The Impact of Regional Trade Agreements on Trade in Agricultural Products
AbstractTrade flows are significantly affected by the trade agreements both with respect to impacts on pre-existing trade flows, (intensive margin) and on new, previously non-existent trade flows (extensive margin). The effect of the Regional Trade Agreements on pre-existing trade flows are found to be significant with a mean elasticity of substitution at the product level of about 2 so that a 1% preferential margin increases trade by only 2% on average. Total bilateral exports are found to be increased by 18% on average for products benefiting from a preferential margin between 5 and 10%, and by 48% for products where the margin exceeds 10%. The effect of an RTA agreement on extensive margin is to increase the probability to export a given a product to a partner country by one percentage point on average. Furthermore preferential margins, as measured through their impact on tax-inclusive consumer prices, nearly double within eight years of entry into force rising from 4.7% to 8.9% on average.
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Bibliographic InfoPaper provided by OECD Publishing in its series OECD Food, Agriculture and Fisheries Papers with number 65.
Date of creation: 09 Oct 2013
Date of revision:
agricultural trade; preferential margins; extensive and intensive margins; regional trade agreements; econometric estimates;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-10-18 (All new papers)
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