Theory vs practice: Patterns of the ASEAN-10 agri-food trade

Tamás Mizik

doi:10.1515/opag-2021-0014

Abstract

Abstract During the past decades, agricultural trade is enormously expanded. One of its driving factors is the World Trade Organization. However, regional agreements can give further trade opportunities for the participating countries. Association of Southeast Asian Nations (ASEAN) is one of them. This article aims to give a detailed overview of ASEAN members’ agri-food trade by using the world and regional level data. The country level competitiveness is calculated by four different Balassa-type indices and highlights whether the agri-food trade (practice) of these countries is in line with the revealed comparative advantages/competitiveness of the different product groups (theory). According to the results, commodities with the highest comparative advantages overlap with the most important export products. This confirms a tight connection between theory and practice. It should also be noted that world level values are generally higher than that of the regional levels. Moreover, countries with significant agri-food production (Thailand, Indonesia, Vietnam, and Malaysia) can be characterized by higher comparative advantages compared to the other ASEAN member states. These results can help to better understand these countries’ trade specialization and international trade performance.

Highlights

It has been 27 years since the World Trade Organization (WTO) was established at the GATT’s Uruguay Round
There are 304 regional agreements in force, including the Association of Southeast Asian Nations (ASEAN) Free Trade Area (WTO RTA 2020). The impact of this agreement on agricultural trade is strong as ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) apply and maintain a strong market protection level for agricultural products (Febriningtyas et al 2018)
This article aims to present the characteristics of both extra-trade and intra-trade and their comparison by using four different types of Balassa indices (RCA, revealed comparative advantage; RSCA, revealed symmetric comparative advantage; RTA, relative trade advantage; RC, revealed competitiveness)

Summary

Introduction

It has been 27 years since the World Trade Organization (WTO) was established at the GATT’s Uruguay Round. It has 164 member states, including all the 10 members of the Association of Southeast Asian Nations (ASEAN). There are 304 regional agreements in force, including the ASEAN Free Trade Area (WTO RTA 2020). The impact of this agreement on agricultural trade is strong as ASEAN members (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam) apply and maintain a strong market protection (tariff and nontariff measures) level for agricultural products (Febriningtyas et al 2018). By analyzing five ASEAN member states, Hamid and Aslam (2017) identified policy mismatch as a barrier of further integration of the agriculture industry

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Conclusion