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AEC 2012 - Impacts of Regional Trade Agreements on Trade in Agrifood Products- Evidence from Eastern and Southern Africa

25-oct-2012

The study analyzed the impacts of regional trade agreements on intra-trade in three selected agrifood products which are maize, rice and wheat in the three regional economic communities (RECs), namely the Common Market for Eastern and Southern Africa (COMESA), the East African Community (EAC) and the Southern Africa Development Community (SADC for the period 2005 to 2010. The study relied on two methodologies: statistical analysis and the gravity trade model.

Changes in intra-regional trade shares shows that Namibia, Rwanda, Tanzania and Zimbabwe are the four countries whose intra-regional trade across the three products increased during the period reviewed. On the other hand, Burundi, Malawi and Sudan are the countries whose intra-regional trade in at least two of the three products has declined. The results from the gravity trade model show that all the tradition variables, that is, GDP for exporter and importer countries as well as distance have expected theoretical signs. The coefficients on all variables of interest, that is COMESA, EAC and SADC regional dummies, shows that, overall, the estimated coefficients for these regional dummies in all other RECs and commodities is positive and statistically significant; indicating that intra-regional trade in those regions and for such commodities is above the predicted level of the standard gravity model.

The coefficients of the COMESAO, EACO and SADCO dummy variables which provide information on the presence of trade diversion effects varies across regional blocs and also across the products. For instance the estimated coefficients of COMESAO across the three products is positive and statistically significant, suggesting that imports of these commodities into COMESA member states from non-member states in the rest of the world were higher than the gravity model would predict.

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