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The Latest Wave of Regionalism: Does Outsider Status Affect the Competitiveness of U.S. and Canadian Agricultural Exports?

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  • Grant, Jason H.

Abstract

The degree to which countries are pursuing regional trade agreements (RTAs) has been nothing short of extraordinary. The latest wave of regional integration, however, is “breeding concern” among academics and policymakers as to the extra‐regional effects of these agreements and their impact on North American agricultural exporters who are party to relatively few RTAs in world trade. This study constructs and uses an updated database of agricultural trade flows from 1992‐2008 to shed light on the degree to which outsiders status affects U.S. and Canadian agricultural exports and its competing suppliers. Regarding outsider status, the existing dummy‐variable approach is modified by incorporating region‐specific extra‐bloc trade flow variables to examine the degree to which RTAs divert trade from specific regions of the world, including Canadian agricultural exports. The results are quite illuminating. While RTAs may not be trade diverting on net, all RTAs considered exhibit trade diversion with respect to at least some regions. The results have important policy implications for nations that are not actively participating in the latest wave of regionalism.

Suggested Citation

  • Grant, Jason H., 2010. "The Latest Wave of Regionalism: Does Outsider Status Affect the Competitiveness of U.S. and Canadian Agricultural Exports?," Working Papers 90888, Canadian Agricultural Trade Policy Research Network.
  • Handle: RePEc:ags:catpwp:90888
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    File URL: http://purl.umn.edu/90888
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    1. Scott L. Baier & Jeffrey H. Bergstrand & Peter Egger & Patrick A. McLaughlin, 2008. "Do Economic Integration Agreements Actually Work? Issues in Understanding the Causes and Consequences of the Growth of Regionalism," The World Economy, Wiley Blackwell, vol. 31(4), pages 461-497, April.
    2. Egger, Peter, 2000. "A note on the proper econometric specification of the gravity equation," Economics Letters, Elsevier, vol. 66(1), pages 25-31, January.
    3. Steven S. Zahniser & Daniel Pick & Greg Pompelli & Mark J. Gehlhar, 2002. "Regionalism in the Western Hemisphere and Its Impact on U.S. Agricultural Exports: A Gravity-Model Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 791-797.
    4. Elhanan Helpman & Marc Melitz & Yona Rubinstein, 2008. "Estimating Trade Flows: Trading Partners and Trading Volumes," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 441-487.
    5. Thomas L. Vollrath & Mark J. Gehlhar & Charles B. Hallahan, 2009. "Bilateral Import Protection, Free Trade Agreements, and Other Factors Influencing Trade Flows in Agriculture and Clothing," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 298-317.
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    Keywords

    regionalism; WTO; trade; Agricultural and Food Policy; International Development; International Relations/Trade; Political Economy;

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