Analysis of Agri-Food Trade Structures
To Promote Agri-Food Trade Networks
In the Islamic Countries
53
3.4. Agricultural Trade Policies and Regional Trade Agreements
There is no international database that makes it possible to accurately identify what proportion
of trade takes place under regional trade agreements (RTAs). Utilization rates of preferences
vary across agreements, due to differences in compliance costs (especially related to rules of
origin), and preferential margins. Most countries do not systematically produce data on
preference utilization rates, although in theory it could typically be collated from detailed
customs statistics.
To provide some basic information on the role of RTAs in shaping trade in agricultural products
within the OIC, it is possible to analyze export and import flows assuming that trade flows
covered by an RTA use preferences at a rate of 100%. This is therefore an upper bound on the
true role of preferences in agricultural trade, but it is not feasible to conduct a more rigorous
analysis across all countries in the OIC as there is no standardized international source on
preference utilization within RTAs. To conduct the analysis, it is necessary to merge bilateral
trade data from UN Comtrade with the standard RTA dataset used in empirical international
trade.15 The result is a measure of the percentage of trade by value that is with RTA partners
and with non-RTA partners respectively. This summary statistic shows the relative importance
of RTAs as drivers of agricultural trade by product, focusing exclusively on intra-OIC trade.16
Table 12 presents results. Although the RTA data are not granular, breaking out exports
separately by product within regional groups shows that trade with RTA partners differs
substantially across sectors. This difference likely reflects different degrees of liberalization
within agreements, while differences over time likely reflect the signature of new agreements.
For the African Group, most trade in leading agricultural goods takes place within RTAs.
Although percentages of coverage have changed over the last decade, they still represent inmost
cases the bulk of trade in 2016. Exceptions are rice, vegetables, palm oil, fish and crustaceans,
and cocoa, where more trade takes place outside RTAs. The case of fish and crustaceans is
interesting, as there is a significant decrease in RTA coverage over the last decade, but it was
seen above that trade is still strongly intra-regional in a geographical sense. The implication is
that African exporters are trading with close countries whether or not there is an RTA. For the
Arab Group, most trade in most products also takes place within RTAs. In most cases, coverage
has either stayed constant or increased over time, which is consistent with signing more RTAs.
Only the case of tobacco sees a marked shift to extra-RTA trade over time, while the dynamic is
strongly in the opposite direction for fish and crustaceans. Coverage rates are generally lower
for the Asian Group, which means that trade flows outside regional agreements are relatively
more important. Nonetheless, RTAs still play a strong role in shaping intra-OIC trade in most
products, although in many cases that role is declining over time.
15 De Sousa, J. 2012. “The Currency Union Effect on Trade is Decreasing Over Time.” Economics Letters, 117(3): 917-920.
16 An extension to this exercise would be to look at the proportion of extra-OIC trade that goes through regional agreements
with non-members, such as the EU, as well as other countries. However, the focus of this section is on intra-OIC trade, so the
analysis is not further complicated by introducing this dimension.