Effect of Trade Agreements on Agricultural Trade Examined in USDA Report
(STR/World Trade Interactive)
A recent report from the Department of Agriculture’s Economic Research Service concludes that reciprocal trade agreements increase agricultural trade between member countries and decrease trade between member and non-member countries. The report also finds that RTAs have been particularly effective at expanding agricultural trade and opening markets between developing countries.
RTAs include many types of agreements, such as preferential arrangements, free trade agreements, customs unions and common markets, in which members agree to open their markets to each other’s exports by lowering trade barriers. There were 186 RTAs in force in 2005, up from 50 in 1994, and the RTA share of world trade increased from 22% in 1975 to over 50% in 2005. Some economists believe RTAs can help promote market liberalization by exceeding World Trade Organization standards on non-tariff barriers, but others says that despite their positive effects RTAs can also distort trade, increase discrimination against non-member countries and lower overall economic welfare. The ERS study was intended to quantify such negative effects with respect to agricultural trade. Read more here.
Date: April 21, 2011