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Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data

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  • Sampath Jayasinghe
  • Rakhal Sarker

Abstract

The recent proliferation of regional trade agreements (RTAs) has intensified the debate on their merits. A growing literature has addressed this policy debate, focusing on the welfare and trade effects of RTAs and their likely impacts on the multilateral trading system. Some view them as stepping-stones toward multilateral trade liberalization while others see them as stumbling blocks against free trade. The existing literature has neglected some important aspects of RTAs dealing with trade in agrifood products. This study analyzes trade creation and diversion effects of the North American Free Trade Agreement (NAFTA) on trade of six selected agrifood products from 1985 to 2000. The investigation estimates an extended gravity model using pooled cross-sectional time-series regression and generalized least squares methods. The result shows that the share of intraregional trade is growing within NAFTA and that NAFTA has displaced trade with the rest of the world. NAFTA has served to boost trade significantly among its members rather than with the rest of the world. Countries participating in NAFTA have moved toward a lower degree of relative openness in agrifood trade with the rest of the world.

Suggested Citation

  • Sampath Jayasinghe & Rakhal Sarker, 2004. "Effects of Regional Trade Agreements on Trade in Agrifood Products: Evidence from Gravity Modeling Using Disaggregated Data," Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) 04-wp374, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:fpaper:04-wp374
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    References listed on IDEAS

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    1. Dell'Aquila, Crescenzo & Sarker, Rakhal & Meilke, Karl D., 1999. "Regionalism And Trade In Agrifood Products," Working Papers 14591, International Agricultural Trade Research Consortium.
    2. Xinshen Diao & Terry Roe & Agapi Somwaru, 2001. "What is the Cause of Growth in Regional Trade: Trade Liberalisation or RTAs? The Case of Agriculture," The World Economy, Wiley Blackwell, vol. 24(1), pages 51-79, January.
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    Cited by:

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    2. Fukui, E. Tani & Hammer, Alexander B. & Jones, Lin Z., 2013. "Are U.S. exports influenced by stronger IPR protection measures in recipient markets?," Business Horizons, Elsevier, vol. 56(2), pages 179-188.
    3. Hobbs, Jill E. & Kerr, William A., 2007. "Agrifood Supply Chains in the NAFTA Market," 2007 NAAMIC Workshop IV: Contemporary Drivers of Integration 163899, North American Agrifood Market Integration Consortium (NAAMIC).
    4. Cardamone, Paola, 2007. "A Survey of the Assessments of the Effectiveness of Preferential Trade Agreements using Gravity Models," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 60(4), pages 421-473.
    5. Boughanmi Houcine & Al Shidhani Jamal & Mbaga Msafiri & Kotagama Hemesiri, 2010. "The Effects of Regional Trade Arrangements on Agri-Food Trade: An Application of the Gravity Modeling Approach to the Arab Gulf Cooperation Council (GCC) Countries," Review of Middle East Economics and Finance, De Gruyter, vol. 5(3), pages 46-62, February.
    6. Qammer, N.A. & Baba, S.H., 2016. "Export Performance of Indian Walnut: Decomposition Analysis and Gravity Model Approach," Agricultural Economics Research Review, Agricultural Economics Research Association (India), vol. 29(2).
    7. Grant, Jason H. & Lambert, Dayton M., 2005. "Regionalism in World Agricultural Trade: Lessons from Gravity Model Estimation," 2005 Annual meeting, July 24-27, Providence, RI 19269, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Miran, Bülent & Atiş, Ela & Bektaȿ, Zerrin & Salalı, Ece & Cankurt, Murat, 2013. "An Analysis of International Raisin Trade: A Gravity Model Approach," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152200, Australian Agricultural and Resource Economics Society.

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