THE EU-SACU ECONOMIC PARTNERSHIP AGREEMENT: RESULTANT TRENDS AND PATTERNS IN SADC INTRA-REGIONAL AGRICULTURAL TRADE FLOWS
Abstract
The study analyses the effects of the EU-SACU Economic Partnership Agreement (EPA) on intra-regional agricultural trade in the SADC region. Trade data for the SADC region from 1996 to 2020 was utilized. The study used a “before and after” analytical approach, where first, after establishing that intra-regional trade in the region was relatively higher before the EPA compared to the period after the EPA was signed, a gravity model was estimated to identify the determinants of SADC imports from the EU before and after the EPA. The regression showed that GDP and population had positive and significant effects on bilateral trade, while distance and tariffs had negative but not highly significant effects. In conclusion, the results indicated that the EPA was trade-creating, with the SADC having more imports after entering the agreement with the EU.
Keywords
intra-regional trade; economic partnership agreement; agricultural trade; gravity model
References
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Timsina, K.P., Culas, R.J. (2020). Do free trade agreements increase Australian trade: An application of poisson pseudo maximum like-lihood estimator? J. East-West Bus., 26(1), 56–80. https://doi.org/10.1080/10669868.2019.1685056
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Aprilia, G.T., Handoyo, R.D., Ridzuan, A.R., Md Razak, M.I. (2020). Impact of trade creation and trade diversion in ASEAN-Japan Comprehensive Economic Partnership (AJCEP). Int. J. Acad. Res. Bus. Soc. Sci., 10(5), 82–90. https://doi.org/10.6007/ijarbss/v10-i5/7208
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Awata, L.A.O., Ifie, B.E., Danquah, E., Tongoona, P., Suresh, M., Gowda, M., Marchelo-Dragga, P.W., Sitonik, C., Olsen, M., Prasanna, B.M., Jumbo, M.B. (2022). Comparison of non-overlapping maize populations of unequal sizes for resistance to maize le-thal necrosis. J. Crop Improv., 36(4),
494–513. https://doi.org/10.1080/15427528.2021.1979157
Baker, P., Deleplancque, V. (2015). Achievements, challenges and constraints of trade integration in SADC. https://www.tradeeconomics.com/wp-content/uploads/2019/07/Achievements-challenges-and-constrainst-of-trade-integration-in-SADC1-min.pdf
Berends, G. (2016). What does the EU-SADC EPA really say? An analysis of the economic partnership agreement between the Euro-pean Union and Southern Africa. South Afr. J. Int. Affair., 23(4), 457–474. https://doi.org/10.1080/10220461.2016.1275763
Berger, A., Schwab, J. (2020). Www.Econstor.Eu.
Braha, K., Qineti, A., Cupák, A., Lazorcáková, E. (2017). Determinants of Albanian Agricultural Export: The Gravity Model Approach. Agris Pap. Econ. Inf., 9(2), 3–21. https://doi.org/10.7160/aol.2017.090201
Brewer, T.D., Andrew, N.L., Sharp, M.K., Thow, A.M., Kottage, H. (2020). A method for cleaning trade data for regional analysis: The Pacific Food Trade Database (Ver. 2, 1995–2018), 1995–2018.
Cameron, M. (2021). The SADC-EU Economic Partnership Agreement – Potential Export Opportunities for South Africa.
Charandabi, S.E., Ghashami, F., Kamyar, K. (2021). US-China tariff war. A Grav. Approach, 11 (3): 69–77. https://doi.org/10.5296/ber.v11i3.18757
Chen, L. (2017). Markets Matter: The Potential of Intra-Regional Trade in ASEAN and Its Implications for Asian Regionalism. https://doi.org/10.1162/ASEP
Costantiello, A., Lucio, L., Angelo, L. (2021). The Determinants of imports of goods and services in European Countries in the period 2010–2019. SSRN Electr. J., 6, 352–369. https://doi.org/10.2139/ssrn.3933421
Crivelli, P., Stefano, I., Jonas, K. (2021). Using utilization rates to identify rules of origin reforms: The case of EU free trade area agreements. SSRN Electr. J., 21. https://doi.org/10.2139/ssrn.3821597
Dadakas, D., Salim, G.K., Scott, F. (2020). Examining the trade potential of the UAE using a gravity model and a poisson pseudo maximum likelihood estimator. J. Int. Trade Econ. Dev., 29(5), 619–646. https://doi.org/10.1080/09638199.2019.1710551
Deme, M., Ndrianasy, E.R. (2017). Trade-creation and trade-diversion effects of regional trade arrangements: Low-income countries. Appl. Econ., 49(22), 2188–2202. https://doi.org/10.1080/00036846.2016.1234700
Ebaidalla, E.M. (2017). Assessing the success of SADC regional trade integration: A comparative analysis with ASEAN and MER-COSUR trade blocs. Bloom. Bus., 11(3), 14–21.
Edeme, R.K., Chigozie, N.N., Chinenye, E.I. (2020). Potential impacts of free trade areas and common currency on sustainable agricul-tural export in Africa. J. Pub. Aff., 22(1), 1–10. https://doi.org/10.1002/pa.2392
Gaspar, J.M. (2020). Paul Krugman: Contributions to geography and trade. Lett. Spat. Res. Sci., 13(1), 99–115. https://doi.org/10.1007/s12076-020-00247-0
Gaulier, G., Soledad, Z. (2012). BACI: International trade database at the product-level (the 1994–2007 Version). SSRN Electr. J., https://doi.org/10.2139/ssrn.1994500
Gauto, V.F. (2012). An econometric analysis of trade creation and trade diversion in Mercosur: The case of Paraguay. 2012 Conference, August 18–24, 2012, Foz do Iguacu, Brazil 126864, International Association of Agricultural Economists. 10.22004/ag.econ.126864
Geda, A., Addis, Y. (2019). The trade effects of the African Continental Free Trade Area (AfCFTA): An empirical analysis. World Econ., 46(2), 328–345. https://doi.org/10.1111/twec.13362
Gnutzmann-Mkrtchyan, A., Hugot, J. (2022). Gravity-based tools for assessing the impact of tariff changes. ADB Econ. Work. Pap. Ser., 649. http://dx.doi.org/10.22617/WPS220053-2
Hayakawa, K., Yoshimi, T. (2020). Tariff Rates in Gravity. IDE Discussion Papers 796, Institute of Developing Economies, Japan External Trade Organization(JETRO).
Hulse, M. (2020). Actorness and effectiveness of ECOWAS and SADC in interregional negotiations for economic partnership agree-ments. PDF hosted at the Radboud Repository of the Radboud University, Nijmegen. https://repository.ubn.ru.nl/handle/2066/158942
Irshad, M.S., Qi, X., Zhang, H., Hamza, A. (2018). An empirical analysis of Pakistan’s bilateral trade and trade potential with China: A gravity model approach. Cog. Econ. Fin.,
6(1), 1–18. https://doi.org/10.1080/23322039.2018.1504409
Kabamba, G.B. (2020). The importance of bilateral agreements on trade flows. Retrieved from: http://hdl.handle.net/10500/26799
Kalaba, M. (2014). The impact of non-tariff measures on SADC agricultural trade. Retrieved from: http://repository.up.ac.za/handle/2263/43366
Kalaba, M., Kirsten, J. (2011). Determinants of trade patterns and comparative advantage of processed agricultural products in SADC. Dev. Country Stud., 4(3), 21–36. Retrieved from: https://ideas.repec.org/p/ags/upaewp/206516.html
Kamga, S.D. (2019). Economic partnership agreements. Economic Partnership Agreements Another Tool for the Scramble for Africa or a Viable Undertaking for the Continent’s Development? In: Unite or Perish: Africa Fifty Years after the Founding of the OAU (p. 247–262). https://doi.org/10.2307/j.ctvh8qzr9.23
Kassa, W., Sawadogo, P.N. (2021). Trade creation and trade diversion in African RECs drawing lessons for AfCFTA. Retrieved from: https://documents1.worldbank.org/curated/en/
215761630345612049/pdf/Trade-Creation-and-Trade-Diversion-in-African-RECs-Drawing-Lessons-for-AfCFTA.pdf
Khalid, N., Zainuddin, M.R.K.V., Sarmidi, T., Jusoh, S., Ali, M.H., Razak, F. (2021). The trade restrictiveness index and its impact on trade performance in selected East Asian Countries. no. 402. ERIA Discussion Paper Series.
Kinzius, L., Sandkamp, A., Yalcin, E. (2019). Trade protection and the role of non-tariff barriers. Rev. World Econ., 155, 603–643.
Krapohl, S., Van Huut, S. (2020). A missed opportunity for regionalism: The disparate behaviour of African countries in the EPA – Negotiations with the EU of African Countries in the EPA-Negotiations with the EU. J. Eur. Integr., 42(4), 565–582. https://doi.org/10.1080/07036337.2019.1666117
Król, K. (2019). Trade theory in international economics. Int. J. Tax Econ. Manag., 33–42. https://doi.org/10.35935/tax/24.4233
Machado, J.A.F., Santos Silva, J.M.C. (2001). Identification with averaged data and implications for hedonic regression studies. Banco de Portugal.
Matoo, A., Mulabdic, A., Ruta, M. (2019). Trade creation and trade diversion in deep agreements, Cand. J. Econ., 55 (3), 1–47. https://doi.org/10.1111/caje.12611
Mccarthy, C. (2003). The Southern African Customs Union Food and Agricultural Organization of the United Nations. Retrieved from: http://hubrural.org/IMG/pdf/fao_etude_sacu.pdf
Mhaka, S. (2018). A comparative analysis of the determinants of South Africa bilateral trade flows with the European Union-Southern African development community economic partnership agreement and trade development and cooperation agreement. Working Pa-pers 1836, Department of Economics, Nelson Mandela University. Retrieved from: https://ideas.repec.org/p/mnd/wpaper/1836.html
Mohammed, M., Magai, P.S. (2019). Effects of regional economic integration on regional trade in Africa. Bus. Manag. Rev., 22(2).
Ngalawa, H.P.E. (2014). Anatomy of the Southern African Customs Union: Structure and revenue volatility. Int. Bus. Econ. Res. J. (IBER), 13(1), 145. https://doi.org/10.19030/iber.v13i1.8385
Obasaju, B.O., Olayiwola, W.K., Okodua, H., Eseyin, O., Ahmed, A.V. (2019). Intermediate tariffs and intraregional intermediate exports: Implications for regional value chains in ECOWAS. Cogent Econ. Fin., 7(1). https://doi.org/10.1080/23322039.2019.1622179
Pfaffermayr, M. (2020). Trade creation and trade diversion of economic integration agreements revisited: A constrained panel pseu-do-maximum likelihood approach. Rev. World Econ., 156. Springer Berlin Heidelberg. https://doi.org/10.1007/s10290-020-00389-9
Popović, B. (2019). The optimal solution to the problems by regression analysis. J. Eng. Manag. Compet., 9(1), 25–37. https://doi.org/10.5937/jemc1901025p
Ruck, A., Derrick, B., White, P., Toher, D. (2018). Tests for equality of variances between two samples which contain both paired ob-servations and independent observations. J. Appl. Quant. Method., 13(1), 36–47.
SACU (2002). Southern African Customs Union Agreement 2002 between the governments of The Republic of Botswana, The King-dom of Lesotho, The Republic of Namibia, The Republic of South Africa and The Kingdom of Swaziland” 2002 (April). Retrieved from: https://www.sacu.int/docs/agreements/2017/SACU-Agreement.pdf
Schneider, T., Stuart, A.M., Wu, J.L. (2022). Ensemble kalman inversion for sparse learning of dynamical systems from time-averaged data. J. Comput. Phys., 470. https://doi.org/10.1016/j.jcp.2022.111559
Senaviratna, N.A.M.R., Cooray, T.M.J.A. (2019). Diagnosing multicollinearity of logistic regression model, 5 (2), 1–9. Asian J. Prob. Stat., 5(2), 1–9. https://doi.org/10.9734/AJPAS/2019/v5i230132
Southern African Development Community European Union Economic Partnership Agreement (2018). Wesgro & Tralac. Retrieved from: https://www.tralac.org/documents/events/info/2046-eu-sadc-epa-booklet-tralac-wesgro-july-2018/file.html
Spanton, R.W., Berry, C.J. (2020). The unequal variance signal-detection model of recognition memory: Investigating the encoding variability hypothesis. Quart. J. Experim. Psychol., 73(8). https://doi.org/10.1177/1747021820906117
Sunde, T., Ogbokor, C. (2018). The effect of exports in SACU Ccuntries: An empirical analysis using panel data. Acta Univ. Danub. Œcon., 14(5).
Timsina, K.P., Culas, R.J. (2020). Do free trade agreements increase Australian trade: An application of poisson pseudo maximum like-lihood estimator? J. East-West Bus., 26(1), 56–80. https://doi.org/10.1080/10669868.2019.1685056
Tröster, B., Von Arnim, R., Staritz, C., Raza, W., Grumiller, J., Grohs, H. (2019). Delivering on promises? The expected impacts and implementation challenges of the economic partnership agreements between the European Union and Africa. J. Comm. Mark. Stud., 1–19. https://doi.org/10.1111/jcms.12923
Umair, M., Sheikh, M.R., Tufail, A. (2022). Determinants of Pakistan’s bilateral trade with major trading partners: an application of Heckscher-Ohlin model and Tinbergen gravity model. Bull. Bus. Econ. (BBE) Research Foundation for Humanity (RFH), 11(1), 24–36.
Vickers, B. (2017). The SADC EPA: a driver of development? In: North-South Regional Trade Agreements as Legal Regimes (p. 231–267). Edward Elgar Publishing.
Zainuddin, M.R.K.V., Sarmidi, T., Khalid, N. (2020). Sustainable Production, Non-Tariff Measures, and Trade Performance in RCEP Countries. Sustainability, 12(23), 9969. https://doi.org/10.3390/su12239969
Zaucha, J., Gee, K. (2019). Maritime spatial planning-past, present, future. Palgrave Macmillan.
Mutanga, A., Tagwi, A., & Chipfupa, U. (2023). THE EU-SACU ECONOMIC PARTNERSHIP AGREEMENT: RESULTANT TRENDS AND PATTERNS IN SADC INTRA-REGIONAL AGRICULTURAL TRADE FLOWS. Journal of Agribusiness and Rural Development, 68(2), 179–196. https://doi.org/10.17306/J.JARD.2023.01684
Albert Mutanga
atmutanga@gmail.com
University of South Africa South Africa
University of South Africa South Africa
Aluwani Maiwashe Tagwi
University of South Africa South Africa
University of South Africa South Africa
Unity Chipfupa
University of South Africa South Africa
University of South Africa South Africa
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