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The Impact of Regional Trade Agreements on Trade in Agricultural Products

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Author Info

  • Jean Christophe Bureau
  • Sebastien Jean

Abstract

Trade 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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File URL: http://dx.doi.org/10.1787/5k3xznkz60vk-en
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Food, Agriculture and Fisheries Papers with number 65.

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Date of creation: 09 Oct 2013
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Handle: RePEc:oec:agraaa:65-en

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Related research

Keywords: regional trade agreements; agricultural trade; preferential margins; econometric estimates; extensive and intensive margins;

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