Abstract: Liberalization and globalization of international trade have connected the global economy. Advancements in transportation and communication have transformed international trade, reducing trade costs significantly. The liberalization of international trade, initiated by the General Agreement on Tariffs and Trade (GATT) of 1947 and the establishment of the WTO in 1995, has considerably reduced average tariff rates and boosted the integration of world economies. However, agricultural products are subject to unique precautionary policies and regulations, and their physical characteristics set them apart from other goods in international trade. Therefore, there is still limited evidence and understanding of how agricultural trade costs have evolved in the 21st century. In this study, we address this gap with a novel three-step estimation procedure to estimate ad valorem equivalent trade costs that are directional and disaggregated at the SITCR1 4-digit level. We discover that agricultural trade costs have not decreased significantly in the period between 2001-2018. The evolution of agricultural trade costs is found to be heterogeneous among products, regions, and income levels. Furthermore, globalization has had unequal effects, as only high-income countries experienced lower trade costs during the sample period. In the final section, we investigate the determinants of trade costs. We find that agricultural tariff rates, trade agreements, and logistics and infrastructure systems play a crucial role in reducing trade costs. However, we also find that while some provisions in deep trade agreements contribute to reductions in trade costs, others lead to higher trade costs.
Abstract: Non-tariff measures (NTMs) have become increasingly important in global agricultural trade and value chains. 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 paper, we take a different approach relative to the existing literature and focus on a highly publicized subset of Sanitary and Phytosanitary (SPS) and Technical Barriers to Trade (TBT) reported in the United States Trade Representative (USTR)’s National Trade Estimate (NTE) report over the last several years. We ask two fundamental questions: (i) do these measures impact U.S. agricultural export values and if so by how much? and (ii) What types of SPS and TBT measures appear to be the most trade restrictive against U.S. agricultural exports? Using a theoretically consistent gravity equation at the product-line with intensive and extensive margins of trade, we find that the presence of NTMs decreases U.S. agricultural exports by 34% which is equivalent to an 16.5% ad valorem equivalent (AVE) tariff for the intensive margins, on average, using the latest elasticity estimates. Conversely, we find very little evidence that these NTMs affect the extensive margin of U.S. export failures (i.e., the probability that U.S. exports stop).
Estimating Border Costs for Agricultural Exports to Sub-Saharan Africa
Abstract: Sub-Saharan Africa (SSA), with its large population and growing economy, constitutes a significant market for agricultural trade. Despite food insecurity being a critical issue in the region, SSA's involvement in agricultural trade remains relatively low due to substantial border frictions. This paper employs a recently developed method to estimate the border effect, i.e., border costs on agricultural exports, of the USA and competitive suppliers to the SSA region, reporting results in ad valorem equivalent (AVE) tariff terms. Our findings reveal significant differences in border effects between USA exports to NAFTA, a relatively less frictionless market, and USA exports to SSA, equivalent to a 43% AVE tariff. The AVE of border effect differences varies heterogeneously among competitive partners, ranging from 3% to 46% depending on the group of interest and trade direction. In a later section, we conduct a general equilibrium analysis of a reduction in border costs by 20% for the USA and each competitive supplier's export to SSA in separate specifications. Our results reveal that border liberalization and deeper integration have positive and heterogeneous trade and welfare effects for both parties. This reduction in border costs significantly increases SSA's imports from the countries subject to liberalization. The welfare gains for SSA countries reach up to 3.6%, with larger gains observed for border liberalization with the EU, followed by the USA. For partner countries, the welfare gains are larger for Ukraine, followed by Russia and the USA, respectively.
Agricultural Trade Costs in the 21st Century, 2024, V. International Conference on Economics, İstanbul, Türkiye
Estimating Costs of Protection for Agricultural Exports to Developing and Emerging Markets, 2023, IATRC Annual Meeting, Clearwater Beach, FL
Non-tariff Measures and U.S. Agricultural Trade, 2023, AAEA Annual Meeting, Washington, DC
Agricultural Trade Costs in 21st Century: New Evidence, 2023, Virginia Association of Economists 50th Annual Meeting
Non-tariff Measures and U.S. Agricultural Trade, 2022, IATRC Annual Meeting, Clearwater Beach, FL
Non-Tariff measures and U.S. and Global Agricultural Trade: Developing a Framework for Analysis, 2022, Foreign Agricultural Service (FAS), Agricultural Trade Webinar
Agricultural Trade Costs in 21st Century: New Evidence, 2022, AAEA Annual Meeting, Anaheim, CA
Electricity Price Forecasting: A case in Turkish Electricity Market, 2018, International Congress of Energy, Economy and Security, İstanbul, Türkiye
2nd Place in USDA Agricultural Market Service, 2023 Local Food Economics Virtual Data Visualization Challange with Naveen Abedin and Yang Cheng
Nominated as an alternate finalist for the 2019 - 2020 Turkish Fulbright Student Program
Contact:
Mail: 250 Drillfield Dr., Hutcheson Hall, Virginia Tech, Blacksburg, VA 24061
Email: karagulle@vt.edu ; karagullemre@gmail.com
Phone: +1 (540) 257-3391