Do the WTO and RTAs Promote Food Trade

Abstract

In addition to multilateral trade agreements under the World Trade Organization (WTO), the world has seen a remarkable proliferation of regional trade agreements (RTAs) in the last two decades. This study investigates the impacts of these multilateral and regional trade institutions on food trade. The Gravity model of international trade is used for the empirical analysis. The model is developed in a large panel data setting and attempted to address some potential problems in the estimation including multilateral trade resistances and zero trade values. The results suggest that both the WTO and RTAs have delivered significant positive effects on bilateral trade among the participant countries, but not food. Only RTAs are found to have increased bilateral food trade among the members. However, although no evidence can be found that the WTO enhances food trade among the members, it promotes food trade of the developing countries more than the developed ones.