International Agricultural Trade Costs and Non-Tariff Measures

This dissertation investigates how agricultural trade frictions, such as tariffs and non-tariff measures (NTMs), impact trade competitiveness and globalization in the agricultural sector. The dissertation consists of three chapters.

The first chapter argues that agricultural trade cost evolution differs from other sectors due to frequent regulations, standards, and the unique physical characteristics of agricultural products. We measure agricultural trade costs in the 21st century using a three-step estimation procedure based on structural gravity models. Our findings reveal unequal integration of world economies into agricultural trade, with heterogeneous trade costs among countries. Only high-income countries have achieved lower agricultural trade costs between 2001 to 2018. The chapter concludes by demonstrating that while standard country characteristics are important, trade policy tools such as agricultural tariff rates, trade agreements, provisions in deep trade agreements, as well as logistics and infrastructure systems, significantly impact agricultural trade costs.

In the second chapter, we assess the impact of non-tariff measures on U.S. agricultural exports as these measures have become increasingly important in global agricultural trade. Despite a vast empirical literature, the universe of NTMs is large and diverse, making it difficult to understand trade and export survival in the face of restrictive non-tariff regulatory measures. Moreover, the sheer number of NTMs collected and notified makes it difficult for researchers to disentangle and quantify measures that are burdensome for exporters from those that are largely inconsequential. In this chapter, we follow a different approach and create an NTM dataset consisting of sanitary and phytosanitary (SPS) measures and technical barriers to trade (TBT) measures from the National Trade Estimate Report of the United States Trade Representative. Using this dataset, we quantify the impact of SPS and TBT measures on U.S. agricultural exports. We find that the existence of NTM measures reduces U.S. agricultural exports by 34%, an effect equivalent to an 8% ad-valorem tariff. Furthermore, we find that these NTMs do not increase the probability of U.S. agricultural exports stopping.

In the third chapter, we employ a recently developed method to estimate the border effects of the USA and competitive agricultural exporters to Sub-Saharan Africa (SSA). We use recent advances in structural gravity modeling to estimate international border effects, incorporating intra-national trade. We present the differences in border effects relative to USA exports to the North American Free Trade Agreement (NAFTA) in ad valorem equivalent (AVE) tariffs. Our findings reveal substantial differences in USA agricultural border effects between relatively more integrated NAFTA partners and the SSA region, equivalent to a 43% AVE tariff, while for competitive suppliers, these AVEs range from 3% to 46%. The chapter concludes with a general equilibrium experiment stimulating a 20% reduction in border effects. Results indicate significant increases in SSA's imports, as well as welfare gains for both SSA and partner countries subject to border liberalization, with larger effects observed in SSA countries.