Food trade and regional trade agreements

Abstract

Since the establishment of the World Trade Organization (WTO) also the number of Regional Trade Agreements (RTAs) has risen strongly, from less than 50 in 1995 to more than 350 in 2022. Increasingly overlapping RTAs imply challenges and can raise trade costs associated with the management of multiple trade rules and regulatory standards. At the same time, countries that are connected through several RTAs could be strongly integrated and their regulatory approaches well-aligned, thus reducing trade costs among them. This paper looks at the parallels in the evolution of agricultural trade and RTAs and asks how the layering of RTAs is associated with agricultural trade among their signatories and with countries outside the RTAs. Based on network measures and correlations we identify common patterns in the evolution of RTAs globally and agricultural trade of a balanced panel of 190 countries in the years 1995, 2007, 2013 and 2019. We also provide first indication on the interaction of overlapping RTAs and agricultural trade. On global average, our findings hint at a positive association between RTA and agricultural trade connectivity and suggest that this relationship could be more pronounced at the extensive margin of trade and for countries that share several RTAs, possibly indicating a stronger political integration among these countries.