahan, ; Villoria, ; Philippidis et al., ; and Grant, ). Rauch () examines a wider array of goods by disaggregating tradables according to market characteristics of the goods: “[goods] traded on organized exchanges, [goods] not traded on organized exchanges but nevertheless possessing … ‘reference prices’, and all other commodities,” (p. 8).…”

On the Evolution of Trade and Sanitary and Phytosanitary Standards: The Role of Trade Agreements

“…As for trade measures, only the SPSs that regulate trade of cereals decrease after the approval of RTAs (Table 3, C). The product-specific effects of the RTAs may be due to the fact that the agreements frequently cover a limited set of products (i.e., partial scope agreements): in the agri-food sector this issue is the rule rather than the exception [16].…”

“…Most of the existing literature focuses on the trade effects of NTMs, distinguishing between country-specific and internationally harmonised measures [14,15], or on the effects of trade agreements, in particular on trade creation and diversion [3,16,17]. By contrast, in the academic debate, little attention has been given to the role of NTMs as trade barriers or catalysts in the context of trade agreements.…”

Agricultural Trade Liberalisation in the 21st Century: Has It Done the Business?

“…The WTO headcount of notified and enforced RTAs is often quoted to illustrate how regionalism and bilateralism have progressed, and how this preferential trade is now the dominant path for trade liberalisation. However, because agreements vary widely in breadth and depth, counting RTAs actually tells us little about the importance of preferential trade, and about the extent to which these agreements deliver effective trade liberalisation (Grant, ).…”