The impact of regional trade agreements on agrifood trade flows: The role of rules of origin

In this paper we provide an assessment of the impacts of Regional trade agreements (RTAs) on agricultural trade, putting emphasis on the role of rules of origin (RO) which are always part of these agreements. We distinguish trade in raw agricultural products and trade in processed food products. Our sample includes 180 countries over four time periods: 2001, 2004, 2007 and 2011. We consider the main trade agreements involving major world exporting countries of agricultural commodities and food products. Using a gravity model, we introduce dummies for controlling for the multilateral resistance terms and we use the Poisson-Pseudo Maximum Likelihood (PPML) estimation method to deal with zero trade flows. Econometric results globally confirm that RTAs have a positive impact on trade between member countries, a negative or a non significant direct impact of RO, a negative or a non significant cross impact of RTAs and RO. Our estimation results globally support a significant non linear impact of RTAs, its positive effect on trade between members decreasing with the degree of restrictiveness of involved RO. As expected, our results suggest that trade in food products is more sensitive to RTAs and their RO than trade in agricultural products. Contrary to expectations, our estimation results do not support clear differentiated impact of RTAs and involved RO on North to South and South to North agrifood exports. Finally, our results suggest that RO matter regarding the trade impacts of RTAs